Caldwell v. Taggart

Mr Justice Johnson delivered the opinion of the Court; The material facts of this case may be thus stated : Grizzle Taggart, wishing to make provision for the family of her son John Taggart, conveyed a considerable property to one Goldsmith, and the defendant, James Caldwell, to the use of herself for life, then to the joint use of John Taggart and his wife for life, to the. use of the survivor for life, and finally, to be distributed among their children. The children, together with their parents, preferred this bill; The deed bears date the 22d of June 1809, and contains a clause, empowering John and his wife, or the survivor of them, to sell and dispose of the'trust property, “ and invest it in.other property subject to the like uses and trusts, and to repeat the same as often as they may think beneficial for them and their children.” In July 1812, Goldsmith being dead, Caldwell prevailed upon the cestui que trusts; Taggart and'wife, to permit him to make use of a large sum of money'raised upon the trust pr.opérty, and secured it to them by a mortgage on the Salisbury mills, executed to Nicholas Brice, in terms adapted to the purpose? of .the original trust deed. Afterwards, in the year 1816, Caldwell prevailed upon the--cestui que trusts to make another change of application of the trust found'in his favour, by executing a release of the mortgage to enable him, as is alleged in the bill, to make a purchase *200 of the Sulphur Springs in Virginia, and under a promise to mortgage that property when purchased, to secure the money according to the originaltrusts. These facts make out the complainants’ case; and.excepting the three allegations, that the last loan was solicited for a specific purpose, that it was applied to that purpose, and under a promise that the property when purchased should be mortgaged to secure the loan according to the trusts; the answer admits the facts set out in the bill. It is then a clear case for relief; since the defendant Caldwell, uniting in Himself the two characters of trustee and debtor to the trust fund, was guilty of a clear breach of trust in availing himself of {he release of 1816, without seeing the debt well secured, agreeably to the deed of 1809. He must in any event be. decreed to substitute such security as; he ought to have taken upon any other, change of investment effected in pursuance of the original trust. But the complainants here go for specific relief, claiming, to stand in the relation of cestui que trusts or mortgagees of a specified property; upon the ground, as to the first relation, of having paid the consideration money,- and as to the second, of having surrendered their existing mortgage upon Caldwell’s promise tó execute that in contemplation; and in' one or the other or both.those rights, to have the property placed in the hands of a receiver, that the income may be applied to extinguish prior ¡.incurnbrances, and leave the property free to satisfy this claim. The bill also contains the prayer for general relief, but the .specific claim must first be disposed of beforé the general prayer can be considered. The court below sustained the allegations of the bill relative to the promise to mortgage the specific property, and decreed Caldwell to execute a mortgage accordingly, to secure the principal sum ot fiftéeltf thousand seven hundred and sixty dollars. It then goes on to order tne interest, calculated to the date of the decree, amounting to seven thousand five hundred dollars, to be paid by a day prescribed, or in default theteof, that the property so ordered to be.mortgaged to secure the principal, shall be sold to' ,aise the interest. We think it clear that there is an error, in this, since the *201 interests of those in remainder would thus be sacrificed to the first taker. And although there is no appeal taken in their behalf, yet the court, while interfering to prevent the breach of a trust, in behalf of the father, can hardly be expected to pass over without noticing an omission in the father, ^amounting to a breach of trust, to the prejudice of his infant children. In an instance therefore in which a decree so obviously needs reforming, it is without reluctance that the court lays. hold of such legal grounds for reversing it as may be considered under the appeal taken by the defendant. . The complainants in théir bill set out, that soon after receiving and using the release before mentioned, Caldwell purchased the five-sevenths .of the interest in the Sulphur Springs, and shortly alter mortgaged , the same to Sullivan and others, to secure certain large sums which they had assumed for.him; that this mortgage was foreclosed according to.the laws of Virginia, and finally lifted and assigned, to Mr Richard Singleton, who advanced thereon, for the relief of Caldwell, twenty-three thousand dollars, to secure which the latter executed a trust deed to A. Stevenson and F. Bowyer, which it appears became absolute by failure of payment more than a year since. . And when the defendant, Caldwell, as well as Frances Bedford, come to answer to the allegation of the purchaser of the property in question, we find that, although Caldwell has repeatedly executed - eeds conveying or incumbering five sevenths of the. whole, he does not pretend1 to make title -to more than one-seventh, to wit: the share of James Bowyer. The rest are either vested in his wife or his children, or incumbered with prior liens, which will probably sweep the whole. His answer also introduces into the cause a deed of partition, or one partaking of that character, executed by the parties interested in this property, bearing date in 1810, by which a division or distribution, has been agreed upon, adapted to the nature of the property, and in which every individual has so distinct an interest that it-may. well be questioned whether, until it is in some way carried into exe *202 cution, it will be possible for any purchaser to know what he is buying.. This deed has not been copied into the record sent up, but it is presumed that it could hardly have been passed over in the court below. Of the interests thus introduced into the cause by the answer, that of the children of Thomas Bowyer, as set out in. Mrs Bedford’s answer,, and that of the children of Mrs Caldwell and Mrs Copeland, as shown by the will of William Bowyer; are wholly unrepresented. And as to the interest of Mrs Copeland or her representatives, although there was an order for a decree nisi, the Recrée no where appears to have been entered, nor evidence of the service or return of the rule exhibited in the record. In reply to all these grounds of reversal, for want of parties, or for want of due maturation for a final hearing, it has bdfen urged that nothing is ordered to be mortgaged or sold beside Caldwell’s own interest, whatever that may be. But this we conceive to be an insufficient answer. It is not enough that a court of. equity causes nothing but the interest of the proper party to change owner's. Its decrees should terminate and not instigate litigation. Its sales should tempt men to sober investment, and not to wild speculation. Its process should act upon known and definite interests, and not upon such as admit of no medium of estimation. It has the means of reducing every right to certainty and precision, and is therefore bound to employ those means in the exercise of its jurisdiction. There is no want of learning in the books on this subject. The general rule is laid down thus; “however numerous the .persons interested in the subject of a suit, they must all be made parties plaintiffs or defendants, in order that a complete decree may be made; it being the constant aim of a court of equity to do complete justice by embracing the whole subject, deciding upon and settling the rights of all persons interested in the subject of a suit; to make the performance of the order perfectly safe to those who have to obey it, and to prevent future litigation.” And again, “ all persons are to be made parties who are legally or beneficially interested in, the subject matter and result of the *203 suit;” extending in most cases to heirs at law, trustees, and executors. Thus; in a case in which a remainderman in tail brought a bill against the tenant for life, to have the title deeds brought into court, and there were annuitants on the reversion, and á child interested under a trust term of years prior to the limitation to the plaintiff, that is ihcumbránces prior and posterior to the plaintiff; Lord Hardwicke, 3 Atk. 570, refused a decree without first making them parties. So, where husband tenant foriife, remainder to his wife for life, remainder over, brought his bill without joining the wife; the objection was made and sustained, .on the ground that if there was a decree against, the husband, it would not bind the wife. 1 Atk. 289. So, if an under mortgagee brings his bill to foreclose the original mortgagor, he must make the first mortgagee a party. 3 P. W. 643. This is the relation in which the com"' plainants here seek to place themselves in reference, to Mr Singleton. And there are various cases in which, though the heir at law is not a necessary party, he is made such in practice, and the reason assigned is to free the estate from every blame that may lessen its value at the sale. 2 Ves. 431. 3 P. W. 91. 3 Br. Ch. Rep. 229, 365. And so in cases of indefinite or blended interests, all the participators are necessary parties; as wheré a residue is devised to several,-or even devised by specified shares. It is clear then that this cause must go back,- as well to have the necessary parties made, as to have the decree re-, formed and reduced to legal precision. It is true this course might have been avoided, if this court, upon looking through the complainants’ case and allowing the full benefit of every thing that has been legally established, had seen that a decree might now finally be rendered against the appellant. It would then have been nugatory to send it back for parties. But such is not the conclusion to which this court has arrived; it has already expressed the opinion, that to- a certain extent it is a very clear case for relief, and all the difficulties arise upon the nature of the *204 relief prayed and granted. There is no knowing what new aspect may be given to the cause, when all the necessary parties come in and answer. But as it is now presented, had the prayer for specific relief upon the Sulphur Springs been out of the cause, it would not have been sent back without such a decree against the defendant, Caldwell, as the court below ought to have rendered. This cause came on to be heard on the transcript of the record from the district court of the United States for the district of' West Virginia, and was- argued by counsel; on consideration whereof, it is ordered and decreed by this court, that the decree of the said district court in this cause be, and the same is hereby reversed, and that this cause be, and the same is, hereby remanded to the said district court for further proceedings to be had therein* according to law and justice.