Roane v. Pickett, 7 Ark. 510 (1847)

Jan. 1847 · Arkansas Supreme Court

7 Ark. 510

Roane et al. vs. Pickett.

Where a creditor applies to a court of equity for its nid in the collection of his debt, against securities, a simple allegation of the death of the principal debtor and his insolvency, will not excuse the omission to make his representatives a party to the bill: but it must appear that he is so destitute of all property that no valuable portion of the debt could be made out of his estate.

The grants, powers and privileges conferred upon the original trustees of the Real Estate Bank have passed entirely from them and vested in the Residuary trustees.

Appeal from, the Chancery side of the Crawford Circuit Court.

This was a bill in chancery, filed by Sam. C. Roane and others, Trustees of the Real Estate Bank, against Robert S. Gibson, one of their number, and George G. Pickett, determined in the Crawford circuit court at the Sept, term 1844, before Brown, judge.

The bill alleged that on the 13th April 1841, defendants and one Wharton Rector executed their joint and several note, whereby the said Rector as principal, and the defendants as his securities promised to pay, twelve months after date to said Bank, or order, $4,000, which note was discounted by the bank. That on the 2d April 1842, the bank, by deed of assignment, conveyed, assigned and transferred to complainants, and defendant Gibson, as trustees, and to their successors and survivors, all and singular its estate, real and persona], goods, chattels, moneys, credits, choses in action, rights andpnterests of every name, nature and description whatsoever, in trust for the payment of all debts &c., and among the assets so conveyed was the note aforesaid. “That said Rector departed this life insolvent, leaving said note wholly unpaid,” &c. The bill prayed a decree against defendants for the amount of the note. A copy of the note, and of the bank’s deed of assignment were exhibited.

Defendants demurred to the bill, because the legal representatives of Rector were not made defendants, the court sustained th© demurrer, dismissed the bill, complainants refusing to amend, and complainants appealed.

In this court, the death of Gibson was suggested, and the cause» progressed against Pickett.

Oldham J. did not sit in this case.

Pike & Baldwin, for the appellants.

The note sued on in this case was by law joint and several. At law the plaintiff clearly had the right to sue one, two or more of the parties, and at law could not join the representatives of a deceased party.

It was settled in Collins vs. Griffith, 2 P. Wms. 313, by Lord Chancellor King, that in case of a joint and se veral bond, the obligee might sue one of the obligors alone, or else there would be no difference in equity between a joint bond, and a joint and several bond; and he remarked that, if the obligors must all be joined in case they were living, by the same reason, if they were dead, their heirs as well as executors must be made parties, and then, as it would be difficult to commence the suit, so, when commenced, it would be subject to continual abatements, which would be a great difficulty on an honest creditor who had fairly lent his money. The demurrer there was overruled with great clearness. See also, Barker vs. Wyld et al. 1 Vern. 140.

The bill in this case states that Rector has died insolvent; and it has been often held that, even if it were otherwise necessary to make a joint and several obligor or promissor, or his representatives, a party, the allegation of insolvency obviated this necessity. Cock-burn vs. Thomson, 16 Ves. 326. Laioson vs. Wright, 1 Cox 275. Madox vs. Jackson, 3 Atk. 406.

The two who were sued here were only entitled to have their co-obligor and principal made a party, on the ground that they were entitled to relief over. This ground is removed by the allegation of insolvency.

E. H. English, contra.

The complainants were compelled to sue Gibson in chancery, because he was their co-trustee, and could not join in a suit against himself at law. They might however have sued Gibson in equity and the other parties at law, but for' the rule that equity abhors a multiplicity of suits, and being compelled to come into chancery against one party, they were bound to bring the others in to avoid a suit at law also.

But they have violated the rule which gave them a right to bring' Gibson’s co-security into equity — they have sued the securities alone, and seek to make the debt out of them, and leave them to' sue Wharton-Rector’s representatives for the money thus forced out of them. To avoid and prevent that multiplicity of suits, which chancery sets her face against, the complainants were bound to-join the representatives of Rector, the principal, in the bill.

They were bound to do it on another ground. The bill shows that Rector was principal in the note^ — that he got the benefit of its consideration — and that Gibson and Pickett were merely securities. In chancery, the undertaking of the surety is declared to be, that he will pay the debt if it cannot be made out of the principal — and equity requires the creditor to exhaust the means of the principal before it will aid him to make the debt out of the securities — securities are much favored by equity. See on this subject, Hempstead 4" Conway vs. Watkins ad. of Byrd, 1 English — and cases there cited.

Chancery therefore requires the complainants to join Rector’s representatives in the suit, that judgment may be obtained against them, and the debt made of Rector’s estate, if possible, before the property of the sureties is touched. He who seeks equity must do equity. Equity will not permit complainants to have judgment against the sureties, and allow the debt made out of them, while the estate of the principal, who is first liable, is not proceeded against at all.

The complainants, therefore, to excuse themselves for not mak-’ ing Rector’s ad’rs parties to the bill, should have averred that he' died utterly insolvent, that the debt nor any part of it could be made out of his estate.

This they failed to do. They allege that he “ died insolvent:’? grant it: yet may not his estate have been able- to pay something, 25, 50, or 75 per cent on the dollar. If an estate is not able to pay the full demand of all its creditors, it is termed “insolvent,” but still it may pay a prorata.

It is submitted therefore whether complainants should not have made Rector’s adm’rs parties, or have averred his estate utterly “insolvent”? And if so the demurrer was properly sustained to their bill.

Conway B, J.

The trustees of the bank filed their bill of complaint against the defendants alone on a note for $4,000, made to' the bank by Wharton Rector as principal and defendants as sureties. The bill alleged, among other things, that Rector had departed this life insolvent leaving the note wholly unpaid. Defendants demurred to the bill and assigned as cause the omission to make the legal representatives of Rector a party. The demurrer was sustained, and complainants declining to amend,-their bill was dismissed and an appeal granted them.

The only question presented by counsel, is, whether the allegation in the bill that Rector had died insolvent, superseded the-necessity of making his legal representatives a party to the suit. The rule is that the complainant suing on a joint and several note-must bring forward all the makers of it, that the court may be enabled to do complete justice in the case. But this is a general-rule established for the convenient administration of justice and there are exceptions to it. If, for instance, it be alleged in the bill that any of the makers of the note are out of the jurisdiction of the court, dead or insolvent, they may be omitted, but an allegation of simple insolvency will not excuse the omission ; especially of the principal in the note. For a man may be insolvent and yet able to pay a considerable proportion of his debts. To justify the leaving out of the principal it must appear that he is so destitute of all property that no valuable portion of the debt could be made out of his estate.For equity regards securities as mere guarantors of the principal’s ability to pay the debt and requires the creditor to obtain as much-of his money from the principal debtor as practicable and to hold* the sureties responsible only to the extent of the principal’s inability. 2 Term. R. 127. 3 Atk. 406, Madox vs. Jackson. 3 Swanst. R. 147, Augustein vs. Clarke. 16 Ves. Ch. R. 326, Cockburn vs. Thompson. 2 Story's Eq. 741-2. 2 Mad. Ch. 193.

There is another question arising in this case which we deem it our duty to notice. The appellants sued in the court below, as Trustees of the Real Estate Bank, and as such now prosecute this appeal. The deed by which they claim to have been constituted the trustees, was executed the 2d of April 1842, and contains the following clauses: “ And it is further declared and agreed by and between the parties hereto that at the expiration of two years from the date of these presents the said trustees or a majority of them shall meet at Little Rock on a day to be fixed by said Executive Board, and there elect five of their own number who shall thereafter be sole trustees” &c. “ And finally that all of the grants hereby made to, the powers vested in, and privileges conferred upon said trustees shall at the expiration of two years from the date of these presents enure, pass to, and vest absolutely, fully and completely in said residuary trustees alone.”

From the terms of the deed therefore it clearly appears that all of the grants, powers and privileges conferred upon appellants as Trustees of the Real Estate Bank have long since passed entirely from them and vested wholly in their appointed successors.

Decree affirmed,-