Tyson v. Applegate

The opinion of the court was delivered by Magie, J. The claim of the appellants, who were the demurrants below, is that it appears on the face of the bill that there are other persons who ought to have been, but were not, made parties thereto. The demurrer first alleges that Frank S. Winchester should have been made a party. The bill was filed by respondent as receiver. Its object is stated to be to foreclose a mortgage given by Tyson to Frank S. Winchester, trustee of Maria L. Parker, to secure Tyson’s bond to Winchester as such trustee. Upon this statement it is obvious that it became incumbent on the receiver to show, by apt •allegations in his bill, his right to foreclose this mortgage. He attempted to do this by reciting a decree of the court of chancery made in a cause in which Tyson and Winchester (with others) were parties, and by which he was appointed receiver. What was adjudicated by the decree must be ascertained from the recitals of this bill. From those recitals it appears that Applegate was appointed receiver to take possession of the bond and mortgage in question, and “ to take, such measures and steps as may be necessary to recover the sums due thereon.” When recovered, the receiver was to distribute them among three persons in speci [310] fied but unequal proportions. It further appears that those persons were declared to be entitled to the bond and mortgage or to the moneys due thereon. But it nowhere appears that the decree directed the transfer of the bond and mortgage either to the receiver or to the persons declared to be entitled to them or the moneys due thereon. Nor is there anything in the decree as recited which, in my judgment, divests Winchester of his legal title to the bond and mortgage as trustee. Looking at the decree as the bill states it, the legal title of Winchester as a naked trustee remains, and no question can be-made but that a trustee holding the legal title to a mortgage is» in general, a necessary party to a bill to foreclose. Story’s Eq. Pl. § 201. The demurrer to the bill on this ground was well taken, and should not have been overruled. The demurrer also alleged that Maria L. Parker should have been made a party to the bill. Winchester held the bond and mortgage in trust for her. She is shown to have been a party to the cause in which the recited decree was made. While the recitals of the decree respecting her interest in the bond and mortgage are by no means clear, I think enough appears to justify the conclusion that it was adjudged that her interest was divested from her, and vested in the three persons hereinafter named. For that reason it was correctly held that she was not a necessary party to the bill. It is urged that a successful appeal by her from the decree which has thus affected her interest, might greatly embarrass the parties to this foreclosure, .or the purchaser under these proceedings. But I do not think that question is to be considered. The bill must be viewed in the light of the adjudged rights of the parties at the time it was exhibited. The demurrer further claimed that James Eugene Parker should have been made a party to the bill, but nothing whatever appears to justify this claim. The demurrer, lastly, claimed that Maria Louisa Parker» Samuel Parker and Elizabeth B. Parker should have been made parties to the bill. The bill shows that they were the complainants in the cause [311] in which the recited decree was made, and that it was adjudged by the decree that they were entitled to the mortgage or to the moneys due thereon, in proportion to certain specified but unequal sums declared to be due to each of them from Maria L. Parker. From this it is clear that the whole beneficial interest in the bond and mortgage became vested in them, and they stand in the position of cestuis que trustent in relation thereto. In contests respecting property held in trust, the general rule is that a cestui que trust is a necessary party. Stillwell v. McNeely, 1 Gr. Ch. 305; Van Doren v. Robinson, 1 C. E. Gr. 256; Cool v. Higgins, 10 C. E. Gr. 117; Elmer v. Loper, 10 C. E. Gr. 475; McIntyre v. E. & A. R. R., 11 C. E. Gr. 425. In proceedings upon mortgage, the general rule is that there can be no redemption or foreclosure of a mortgage unless all the persons entitled to the whole mortgage-money are before the court. So, if a mortgage has been made to a trustee in trust, all the cestuis que trustent should be made parties, as well as the trustee, to a bill to foreclose. Story’s Eq. Pl. § 201; 1 Dan. Ch. Pr. 213, 253. This rule has been constantly applied in our court of chancery. Chapman v. Hunt, 1 MaCart. 149; Large v. Van Doren, 1 McCart. 208; Jewell v. West Orange, 9 Stew. Eq. 403. These general rulas admit of exceptions arising out cf the circumstances of particular cases. Story’s Eq. Pl. § 207 et seq. Thus — to select, the exception applicable to such cases as that now before us — when a mortgage is made to trustees, in trust for numerous and unknown persons, such as holders of bonds issued by railroads &c., whose names and consent it would be inconvenient or practically impossible to obtain, the trustees may maintain a bill without making the cestuis que trustent parties. In Willink v. Morris C. & B. Co., 3 Gr. Ch. 377, the force of the general rule was admitted, but such an exception was allowed, because, unless allowed, there would have been a practical denial of the relief to which the parties were entitled. A similar view was taken by Chancellor Kent, in Van Vechten v. Terry, 2 Johns. Ch. 197. And ^e course of litigation upon railroad mortgages has called tor frequent application of this [312] exception. The language used by Chief-Justice Green, in delivering the opinion of this court in N. J. Franklinite Co. v. Ames, 1 Bens. 507, must be read in the light of the facts of that case, which bring it within this exception to the general rule. In Sweet v. Parker, 7 C. E. Gr. 453, it was held that the general rule requiring the presence of a cestui que trust, in a contest respecting the trust property, would be satisfied if any party was present in the suit, who, with reference to that interest, would be certain to bring forward the entire merits of the controversy. It is unnecessary to determine' the propriety of that view, for in the case in hand there is no person to represent the interest of these beneficiaries in this cox«test, which may, at least, involve the extent of the lien securing their interest. The receiver, so far as the bill shows, is a mere collector, and Winchester is only a nominal trustee. The question presented ixi this case was not discussed in Miller, Receiver, v. Mackenzie, 2 Stew. Eq. 291. It was not, in my judgment, involved in that case. The receiver there was appointed under the statute providing for supplemental proceedings in aid of executions at law. His authority was derived from the statute, and by its terms he was vested with title to such property of the judgment debtor as came within its provisions. It was therefore held that he was entitled to file a bill in his own name to remove fraudulent encumbrances, which stood in the way of the enforcement of the judgment, upon such property. I have not been able to find that the general rule, requiring the presence of both trustee and cestuis que trustent in proceedings for the foreclosure of a mortgage made in trust, is subject to any other exception than that applied in Willink v. Morris C. & B. Co., swpra, and similar cases. That exception is not applicable here. The cestuis que trustent who are beneficially interested in this mortgage, are only three persons, who are known and named in the bill. Appellants were entitled to have them made parties to the jwoceeding, which is to enforce the lien of the mortgage on their property. . For these reasons the demurrer for the want of Frank S. Winchester, Maria Louisa Parker, Samuel Parker and Elizabeth B. [313] Parker, as parties to the bill, was well taken, and should not have been overruled. The order appealed from must therefore be reversed in these respects, and the demurrer allowed so far as relates to the persons above named. Appellants are entitled to costs. , Order v/nanimously reversed.