Illinois Trust & Savings Bank v. Kilbourne

ROSS, Circuit Judge, after stating the facts as above, delivered the opinion of the court. One of the ordinary rules respecting appeals is that all parties to the record who appear to have any interest in the order or judgment challenged must be given an opportunity to be heard on such appeal. The reasons for the rule are fully stated in Masterson v. Herndon, 10 Wall. 416, and restated in Hardee v. Wilson, 146 U. S. 179-181, 13 Sup. Ct. 39, 40. Turning to the decree appealed from, it is seen that the court below allowed the claim of the intervening petitioners to the extent only of the principal sum of the Sears judgment — $16,000—and the costs of that action taxed in the supreme court of the state of Washington, amounting to $36, but without interest, and without the allowance of any of the expenses of the subsequent litigation alleged by the intervening petitioners to have been incurred by them in resisting the enforcement of that judgment; all of which the intervening petitioners claimed. The claim of the petitioners, to the extent that it was allowed by the court below, the decree directs the receiver to pay next after the payment of the receiver’s certificates, amounting to $80,000, with interest thereon, issued under the orders of the court for the betterment of the property and “co-equally with any liabilities and expenses of the receivership and of the operation of said railway company’s property by the receiver now or hereafter to be incurred, and prior to all indebtedness of said company secured by the mortgages to the complainant Illinois Trust & Savings Bank and Central Trust Company of the City of New York, respectively, and prior to all unsecured debts of the company, and also the certificates issued in December, 1893, for six months’ interest upon the $381,000 bonds secured by the first mortgage to the complainants.” [888] Notwithstanding the fact that the receiver was- thus directed to pay $16,036 on the Sears judgment prior to the payment by him of any part of the indebtedness secured by either the first or second mortgage, and prior to all unsecured debts of the railway company,. including the indebtedness to Fuller, yet neither the Central Trust Company of the City of New York, holder of the second mortgage, nor Fuller, nor the receiver was in any way made a party to the appeal. The receiver himself asked to be allowed to appeal, which petition the court below denied on the ground that it appeared “that the complainant desires and intends also to appeal from said decision, and that it is unnecessary for the receiver to appeal.” Upon that ground the court below denied the petition of the receiver, but, in the language of the order of denial, “without prejudice to the right of the' complainant or any other party therein who is interested and adversely affected by said order to appeal therefrom; and the complainant or any such other party is hereby allowed to appeal separately from said order allowing said claim and requiring the receiver to pay the same in the manner-stated in said order.” The receiver made no other application to be allowed to appeal, but tlae complainant in the foreclosure suit brought the appeal now here, serving therewith only Annie and Frank Sears, Thompson, Edson & Humphreys, Kilbourne and wife, and Porter and wife; and to those parties only was the citation addressed. The receiver was clearly entitled to be heard upon the question as to whether there should be any change in the .decree. So, also, were the holder of the second mortgage upon the property, and the unsecured creditors, whose claims were, by the decree appealed from, subordinated to the Sears judgment to the extent of $16,036. But that amount was not the limit of the claim of the intervening petitioners, and the setting aside of the decree appealed from might result in a larger allowance to those petitioners, and a corresponding decrease in what the holder of the second mortgage and the unsecured creditors may receive. Manifestly, therefore, those parties to the record were necessary parties to the appeal, and their absence is fatal to it. Davis v. Trust Co., 152 U. S. 590, 14 Sup. Ct. 693; Sipperley v. Smith, 155 U. S. 86, 15 Sup. Ct. 15. Appeal dismissed.