Love v. Keowne ( 1882 )

On Motion for Rehearing.

Stayton, Associate Justice.

In thedisposition of the motion for rehearing in this cause, all the members of the court concur in holding that the motion should be overruled. In stating some of the reasons which influence this action, no inquiry will be made into the question as to whether the sureties upon the last bond may not be responsible, notwithstanding the sureties upon the first bond may also be responsible, for that which, by the inventory, reports and decrees of the court, appeared to be in the hands of the administrators at the time the last bond was executed, notwithstanding some of such assets of the estate may have been misappropriated prior to the execution of that bond, for this question has not been argued, and we would not undertake to decide it without, as it is not necessary to do so in the disposition of this motion.

The pleadings, as amended, aver that a large sum of money, together with other property, went into the hands of the administrators, and that a portion of that money (the exact amount of which the plaintiffs were unable to state) was in the hands of one of the administrators at the time the second bond was executed.

The pleadings further allege, that, prior to the execution of the second bond, but while the first was in full force, one of the administrators, acting partly for himself and in association with the-sureties on the second bond, invested a large portion of the money of the estate in the purchase of stock in the Southern Pacific Bailroad, which stock was held by the administrator in his own right in part, and as to the residue in right of himself and associates; that about $17,500 of the money of the estate was so invested; that after-wards the sureties upon the first bond required a new bond to be given, which was done, Hall, Burnham and Hargrove becoming the sureties, under an agreement between them and the administrator that the administrator would deposit with them, as security against loss by his acts, sufficient security to indemnify them.

It was further charged, that, in pursuance of said agreement, the administrator did place in the hands of the sureties upon his second bond, stock of said railroad of the value of $25,000, which stock was purchased by the administrator, as his sureties well knew, at the time they received the same, with the funds of the estate, and that said sureties afterwards converted said stock to their own use; that a.t the time the second bond was given, one of the administrators had in his hands belonging to the estate a large sum of money, as well as the railroad stock. That they are unable to state, on account of the loss of all the papers pertaining to the estate, the exact amount converted by the administrators under the first or second bond; but they allege to the best of their information about the sum of $17,500 was converted under the first, and a like sum under the second bond. The petition prays that the amount for which each set of sureties may be liable be ascertained, and for judgment; and they also pray judgment against the sureties upon the second bond for the value of the "railroad stock, for general relief, for an account and for discovery.

The main grounds relied upon for a rehearing are based upon a supposed misjoinder of parties and of causes of action.

The breach of each of the bonds doubtless constitutes a cause of action against the makers of the several bonds, ordinarily separate and distinct; but the relation of two sets of sureties may be such to the subject matter of litigation, which in this case is the estate, that came into the hands of the administrators, that they may be joined in one action, and in which it may become eminently proper that all the sureties should be joined, not only for the protection of those interested in the estate, but also for the purpose of adjusting the equities existing among the sureties themselves.

In a court of equity this is always desirable, in order to do complete justice between all parties without a multiplicity of suits.

The demurrer admits the devastavit/ that by reason of the loss of the papers of the estate the plaintiffs are unable to ascertain with accuracy the extent of the devastavit prior to the time the second bond was executed; and that prior to the execution of the second bond, one of the administrators, in connection with those persons who became sureties upon the second bond, united in a misapplication of a part of the trust estate, and that these sureties, for their own indemnity, received the proceeds of such misapplication and have applied the same to their own use.

This state of facts connects the last sureties with the subject matter of this suit at a time prior to their becoming sureties at all; and also connects them after they became sureties with a trust fund which not only those interested in the estate may follow, but which the sureties upon the first bond may follow for their own protection ; and upon the plainest principles of equity procedure, it would seem that they should all be joined, to enable the court to make a decree that would be just and binding upon all.

While it is true that a hill for discovery alone cannot be maintained in this state, yet as an auxiliary remedy it is practically given, and, under the peculiar facts of this case, the importance and even necessity of having the answers of such of the defendants as may have knowledge, so taken by interrogatories that the answers may be binding as evidence upon each and every one, cannot be overestimated.

In the case of Alexander v. Mercer et al., 7 Ga., 553, which was a case in many of its facts identical with this, it was held that “ this is just one of those cases in which all have such an interest .in the common subject matter of litigation as makes it necessary and proper to convene them all together, to attend to investigations in which they are all so materially interested.”

In illustrating the propriety of this in the case above cited, which was a case against an administrator and two sets of sureties, in which it was alleged that the second set of sureties had received a portion of the assets of the estate, and that the extent of the devastavit during the period which each bond was effective could not be stated with certainty, Lumpkin, J., said, after considering other questions in the case, “ But we pass by these considerations, and would prefer to put this opinion entirely upon the ground of there being two sets of sureties; and I would remark that this proceeding would seem to be required for the sake of the securities themselves. The principal has no interest in fixing correctly the time when the devastavit was committed. . . . The real controversy, therefore, is not between the heir, legatee or creditor, and the principal, but between the different sets of securities. When their liability, then, is about to be fixed ¡presumptively, if you please, it is reasonable that they should be heard; and in order to do this, they must be made parties. Indeed, upon the simplest elementary principles, every person at all interested in the event of the suit, or necessary to the relief sought, should be made a party, in order to enable the court to settle the rights of all, and to make a complete and definitive decree.”

We, however, base our action in this ease upon the further broad ground, that all the sureties are proper parties in. this case: 1st, for the full protection of the plaintiff. 2d, for the full protection of the first set of sureties. The first set of sureties as well as the second, are liable to the plaintiffs, at least for the devastavits committed during the times covered by their respective bonds, and this through the obligations imposed by their respective bonds; and the sureties upon the second bond are liable to the plaintiffs without regard to their bond, for and on account of their having, if the averments of the petition are true, appropriated, in connection with one of the administrators, a portion of the assets of the estate, prior to the time they became sureties, in the purchase of railroad stock, which they must be held to have held in trust for the estate.

Having thus connected themselves with the subject matter of controversy, i. e., Avith the property of the estate, they are liable in connection Avith the sureties upon the first bond, without reference to the bond which they subsequently executed, at least to the extent of the assets Avhich they so misappropriated, or the value of the property which they acquired by purchase with the funds of the estate. Thus being proper parties, and having become sureties upon the second bond, holding the railroad stock as indemnity to them, they must be held properly parties to this suit for all purposes; for “it is not indispensable that all the parties should have an interest in all the matters contained in the suit; it will be sufficient if each party has an interest in some matters in the suit and they are connected Avith the others.” Story’s Equity Pleading, 271 a, 155.

It may be laid down as a general rule, that one who so participates in a transaction by Avhich he obtains improperly from a trustee a part of the trust estate, is a proper party to a suit against the trustee to enforce the purposes of the trust, and this even though the greater part of the trust estate is still in the hands of the trustee (Story’s Equity Pleading, 538; Attorney General v. Craddock, 3 Mylne & Craig, 85); in the course of which Lord Cottenham said: “Would it ever occur to any one to file one bill against the trustee for one part of the transaction, and another bill for another part of the transaction? Then is a party entitled to raise this objection Avho has made himself, by uniting with the trustee in a breach of trust, part and parcel of the transaction ? The object of the rule against multifariousness is to protect a defendant from unnecessary expense; but it Avould be a great perversion of that rule if it Avere to impose upon the plaintiffs and all of the other defendants the expenses of two suits instead of one. The object of the suit is to establish that Craddock has, by means of the transaction stated in the information, become a trustee of a part of the charity estate. Suppose he had been an actual instead of a constructive trustee, and the object Avas to have accounts taken and an administration made of the whole of the charity property; could he object on that ground that he Avas a trustee of only a part of the charity property, and that he could not be made a party to a suit relating to the whole? If that Avere to prevail, it Avould be directly against the decision of the vice chancellor, Avhich I affirmed in Campbell v. Mackay, 1 Mylne & Craig, 603. There some of the parties were trustees of part only of the trust property in question, but the trusts were so united by the allegations of the bill that the whole was made one fund; and first the vice chancellor, and after-wards myself, were of opinion that in such state of circumstances the objection of multifariousness could not be sustained. If that be so, according to the decision in Campbell v. Mackay, when the defendant is a trustee only of part, but which part is so blended as to make it improper to separate it, is greater favor to be shown to a person who becomes one of the trustees by joining with another trustee in committing a breach of trust? The doctrine of multifariousness would be carried much too far if that were to be the case.”

[Opinion delivered December 15, 1882.]

In the case of Alexander v. Mercer et als., 7 Ga., 553, above referred to, the court said: “ But secondly, the charge that property or money belonging to the estate, the amount and value of which are unknown to complainant, have been turned over to the second set of securities, or some of them, and which the complainant is entitled, as administrator de honis non, specifically to recover, would reduce the liability of all the securities so much, presents an additional reason why chancery should not decline jurisdiction.” The right of the plaintiffs in this case to enforce their claim for the railroad stock, specifically, if it yet remains in the hands of the sureties, cannot be questioned.

It is, moreover, the right of the sureties upon the first bond to have the proceeds of the funds of the estate, misappropriated while they were bondsmen, which may have gone into the hands of the sureties upon the second bond with notice of its character, appropriated in discharge of their liability, so far as may be necessary, as between them and the sureties upon the second bond.

Such would certainly be the just rule, and it is not believed that the second set of sureties, if they hold the proceeds of the very fund on account of which, at least in part, the liability of the first set of sureties depends, should be permitted to appropriate the same in discharge of their own liability, to the prejudice of the first set of sureties.

As the parties now stand, such decree may be made in the case as will be final and just between all parties, which could not be done if all the sureties were not before the court. The motion for rehearing is overruled.

Motion overruled.