McDougald v. Dougherty , 11 Ga. 570 ( 1852 )

By the Court.

Lumpkin, J.

delivering the opinion.

William Dougheriy, in behalf of himself and other creditors of Daniel McDougald, deceased, filed his bill in Equity, in the Superior Court of Muscogee County, against Seaborn Jones, Ann E. McDougald, Alexander McDougald, and Duncan Mc-Dougald, returnable to the May Term, 1851, of said Court. The bill alleged, amongst other things, the execution and delivery of the deed of trust, by the said Daniel McDougald in his lifetime, to the said Seaborn Jones and one Robert B. Alexander, for the benefit of his said creditors; the acceptance thereof by the said trustees, and the subsequent death of Alexander, and prayed for the removal of Jones on account of his misconduct and refusal to perform said trust, the substitution of another trustee in his stead, and the appointment of a receiver in the meantime, to take charge of, preserve and manage, the trust property.

On the 9th of April, 1851, on the hearing of complainant’s application, one Adolphus S. Rutherford was, by the order of the Court, appointed receiver, being required before entering on his duties as such, to enter into bond with good security, payable to the Governor of the State, in the sum of ten thousand dollars, for his good conduct.

A motion was made, that the order appointing Adolphus S. Rutherford receiver, be revoked and rescinded, on a great variety of grounds, to wit: Because there was never any legal execution and delivery of the deed of trust; that no creditor ever accepted the appointment} and the provisions thereof; that the grantor retained the deed, together with the property and the titles to the same, in his own possession, and previous to his death destroyed the conveyance ; that Mrs. Ann E. McDougald tendered to the complainant, Dougherty, the sum of $1,300, an amount sufficient to pay off and discharge the whole of his debt, principal, interest and cost; that the receiver was appointed without notice or the service of the bill upon any of the defendants, except Jones; that Rutherford, at the time of his appointment, was Deputy Sheriff, and is now acting Sheriff of Muscogee County; and that his duties as receiver and Sheriff, are, or may be, in conflict with each other; that the deed of assignment, even if duly executed, is void ; that there is in the hands of the administratrix of Daniel McDougald, assets ample to pay complainant’s debt; and besides, there are other persons liable and bound for the same, who are entirely solvent and responsible, and out of whom the demand might be collected; that the bill, although nominally a creditor’s bill, is alone the bill of the complainant Dougherty, and when the amount due hirn is paid or tendered it is the right of the defendants, to have the order appointing a receiver annulled; that the security required of the receiver, is too small — is not payable to the proper party— is illegal and improper in its condition, and is in other respects void; that the whole proceedings in the appointment of receiver, and the subsequent action in relation thereto, are irregu-. lar, informal, and unauthorized by the rules of practice of a Court of Equity, or by Equity or Law ; that because the answer of the defendant fully swears oft all the Equity contained in the bill, and because the said defendant, Duncan McDougald, has again tendered, and now before the Chancellor tenders and offers to pay said complainant, the entire amount of principal, interest, and cost due on said debt, and cost of the pending suit, namely, #1,300.

I shall not attempt to examine every point made in this heavy record, which we have scrutinized with great care and attention, but shall endeavor merely to touch upon the main questions which it presents.

[1.] Counsel for the plaintiffs in error have totally iqipapprebended the nature of this bill. It is not a bill of quia timet, nor in the nature of such a proceeding.

[2.] A creditor has two resources for paying his debts ; either to pursue his debtor personally in his lifetime, or his estate since his death; or to ask the aid of a Court of Equity, to enforce a trust which the debtor had created for his benefit, in common with the other creditors. He resorts to the latter course, and he is clearly entitled to the assistance of Chancery, to have the trust executed. Hence, in writing out the opinion delivered by the Court in this case, when it was up before, twelve months ago, I stated that the allegation in the bill, that there were other fi.fas. which would hinder or delay the creditor, if he attempted to proceed with his execution at Law, to enforce his judgment lien, was not the foundation of his equity; nor did it give to the Court its jurisdiction. That it was upon another and altogether different principle, namely: the application of one creditor in behalf of himself and all others, who choose to come in, to enforce the execution of a trust made for their benefit.

Neither is the appointment of a receiver, under such a bill, predicated necessarily, upon the apprehended loss of the debt. It would be sufficient to allege that the trustee appointed refused to perform the trust; and that of itself, would be ground enough to authorize the Court to appoint a receiver; and this simple, ■but true exposition of the nature and object of this proceeding, will strip it at once of many of the difficulties which have been thrown around it.

All the law points adjudicated by this Court, in this case, at this place in July, 1851, (10 Gen. Rep. 273,) stand affirmed, upon the facts which were then before us. For while we do not profess to be bound by the authority of our decisions, “ as firmly as the Pagan deities were supposed to be bound by the decrees of fate,” still we must be clearly convinced of their error, before we shall fee] it to be our duty to overrule them.

All the issues made by the answers, such as the denial of the delivery of the deed of trust, and its acceptance by the creditors; the allegation that the assignor kept the deed, and also, the property and titles to the same, in his possession, and before his death revoked the deed by destroying it; that there is in the hands of the administratrix of Daniel McDougald, assets amply sufficient to pay complainant’s debt; and that there are other solvent persons bound for the same — are matters in pais, dependent on the proof; and conceding that the material facts stated in the bill, are flatly denied, ne'verthless, we should continue the receiver until the final hearing. •

Whether the security required of the receiver was sufficient, and Mr. Rutherford a suitable person to fill the office, are matters of discretion ; and having no evidence that the power thus entrusted to the Court, has been wantonly or injuriously exercised, we shall not undertake to control his judgment in these particulars.

[3.] It is objected that the whole proceedings, in the appointment of a receiver and the subsequent orders in relation thereto, were irregular. I would remark that these proceedings before a Master, are in the nature of an informal bill in Equity ; and supervisory Courts will not interfere, unless substantial errors or defects exist.

[4.] If any great right or public policy has been violated by the Master, relief will be afforded otherwise. Not much is left to the discretion of the Master. We see nothing, in our opinion, which amounts to this, so far as the formal objections taken to the various rulings of the Circuit Judge, sitting as a Master in Chancery, are concerned. He has performed the most arduous services, voluntarily and gratuitously, and for which, as an example, he deserves well of the country.

[5.] This extra-judicial mode of investigation, is of very great advantage, by relieving the Court at its regular terms, from the performance of burthensome duties, and thus enabling it to exercise its regular jurisdiction in a much more beneficial manner. (See Jeremy's Equity Jurisdiction, 292, 293.)

[6.] Let us briefly consider, however, some of the more important points of this case. And first, is the tender proven here, sufficient to require the removal of the receiver ? Candor compels me to confess that for myself, I have grave doubts upon this question. Had the tender been formally pleaded, which it is not, and which is of itself a good reason for not allowing it, and had it been made by Mr. Jones, the assignee, or by Mrs. McDougald, as the administratrix of her deceased husband, who owed the debt, and whose estate is liable for its payment, after she had been made, in her representative character, a party defendant to the bill, I should feel constrained, upon principle as well as authority, to compel the plaintiff to accept it, and to arrest his bill till he did. It is noi made however, by the party who is the debtor and ■ defendant in this case. It is made by Mrs. Ann E. McDougald and by Mr. Duncan McDougald, against whom no decree is prayed, and for the payment of Daniel MoDougald’s debt. Whether the reasoning applies 'to them, I am not prepared to say; the cases cited certainly do not go so far.

[7.] The reply of the defendant in error, that inasmuch as one creditor could not sue alone, to enforce this trust, that payment to him cannot arrest the suit, is not satisfactory. True, one creditor cannot sue alone, to enforce payment of his demand, out of a common trust fund, which has been set apart for himself and others. Story's Eq. Pl. §. 157. He must allow others to come in under the decree, and share in the proceeds.

[8.] But this, we apprehend, does not interfere at all, with another equally well established doctrine, that up to the time of the decree, it is a suit only between party and party, and the plaintiff is dominus litis, or master of his own case. He may dismiss or compromise it, or make any other disposition of it which he sees fit; and as a correlative right to this, the defendant may tender satisfaction, and compel him to accept it.

The tender, I repeat, not having been formally pleaded, and not having been made by the debtor party, we will leave this principle undisturbed for the present.

[9.] As to the several orders which were passed, requiring Ann E. McDougald and Duncan McDougald to deliver up to the receiver the property in their possession, because it was contained in the deed of assignment, we are clear, that no Judge in this State, sitting either as Master or Chancellor, possesses such power.

[10.] This property was held by third persons, who claimed adversely to the deed of trust, and who, by their answers, attacked the validity of that instrument. A Chancellor in Kngland would hardly venture to decide upon such a disputed title, without the aid of a Jury. It is conformable, I know, with the practice of the British Chancery, and is considered there peculiarly proper, when titles are disputed, especially in relation to land, to desire an inquisition by a Jury. And Mr. Maddock, (in his Chancery, 2 vol. p. 276,) says, that “ In all doubtful cases, the Court will direct an issue, in order to relieve its own conscience, and to be satisfied by the verdict of the Jury, of the truth or falsehood of the facts controverted, lest taking it upon itself to pronounce decidedly, a matter of such uncertainty, it might do injustice to one of the parties, by determining against the real truth of the fact.”

If a Chancellor in England would not undertake to decide upon antagonist facts and deductions, but would summon a Jury to his aid, much less will a Master in Chancery, in this State, claim to exercise this right without the aid of an inquisition.

[11.] Their province is, and by far the most extensive branch of their cognizance, to investigate accounts; to make sale of property under a decree in Equity ; and for the purpose of facilitating their inquiries, and rendering them more effectual, they are often empowered to examine witnesses, or even parties to the cause. In England, they are often called upon to examine titles to estates, and to settle conveyances. But even the business of examination merely, is rarely confided to the Master here, much less the power of passing upon them.

And this view applies to all the property in the hands of Duncan McDougald. For even as it respects Peter, the negro that he purchased of Daniel McDougald, in 1847, the year after the assignment was made, controverting as he does, the legality of that deed of trust, this slave should not be wrested from him, except by due course of law. Admitting that the conveyance is valid, it may be well doubted how far the title of a hona fide purchaser from Daniel McDougald, who was in possession of the property when he sold, would not be protected, and the transfer made two years before any creditor had signified his acceptance of the trust.

As to the wharf lots, they stand upon a different footing. Duncan McDougald sets up no title to them. To the extent, however, that the order directed peremptorily Duncan McDougald to account to the receiver, and for a specified amount, we think it was wrong. He leased these lots of a Company, of which the deceased was a member; and consequently, the receiver in this, as in all other respects, is remitted to the rights which the assignor held in this, and all other property embraced in the deed; and he must assert these rights according to law.

As to Mrs. Ann E. McDougald, she too contests the validity of this assignment. Her husband died intestate with the property which she holds in his possession. Notwithstanding the deed had been executed more than four years previously, she administered on his estate, took possession of it, and had it inventoried. She has given bond and security for its safe keeping and faithful administration; and under these circumstances, until the title is litigated and settled by a decree, we do not think that she ought to be ousted or dispossessed in this summary mode.

If the receiver conceives that any portion of the property in dispute, is in danger of being eloigned, or otherwise wasted or mismanaged, he has all the remedies at his command, both at Law and in Equity, to prevent any detriment to the creditors.

As to the money collected by Mrs. McDougald of Dr. Tomlinson Fort, on the debt which is set forth in the deed of assignment, even if that conveyance is established — if it has been duly administered by being paid to a judgment in favor of the Mechanics’ Bank, one of the oldest, if not the oldest, against Daniel McDougald, and with which the trust would be charged, the Jury upon proof of these facts, would on the hearing of the bill, allow her this credit, or subrogate her to the rights of the creditor for this sum.

[12.] A question of practice, as to the mode of interrogating parties by the Master in Chancery, is urged upon the consideration and determination of this Court. Its settlement, the one way or the other, can in no wise affect or change the result in this case. The question is, shall a party to a suit, when examined by the Master in Chancery, be interrogated viva voce, or shall interrogatories be filed in writing, to which he shall make answer.

[13.] In England, we believe that witnesses are sometimes examined viva voce. (Smith’s Ch. Pr. 147, 148.) And if parties submit to a viva voce examination, it would not vitiate the proceeding. Indeed, for ourselves, we believe that in the case either of witnesses or parties, that the viva voce mode is unquestionably the better practice, in order to search the conscience .and extract the truth. We believe, however, that in case of parties, the regular course is for counsel to prepare written interrogatories, which are submitted to the Master for his approval; and when approved, are handed over to the party to be examined who being allowed a reasonable time, returns his answer to the same. Smith’s Ch. Pr. from 122 to 125, and the authorities there cited. If additional interrogatories are deemed essential, they are to be prepared and executed in the same manner.

The party has a right to demand this, and it is aright of which he cannot be deprived, against his will.

Interrogatories to the parties are provided for the same purpose, as are interrogatories in a bill. They are substituted for the latter as a more convenient mode, to extract the truth from the conscience of the defendant. And as the party interrogated by the bill, is never required to submit to an oral examination, neither should he be, before the Master. It is unnecessary to enlarge upon this rule.

Thirteen interrogatories were propounded to Duncan McDougald. Defendant’s solicitors demurred to, or objected, as the bill of exception states, to the defendant, Duncan McDougald’s answering any or either of said interrogatories, on ten grounds, which are stated.

[14.] To elucidate the folly under our improved and enlightened Judiciary, of sticking in mere matters of form, for whichj profess to have no taste whatever, I would state, that if this exception is to be decided on the form, then itis certainly not well taken. For the rule is, that if one general exception is taken to th'e Master’s certificate, approving of all the interrogatories, the party excepting will succeed, if he shows that the Master was wrong in allowing any rule ; but if the exception is because the Master ought not to have allowed any, then if any one was proper to be allowed, the general exception fails as to all; and the Vice Chancellor, in Moore vs. Lankford and wife, (6 Simons, 323,) said that the distinction was so obvious, that he could not conceive that any person could have any doubt upon the subject. Ac etiam, Pearson vs. Knapp, T. M. and K. 312. Kothun vs. Best, 1 Beavan, 380. Hopkinson vs. Bogster, 1 G. C. 13.

Now while we might grant that a portion of these interrogatories were objectionable ; yet we are clear, that there were others which were right and proper to be answered. The exception, consequently, must fail as to the whole.

[15.] At the May Term, 1852, of the Court, the complainant was allowed to amend his bill, by making Edward Carey, assignee, John Banks and others, parties complainants, and Ann E. McDougald as administratrix, a defendant; and other alterations were made to correspond with this change of parties. It was further ordered at the same time, that Ann E. McDougald, as such administratrix, be served with a copy of said bill as amended, at least sixty days before the next term of the Court; and that she plead, answer or demur, to such bill as amended, not demurring alone, on or before the first day of said next term; that the other defendants be served with a copy of the amendment, sixty days before the next term of the Court; the complainant expressly waiving the answer of the other defendants, to said amendment to said bill.

In the first place, was it allowable to make this amendment ? With respect to this point, there can be no doubt. New parties may be introduced upon the record, either as plaintiffs or defendants. It is a familiar practice to allow a creditor, suing for his own private debt only, to amend his bill at the hearing, by converting it into a bill on behalf of himself and all other creditors. Milligan vs. Mitchell, 1 Mylne and Craig, 433. Hichens vs. Congreve, 4 Russell, 592. In Attorney General vs. Newcombe, (14 Ves. 1,) Lord Eldon said, he should allow an informality in the bill in not stating that the plaintiffs sued on behalf of them selves and all others interested, to be amended even at the hearing. And it seems that whether the parties introduced on the record are made plaintiffs or defendants, is utterly immaterial; the only restriction being, that a plaintiff who amends under such considerations, shall not be permitted to make a different case. No new case is made in this record; it is still the creditors of McDougald, seeking to enforce the execution of the trust made for their benefit; and the only new matter introduced in the amendment, consists of allegations and charges explaining the claims of the new plaintiffs. As it respects the addition of Mrs. McDougald as administratrix, as a party defendant, we think it was entirely proper that she should be brought in. The protection of her intestate’s estate, who is the debtor, made this amendment almost as desirable to her, as it was made indispensable to the plaintiff. But this being a sworn bill, we are of the opinion that the Court erred in allowing the complainant to make a material amendment, not verified either by the affidavit of the orriginal or the new parties.

It may -not be absolutely necessary to decide whether or not the time given to Mrs. McDougald, was sufficient; situated as this case was, under the amendment. She was introduced for the first time, upon the record, as a party defendant, and that too, in her representative character; and she was required to plead, answer, or demur, at the next Term of the Court, after being served with the amendment. The amendment consisted of making numerous other creditors of her deceased husband plaintiffs to the bill; and their various demands were inserted, and she required to answer them.

[17.] Every amendment is an indulgence given by the Court, and is granted to the mistakes of the parties and with a view to save expenses.

[18.] But when this indulgence is allowed, the Courts should see to it, that it is done upon such terms as that injury may not arise to others, who are not'in default.

[19.] And if the new matter brought into the bill by way of amendment will affect either the parties to it or strangers, it should not have relation !>ack to the time of filing the original bill; but the suit will be considered as pending, only from the time of the amendment, Story’s Eq. Pl. §. 904.

For myself, I must say that a fair and liberal indulgence to prepare her defence, was not extended to this defendant, who was an innocent party.

[20.] The only other matters to be noticed, is the protest of Seaborn Jones, against signing the draft of the deed to Rutherford, the receiver. After specifying the property contained in the original assignment from McDougald to Jones, the copy continued thus : “ Now this indenture made this thirteenth day of February, eighteen hundred and fifty-two, between the said Sea-born Jones, as such surviving trustee, of the one part, and the said Adolphus S. Rutherford, as the receiver, of the other part, witnesseth, that the said Seaborn Jones, as such surviving trustee, for and in consideration of the premises, and in obedience to the order of the Court, hath aliened, conveyed and assigned, released and relinquished, and quit claim, and by these presents, doth alien, convey and assign, release and relinquish, unto the said Adolphus S. Rutherford, as such receiver as aforesaid, the aforesaid property and effects, together with all the rights, title, claim to, or interest vested in the said Seaborn, as such trustee, by virtue of said deed of the said Daniel McDougald, fycP

Jones objected to executing the deed in the form as above set forth, and asked that he might be allowed to insert in said deed, “ that though signing the same, he, said Jones, protests that he does net thereby admit that said alleged deed of trust is, or ever was, valid or binding in any way upon him; or thereby admits that the recitals contained in said proffered draft of a deed, or the recitals contained in the orders slated in said draft deed to be true.” He further objected to executing the same as presented, because “ he is thereby made to convey away certain pieces of property which are his own, namely: Lot No. 173, in said City of Columbus, commonly called the Shylock Comer ; and also lot No. 184, in the same city, which he claims adversely to said alleged trust deed, and because no reservation or provision is made in said deed, for the protection of the said Jones, in reference to his right or claim to said lots.”

The Judge overruled these objections, and refused to allow Jones to insert his protest; and also, overruled his objection to executing the same, on other grounds, and required him (Jones) to sign the draft deed as presented.

Our judgment is, that it was wholly unnecessary for Mr. Jones to make this protest; that he conveyed away no rights or interest, except such as were vested in him os trustee, by virtue of the deed of assignment from Daniel McDougald; that he could not be prejudiced by any recitals in this copy paper, it being executed by him in invitum, under the order of the Court. I have serious doubts, as to the propriety of requiring this transfer to be made. The appointment of the receiver vested in him the authority to control this property, while his office continued.