Flournoy v. Bullock, Baker & Co. , 55 L.R.A. 745 ( 1901 )

OPINION OF THE COURT.

MILLS, O. J.

-This case comes before us in almost the same form as it did before. About the only difference being that the judgment formerly appealed from ivas for the sum of $2,627.94,_ while on the rehearing the amount Ayas reduced, the master crediting the defendants with the value of a certain lot conveyed to Champion, so that the amount of the judgment now appealed from is fl,536.24.

1 According to Avell-settled principles of law and the decision of this court, in the case of Crary v. Field, 61 Pac. 118, the former decision of this court, when this case was here before on appeal (Rice v. Schofield, 9 N. M. 314), so far as it states the law, is the law of this case, and will not be reviewed by the court on this hearing.

In the case of Rice v. Schofield, supra, when this case was reversed and remanded, the court said: “It appears that pending the hearing, a paper purporting to be a bond to ansAver any judgment Champion might recover was "‘filed’ in the cause, and after the master’s report was confirmed, the court rendered judgment against the persons purporting to be sureties on the bond. The bond does not appear to have been acknowledged before the court or judge. It is manifest that these persons never were in any sense before the court. They were not parties to the cause, and were not given any notice of the proceedings against them. If the signatures were forgeries, or if the paper had never been delivered, these persons were given no opportunity to avail themselves of such defense. ‘It is an acknowledged general principle that judgments and decrees ace binding only upon parties and privies. The reason of the rule is founded in the immutable principle of natural justice that no man’s right should be prejudiced by the judgment or decree of a court, without an opportunity of defending the right.’ Hollingsworth v. Barbour, 4 Pet. 466. To argue that by the terms of the bond, they consented to become parties, to submit to the jurisdic-' tion of the court and to the rendition of the judgment by it, is to assume they have consented. As to whether they have consented is the very point which the court, had no power to determine in their absence.”

On this trial this same paper purporting to be a bond is still in the record, but the transcript nowhere shows that either the original or a copy of it was ever offered or introduced in evidence, or that any attempt was ever made to make the persons whose names are signed to it as sureties parties to this suit, nor to prove that they or either of them signed, executed and delivered it; consequently the decision in Rice v. Schofield, 9 N. M. 314, being the law of the case and binding on us, and as some of the reasons given for the reversal of that case appear in this, if for no other reason we would have to reverse this cause, and remand it to the district court of the second judicial district, sitting within and for the county of Bernalillo.

We might end this opinion at this point, but it appears to us that it will be better for us to go further into the case, and examine it with the view of ascertaining whether or not there are any exceptions reserved which, are vital to the issues, the determination of which will end this litigation, in its present form at least.

2 The main point in this case and the one which will in all probability have to be finally met and passed upon is, could Champion, a simple contract creditor, intervene in the litigation (it being a suit in equity, brought by one of the partners to put the property belonging to a partnership into the hands of a receiver, convert them into cash and divide the proceeds among the several creditors of the firm), and recover a judgment on his claim against the partnership and one of the partners, on such intervention, or should he have brought a separate action at law to recover judgment, he being a simple contract creditor.

In this Territory we have statutes concerning interventions. In the Compiled Laws of 1884, sections referring to interveners were numbered 1890, 1891, 1892, while in the revision of 1897, such sections, which are not chauged in any particular, are numbered 2947-8-9.

These statutes refer solely to actions at law and not to suits in equity. This has been expressly decided by our Supreme Court in the case of Union Trust Co. v. A. T. & S. F. R. Co., 8 N. M. 327, 43 Pac. 704. In that case the court says: “It is insisted by the appellee that the Postal Company can intervene only under sections 1890-1892, Compiled Laws of 1884, and that the facts stated do not show that the Postal Company has sufficient interest in the cause pending to permit it to intervene. This contention can not be maintained, because this is an equitable proceeding, and the sections of the statute referred to relate only to actions at law.”

Such being the law in this Territory we will therefore in this case be guided by the rules of equity regulating interventions in chancery cases. In equity the right of intervention in proper cases has always been recognized. 17 Am. and Eng. Ency. of Law (1 Ed.), p. 633.

In the case at bar the intervention was evidently brought under the statute which this court held only applied to common law cases. In equity cases, petitions of intervention should contain all of the material facts relied upon and should show a right to the particular relief asked by tlie petitioner, and must show a case of substantial equity. Empire Distilling Co. v. McNulta, 77 Fed. Rep. 703; French v. Gapen, 105 U. S. 519. It is not claimed that the intervention we are now considering complies with this rule.

The organic act passed by Congress, when this.Ter-ritoiw was organized, and which is our constitution, provides, that the constitution and all laws of the United States, which are not locally inapplicable, shall have the same force and effect, within the Territory of New Mexico, as elsewhere within the United States, and article 7, of the amendments to the Constitution of the United States provides that, “In suits at common law . . . the right of trial by jury shall be preserved.”

If, therefore, the intervenor in this case had brought a separate suit to reduce his claim to judgment, it necessarily would have been in the nature of a common law proceeding in assumpsit, and the parties defendant would have been entitled to a jury to try the issues raised. We do not think that this right to a trial by jury can be avoided, by. filing an intervention in a suit in equity, wdien the intervention does not contain a single allegation which would have entitled the inter-venor to have brought a suit in chancery in the first instance.

The intervenor in this case does not seek to assert any right against the property sequestered and in the hands of the court, nor does the intervention set out that Champion has any lien on such property. All it prays for is a judgment against the firm of Bullock, Baker & Company, and against Alfred W. Rice, one of the members of the firm.

To authorize an intervention the intervenor must have an interest in the object of the suit. “The fact that he has an interest in the thing which is the subject of controversy will not be sufficient.” 11 Ency. P. & P., 496, and cases cited.

In the case at bar Champion is simply a contract creditor of the firm, the same as many others. He has no lien on its assets until he has reduced his claim'to judgment. It is true that he has a priority over creditors of the individual partners, but this does not constitute a lien. When a judgment is obtained the lien is worked out through the equities of the partners, to have firm assets first applied to the satisfaction of firm debts. Nowhere, so far as we have been able to ascertain, has it been held that a simple contract creditor of a co-partnership could file an original bill in equity to get a personal judgment against the partners, any more than a simple contract creditor of an individual could file a bill in equity to get a judgment against him.

A crossbill will not be sustained (and an intervention is somewhat analogous to a crossbill), when it merely alleges matter which authorizes a recovery at law. Santz v. Gordon, 28 Fed. Rep. 264, and cases cited in Century Digest, column 856, sec. 464. Still more objectionable is the presumption to permit á stranger to the suit, to come in as an intervenor to assert a purely legal demand. It would be very different if Champion had first-obtained a judgment at law and had then filed his petition alleging that recovery on execution could not be had on account of the property being in the hands of the court, through its receiver, and asking leave to assert his right to the property in the hands of the court. This principle is recognized by the Supreme Court of the United States, Adler v. Fenton, 24 How. 407; Scott v. Neely, 140 U. S. 106; National Tube Works v. Ballou, 116 U. S. 517; Hollins v. Brierfield Coal Co., 150 U. S. 371; Cates v. Allen, 149 U. S. 451.

The court in the case of Case v. Beauregard, 101 U. S. 688, which is relied on by the learned counsel for the intervenor, to sustain the intervention says: “When the the debtor’s estate is a mere equitable one, which can not be reached by any proceeding at law, there is no reason for requiring attempts to reach it by legal process. . . .” “It may be that whenever a creditor has a trust in his favor, or a lien upon the property for the debt due him, he may go into equity without exhausting legal process or remedies.”

3 In the present case the debtor’s estate, that is, the partnership property, is not an equitable one which can not be reached by proceedings at law, nor had Champion any trust or lien in his favor, any more than any other simple contract creditor of the insolvent firm, nor in this intervention does he seek to reach the debtor’s estate which is in the hands of the court. Only the partnership property is in the custody of the court through its receiver, and not the persons of the partners, and yet the intervention seeks to get individual judgments against persons, i. e. the firm and one of its partners, and does pot even ask for the distribution of the firm assets among the creditors.

The court says in the case of Hollins v. Brierfield Coal Co., supra, “It is the settled law of this court that such creditors (simple contract creditors )can not come into a court of equity to obtain the seizure of the property of their debtor, and its application to the satisfaction of their claims, and this notwithstanding a statute of the State may authorize such a proceeding in the courts of the State. The line of demarcation between equitable and legal remedies in the Federal courts can not be obliterated by state legislation;” and again, “Nor is the rule changed by the fact that the suit is brought in a court in which at the time is pending another suit for the foreclosure of a mortgage or trust deed upon the property of the debtor. Doubtless in such foreclosure suit the simple contract creditor can intervene, and if he has any equites in respect to the property, whether prior or subsequent to those of the plaintiff, can secure their determination and protection.”- This case then decides that a simple contract creditor must have equities in his favor before he can come into a court of equity as an intervenor or othrwise. It is not sufficient that the assets attempted to be reached are m custodia legis, as appellee contends on the strength of Case v. Beauregard, supra. We therefore think that the intervenor has shown no grounds of equity jurisdiction for his intervention, and that the court below erred in not sustaining the first exception of the appellate Rice, to the master’s report, which was as follows:

“Because there was no jurisdiction in the court to entertain this intervening petition of Champion, the matters therein alleged and the matters proven before the master being simply items of an account recoverable in an ordinary action of assumpsit at common law, and having nothing in their nature to give a court of equity jurisdiction, and the complainant, A. W. Rice, a party against whom they are sought to be established, being entitled to a trial by jury thereon.”

In view of the foregoing, this case is therefore reversed and remanded to the district court of Bernalillo county, with instructions to the said court to sustain the first exception of appellant Rice, to the report of the referee, and dismiss the intervention. And it is so ordered.

McPie, Parker and McMillan, JJ., concur. Crum-packer, A. J., having tried this case below, did not participate in this decision.