Parr v. State ex rel. Cockey

Alvey, C. J., delivered the opinion of the Court. This is an action on a guardian’s bond brought against the principal and sureties for the use of the ward, and the — 229 — case is here ou the appeal of the sureties alone; the principal not appearing to have made defence to the action. The principal questions in the case arise on the pleadings, and hence it is necessary, to an intelligible understanding of the questions and how they are presented, that we state the pleadings with some fulness. The declaration sets forth the condition of the bond; the settlement by the guardian in the Orphans’ Court of an account showing a balance in his hands due the ward of $10,591.30; the fact of the arrival at age of the ward; and assigns as a breach of the condition of the bond the failure of the guardian to pay over to the ward the sum of $7,707.97 of said balance, alleged still to be due and owing. The defendants, the sureties in the bond, filed three pleas. 1. That the guardian did not settle in the Orphans’ Court any such account as that alleged in the declaration. 2. That after the ward became twenty-one years of age, he executed and delivered to the guardian a full and complete release of all claims against him as guardian. And 3. That after the ward became twenty-one years of age, in consideration of the transfer to him by his guardian of certain valuable property, he executed and delivered to his guardian a full release of all claims against him as guardian; and that to the prejudice of the defendants as sureties, the ward took possession of and title to said property, while it was of large value, and did not repudiate said release, or seek to have it set aside, or notify the defendants of any objection thereto, or of any claim against them, under said bond, until after said property had become utterly worthless. The plaintiff joined issue on the first plea; and, by way of replication to the second and third pleas, alleged that the ward was induced to execute the release mentioned in said pleas by the fraud and fraudulent representations of the guardian; that, as soon as the fraud — 230 — was discovered by the ward, he filed a bill in equity in the Circuit Court of Baltimore City against said guardian to have the said fraudulent transfer annulled, and said release vacated and set aside; that the defendants, as sureties of the guardian, were notified of the filing of such bill in equity, and that they employed counsel to appear and defend the said case, and were represented by such counsel throughout the entire proceeding, and that they paid the fees of such counsel; that through their counsel they cross-examined the witnesses for the plaintiff, and produced and examined witnesses on their own behalf, and paid the costs of taking such testimony; that counsel so employed by them argued the case in the Circuit Court, and that, after the decree, which declared said release to be null and void> and adjudged and directed the guardian to pay to the said ward the sum of $Y,Y0Y.9Y, with interest thereon from the 2Yth of November, 1880, the defendants, by their counsel, prosecuted an appeal from such decree to the Court of Appeals, and that they paid the costs of such appeal; that the counsel so employed argued the case in the Court of Appeals, and that said decree, so appealed from, was in all respects affirmed by the said Court of Appeals; and so the plaintiff avers that the defendants, in consequence of such notice to 'them of said proceedings, and of their participation therein, became parties to said cause, and are conclusively bound by said decree to the same extent that the said guardian, Edward D. McConkey, is bound thereby; and the plaintiff pleads and relies on said final decree as a conclusive adjudication, estopping the defendants from setting up the matters and things set forth in their said second and third pleas. To this replication there were three rejoinders. 1. That the said ward was not induced to execute the release mentioned, by false and fraudulent representations of the guardian. 2. That the ward did not, as soon as he dis — 231 — covered the alleged fraud by which the release was procured, file his bill in equity against the guardian to have the transfer therein referred to annulled, and the release vacated and set aside. Upon these two rejoinders issues were joined. By the third rejoinder to the replication, the defendants aver that the counsel employed by them to defend said cause was employed to do so in the name and on behalf of the guardian, Ed. D. McOonkey, the only defendant in said cause; that said counsel was only permitted by said guardian to make, and did only make, defence therein in the name, under the control and as the representative of the said guardian; that the present defendants were not represented by such counsel throughout said proceedings, but that, as counsel of the guardian, and not of these defendants, said counsel produced witnesses on behalf of the guardian, cross-examined witnesses produced by the plaintiff, took an appeal, and argued the case in the Court of Appeals, and advanced the money due by the guardian to pay the costs of taking testimony and costs of the appeal. And they aver that they did not, and could not, control the defence in said proceedings, or in any of them; that if they could have controlled the defence in said proceedings, they could and would have procured competent testimony, material to the issues involved in said proceedings, and that the said decree would not have been rendered; and that, therefore, they did not become parties to said proceedings, and are not conclusively bound by said decree rendered therein. To this rejoinder the plaintiff entered a general demurrer, which was sustained by the Court below, and judgment was entered on the demurrer for the plaintiff. Whether this demurrer was properly sustained, is the first question presented on this appeal. It may be stated as a well settled general rule of pleading that, whenever a material foot loell pleaded is — 232 — passed over by the adverse party ivithout denial, whether it be by pleading in confession and avoidance, or by traversing some other matter, or by demurring in lato, it is thereby, for all purposes of pleading at least, conclusively admitted. Or, as stated by the Queen’s Bench, such tcan admission made in the course of pleading, whether in express terms, or by omitting to traverse lohat has been before alleged, must be taken as an admission for all purposes regarding the issue arising from that pleading, whether the facts relate to the parties or to third persons, provided the allegations so admitted be material. ” Bingham vs. Stanley, 2 Q. B., 127; Robins vs. Maidstone, 4 Q. B., 816. Therefore, if the plaintiff in his replication makes séveral averments, which the defendant does not traverse in his rejoinder, to which the plaintiff demurs, judgment shall be for the plaintiff; for Avhat is materially alleged must be traversed, or it is always taken to be admitted. Com. Dig., tit. Pleader, (G. 2.). Now the plaintiff, in the replication to the second and third pleas of the defendants, expressly avers and sets-forth the material facts of the filing of the bill in equity by the ward against the guardian; the obtaining the decree of the Circuit Court setting aside and vacating the release, and also decreeing the payment of a certain sum of money by the guardian to the ward; and that such decree was affirmed on appeal. It also further avers that the present defendants, as sureties of the guardian, were not only notified of the pendency of the suit, but that they actually employed counsel to defend the same, and that they were in fact represented in those proceeding's by such counsel, who was paid by the defendants. These facts, most material in their character, have not been traversed or denied by the defendants in their rejoinder. They admit that they had notice of the pendency of the proceeding, and that they did in fact, employ counsel to appear in and defend that cause; but — 233 — they aver that it was to be done in the name and on behalf of the guardian, and that the defence was so conducted. They traverse certain subordinate facts alleged in the replication, and then aver that they did not and could not control the defences of the equity suit, and that if they could have done so, the decree would not have been made; wherefore they aver that they were not parties to that proceeding, and are not conclusively bound by the decree therein. This latter averment is but the legal conclusion supposed to follow from the facts previously stated in the rejoinder, the correctness of which is not admitted by the demurrer. Suppose, however, we concede for the moment the correctness of that conclusion, and treat the case as if the defendants here had not so far participated in the defence of the equity suit as to bind them as parties thereto, the question then is, upon the facts admitted in pleading, how are the defendants, as sureties of the guardian, affected by the decree that was passed? In the first place, if there had been no question made as to the defendants’ becoming parties to the equity suit, there could be no doubt of the effect of the decree, so far as the release is concerned. The release wms given to the guardian as an acquittance by the ward; but if it ■was given under circumstances, whether of fraud or mistake, such as affected its validity, it was subject to be vacated and annulled as if it had never existed. Such turned out to be the case; and a Court of equity of competent jurisdiction, in a proceeding as between the parties, to the instrument, has by' decree declared such release to be null and void for causes existing at its date. It could no longer be regarded as a subsisting instrument, to be used for any purpose. It could not be used as an effective instrument by the guardian himself, nor could it be used by any one standing in a relation of privity with or surety for him. Even as against strangers the — 234 — record of the equity proceeding and the decree thereon would he admissible to prove rdm ipsam, and the legal incidents and consequences of the decree, though not to prove the facts upon which the decree is founded. Key vs. Dent, Adm’r of Wood, 14 Md., 86, 98; Barr vs. Gratz, 4 Wheat., 213, 220. This principle is stated and fully illustrated hy a large collection of cases, in Notes 26, 27 and 85 by Cowen and Hill to 4 Phill. Ev., pages 43, 45 and 170, Ed. of 1850. The principle is also very clearly .stated in 2 Starkie’s Ev., 182, 184. But, hy reason of the relation the defendants bear to the principal in the bond, they do not occupy the position of mere strangers to the operation of the decree. And the release having been vacated" and annulled, and the defendants not being able to invoke or in any manner avail themselves of it •as a subsisting instrument in their defence, it is very ■clear that the issues in fact made on the first and second rejoinders to the plaintiff’s replication were wholly immaterial; for if the facts therein traversed were found for the defendants, they could not rehabilitate, and restore the original vigor and effect of the release, so as to entitle the defendants to plead or use it in evidence, as if it had never been vacated and set aside. Then, with respect to that part of the decree which adjudicates and directs the payment of a certain sum of money by the guardian to the ward, the principle is well .settled, in this State at least, that such recovery against .the principal in the bond, even though the sureties were no parties to the suit, is prima facie binding upon the sureties; and that they can only relieve themselves of ■such- binding effect of the recovery against the principal, by showing that the amount recovered was in excess of the amount which the plaintiff in the judgment or decree was really entitled to recover, or that he was not entitled to recover at all. Iglehart vs. State, use Mackubin, 2 G. & J., 235, 245. The Supreme Court of the United States — 235 — have held in Stovall vs. Banks, 10 Wall., 583, that a recovery hy a decree against an administrator, the principal in the hond, of a certain amount of money, is binding and conclusive against the sureties as well as the principal, and that the sureties would not be allowed to attack the decree collaterally. But this would seem to be giving to the recovery against the principal an effect as against the sureties, greater than this Court has hitherto allowed. But the broader question is presented on the facts admitted by the pleading, and that is, whether the present defendants did not so far participate in the defence of the ■equity suit as to make themselves parties in legal effect, though not technical parties of record, and as such become bound and concluded by the decree? It is certainly true, as a general rule, that no one can be conclusively bound by a judgment or decree unless he be a party to the suit, or be in privity with the party, or possesses the power of making himself a party. But it does not require a person to become a technical party of record in order to be bound and concluded by the result of the suit. State, use Charlotte Hall School vs. Greenwell, 4 G. & J., 407, 415. If he be interested in the subject-matter of the suit, as were the present defendants in the equity suit, and does in fact appear and exercise the right of participating in the defence, as if he were a technical party upon record, he cannot afterwards be heard to contend that he is not bound and concluded by the judgment or decree, to the same extent that he would have been if made a technical party to the proceeding. The law requires that there should be an end of litigation; and, where a party has had a full and fair opportunity presented of making all the defences at his command to an asserted right or claim, it is quite immaterial that he has elected to appear and defend in the name of another who is a party of record, rather than cause himself to be. — 236 — made a co-defendant in the proceeding. It is no answer for the present defendants to say that they only defended, the equity suit in the name of the guardian, the principal in the bond, and that they could not and did not control the defence throughout. They admit that they employed the only counsel who appeared in the case for the defence, and that defence was made throughout, though in the name of the guardian. Their relation to the defendant of record, and their immediate interest in the subject-matter of the suit, entitled them, as matter of absolute right, to appear and make all lawful defences that could be made, and we must assume that such defences were made, as it was the duty of the defendants then and there to make them. At any rate, having had a legal opportunity to make their defences, they cannot be heard to say that they did not avail themselves of it. The authorities are clear in support of that proposition. McKinzie vs. Baltimore & Ohio Railroad Co., 28 Md., 161; Ches. & Ohio Canal Co. vs. Com’rs of Alleghany County, 57 Md., 201; Chicago City vs. Robbins, 2 Black, 418; Robbins vs. Chicago City, 4 Wall., 657. We are therefore clearly of opinion, that, in any aspect in which it may be considered, the rejoinder failed to make a legally sufficient answer to the replication; and that the Court below was quite right in sustaining the demurrer and entering judgment thereon for the plaintiff. We come now to consider the case as presented on the exceptions. The case was tried before the Court without the aid of a jury, and at the trial there were five bills of exceptions taken by the defendants. The first was taken to the reading of the guardian's bond in evidence. This, though quite unnecessary and was in support of no issue-joined, could do no harm to the defendants, and was-therefore altogether immaterial. The second exception was taken to the admissibility ,in evidence of the guardian's final account stated in the — 237 — Orphans’ Court, with the release referred to therein, executed hy the ward to the guardian, coupled with an offer to follow up such evidence hy the production of the record of the equity proceeding's of the ward against the guardian, and the decree of the Court of Appeals, to show that the release had been vacated and annulled. It follows from what we have already said in regard to the effect of the decree upon the release, that the Court was clearly right in admitting this evidence. JSTor was there any error in the ruling as stated in the third exception. The record of the proceedings in the equity suit, and the decree of affirmance passed thereon, were binding on the defendants, as we have already shown: and there could he, therefore, no valid objection to their being read in evidence to the Court. The fourth exception was taken to the refusal hy the Court to admit certain testimony offered hy the defend-* ants, to show the value of the stock mentioned in the decree, at the time of its transfer to the ward, and its subsequent depreciation; and to disprove fraud and misrepresentation in obtaining the release from the ward, upon the transfer of the stock to the latter. But, as we have already shown, the issues made hy the first and second rejoinders to the plaintiff’s replication were wholly immaterial; and therefore, there could he no error in excluding evidence offered hy the defendants to support such'issues, in the face of the decree which had annulled the release, and decreed the stock to he retransferred to the guardian. If such issues had been found with the defendants, they would have constituted no bar to the right of the plaintiff to recover the amount shown to he due the ward hy the account stated in the Orphans’ Court, and which amount had been solemnly decreed to he paid hy the guardian to the ward. Moreover, the very testimony, thus offered hy the defendants, goes to show most conclusively, that the girardian himself did — 238 — not actively participate in the defence of the equitjr suit, but that he gave over and confided the entire and exclusive defence of the case to his sureties, the defendants; and that being shown, the latter certainly could introduce no evidence for the purpose of impairing the operation of or in any manner derogating from the full force and effect of the decree, against the making of which they had defended. (Decided 12th June, 1889.) The fifth exception was taken to the refusal by the Court to accept three prayers offered by the defendants as containing the law to govern the case. These prayers are founded upon theories that we have already examined in a former part of this opinion, and have shown to be incorrect as applied to this case. It is unnecessary to repeat what we have already said in regard to the propositions made by these prayers; it is sufficient to say that there was no error committed in rejecting them by the Court. Finding no error we shall affirm the judgment. Judgment- affirmed.