Pappenheimer v. Roberts , 24 W. Va. 702 ( 1884 )

Woods, Judge:

The first question presented by this record is, what judgment should the court have entered upon the defendants’ demurrer to the plaintiffs’ bill ? It does not appear that the demurrer was formally acted upon or considered by the court. It would seem as if the court had overlooked it altogether, for in all its subsequent proceedings no notice of it was ever taken. Under these circumstances we must hold that the demurrer was overruled. Ho grounds for the demurrer are stated, but it will appear at a glance that the real cause of demurrer was the absence ot proper parties. The object of the plaintiffs was evidently to enforce the lien ot their judgment against the lands in the bill mentioned, as the lands of Henry Roberts one of the judgment-debtors which they allege had been fraudulently conveyed to the defendants, Emily Roberts, Cornelius Loyd and Catherine Roberts. The plaintiffs in order to show the fraudulent character of these conveyances, not only allege that they were made without valuable consideration, but that defendants, Roberts & Wysong, had carried on a partnership business as merchants from 1866 to 1869, and that during this period they had contracted not only the debt for which their judgment was recovered, but that they between these dates, contracted 'other large debts, for the purchase of merchandise, which remain unpaid; that among such creditors of Roberts & Wysong, M. E. Reeves & Co., Duncan, Ford & Elder and John Wynne & Co., had recovered judgments against them which were docketed on the lien-docket of Lincoln county. The dates when these several judgments were recovered as well as the amounts thereof are not stated, neither are the said judgment-creditors nor any of them made parties, plaintiff or defendant. Heither is the said bill filed by the plaintiffs on their own behalf, and on behalf of all other judgment-creditors, nor is there any allegation- in the bill looking to a convention of the lien-creditors of said firm, or of either o.f the partners, and the prayer of the bill is that said deeds may be declared fraudulent as to the plaintiffs and that their debt be paid by a sale thereof.

Were these judgment-creditors of the firm of Roberts & Wysong, appearing on the face of the hill, necessary parties to the plaintiffs’ suit?

It is a general rule in equity that all persons interested in the subject-matter involved in the suit, who are to be affected by the proceedings and result of the suit, should be made parties however numerous they may he, and if they are not made parties, and their interest appeal’s upon the face of the bill, the defect may be taken advantage of either by demurrer or upon the hearing; and if it appears on the face of the record' that the proper parties are wanting, the decree will be reversed by the appellate court unless the objection.was waived in the court below. Hill, &c., v. Proctor, &c., 10 W. Va. 59; Clark v. Long, 4 Rand. 451; Shepherd’s Ex’or v. Starke, &c., 3 Munf. 29; Barton’s Ch. Pr. § 34; Story’s Eq. Pl. § 76.

This subject has frequently been before this Court, and it has decided that a creditor who brings his suit against a debtor to enforce the lien of his judgment against his debtor’s land should sue on behalf of himself and all other judgment-creditors, excepting those made defendants, and he should make formal defendants in his suit all other creditors who have obtained judgments in the. courts of record in the county in which the debtor owns lands which are sought to be subjected to the payment of the judgments, and also all creditors who have obtained judgments in any paid of the State, which have, been recorded in the judgment-lien docket of said county; and that if all the judgment-creditors are not made parties to such a suit either formally, or informally by being called by publication before a commissioner under a decree of the court to present their judgments, and this is disclosed in any manner, by the record, the appellate court will reverse any decree ordering the sale of the lands, or the distribution of the proceeds of such sale. Neely v. Jones, 16 W. Va. 625; Norris, Caldwell & Co. v. Bean, 17 W. Va. 625.

It also appeared from the face of the deed made to Cornelius Loyd, dated December 29,1869, which was made a part of the plaintiffs’ bill, that said conveyance purports to have been executed in consideration of four thousand dollars, of which .one thousand dollars was to be paid on April 1, 1870, and three thousand dollars on December 29, 1870, with interest from the date of the deed to secure the payment whereof a vendor’s lien was retained upon the one hundred and seventy-three acres thereby conveyed. The bill alleged that this conveyance to Loyd, as well as his deed to Catharine Roberts, conveying to her the same land on May 4, 1874, were made without valuable consideration and were therefore void as to plaintiffs’ judgment, and. the bill seeks the cancellation of these deeds as part of the relief sought. It was a matter of perfect indifference whether there was any consideration deemed valuable in law for the execution of the deed to Catharine Roberts, provided the deed from Henry Roberts to Loyd was made for a valuable consideration, and free from fraud. Loyd had bound himself to pay his vendor for this land four thousand dollars, for which he had executed his obligations, secured by a vendor’s lien thereon; both the deed made to him as well as his deed to Catharine Roberts contained covenants of general warranty of title to the land thereby conveyed, and he was liable upon this warranty in case the land was lost to his grantee, by reason of any fraud bn his part that rendered his title worthless in her hands, and being directly and materially interested in the subject-matter of this controversy, he was entitled to his day in court to resist the pretensions of the plaintiffs, and to defend his title to said one hundred and seventy-three acres of land; and he could not justly he deprived of this privilege because he had conveyed all his interest in the land to said Catha-rine Roberts, a fact which, as we have already shown, preeminently entitled him to make such defence. This question came before the court of appeals of Virginia in the case of Hagan &c. v. Warden, reported in 3 Gratt. 315. In that case the plaintiffs, Warden and others, claiming a tract of three thousand five hundred and thirty-three acres of land entered by S. on January 20, 1795, surveyed in 1798, and granted in 1799, filed their bill against Hagan & Co. to repeal a grant of one hundred thousand acres entered by N. on June 22, 1795, and granted to L. and I), his assignees by patent dated March 28, 1796, under whom the defendant claimed title upon the ground that the entry made, and the grant obtained for the one hundred thousand acres were fraudulently made and obtained with full knowledge of the prior entry of S. In this proceeding, neither the said N. L. nor D. nor any of their representatives were made parties, but the superior court, notwithstanding this fact, granted the relief prayed for by compelling the defendants to release to the plaintiffs all the title vested in them to the land in controversy. From this decree the defendants appealed, and the com’t sustained their appeal, upon the ground that such decree could not be entered in the absence of N, L‘. and D. or their representatives, because they were necessary parties, and for this cause reversed the decree, and remanded the cause with directions to amend the bill, and bring the said N., L. and D. or their representatives before the court by proper process.

In the case under consideration the individnals composing the firms of Duncan, Ford & Elder, M. E. Reeves & Co. and John Wynne & Co. were directly and materially interested in the lands sought to be sold to the full amounts of their several judgments, and they and the said Loyd were deeply interested in ascertaining the correct amounts and priorities of said several judgments, if such in fact existed and constituted valid liens on said lands, and being so interested in the subject-matter involved in the plaintiffs’ bill, they were necessary parties thereto, and the defendants’ demurrer ought to have been sustained for want of proper parties, and leave given the plaintiffs to amend their bill and bring such parties before the court by proper process or in some other manner prescribed by law.

But it is insisted in argument by counsel for the appellee, that although the various creditors mentioned in the bill are not made parties, yet as their judgments are set out, and th'e commissioner reports the same as liens on the lands which no one excepted to, these lienors are informally parties before the court because their judgments are reported. In this the counsel for the appellees are in error, for the bill does not set out the amounts of said judgments, nor when, nor in what court they were recovered, nor do the plaintiffs in their hill file, or offer to file, or even refer to any evidence whereby the defendants or the court could ascertain the description of these judgments, nor was there any order or decree rendered in the cause directing the commissioner to convene before him by publication the creditors of the defendants, Roberts & "Wysong, and requiring them to appear and furnish proof, of the validity, amount and priority of their several liens. On the contrary, no such opportunity was afforded them, for the order of reference entered in the cause only directed the commissioner “to give reasonable notice to the parties” (that is, to the parties to the suit) “ of the time and place of executing the same.” Row neither any of such judgment-creditors "nor the said Loyd could have had any legal notice of these proceedings, nor did they have any right, under the proceedings in the cause, to contest or controvert any of the matters set forth in the hill. Loyd was especially interested in resisting the demands of these judgment-creditors, and in having all the lands owned by John Wysong, as well as by Henry Roberts and Thomas Roberts, ascertained, and in having the lands liable to be first sold, so marshaled and sold as, if possible, to leave the one hundred and seventy-three acres conveyed to him relieved from the liens of the said judgments, if any such existed thereon. It was not competent for the plaintiffs and the said judgment-creditors, who were not parties, and the said Thomas Roberts and the heirs of said Emily Roberts, deceased, even if they had all been of full age, to consent to a sale of the said lands conveyed to Emily Roberts, which might materially affect the liability of said Loyd, who was no party to. the suit. The injustice of this whole proceeding becomes more apparent when it appears by the record that both of them by proper petitions tendered and offered to be filed, setting up other liens on said lands of Emily Roberts, older than any of those reported by said commissioner, and praying to be made defendants, and to be permitted to defend their rights, and when both of said petitions,* as well as their applications to be made parties 'to the suit, were, upon objections made thereto by the plaintiffs and said judgment-creditors, rejected and disallowed. In rejecting these petitions and in refusing to permit said Loyd and M. S. Thornburg, administrator of John Samuels, deceásed, to become parties to the suit the court erred to their prejudice. Marling v. Robrecht, &c., 17 W. Va. 440. The report of sales made by the special commissioner was excepted to by all the defendants, and the appellants, Loyd and Thornburg,, in said petitions so improperly rejected, excepted to said report of sale, on the especial grounds that the sales ought not to be confirmed because the proper parties were not before the court. While section 8 of chapter 132 of the Code provides, that “if a sale of property be made under a decree or order of court, and such sale he confirmed, though such decree or order be afterwards reversed or.set aside, the title of the purchaser at such sale shall not be afiected thereby; but there may be restitution of the proceeds of sale to those entitled,” yet it has been decided by this Court that it’must be understood that such a sale is in a case where the parties interested in the property are before the court, and the decree of sale, and the sale itself, and the confirmation of the sale, are free from fraud. Capehart v. Dowery, 10 W. Va. 130. The same was held, in Underwood v. Pack, 23 W. Va. 794, wherein Johnson, President, delivering the opinion of this Court, said: that in such a case “ a purchaser could get no title, and would not be protected by section 8 of chapter 132 of the Code if the owner of the property was not before the court. It is clear that the purchaser would not be protected under said section, if parties shown by the record of the suit to be interested in the property by having liens thereon were not before the court. If the necessary parties were not formally or informally before the court, the purchaser would not be protected in his purchase under that section of said chapter.” The exceptions of defendants, and especially those of Loyd and Thorn-burg, administrator, &c., to the report of the commissioner for want of proper parties were well taken and ought to have been sustained and the court erred in overruling the same and in confirming said sales.

Por the reasons hereinbefore stated the decrees of the circuit court of Lincoln county entered in'this cause at the April term, 1877, and the report of Commissioner Curry made thereon, the decree entered at the September term, 1878, directing the sale oí said lands, as well as the decree modifying the same, entered on the 15th day of April, 1880, and the final decree entered at the April term, 1881, of said court, must be set aside, reversed and annulled with costs against the appellees in favor oí the appellants, except as to Margaret Loyd, the wife'of Cornelius Loyd, as to whom the appeal is dismissed, the same having been improvidently allowed as to her.

And this Court proceeding to render such decree as the said circuit court should have rendered, it is adjudged, ordered and decreed that the defendants’ said demurrer to the plaintiffs’bill be sustained; that the said exceptions to the special commissioner’s report of sales be also sustained, and that the sales be wholly set aside, and that the plaintiffs have leave to amend their bill 'by making proper parties thereto, and otherwise it they see proper to do so; and this cause is remanded to the circuit court of Lincoln county for further proceeding there to be had therein according to the principles laid down in this opinion, and further according to the rules governing courts of equity.

Reversed. Remanded.