Newman v. Shreve

Opinion by

Mr. Justice Elkin,

As we view this record the learned court below erred in dismissing the bill as to all the defendants except appellant. The bill was filed against five defendants, two of whom, Shreve and Braddock, were treated as principals both in the averments of the bill and in the prayers for relief, and the other three were included because connected with the transaction about which complaint is made. The bill was dismissed as to all the defendants except Shreve upon whose shoulders the whole burden was cast without even extending relief to the extent of the unpaid purchase money, which, it is conceded, he never received, and to which relief he was clearly entitled if within the power of the court to grant. Braddock was a resident of the state of New Jersey in which was located the land out of which this controversy arose. Shreve, trustee for the bondholders, and as such a principal defendant, was a resident of Chester county, Pennsylvania, at the time'the bill was filed, and being properly served, was within the jurisdiction of the court. Braddock, being a nonresident, was served as authorized and directed by the act of 1859. He caused a general appearance to be entered for him and in his answer set up a general defense upon the merits. The other three defendants voluntarily appeared, accepted service and filed answers. All of the defendants were in some way interested in the property sold, or in the proceeds arising from the sale of it, or as mortgagor or mortgagee, or otherwise. It was a situation calling for the exercise of the equity powers of a court in such manner as to work out equitable and just results between the parties in so far as it could be done under the circumstances. Shreve was the active trustee and the bill was filed against him as such, but Braddock was also charged as being a trustee ex maleficio, and as such with having received moneys for which he had not accounted. As to the conduct of Braddock the court did not inquire and no finding was made as to his being a trustee ex maleficio, although this was one of the principal averments of the bill. In the fifth paragraph of his answer, Braddock sets up that he only assumed to act as agent for Shreve in the agreement with Taylor for the purpose of securing the payment to Shreve as trustee of $15,000, which was the amount the latter had agreed to accept for the land in question, and the balance of the purchase money agreed to be paid by Taylor did not belong to Shreve as trustee, but was due him, Braddock, as a party in interest. These were important matters bearing upon the relations and equities existing between Shreve and Braddock and upon their resultant liability to the bondholders or to each other. These things were not considered by the court in any conclusive way because the bill was dismissed as to Braddock and the other three defendants. This led to error in another respect, that is, not to fully consider the terms and conditions upon which the sale for $33,000 was made. Enough appears in the record here presented to show that Shreve only received $15,000 out of the entire purchase money, and that Braddock did not receive nearly all of the remaining $18,000. Whether he paid a commission for making the sale, what became of the money unaccounted for, why he did not receive the entire balance, and how all these things affected the equities and legal liabilities of the principal party or parties were not given that consideration in the determination of the questions involved which the facts warranted and the case demanded. No doubt this was due to the fact that the court did not consider Braddock and the other defendants within its jurisdiction for the purpose of entering a final decree against them or any of them. No one can read this record without being convinced that Shreve was misled, or imposed upon, or misinformed, or that by reason of impaired health and bodily infirmities he failed to exercise that careful diligence he otherwise would have done. While these things may not excuse him for failure to secure the largest price possible for the sale of the trust property, they do appeal to the conscience of a chancellor in determining not only his legal liability, but the equities that may exist between all the parties connected with this transaction. Then, again, it is admitted that at the time of the hearing $2,500 of the original purchase money was unpaid, and if Shreve is to be held for the entire purchase price agreed to be paid by Taylor, he is clearly entitled to have some decree entered by the court in reference to the payment of this unpaid balance as a protection to him. AIL of the parties were before the court, and we can see no reason why these matters should not have been considered and such decree made in reference thereto as to equity and justice doth appertain.

The bill was dismissed as to Braddock and the other defendants on the ground that they were nonresidents and not within the jurisdiction of the court or amenable to its processes.. The general rule is that when a court has jurisdiction of the person of a defendant it may render any appropriate decree acting directly upon the person, -although the subject-matter may be without the jurisdiction. When the court has jurisdiction over the subject-matter, or the person of a principal defendant, the rule prevailing generally in judicial proceedings applies to suits in equity. Objections to jurisdiction over the parties are waived by appearing on the merits. An answer to the merits waives an objection contained in the same answer that the defendant is a nonresident: Mutual Aid Association v. Richardson, 38 Ill. App. 111; Carroll v. Lee, 22 Am. Dec. 350; 16 Cyc. 120. In Phelps v. McDonald, 99 U. S. 298, it was held that where the necessary parties are before a court of equity it is immaterial that the res of the controversy, whether it be real or personal property, is beyond the territorial jurisdiction of the tribunal. It has the power to compel the parties to do those things necessary to give effect to the decree entered against them. Without regard to the situation of the subject-matter courts consider the equities between the parties, and decree in personam according to those equities and enforce obedience to their decree by-process in personam. For a very interesting and exhaustive discussion of this question see our late case of Schmaltz v. York Mfg. Co., 204 Pa. 1. The appellant was a trustee, the bill charged Braddock with being a trustee ex maleficio, the subject-matter of the controversy was a trust estate, and the principal defendant lived in Chester county where the court had the power to compel an accounting. When the parties all appeared either voluntarily or by service regularly made or as directed by the court under the act of 1859, and entered a general appearance, filing answers on the merits, they were within the jurisdiction of the court for every purpose of the case and should have been so treated. For these reasons we think the record should be remitted so that the court and the parties may have the opportunity of considering all questions that have been or may be raised under the pleadings affecting all the parties to the controversy.

Decree reversed, bill reinstated as to all the parties and record remitted for the purpose of having all questions affecting any or all of the parties determined in accordance with the general views herein expressed and upon the facts as they shall be ascertained upon a final hearing. Costs of this appeal to be paid by appellee.