Hall v. Jack , 32 Md. 253 ( 1870 )

Bartol, C. J.,

delivered the opinion of the Court.

These two appeals have been brought up in one record and were argued together, and for the sake of brevity and convenience, will be disposed of in one opinion. In order to understand the several questions involved, it is necessary to state, with some degree of particularity, the facts and circumstances of the ease as disclosed by the record.

The bill was filed on the 19th day of January, 1867, by the appellee and William B. Johnston, suing as well for themselves as for all other creditors of Alexander M. White, for the purpose of annulling or setting aside a voluntary gift of property made by White to his wife, alleged to be in fraud of his creditors, and to subject the same to the payment of his debts.

The property consisted as alleged in the bill and shown by the proof:

First, of a house and lot on Lombard street, in the city of Baltimore; and secondly, of certain promissory notes of Geo. A. Cox, secured by a mortgage executed by Cox, in favor of Mrs. White, for and in consideration of furniture alleged to have been purchased by Cox from Alexander M. White.

It appeared in the-progress of the cause, that the house and lot had been sold and conveyed by White and wife, before the filing of the bill, to a bona fide purchaser, and all claim thereto was therefore abandoned by the complainants, who continued the further prosecution of the suit, for the purpose of subjecting to the payment of their claim, and those due to the other creditors of Alexander M. White, the money due by Cox 'upon his promissory notes.

White and wife and Cox were made defendants, and an injunction was issued prohibiting White and wife from selling or disposing of the promissory notes, and enjoining Cox from Spaying the same to White and wife, or to any other person for them.

The defendants answered, and testimony was taken, and on the 11th day of May, 1868, the cause was set down for hearing on the 2d day of June, 1868.

On the 13th day of May, 1868, the appellant, Amasa C. Hall,-filed a petition claiming to be the bona fide assignee and owner of the promissory notes and mortgage of Cox, and praying to bo made a party to the cause, for the protection of his rights. '

On the 24th day of June, 1868, a decree was passed by the Circuit Court dismissing Hall’s petition, declaring the gift of the personal property made by White to his wife, to be null and void as against the complainants, and other creditors of Wliite, who were such at the time of the gift, and further ordering that the defendant Cox bring into Court the money due, and as, and when the same might thereafter fall due upon his promissory notes, to be applied under the Court’s direction, all equities as to the distribution of the fund being reserved for hearing upon the report of the auditor, to whom, the cause was referred by the decree. The auditor reported the amount due and to become due by Cox, and the account was finally ratified on the 16th day of November, 1868. Afterwards, upon the petition of the complainants setting forth that no other creditors of White had appeared to claim the fund, the Court, on the 17th day of November, 1868, passed an order directing the same to be paid to them in satisfaction pro tardo of their claim.

On the 24th day of December, 1868, Amasa C. Hall entered his appeal “ from the decree of the Court in the cause,” and gave his appeal bond on the 8th day of March, 1869.

On the 3d day of March, 1869, the appellee filed a petition alleging that Cox had failed to pay into Court the amount due on his mortgage notes, as directed by the decree before passed, and praying that the property mortgaged might be sold to pay the same. To this petition an answer was filed by Cox, alleging for cause against granting the same; that the Court had no jurisdiction to proceed in the cause, by reason of the appeal having been taken by Hall; and alleging further that the property mortgaged ~was full and ample security for the money due by him.

In support of this last averment testimony was taken, and on the 10th day of May, 1869, an order was passed requiring Cox to bring into Court, within thirty days after the date of the order, the balance of principal and interest due on his mortgage debt.- From this order the appeal of Cox was taken on the 10th day of May, 1869.

Before we proceed to consider the real questions in controversy presented by these appeals, it may be well to premise that no valid objection has been urged, and, in view of the evidence contained in the record, we think none could be successfully urged to the decree of the Circuit Court, in so far as it annuls the gift made by White to his wife, and declares the same to be void as against White’s creditors. White and wife, the only 'parties affected by that part of the decree, have not appealed. ■

Nor is there any valid objection to the correctness of the complainants’ claim against Alexander M. White, as stated in .the bill of complaint; this is abundantly established by the vouchers and proof in the cause. The debt of White originated in December, 1858, and January, 1859. It has been .argued that it was extinguished by the agreement of February 4th, 1865. It is unnecessary to decide what may have been he effect of that agreement, because, on the 10th day of May, 1866, another agreement was made by White with the complainants, whereby his debt was renewed and his promissory notes given therefor, bearing date the 26th day of February, 1866. The gift by White to his wife, which is sought to be set aside, was made on the 22d day of December, 1866, as appears by the mortgage from Cox to Mrs. White, exhibited with the bill. There can be no question, therefore, that the complainants were subsisting creditors of White at the time of this gift, which they Impeach as fraudulent.

The first question to be disposed of upon Hall’s appeal is raised by the motion to dismiss the appeal, for the reason, as alleged, “ that the appellant was not a party to the cause in which the decree was passed, the Court having refused his application to be made a party.”

In support of the motion the appellee relies upon Article 5, section 20, of the Code, as amended by the Act of 1864, chapter 156.

That Act provides, that “ an appeal shall be allowed from any final decree, or order in the nature of a final decree, passed by a Court of Equity, by any one or more of the persons parties to the suit, with or without the assent or joinder of co-plaintiffs or co-defendants in such appeal.” The evident intention of the Act was to change the pre-existing law, as it had been construed in Lovejoy vs. Irelan, 17 Md., 525, and to enable one or more of the parties to a suit in equity to prosecute an appeal without joining the co-plaintiffs or co-defendants, and without the necessity for summons and severance, which was before required. The Act was designed to extend, and not to limit the right of appeal, and cannot be construed as restricting that right in all cases to such persons only as are technical parties to the suit. Ordinarily, none but parties to the cause can appeal, because, ordinarily, no others are bound or affected by the decree.

In the present case it is obvious that the decree dismissing the petition of Hall, and directing the fund to be brought into Court for distribution among the creditors of White, for such we construe to be its effect, and the subsequent order of the 17th of .November, 1868, which directed the fund to be paid to the complainants, operated to conclude the rights of Hall in respect to the fund. And, being directly interested in the subject-matter of the decree, and having filed his petition in the cause, praying to be permitted to intervene for the protection of his rights, he must be considered as a party within the meaning of the Act of 1864, entitled to appeal. The motion to dismiss must, therefore, bo overruled.

But we are of opinion there was no error in the decree dismissing his petition. In order to be entitled to intervene in the suit or claim title to the property, it ought to appear affirmatively that his title as assignee, or that of McKenzie, under whom he claims, was acquired before the pendency of the suit. If acquired after suit brought, he is affected by the lis pendens. It was not denied in the argument that the doctrine of lis pendens would apply to this case in the same manner as if the property in dispute was of a different kind or description.

It is well settled, that “the Court is not bound to take notice of any interest acquired by purchase in the subject-matter of a suit pending the suit.” 5 Johns. Ch. R., 96; 1 Story’s Equity Jur., secs. 405, 406; Inloes vs. Harvey, 11 Md., 524.

In this case, the bill was filed on the 19th day of January, 1867. Notice to White and wife, who were non-residents, was given by publication in the newspapers for four successive weeks, beginning on the 22d day of January, 1867. The injunction was served on A. M. White on the 1st of February, 1867, and on Mrs. White on the 11th of the same month.

When did the appellant, Hall, purchase the notes and mortgage? For the answer to this question, we can refer only to the statement found in his petition; and that does not furnish the'required information. It is alleged that he began his negotiation for the purchase of the notes in January, 1867, but declined to buy until an assignment of the mortgage was made, which he alleges was done shortly thereafter, but at what time is not stated; nor is the assignment produced which would show the date of the transaction. It is not alleged in the petition that it took place before the institution of the suit; he must be regarded, therefore, as a purchaser or assignee pendente lite.

It was argued, on the part of the appellant, that the endorsement or transfer of the notes to McKenzie carried with it the title to the mortgage, as a security or incident thereto without a formal assignment of the mortgage, and that if the transfer to McKenzie was made before the institution of the suit, his subsequent transfer to Hall would confer a good title, unaffected by the Us pendens, although it may have been made after the institution of the suit. Conceding those propositions to be correct, they do not affect the decision of the case, because it does not appear that the notes were transferred to McKenzie as a bona fide purchaser; nor is it alleged in the petition, that the notes were transferred to him before the institution of the suit. In the absence of any averment to the contrary, it must be intended that the title, both of the appellant, Hall, and of McKenzie, (if McKenzie ever was the owner, which is not distinctly averred,) was acquired pendente lite, and for that reason we think the appellant’s petition was properly dismissed.

It is conceded in the petition, that he had actual notice of the pendency of this suit as early as the 25th day of June, 1867, when the first note matured, and yet he took no steps to assert his claim, or to offer proof in its support, until the 13th day of May, 1868, after the cause had been set down for hearing. After such delay, his application does not address itself to the favorable consideration of the Court. But, independently of the question of laehes, we are of opinion for the reasons slated, that the averments of the petition are insufficient to entitle him to be admitted as a party to the cause, and will, therefore, sign a decree affirming the decree of the Circuit Court, passed on the 24th day of June, 1868.

Having decided Hall’s appeal, the appeal of George A. Cox may be briefly disposed of. Without stopping to argue the questions presented by the motion to dismiss, and assuming that the motion ought to be overruled and the appeal entertained, we discover no sufficient ground for reversing the order of the 10th of May, 1869, from which the appeal was taken.

It is no doubt well settled, that “ after an appeal is taken, and an appeal bond executed and approved, no step in the cause can be taken in the inferior Court which, by any possible contingency, can prejudice the appellant.” 3 Bland, 413; 6 H. & J., 333; 4 Md. Ch. Dec., 254.

(Decided 5th March, 1870.)

In this case we think the effect of Hall’s appeal, an appeal bond having been given, was to suspend the operation of all and every part of the decree of the 24th of June, 1868, and that the Circuit Court had no jurisdiction' or power to enforce the same, while the appeal was pending and undecided.

But the effect of the order of the 10th of May, 1869, could not by any possibility prejudice the rights or interests of the appellant Hall. On the contrary, if he should succeed in his appeal and establish his right to the fund in question, his interests would not be prejudiced by the payment of the same into Court. But, however that may be, it is clear that Cox, who is a mere stakeholder liable for the payment of the money, cannot be heard to object to the passage of the order. He does not deny his obligation to' pay, nor is there any question as to the correctness of the amount stated in the order.

Having in the previous part of this opinion upon Hall’s appeal, decided that the decree of the 24th of June, 1868, ought to be affirmed, there is no real or substantial reason for reversing the order of the 10th of May, 1869, which merely reiterates what had been directed by the previous decree. The case is one in which it was eminently proper to require the money due by the mortgagor to be paid into Court, and he cannot be heard to complain of the order of the 10th of May; which though it may have been passed unnecessarily or irregularly in no manner affected his rights.

Decree and order affirmed.