Security Savings & Loan Ass'n v. Buchanan

Having stated the case as above, SEYEEENS, District Judge, delivered the opinion of the court. Although the demurrer was sustained in the circuit court upon the one ground stated in the opinion of that court, the question for us is whether it should have been sustained for any of the causes therein shown. There can be no doubt that, upon the facts stated in the bill, the appellee, Hutsell, was guilty of a gross fraud upon the complainant, and that an action a,t la,w would lie to recover the damages occasioned thereby. It was held by the court below that that was an adequate remedy, and hence that a suit in equity could not be maintained; citing Ambler v. Choteau, 107 U. S. 586, 591, 1 Sup. Ct. 556, and Buzard v. Houston, 119 U. S. 347, 354, 7 Sup. Ct. 249. The only ground we can see for thus joining Hutsell, and the cause of action against him, in this litigation, is that the security of the note and mortgage of Buchanan and Crabbs may first be liquidated in order to ascertain the extent of the damages arising from Hutsell's alleged fraud. But the value of the security could be ascertained for the same purpose in a suit at law with equal facility. No discovery is here prayed, and answer under oath is waived. The case is therefore, as against Hutsell, a mere graft of a strictly legal cause of action upon a bill in equity, the primary purpose of which is to foreclose a mortgage. We do not think the legal controversy can be properly litigated in such a suit. 1 Beach, Mod. Eq. Prac. § 117; Fougeres v. Murbarger, 44 Fed. 292; Williams v. Jackson, 107 U. S. 478, 2 Sup. Ct. 814. It is quite true that fraud is a ground upon which a court of equity is accustomed to afford relief, and this in a great variety of circumstances. But, in doing so, it respects the rule that its jurisdiction should not be exercised where there is an adequate remedy at law. That is the present case. No preventive relief is prayed, and nothing corrective other than a mere judgment for damages upon, a transaction which is passed and confirmed. Parkersburg v. Brown, 106 U. S. 487, 1 Sup. Ct. 442; Buzard v. Houston, 119 U. S. 347, 7 Sup. Ct. 249. In the case of Smith v. Bourbon Co., 127 U. S. 105, 8 Sup. Ct. 1043, a judgment creditor, upon the return unsatisfied of his execution against his insolvent debtor, filed his bill against the debtor, a railroad company, and the county of Bourbon, from which, as was alleged, there were certain bonds due, but not yet delivered to the defendant railroad company. The object of the bill was to compel the railroad company to assign to complainant its claim for the bonds, and to compel the county to deliver the bonds to complainant in satisfaction of his judgment. It was held that the relief prayed for against the railroad company might be granted, and that it might be compelled to assign its claim to complainant with [802] the right to sue for the bonds in the name of the company, but that the relief prayed for against the county was without the jurisdiction of the court, being of a legal nature and enforceable by mandamus, and the bill was dismissed as to that defendant. Near to this question is that raised by the cause of demurrer assigned, upon the ground that the bill is multifarious. The relief prayed is specific. The objects of the bill are that the mortgage may be foreclosed; that the application for loan, the appraisal, the note, and bond, which are alleged to have been lost, may be set up and established;, "that judgment be declared on said bond” against Swabey and Jenkins; and that Petty, Thomas, and Hutsell be declared liable to complainant for their fraudulent representations. Here are several independent causes of action, each of which is sufficient in itself to support a separate suit. Some of the defendants are concerned with some of the causes of action, and not with others, while others of the defendants are not concerned with those which involve the former. Besides this, as to some of the causes of action, the defendants therein are entitled to have the issues tried by a jury, of which right they would be deprived if the complainant were permitted to draw them all into a court of equity. That is the predicament of the defendant Hutsell. The rule .against such practice is well established. Campbell v. Mackay, 1 Mylne & C. 603; Brown v. Deposit Co., 128 U. S. 403, 9 Sup. Ct. 127; Newland v. Rogers, 3 Barb. Ch. 432; Association v. Denton (recently decided in this court) 65 Fed. 569; 1 Daniell, Ch. Prac. 335. In the case of Tyler v. Savage, 143 U. S. 79, 12 Sup. Ct. 340, much relied on by the complainant, no objection was taken to the bill until the case ras brought to the hearing, and much stress is laid upon this circumstance in the opinion. The defendant Tyler was an officer in the corporation, and had been the efficient agent in perpetrating the fraud complained of. The bill prayed for a discovery, and Tyler was a necessary party for the obtaining of such relief. Here no discovery was sought by the bill, and the objection was taken seasonably and in the proper mode. We are of the opinion that there is in this bill such misjoinder of causes and parties as to render it subject to the objection of multifariousness. The complainant claims that its right to come into equity is supported by the fact that it has lost certain instruments which it deems necessary to have set up and established as the basis of its recovery. The "instrument,” so called, on which it charges Hutsell, and which is alleged to be lost, is not any instrument of title to corporeal property, nor a bond or note, nor, indeed, a contract in writing inter partes, whereby an obligation was assumed, but a mere piece of written evidence upon which, with other proof, the complainant seeks to charge the defendant with a tort. This is not an instrument such as a court of equity undertakes to establish on an'allegation of its loss. The jurisdiction of equity in this class of cases has been extended beyond the cases of instruments under seal, bf which profert could not be made at common law, and includes those of lost notes and other writings obligatory, in which the court may require the complainant to give an indemnity to the [803] defendant against vexation by any other person who may after-wards come with the supposed lost instrument, claiming under an assignment. Some of the authorities manifest an unwillingness to go beyond the cases of negotiable instalments. It is not necessary for us to decide precisely where the limit should be fixed. It is sufficient to say that there is, in this case, no ground which has been suggested as the basis of relief in such cases, upon which the court could take action. 2 Pom. Eq. Jur. §§ 831, 832; 1 Story, Eq. Jur. §§ 81-88. Upon proper application to the court below, it is quite likely that the court on sustaining the demurrer might have given complainant leave to trim down the bill as respects parties and subjects, so that it would have been allowed to proceed for its proper purpose. But it has chosen to stand by its bill, and bring the case here on appeal. In our opinion, the decree below was right in sustaining the demurrer, and in dismissing the bill; but we think that should have been done without prejudice, the case having-been disposed of on demurrer, and not on the merits. Durant v. Essex Co., 7 Wall. 107, 113; Cattle Co. v. Frank, 148 U. S. 603, 612, 13 Sup. Ct. 691. For that reason, the ease must be remanded to the court below, with instructions to modify its decree by adding a provision that the dismissal of the bill be without prejudice to any other remedy to which the complainant may be entitled.