Matthews & Co. v. Cantey

The opinion of the Court was delivered by

Mr. Justice Jones.

On the 14th day of November, 1893, the defendant, Mrs. Sallie Cantey, executed and delivered to Mrs. Ida All three promissory notes, each for $233.33. with interest at eight.per cent, until paid, the first note due October 1st, 1894, the second, October 1st, 1895, and the third, October 1st, 1896, and, to secure payment, 'executed a mortgage on a tract of land. Some time thereafter, before maturity of the notes, Mrs. Ida All endorsed the notes and mortgage to W. A. All, jr., & Co. Thereafter W. A. All, jr., & Co. endorsed same or assigned same to the plaintiff, as collateral security for a debt due plaintiffs by said All & Co. Then, on May 6, 1895, after maturity of the first note, plaintiffs began this action to foreclose the mortgage. Defendants answered, setting up three defenses: 1st, a general denial; 2d, that she, Mrs. Cantey, was a married woman at the time of the execution of the notes and mortgage, and that the money was borrowed and used to pay her husband’s debts; 3d, payment — relying, however, principally on the second defense. The issues were referred to the master, Hon. A. Howard Patterson, and at a reference held February 15th, 1896, the testimony of plaintiffs showed that the debt due by All & Co. to plaintiffs, to secure which the said notes and mortgage had been assigned as collateral, had been paid in full, since the suit was brought, and that plaintiffs no longer had any interest in said notes and mortgage. It further appeared that since the commencement of this action the notes and mortgage had been assigned by W. A. All & Co. to Thomas M. Philpot, of Augusta, Ga., as collateral security. It seems, also, so Judge 'Aldrich found, that the notes and mortgage are still in the custody of the plaintiffs or their attorney, and the assignment of All & Co. to Philpot was made subject to the assignment to plaintiffs. Neither Philpot nor W. A. All & Co. were parties to this suit. On motion of the defendant, the master made an order requiring that Thomas M. Philpot be substituted as plaintiff in this action, with leave of defendant to answer. Plaintiffs appealed to the Circuit Court from this order and succeeded in getting it reversed. The order of Judge Aldrich, reversing the master’s order, adjudged simply that it was error to order that Philpot be substituted as plaintiff, ruling, that while Philpot had the right to become plaintiff if he so desired, he could not be compelled to become plaintiff. With this ruling the case was remanded to the master for such determination as might be proper. On May'5,1896, the master held another reference for the purpose of hearing the cause or entertaining any motion. Defendants’ counsel moved to dismiss the complaint, or that Philpot be made a party defendant, which was resisted by plaintiffs. The master, after reciting the facts, dismissed the complaint, under section 132, Code of Procedure, requiring that “every action must be prosecuted in the name of the real party in interest.” Plaintiffs appealed to the Circuit Court, and Judge Benet confirmed the master’s order dismissing the complaint, but without prejudice to the real party in interest to. institute such proceedings on the notes and mortgage in question as he may be advised. And now plaintiffs allege error as follows: “That his Honor erred in affirming the master’s order dismissing the complaint in this action, but should have allowed the same to be continued in the name of the original party, the plaintiff, C. G. Matthews & Co. Plaintiffs’ right to bring this action is not, and could not, be questioned. Their right to continue the action is the only point in issue. It will be borne in mind, also, that the facts upon which it is contended plaintiffs cannot continue this action, occurred after the commencement of the action. Now we know that, under the Code, facts occurring after the commencement of an action should be brought before the Court by supplemental complaint or answer, as the case may be. Code, sec. 198. This is the usual and orderly mode of shaping the pleadings so as to make admissible the evidence of such facts. But in the case at bar the facts relied on came out for the first time on the trial of the cause, and constituted a part of the evidence of the plaintiffs. So far as appears, the evidence was received without objection. It, therefore, cannot now be urged, in behalf of the plaintiffs, that before defendants can avail themselves of testimony offered by plaintiff, they should interrupt the progress of the trial and move for leave to file a.supplemental answer alleging such facts. The Code, sec. 197, provides: “The Court shall, in every stage of action, disregard any error or defect in the pleadings or proceedings,' which shall not affect the substantial rights of the adverse party; and no judgment shall be reversed or affected by reason of such error or defect.” If, therefore, it be conceded that the orderly mode of bringing such facts to the Court’s attention was by a supplemental answer on the part of the defendant setting up such facts, this Court will not reverse the judgment below for such error unless some substantial right of the plaintiff has been affected, especially in view of the fact that the plaintiffs themselves put the facts in evidence.

In considering this question we must bear in mind the full import of the admitted facts. It is conceded that the plaintiffs have been paid in full the debt for which the notes and mortgage were pledged as collateral, and the further important fact that plaintiffs have no longer any interest in the note and mortgage. What is one of a pledgee’s interests in the pledged collateral? Manifestly he has interest in the collateral, not only to the extent of the payment of the debt secured thereby, but also to the extent of the proper costs incurred in a suit to collect collateral. If, therefore, a pledgee after suit brought on the collateral has not only been paid the principal debt, but has no longer ■any interest in the collateral, it must be assumed, in the absence of any evidence contradictory, that the pledgee has amply protected himself in the matter of costs, as he had an undoubted right to do before yielding all interest in .the collateral. There is, therefore, not the slightest room in this case for the view that it was error to dismiss the complaint without providing for the payment of costs incurred by plaintiffs in this case. If plaintiffs had shown that while the debt secured by the collateral had been paid, the costs incurred by them in the suit on the collateral had not been paid, and for this reason were insisting on realizing on the collateral for this purpose, a different question might have been presented.

Appellant’s contention is that this case is controlled by section 142 of the Code, while respondents contend that it is controlled by section 132. The difficulty arises in the construction and application of these sections of the Code. Section 142, so far as relates to this controversy, is as follows: “No action shall abate by the death, marriage or other disability of a party, or by the transfer of any interest therein, if the .cause of action survive or continue. In case of death, marriage or other disability of a party, the Court, on motion, at any time within one year thereafter, or afterwards on a supplemental complaint, ’may allow the action to be continued by or against his representative or successor in interest. In case of any other transfer of interest, the action shall be continued in the name of the original party, or the Court may allow the person to whom the transfer is made to be substituted in the action.” This section then goes on to make other provisions in reference to abatement of actions in case of death, marriage or other disability. What is meant by “any other transfer of interest?” It must mean such a transfer of interest in the action (not including those arising from death, marriage or other disability), as would enable the transferee to claim under the original party. This is involved in t-he idea of allowing the party to whom the transfer is made to be substituted for the original party. The transferee, under this section, must derive his title or interest from or under the original party. Now, Philpot took no transfer from plaintiffs, he takes his interest directly from the pledgers, All, jr., & Co., who, at the time of their transfer to Philpot, had satisfied all the claims of the plaintiffs in the collateral. There is no evidence whatever that plaintiffs have made themselves parties to the notes, by endorsement or otherwise. Having no longer any interest in the collateral, they had nothing to transfer to Philpot. It cannot be said that plaintiffs, as trustees, are accountable to the parties entitled for the proceeds of the collaterals, and had a right to proceed in their own name to collect the collateral, and pay over proceeds to party entitled, for this would be inconsistent with the conceded fact that they 110 longer had any interest whatsoever in the notes and. mortgage. Under circumstances of this kind, we must give effect to the imperative requirement of section 132, which requires that “Every action must be prosecuted in the name of the real party in interest, except as otherwise provided in section 134, &c.,” which allows an executor or administrator, a trustee of an express trust, or a person expressly authorized by statute to sue without joining with him the person for whose benefit the action is prosecuted. It will be noted that the language is “-prosectited,” not simply brought or sited. This implies that the suit must be brought and continued in the name of the real party in interest, except as provided in section 134. The expression of exceptions to this positive requirement, wonld seem to exclude the idea that there are other exceptions.

But, beyond this, we repeatedly ruled that before a judgment of a Circuit Court can be overthrown in this Court, it must not only appear that there was error, but the error must be prejudicial to the rights of the party complaining. It is impossible, from the facts of this case, to see how,, even if there were any error, the plaintiffs have been harmed in the slightest. Having no interest whatever in this lawsuit, we cannot see why they should insist on keeping it alive in this manner, after defeating the effort to substitute the real party in interest. No one else is complaining. The defendants are satisfied, and the rights of the real party in interest are without prejudice.

The judgment of the Circuit Court is affirmed.