Jackson County Bank v. First National Bank of Reedy

Miller, Judge: The second of the above styled suits, a judgment creditor’s suit, was the first to be brought, in Wirt County, in which the Jackson County Bank and J. H. Smith, Trustee, were made defendants. The only allegations against the Jackson County Bank and J. H. Smith, Trustee, were that the bank held a deed of trust executed by C. C. Brotton and wife to Smith, Trustee, covering certain lands in Wirt County. Neither the Jackson County Bank nor its trustee, Smith, answered the bill, but the bank by its cashier, Cole, appeared before the commissioner to whom the cause was referred and proved the bank’s debt secured by the deed of trust on the lands of the trust debtor in Wirt County; but being ignorant of the fact that the bill also involved the lands of Brotton in Jackson County, on which the bank held another deed of trust, and in which one K. K. Hyre was the trustee, to secure another and different debt, and as to which no allegation was made in the bill, no proof was offered of the existence or amount of this debt, except that in his testimony before the commissioner, in referring to a payment made it by Archer, the trustee in a third deed of trust on the Jackson County land, Cole explained that that payment was upon a debt secured to it by a trust deed on land in Jackson County and not on the debt secured by the deed of trust to Smith, trustee, on the Wirt County land. Wherefore, there being no exceptions to the commis [167] sioner’s report, the court, in determining the liens and their priorities on the lands of the debtor in Wirt County and Jackson County, and ordering the sale thereof, made no decree in favor of the Jackson County Bank for its trust- lien on the land in Jackson County. This decree was pronounced on September 9th, 1919. Subsequently, on January 7th, 1920, the Jackson County Bank appeared in court and filed its plea, and Hyre, its trustee, on the same day also intervened by petition, each setting up their respective rights as lienor and trustee, explaining the bank’s omission to prove its lien on the Jackson County land, and that Hyre, the trustee, had not been made a party to the suit, so as to bring before the court the outstanding legal title to the land covered by the deed of trust of May 25, 1918, and asking that the plaintiff be required to amend its bill. Upon the filing of these pleadings, the circuit court, on January 7, 1920, suspended the sale of the 1221,4 acres covered by the deed of trust to Hyre, Trustee, decreed to be sold, and adjudged that the cause be remanded to rules, and that process be issued to the several parties thereto to answer said petition, and that the bill of complaint should be amended by making Hyre, Trustee, a party thereto, and by proper allegations set up the said deed of trust. The first of the above styled suits — that of the Jackson County Bank against the First National Bank of Reedy et al. ■ — shows that while it was still pending at rules, the bill in the original suit not having been amended nor process issued thereon as required, the Jackson County Bank, at the March rules, 1920, of said court, filed its answer to the original bill, in the nature of a cross-bill, making the parties to the former bill and Hyre, Trustee, parties thereto, and the papers ■and proceedings in the former suit parts thereof, and praying that the former decree made in the absence of the proper and necessary parties be set aside and held for naught, in so far as the same gave right and priority to the other creditors over the lien of respondent upon the 1221,4 acres of land in Jackson County, and that respondent’s rights be fully protected. As already stated, the plaintiff in the original suit never [168] did amend its bill as required by tbe decree of January 7, 1920, but upon tbe filing of appellant’s answer thereto, and making its trustee and others parties to tbe suit, tbe court, by the decree complained of, undertook to consolidate tbe two causes, namely, tbe original cause and tbe one introduced by appellant’s answer, without requiring plaintiff to amend its bill as formerly ordered, and to dismiss appellant’s case made upon its answer, and to deny it any relief in respect to tbe deed of trust of May 25, 1918, and ordering tbe commissioner appointed in tbe original suit to proceed to execute the decree of sale, thereby bolding, according to the written opinion filed, that appellant, because of its failure to prove its debt secured by the deed of trust on tbe Jackson County land, bad lost its right to participate in tbe proceeds of tbe sale thereof in tbe order of priority to which it would otherwise have been entitled. So tbe sole question presented, and which is comprehensive of all tbe specific errors assigned in tbe decree appealed from, is: Did tbe appellant, tbe Jackson County Bank, lose tbe priority of its debt and lien in tbe way indicated, on tbe 122% acres of land in Jackson County? As already stated, tbe trustee, Hyre, in tbe deed of trust of May 25, 1918, bad not at the time of tbe entry of tbe original decree of sale been made a party to tbe suit. Nor did the bill contain any allegation respecting appellant’s lien on tbe 122% acres. Nor did tbe court below, before reaffirming its prior decree oí sale, require tbe plaintiff to amend its bill and bring in tbe necessary and proper parties. Tbe theory of tbe circuit court seems to have been that as Hyre, Trustee, bad filed bis petition in tbe original suit and bad been made a party defendant to appellant’s cross-answer, which undertook to set up its rights, any defect of parties to, or subject matter of, the plaintiff’s bill was cured thereby, justifying tbe decree dismissing appellant out of tbe cause and denying it tbe right on proper pleadings, and after tbe proper and necessary parties were before tbe court, to prove and have allowed and decreed to it its lien in -the proper order of. priority thereof on said Jackson County land. It seems to have been tbe Opinion of tbe court that tbe statute, section 7 of chapter 139 [169] of the Code, made the decree of sale pronounced on the commissioner ’s report in the original cause a bar to the lien of the bank. That statute would undoubtedly be applicable if the court at the time of its decree of sale had had before it the necessary parties and subject matter. But in this case, as the court before the filing of appellant’s answer determined that the bill was defective in point of necessary allegations and of parties, if correct in this, unless cured by. the answer of appellant and process thereon, the error in the decree remains, and the order that plaintiff amend its bill and bring in the necessary parties has not been complied with. At the time of the original decree of sale the legal title to the 122]4 acres in Jackson County was outstanding in Hyre, Trustee, and the court had not before it that title to dispose of. . The decree of sale as to the tract involved here remains unexecuted, and we have no question presented as to the rights of a purchaser under such decree. The futility of undertaking to decree a sale of the land when there are existing liens thereon by deeds of trust, without the presence as parties of the trustees in such deeds has been repeatedly adjudicated in former decisions. It was so decided in Bilmyer v. Sherman, 23 W. Va. 656; McMillan v. Hickman, 35 W. Va. 705; Turk v. Skiles, 38 W. Va. 404; Farmers’ Bank of Fairmont v. Watson, 39 W. Va. 342; First National Bank of Webster Springs v. McGraw, 85 W. Va. 298, 307; Bragg v. United Thacker Coal Company, 70 W. Va. 655. It is unnecessary to repeat here the reasoning of the cases cited for this proposition. The rule is too well settled to depart from it in this case. In Bilmyer v. Sherman, supra, it was said a decree of sale in the absence of the trustee holding the legal title would be reversed although the trust creditor had had his debt audited in the suit. See, also, Marshall’s Ex’or v. Hall, 42 W. Va. 641, 646. In McMillan v. Hickman, supra, the necessity of bringing in as parties trustees holding the legal title before decreeing the sale of a debtor’s land was declared and reenforced, and reference was made to the statute making it the duty of a plaintiff in a judgment creditor’s suit to make all lien creditors disclosed by the record parties thereto. Counsel for plaintiff in this case excuses [170] his omission to make Hyre, Trustee, a party by alleging in a reply to appellant’s plea that in examining the records of Jackson County he overlooked the deed of trust to Hyre, Trustee, though it appears to have been duly recorded and might easily have been found. The absence of Hyre, Trustee, was, as we have already said, brought to the attention of the court, not only by the plea of the appellant, but also by the petition of Hyre, Trustee. When his absence was thus made to appear, it was the duty of the court to have set aside the prior decree, and that is what it undertook to do, and require the plaintiff to amend its bill and implead all necessary^ parties before undertaking to adjudicate the rights and priorities of any of the parties to the suit,, and it could make no difference, as our decisions hold, how the absence of the necessary party was brought to the attention of the court. Gallatin L. C. & O. Co. v. Davis, 44 W. Va. 109. Our conclusion is to reverse the decree and remand the cause for further proceedings to be had in accordance with the views herein expressed. Reversed and remanded.