Opinion
09-24-1874
ARMENTROUT'S ex'ors v. GIBBONS.
Woodson, for the appellants. Robert Johnston and Newman, for the appellees.
1. In a suit by G, the assignee of two bonds given for the purchase money of land, against the executors of the purchaser, to subject the land to the payment of them, they answer and say, that C has sued them to establish a prior lien on the land; that all the purchase money has been paid without notice of this prior lien, except the two bonds held by G, and one held by S, and they insist that they are entitled to have C's lien credited on the bonds held by G and S. S is a necessary party in the suit, and no decree should be made in the cause until he is made a party. And this objection may be taken at the hearing, or even in the appellate court.
In January 1870, Abel Gibbons filed his bill in the County court of Rockingham, in which he alleged that, on the 4th of April, 1860, James M. and H. M. Lofland sold and conveyed with general warranty to D. Armentrout four hundred and eighty-eight acres of land, lying in the county of Rockingham, in consideration of $23,500; of which $7,833.33 was paid in hand, and the balance to be paid as follows, to wit: $2,000 annually on the 1st of April, 1861-62-63-64-65-66-67, and $1,666.66 on the 1st of April, 1868. That for these deferred payments Armentrout executed his bonds to H. M. Lofland, and to secure them a lien was reserved in the deed. That two of said bonds, of $2,000 each, to wit: one falling due April 1st, 1866, and one falling due April 1st, 1867, have been transferred to the plaintiff. That certain payments have been made upon them; which he sets out. That said Armentrout is dead, leaving a will; and his sons B. F. and H. B. Armentrout are his executors. That the personal estate is exhausted; and that under the lien reserved in the deed he is entitled to subject the land to the payment of his debt. And making the executors and the devisees of the land parties defendants, he prays that the land, or so much as may be necessary, may be sold, & c.
The plaintiff filed with his bill the will of Armentrout, and the bonds. Both of the bonds were assigned by H. M. Lofland to C. M. Kirtly, on the 11th of December, 1860; and the first was assigned by C. E. Kirtly to Gibbons on the 18th of April, 1861, and the second on the 26th of November, 1865.
The executors and devisees of the land answered the bill. The executors admitting the sale and conveyance of the land to their testator, with the lien reserved, the execution of the bonds, and the assignment to C. E. Kirtly, as alleged, they say that on the same day the bond for $1,666.66, falling due April 1st, 1868, was assigned to her by H. M. Lofland; as to the date of the assignments to the plaintiff, they know nothing and require proof. That one of the executors had paid to C. E. Kirtly the bond for $1,666.66, by several payments, the last of which was on the 12th of May 1869; and they exhibit the bond. That the bonds due April 1861, 1862, 1863 and 1864 were paid by David Armentrout in his lifetime, and he made some payments on the bonds of 1865 and 1866. That the bond falling due in 1865 was assigned to Z Shirley and lost during the war; and since the war, as respondents believe, the said David Armentrout, at the instance of said Shirley, executed another bond, being a duplicate of the original, in order that he might have evidence of the debt; but without any purpose of changing the debt, or in any way affecting the rights or the responsibilities of the parties; which bond is now held by said Shirley.
They further say that there could have been no difficulty in the payment of any of said bonds, but for the fact that within the last few months one T. D. Collins has instituted a suit in this court on the chancery side thereof, claiming that he held a prior lien on the land in the bill mentioned, as sold by H. M. and J. M. Lofland to said David Armentrout, for the sum of $1,209.93, with interest from the 26th of August 1861, due by the bond of said H. M. & J. M. Lofland executed to Mary K. Lofland, for the same land, and assigned to the said Collins; which bond purports to be executed on the 26th day of August 1856, and to be secured by a lien in the deed from Mary K. Lofland to said H. M. & J. M. Lofland, of the same date. They do not admit that said debt is a lien upon said land; but if it is, they claim that the amount thereof must be deducted from the bonds of $2,000 held by the plaintiff and Shirley; as their testator, in his lifetime, and respondents, since his death, have paid all the residue of the purchase money for said land, without any knowledge or intimation of the lien of said Collins, or any other lien, thereon; the evidence of which was lost by the burning of the records in 1864, and only accidentally discovered by Collins in January 1871. That by the burning of said records they had no means of knowing the existence of said lien, and they are satisfied their testator never knew it in his life-time. That all the bonds having been paid up in good faith, and without notice of any prior liens, except those held by the plaintiff and Shirley, and as the land was conveyed to their testator by deed with general warranty, if the lien of said Collins upon the land is established, the burden of it must fall upon the plaintiff and Shirley; and no decree should be rendered against the land or the respondents until that question is decided; and if that lien is established, then respondents should receive credit on said bonds for the amount thereof, as the said H. M. & J. M. Lofland and Mary Lofland are insolvent. And they further say, that a decree has been made in the suit of Collins v. Lofland by which the land aforesaid is ordered to be sold to pay said Collins said debt of $1,209.93 and interest. And they exhibit the record. And they insist that said debt is a good legal offset against these bonds.
The devisees answered referring to the answer of the executors. And one of the executors was examined as a witness, whose testimony sustained the answer; and he stated that the only bonds of the testator given for the land which remained unpaid were the two held by the plaintiff and the one held by Shirley.
The cause was removed to the Circuit court of Rockingham, and came on to be heard on the 11th of October 1872, when the court decreed that the executors of David Armentrout, out of the assets in their hands, should pay to the plaintiff $828.51, with interest thereon from the 17th of March 1870, and $2,000, with interest thereon from the 1st of July 1870, subject to a credit of $200 as of the date of the 8th of September 1871, and his costs. These were the amounts due upon the two bonds after crediting them with the payments made upon them. And it was further decreed that if the money was not paid within sixty days, commissioners named should proceed to sell the land, or so much as might be necessary, at public auction, for so much cash as would pay the debt and costs, and the residue, & c. From this decree the executors obtained an appeal to this court.
Woodson, for the appellants.
Robert Johnston and Newman, for the appellees.
OPINION
BOULDIN, J.
It appears as a fact proved in this record, and is also distinctly alleged in the answer of Armentrout's executors, that Zachariah Shirley, as assignee, prior to the institution, and at the trial of this cause, was the holder of one of the bonds of David Armentrout, deceased, in the proceedings mentioned, and that the said bond was unpaid. It further appears from the answer of the executors, that the same equity claimed against the bonds held by Gibbons, as assignee, was expressly and distinctly asserted against the bond held by Shirley. The court is therefore of opinion that the said Zachariah Shirley was directly and materially interested in the matters in controversy, and that the same should not have been adjudicated without bringing him before the court.
No principle of equity is more familiar or better settled than this: that " all persons materially interested in the subject of controversy ought to be made parties in equity, and if they are not, the defect may be taken advantage of, either by demurrer or by the court at the hearing." Clark v. Long, 4 Rand. 451. It is not necessary (although certainly more regular) that the objection for want of parties should be made either by plea, answer or demurrer. On the contrary, " if it appear on the face of the record that proper parties are wanting, the decree will be reversed, unless the objection was expressly relinquished in the court below." Sheppard's ex'or v. Starke & wife, 3 Munf. 29.
In referring to that decision, this court does not intend to affirm that even the express relinquishment, by any party in equity, of an objection for want of proper parties, would justify the court in proceeding with the cause in the absence of such parties. We think it would not. But the case is cited to show that the appellate court will reverse for want of proper parties if apparent on the face of the record, although the objection was not made in the court below.
In that case the objection was not taken advantage of either by demurrer, plea or answer, nor was it suggested to the court below at the hearing. It was pressed for the first time in the appellate court, and the record showing on its face that there ought to be other parties, the decree was reversed.
In the case before us, the answer of Armentrout's executors distinctly and in express terms alleged that Zachariah Shirley then held, as assignee, one of the bonds aforesaid of David Armentrout, deceased, which was unpaid; and the same fact is proved by B. F. Armentrout, a witness in the cause. The answer also asserts against the bond, in the hands of Shirley, the same equity precisely which is claimed against the bonds in the hands of Gibbons. It is very manifest, therefore, that Shirley is directly interested in the questions:
1st. Whether there is an equity against either of the bonds; and secondly, if such equity exist, whether it shall be applied against the bond held by him, or those held by Gibbons, or be equitably apportioned. It was error, therefore, to dispose of the case at all without making Shirley a party, his interest being apparent on the face of the record. Without then intimating any opinion on the merits of the controversy, which would be improper in the absence of Shirley, except to say, that the equity asserted by the appellants should be further considered by the court below, the court is of opinion that the decree complained of is for the reasons above stated erroneous, and should be reversed and annulled with costs to the appellants, and the cause remanded to the Circuit court for further proceedings in accordance with the principles above declared.
The decree was as follows:
The court is of opinion, for reasons stated in writing and filed with the record, that the Circuit court erred in disposing of the cause in the absence of Zachariah Shirley as a party. It is therefore decreed and ordered that the decree complained of be reversed and annulled; and that the appellee, Gibbons, do pay to the appellants their costs by them expended in this court. And this cause is remanded to the Circuit court, with instructions to that court to require the appellee, Gibbons, to make the said Zachariah Shirley, or his personal representatives, parties to the cause; and to consider further the equity set up in the answer of Armentrout's executors. Which is ordered to be certified to the said Circuit court of Rockingham county.
DECREE REVERSED.