Davis v. Cook , 65 Ala. 617 ( 1880 )

STONE, J.

— “ A cross-bill is a bill brought by a defendant against a plaintiff, or other parties in a former bill depending, touching the matter in question in that bill. A bill of this kind is usually brought to obtain a necessary discovery, or full relief to all parties. It frequently happens, and particularly if any question arises between two defendants to a bill, that the court can not make a complete decree without a cross-bill or cross-bills, to bring every matter in dispute completely before tbe court, litigated by tbe proper parties, and upon proper proofs. In this case, it becomes necessary for some or one of the defendants to the original bill to file a bill against-the plaintiff and other defendants in that bill, or some of them, and bring the litigated point properly before the court. . . . But a cross-bill being generally considered as a defense, or as a proceeding to procure a- complete determination of a matter already in litigation in the court, the plaintiff is not, at least as against the plaintiff in the original bill, obliged to show any ground of equity to support the jurisdiction of the court.” — Mitf. Eq. Pleading, marg. pages 80-1.

It will be seen that, under this high authority, the subject of the cross-bill must be a matter in question in the original bill. In Tyler’s rendering of this v7ork —Mitford & Tyler’s Pleadings and Practice in Equity, 178-9 — the language above is adopted without change. The same principle, with language slightly changed, is found in Story’s Equity Pleadings, § 389, and in 2 Daniell’s Chancery Practice, 1550. The latter author, speaking on the subject of filing cross-bills, says: “This most commonly happens, where persons in opposite interests are co-defendants ; so that the court can not determine their opposite interests upon the bill already filed, and the determination of their interests is yet necessary to a complete decree upon the subject-matter of the suit.”

In Hubbard v. Turner, 2 McL. 519-539, the court said: “ A cross-bill is filed, to bring more fully before the court a subject-matter connected with the case made in the bill, and which is necessary to a determination of the controversy. The necessity of a cross-bill may arise, as well between two defendants, as between one or more defendants and the complainant,”

In Elliott v. Pell, 1 Paige, 263-8, it is said: “ It is the settled law of this court, that a decree between co-defendants, grounded upon the pleadings and proofs between the complainant and defendants, may be made ; and it is tbe constant practice of the court to do so, to prevent multiplicity of suits. But such decree between co-defendants, to be binding upon them, must be founded upon, and connected with the subject-matter in litigation between the complainant and one or more of the defendants.” — See, also, Underbid v. Van Cortlandt, 2 Johns. Ch. 339.

In May v. Armstrong, 3 J. J. Mar. 260, in margin, the court said : “ A cross-bill must be confined to the subject-matter of the bill. An entire departure from it is not admissible. If a bill is filed for a certain purpose, the defendant to the bill can not, by any cross-bill, bring into litigation in that suit all causes of action which he may have against the complainant, unless there exist some special circumstances, such as insolvency, non-residence, &c., which would render it necessary in order to avoid irreparable injury. Thus, if a bill be filed for specific execution of a contract for land, the defendant can not, by way of cross-bill, bring into litigation a fraud practiced on him by the complainant in swapping horses, or a debt due by the complainant, unless connected with the contract concerning the land, sought tobe enforced. The cross-bill must relate exclusively to the subject-matter of the bill and things connected therewith, and foreign matter can not be introduced, unless under special circumstances.” This is what we understand is implied in the phrase “ subject-matter of the bill.” See, also, Tate v. Evans, 54 Ala. 16.

In Cullum v. Erwin, 4 Ala. 452, 461, this court said : “A cross-bill is necessary against co-defendants, where they have opposite claims, which the court can not determine upon in the bill already filed, and where the determination of such clashing interests is still necessary to a complete decree upon the subject-matter of the suit.” In Nelson v. Dunn, 15 Ala. 501, this court said : “ It is true the allegations of the cross-bill must relate to the subject-matter in controversy in the original bill; but the rule does not, as is supposed by the counsel, restrict its office so as to confine it to the issues in the original cause.”

This court, in Andrews v. Hobson, 23 Ala. 219, 239, said: “ On. this cross-bill, no relief is sought against the complainant in the original bill; nor would its allegations justify the court in granting any. Under these circumstances, it can not be allowed to stand as a cross-bill, and was properly dismissed by the chancellor.” If it be meant to affirm that, because no relief was sought against the complainant, by direct decree against him, the cross-bill was properly dismissed, we apprehend the language is too broad. There are many cases, where a complainant has a clear, if not common right of recovery against two or more defendants, and yet, as between the defendants, there exist priorities of burden and liability, which, while they do not gainsay complainant’s common right, yet show that one defendant, or that part of the subject-matter of the suit for which he is liable, must be first exhausted, before the other can be called on to pay. In cases of this sort, a'cross-bill by one or more defendants is proper, and is the usual remedy. — Coster v. Bank of Georgia, 24 Ala. 37; Pearson v. Darrington, 32 Ala. 227; Cullum v. Erwin, 4 Ala. 452. But, in the case of Andrews v. Hobson, the court said : “ Much the larger portion of the charges and allegations which it ” [the cross-bill] “ contains, have no connection whatever with the matter involved in the original suit.” To the extent that this remark was true, the cross-bill should not have been allowed, and was properly dismissed under all the authorities. We agree that, in the absence of special circumstances, the cross-bill can bring forward no new subject-matter, not presented in the original bill. It can, however, and usually does, raise new issues relating to that subject-matter; may present equities relating to the subject-matter, which arise between co-defendants, but which are not shown by the original bill, and, generally, may be resorted to, to secure such moulding or modification of complainant’s relief, as to secure full relief to all parties.

The defendant, Nathan B. Cook, complainant-in the cross-bill, made, first, a mortgage to Davis, conveying his interest in a tract of land, to secure a debt for money borrowed. He subsequently conveyed his interest in the same lands to Mrs. Massey, to secure a debt for money borrowed from her. Mrs. Massey filed an original bill, setting up her mortgage, and the debt secured thereby. Davis and Cook are made defendants. She charges in her bill that Davis “ pretends to hold some sort of lien, or other mortgage lien,” on said lands; “ but oratrix charges, on information which she deems perfectly reliable, that the said notes, or all that is legally due thereon, has been fully paid off and discharged.” Her bill then goes on to show what sums of money Cook actually received from Davis, and alleges certain payments made by Cook to Davis.; and charges usurious interest in the notes made by Cook to Davis. The 11th section of Mrs. Massey’s bill is in the following language : “ Oratrix further shows, that if any right the said J. Moses Davis has under his said mortgage, such right is inferior to that of oratrix under her said mortgage: and be that as it may, oratrix hereby proposes that, if anything shall be shown to be due and payable on his said mortgage, oratrix hereby proposes to pay off and discharge the same, and most respectfully insists that the said described land be sold, and that the proceeds of such sale be applied as in equity and good conscience shall be deemed right.” The prayer, in one part, is for a strict foreclosure, but it contains also this clause : “ And that said mortgaged premises be sold by decree of this honorable court, and the proceeds of such sale he applied, first, to the payment of what shall be ascertained to be due your oratrix on her said mortgage debt, and her costs.” There is, also, a prayer for general relief.

Mrs. Massey’s bill has some of the features of a bill to redeem from Davis, if anything be due him ; but its unmistakable purpose, whether Mrs. Massey redeemed or not, was and is that the property be sold, and that the proceeds of sale be applied as in equity and good conscience shall be deemed right.” The purpose of the bill manifestly was, to sell the property under the decree to be rendered. If the balance due to Davis, if any, should be first paid by Mrs. Massey, then, she would step into his shoes, and the proceeds of sale would be applied, first, to the Davis claim as thus paid, and next to the mortgage debt to Mrs. Massey. Or, if she did not redeem from Davis, then the proceeds of Sale would be applied, first, to Davis’ mortgage, and next to Mrs. Massey’s.

In Gullum v. Erwin, 4 Ala. 462, this court said : “ Where no obstacle exists to stating an account between the mortgagor and first mortgagee, the subsequent mortgagee may file his bill to foreclose, and have an account taken of the amount due on both mortgages, making all who have an interest parties, and obtain a decree for the sale of the property.” This is precisely what was done in this case. Under each aspect of the bill, the mortgaged premises were to be sold. If under both mortgages, and without redemption bv Mrs. Massey, then the first proceeds would go to Davis, to the extent of the unpaid mortgage debt to him; and next, the proceeds would go to Mrs. Massey, to the extent of her mortgage claim. If she first redeemed, then the proceeds would go to her, to the extent of both claims. In either event, the surplus, should there be any, would be the property of defendant Cook. He was directly and deeply interested in having the account of his indebtedness to Davis adjusted on a proper basis. The less he owed to Davis, the larger would be the residuum left, to be applied to the claim of Mrs. Massey ; and if the proceeds should not be enough to pay both demands, whatever was saved in the settlement with Davis, would be added to the sum paid to Mrs. Massey, and thus leave a smaller unpaid balance due from Cook to her. So, if there should be a residuum, after paying both demands, whatever was deducted from Davis’ claim, would go to augment the surplus, which would go to Cook.

What is the subject-matter of Mrs. Massey’s original bill in this'case? It is the mortgage interest of Davis and Mrs. Massey under their several mortgages, and the ultimate equity of redemption still retained by Cook, in the lands described in the pleadings. To a bill to foreclose these mortgages, Cook is a necessary party; necessary, because he has the right to be heard in stating the account against him, and because he still has an equitable interest in the lands. That interest — his equity of redemption — can not be barred or foreclosed, without making him a party. Why make him a party? That he may controvert the alleged mortgage debt. If there is no debt, there is no mortgage. No one would deny that, in such a suit as this, Oook would have the right to put either or both of the alleged mortgage debts in issue, and to introduce proof of payment of one or both. Now, usury is a defense; a defense against the claim set up in the older of the two mortgages. It is a personal defense, which Cook alone can make. — 2 Brick. Dig. 128, § 122. If pleaded and proved, it 'shows that Oook owed Davis less than on the face of the papers he appeared to owe him. It was not foreign to the subject-matter of the suit — introduced nothing relating to any transaction other than that shown in the original bill, but only raised new issues on the subject-matter presented in, and made the foundation of the original bill. It was a proper subject for a cross-bill by N. B. Oook.

The defendant, Oook, did not file a cross-bill proper in this case. He embodied in his answer what he here relies on as a cross-bill*. In substance, it is very full in averments of fact, stated as facts, going to show usury, and the extent of it, in the notes secured by the Davis mortgage. It makes Davis and Mrs. Massey parties, prays process, and for relief. It sets forth a stated account, showing and averring that less than five hundred dollars is due to Davis, and tenders that sum to him, and brings it into court. The statutes relied on as authorizing this form of defense, are found in the Code of 1876, and are as follows :

“ 3801. The defendant may obtain relief against the complainant, for any cause connected with, or growing out of the subject-matter of the bill, by alleging in his answer, and as a part thereof, the facts upon which such relief is prayed, and require the complainant to answer the same upon oath.”

“ 3802. The matter thus putlin issue must be considered in the nature of a cross-bill, and be heard at the same time as the original bill.”

“ 3803. The defendent may waive the answer of the complainant to such new matter being made upon oath,” &e.

, “3804. The complainant must file his answer to such new matter, under the rules and regulations provided in this title for the answers of defendants to original bills.”

It will be observed that this system, in its letter, provides for relief against the complainant, and makes no provision for relief against a co-defendant. Whether we should construe these sections strictly, as introductivo of a new statutory remedy, or liberally, as being remedial in their purpose and spirit, we consider it unnecessary to inquire in this case. It was treated as a cross-bill in the court below, and was answered as such; several grounds of demurrer were interposed to it, and none of them raised the question that the defense it sought to make could not be presented by converting the answer into a cross-bill. The answer admitted the usury charged. Testimony was taken, and the chancellor in his decree sustained the plea of usury. And the assignments of error here do not raise the question of Cook’s right in this case to convert his answer into a cross-bill. Ve will not consider this question. — McElhaney v. Gilleland, 30 Ala. 183; 1 Brick. Dig. 779, §§ 91, 92 ; Ib. 777, § 52; Ib. 776, §31.

M. P. Davis, the alleged purchaser at the mortgage sale of J. M. Davis, has paid nothing on his purchase. If not under the circumstances a trustee of the title for J. M. Davis, he has acquired no independent rights against either the complainant in the original bill, or the complainant in the cross-bill. The decree is affirmed.

Brickell, C. J. dissenting.