First National Bank v. Poston

Counsel

Noel Neilson, for appellants. I. THE APPEAL FROM THE INTERLOCUTORY DECREE GRANTED IN THIS CAUSE WAS PROPERLY GRANTED BY THE CHANCELLOR, BECAUSE HE THOUGHT IT PROPER "IN ORDER TO SETTLE THE PRINCIPLE OF THE CAUSE, OR TO AVOID EXPENSE AND DELAY." Hemingway's Code, section 10 and Annotations; Railroad v. James, 108 Miss. 656 , 67 So. 152; Norris v. Burnett, 108 Miss. 378 , 66 So. 740, 332. II. ON THE MERITS OF THE MOTION THE LEARNED CHANCELLOR ERRED IN SUSTAINING THE DEMURRERS TO THE CROSS-BILL. a. Where equity has jurisdiction for one purpose, it will retain the bill for full relief, and adjust the rights of the parties to the whole subject-matter involved. Ga. Pac. Ry. Co. v. Brooks, 66 Miss. 583 ; Leflore County v. Allen, 80 Miss. 298 ; Learned v. Holmes, 49 Miss. 290 ; Baker v. Nichols, 111 Miss. 673 . b. If necessary chancery court will enjoin proceedings in another court dealing with only a part of the subject-matter. Gillian v. Chancellor, 43 Miss. 437 . c. It is a settled maxim in equity that all persons interested in the subject-matter of litigation whose interests will be affected by the decree must be made parties to the bill. Foster v. Jones, 17 So. 893. d. All who have beneficial interests in the lands in controversy, the subject-matter of a suit in equity, are necessary parties. McIllvay v. Allsop, 45 Miss. 365 ; Barry v. Barry, 64 Miss. 709 ; Harding v. Cobb, 47 Miss. 599 ; Harllow v. Mister, 64 Miss. 25 . e. Misjoinder of causes of action are inapplicable in this case as a basis of contention by appellees. Although a complainant in equity cannot demand by one bill several matters of different natures against several defendants, yet when one general right is claimed by the bill, although defendants may have separate and distinct rights, a demurrer will not be sustained. Garrett v. Mississippi, etc., Ry. Co., Freeman Ch. 78. f. "The pendency of a suit will not abate one subsequently brought unless there be a substantial identity of parties." 1 Enc. Pleading Practice, 157, and authorities there cited. g. "Where the relief obtainable is essentially different, they may be prosecuted at the same time, although the same question may to some extent be involved in both." 1 Enc. Pleading Practice, 763, and authorities cited. The first suit, upon which attachment was issued and executed upon the land in controversy, was that of the First National Bank of Canton, one of the appellants. That suit is still pending in the chancery court of Holmes county, Mississippi, and is the suit upon which the first attachment and garnishment were served upon the parties and subject-matter of this suit, conferring upon that court the first right to deal with the property in controversy. Where courts of concurrent jurisdiction deal with the same subject-matter, all other courts defer, ordinarily, to the court, that first acquired jurisdiction over the property in controversy, as a matter of comity, or as positive law. All of the three suits of appellants, ultimately, will come just as this suit does to questions of priorities. This chancery court having originally acquired jurisdiction, is the proper court to adjust priority rights, just as was invoked by the original bill in this cause; and it might as well or better exercise its jurisdiction at one hearing, determining the rights of all parties, at once after giving each an opportunity of presenting his cause and defenses, as in a number of suits ending at different times and in different courts. Equity abhors multiplicity of suits. Here is a case, dealing with trust matters, urgently calling for such exercise of this jurisdiction. We respectfully submit that the decree of the court below should be reversed, the demurrer sustained and the cause remanded. Wells, Stevens Jones, for appellees. The decree appealed from is not an appealable order or decree, and this court has no jurisdiction. A motion to dismiss would be appropriate and should be sustained. The banking institutions which undertook to make their answer a cross-bill had no equitable interest in the lands, the subject-matter of this foreclosure suit, and the sole purpose for making them parties was to enable the court in this proceeding to declare any statutory attachment subordinate to the paramount lien of the original complainants, Poston and Buckingham Dry Goods Company, and make the lands bring a decent price at the foreclosure sale. Another purpose was to give the court jurisdiction to deal with the proceeds in a way to protect any lien which cross-complainants might ultimately be entitled to by way of attachment in the separate suits which the banks are now prosecuting. They are not parties to the trust instrument. They are not junior mortgages. They do not own the land or any interest in the land. The sole prayer of the cross-bill is that the banks may recover a personal decree against William Schild. At the time this prayer was incorporated in the alleged cross-bills the banks had already filed separate attachments in chancery, and in these attachments in chancery were seeking both a personal decree for money against William Schild, and seeking an attachment, which is not, or never was, anything more than an attachment at law. We now direct attention especially to the fact that the decree appealed from did not require any money "to be paid or the possession of property changed," and the decree does not settle the principles of the cause, and this appeal certainly does not "avoid expense and delay." In other words this appeal does not come within either the letter or the spirit of section 10, Hemingway's Code, authorizing an appeal from an interlocutory order. A cross-bill must present matter germane to the original bill, and is only allowed as an incident to the main suit. It is true that section 9, Hemingway's Code, authorizes an appeal from a decree overruling a demurrer. But this is not a decree overruling a demurrer, and therefore this appeal does not come within the terms of either section 9 or section 10, Hemingway's Code. The dismissal of the cross-bills did not take away from appellants their right to answer, or to present anything defensive in their answers. Their answers remain on file and by these answers the banks have the right to attack the trust instrument as being for any reason void or enforceable, and have the right also to attack the indebtedness due Poston or the Buckingham Dry Goods Company, or the extent of that indebtedness. The banks have their day in court on their answers, and may be their answers fully protect their inchoate right to impress a statutory lien on the lien on the lands in controversy, by and through the separate suits which they have filed and are now prosecuting. The banks have not sued out an attachment in this case and without an attachment the court in the present proceeding has no right or jurisdiction to adjudicate that the banks have a valid attachment. The court in the present proceeding has not reached out its arm through the sheriff of the county and attached the lands at the suit of the banks. The banks have no lien by contract. It is obvious therefore that the banks in this case have no lien either by contract or by law. How can it be said, therefore, that the learned chancellor could assume jurisdiction on the cross-bills and grant any relief that in any sense comes within equity jurisdiction. The dismissal of the so-called cross-bills did not dismiss the separate suits which the banks have pending. The dismissal of the cross-bills did not take away from the banks any defense which they have against Poston and the Buckingham Dry Goods Company. The dismissal of the cross-bills did not destroy any attachment which the banks have sued out by their separate suits. The dismissal of the cross-bills did not change money or the possession of property, and there is nothing alleged in the cross-bills and involved in the ruling of the decree appealed from that in any wise settles the principles of this case. No principle whatever was decided except that the cross-bills did not present any matter which the court in this case could take jurisdiction of by way of a cross-action. It is manifest therefore that this appeal was improvidently granted, and that this court should decline to assume jurisdiction, but on the contrary should dismiss this appeal and send the whole case back for trial on the pleadings and proof. At this trial the banks will be parties and the court can protect any inchoate right or claim which they have. On this point the case of Bierce et al. v. Grant, 91 Miss. 791 , 45 So. 876, is distinctly in point, and rules the question. The court will observe that the very decree involved in that case was a decree sustaining a demurrer to a cross-bill. That is the exact situation here. The court will further observe that the court in that case declined to assume jurisdiction, upon the ground that equity had no jurisdiction of the matter attempted to be asserted by way of cross-action. That is exactly the situation and the ruling of the court in the case at bar. We further direct attention to Delta Pine Land Company v. Adams, 93 Miss. 340 , 48 So. 190, which decided a similar point. Similarly the case of Board of Supervisors of Clay County v. Board of Supervisors of Chickasaw County, 63 Miss. 289 , is in point. The ruling of this case is expressly reaffirmed in the subsequent case of Wallace v. Bobbitt, 79 Miss. 403 . Along the same line is the case of Barrier v. Kelly, 81 Miss. 266 , holding that a decree sustaining a demurrer to a bill of complaint, and allowing the complainant time to amend, is not an appealable decree. And to the same effect is the more recent case of Armstrong v. Moore, 112 Miss. 511 . It is a jurisdictional question which lies upon the very threshhold of this case. We did not file a motion to dismiss because the appellants were not diligent in having an administrator appointed upon the estate of William Schild, and the fact is Poston and the Buckingham Dry Goods Company were required to take the initiative in Mississippi and petition for an administrator to be appointed. Since the appointment of Mr. Ruff we have not had time to prepare and present a motion to dismiss and furthermore we are convinced that the same question can be presented at this time when the case takes its usual place on the docket. The interests of the original complainants require a speedy hearing of this appeal in order that the case may be prosecuted on its merits in the chancery court of Holmes county. II. ON THE MERITS, THE ACTION OF THE LEARNED CHANCELLOR IN SUSTAINING THE DEMURRER TO CROSS-BILL WAS PROPER. The cross-bills are not in fact cross-bills at all. They do not present any new matter germane to the issues presented by the original bill, and they do not present any matter of which equity may take cognizance. If the Chancellor had assumed jurisdiction of a simple action at law then a different question might have been presented. But the Chancellor declined to assume jurisdiction, and this court will be required to hold that the cross-bills presented some matter of equitable cognizance before this case can be reversed. As stated, cross-complainants have no equitable interest in the lands which are here sought to be foreclosed under the trust instrument. The instrument sought to be foreclosed is both a mortgage and an active trust and comes within the original jurisdiction of a court of chancery. Wemer Saw Mill Co. v. Sheriff, 89 Miss. 12 , is conclusive. Court had no jurisdiction of the cross-bills. There was no attachment in this case at all. See Pomeroy (4 Ed.), 987-993. While the instrument now before the court is not a general assignment it is a special security in favor of Buckingham Dry Goods Company as the successor corporation and present owner of the indebtedness formerly held by Lemmon and Gale Company, and the instrument expressly secures this indebtedness, both that which existed and was evidenced by promissory note at the date of the trust instrument, and also those advances that were subsequently made to E.E. Bolin, active trustee, in pursuance of the authority granted by the trust instrument. These very advances were made to enable Bolin to prosecute the litigation. The evidence will disclose that he had to take many trips into Mississippi and interview witnesses, attend court trials both before the Federal court proper, and the master appointed by the court to take and state an account. He had to advance witness fees, and pay railroad and hotel bills and other legitimate expenses. Our client furnished the ammunition of war, and has never had even a grateful consideration at the hands either of Schild or of his trustee Bolin. For a discussion of the duties of a trustee in a deed of trust, see Pomeroy, 995. At all times Mr. Bolin, as active trustee, was not only authorized but directed to apply the fruits of the litigation against Mrs. Wilkes to the payment of the expenses for money advanced by Buckingham Dry Goods Company, and a reasonable attorney's fee, and of course had a right to charge William Schild with these payments. In his failure to devote the fruits of the litigation toward payment of these things the trustee breached his trust. Pomeroy, par. 1085: "The trustee is entitled to be allowed, as against the estate and the beneficiary, for all his proper expenses out of pocket, which include all payments expressly authorized by the instrument of trust, all reasonable expenses in carrying out the directions of the trust, and in the absence of any such directions, all expenses reasonably necessary for the security, protection and preservation of the trust property . . . He is also entitled to be indemnified in respect of all personal liabilities incurred by himself for any of these purposes." In Washington v. Soria, 73 Miss. 665 , our court, speaking through Chief Justice COOPER, quoted to approve the following from the New York case of Trotter v. Hughes, 2 Kern, 12 N.Y. 74 : "The acceptance of a conveyance containing a statement that the grantee is to pay off an encumbrance binds him as effectually as though the deed had been inter partes, and had been executed by both grantor and grantee." So in the case at bar, Bolin accepted the trust with express directions to pay off the indebtedness of Lemmon and Gale Company, and was given authority to make further contracts for and on behalf of William Schild, and to pay for advances of money and attorney's fees. The parties who contracted with the trustee therefore contracted with both Bolin and Schild, and are protected by the express provisions of the trust instrument. While Poston is not named in the trust instrument nevertheless when Bolin employed him he thereby became a beneficiary, and entitled to all the rights conferred by the trust instrument. In the same way Buckingham Dry Goods Company is protected in its advances. We take it that there can be no question about its right to enforce the lien, and in all events this question is not now before the court. The question here is whether the cross-bill have been properly dismissed. Furthermore Poston had a lien by law on the fruits of the litigation now in the hands of Bolin, trustee. The following Mississippi cases sustain the lien as to the money now in the hands of the trustee: Dunn v. Vannerson, 7 Howard, 579; Tope v. Armstrong, 3 S. M. 221; Cade v. Wilkinson, 3 S. M. 223; Stewart v. Flowers, 44 Miss. 513 , 7 Am. Rep. 707; Halsell v. Turner, 84 Miss. 432 ; Harney v. Demoss, 3 Howard 174; 3 Encyc. of Pleading and Practice, 105. Poston and the Buckingham Dry Goods Company are the parties who are suffering by this appeal, and they respectfully ask the court first to dismiss the appeal as improvident, and on the fundamental ground of jurisdiction, and secondly, in all events to affirm and promptly remand this case in order that justice long delayed may be administered. Argued orally by E.F. Noel, for appellants, and J. Morgan Stevens, for appellees.