Bonde v. Stern , 73 N.D. 273 ( 1944 )

I agree with the views expressed by Chief Justice Morris, but am constrained to make the following comment:

The complaint alleges that on or about July 20, 1928 the above named defendants executed and delivered ninety notes or bonds, each in the amount of five hundred dollars, or forty-five thousand dollars in all; that to secure the payment of such notes or bonds they executed and delivered a trust deed on certain real property. A copy of such bond or promissory note is attached to and made a part of the complaint. Such bond contains an unconditional promise by the makers thereof to pay a certain sum of money, at a fixed future time to bearer, or the registered owner of the bond. The bond contains among others the following provision: "The liability of the undersigned hereon shall under all circumstances whatsoever, continue in its original force until the principal and interest are paid in full." All the bonds were sold for value to a number of individuals. Eighteen of the bonds were paid, and on January 6, 1938, seventy-two of the bonds remained outstanding, on which interest payments were in default — interest being due thereon from and after August 1, 1936.

On January 6, 1938 the defendants, the makers of the bonds, and the trustee named in the trust deed entered into the written agreement, referred to in the majority opinion and also in the dissenting opinion of the Chief Justice, a copy of which agreement is attached to and made a part of the complaint.

The agreement provided that upon approval thereof by the owners of the bonds, the trustee should proceed with the foreclosure of the trust deed, and that all the expense of the foreclosure, with the exception of seventy-five dollars, should be paid by the defendants. It further provided that a portion of the past due interest and certain taxes should be paid by the trustee from moneys in its possession that had been received as rental, and that if the funds in the trustee's hands were not sufficient to enable the trustee to make such payments, that then the makers of the bonds would pay to the trustee the additional amount required. It further provided that if and when sheriff's deed was issued to the trustee on foreclosure, the makers of the bonds would pay any taxes remaining due and unpaid and all back interest at the rate of four per cent per annum, and that the trustee would then transfer the real property to the makers of the bonds (the defendants) "or the survivors of them then living," and that the said makers of the bonds would thereupon make and execute to the trustee, or to such other trustee as the majority of the bonds outstanding under the trust deed should select, "their joint and several obligation, in amount $36,000.00, in units or bonds of $500.00 each, secured by a mortgage on the property herein described."

The agreement also contained the provision quoted in the dissenting opinion of the Chief Justice, whereby it was specifically stipulated that the agreement should not be construed to release the makers of the bonds, their heirs, legatees, executors, or administrators from their joint and several personal obligations to the owners of the bonds then outstanding under the trust deed of July 20, 1928, and "that if there is any breach of this agreement by first parties or of the new mortgage and trust deed to be given as herein provided, . . . any individual bondholder, his heirs or assigns, shall be privileged to thereupon proceed personally against first parties, or any of them, their administrators, or executors, as though this agreement had not been made."

It is alleged that the defendants breached the agreement and refused to perform their obligations thereunder, and that all the bonds, numbered 19 to 90 inclusive, each in the amount of $500.00, are past due, and that "there is now due on each bond the sum of $500.00, with interest, etc." The agreement of January 6, 1938, does not provide for surrender of the bonds issued in 1928 by the holders of such bonds, and the acceptance of new bonds in exchange and discharge thereof. It was clearly the understanding of the parties to the agreement that the holders of the then outstanding bonds should retain such bonds notwithstanding the issuance of new bonds, as the agreement provides not only that the owner of any such bond shall have the right to proceed personally against the makers of such bond in case "there is any breach of this agreement by first parties" (the makers of the bonds), but that the owner of such bond shall have the right to so proceed and enforce the personal obligation of the makers "if there is any breach of . . . the new mortgage and trust deed to be given as herein provided."

In this action there are 30 named plaintiffs, who according to the title of the action and the allegations of the complaint are suing "for themselves and for all others similarly interested." According to the allegations of the complaint the 30 named plaintiffs are the owners of 49 of the bonds; five persons who owned six of the bonds have sold the same to the defendant, Stern; and the remaining seventeen bonds are owned by twelve persons, who are not named as parties to the action, and, hence, must be those whom the named plaintiffs intended to include in the designation "all others similarly interested."

The complaint obviously sets forth facts showing a cause of action in favor of each of the named plaintiffs and against the defendants. The holder of each bond has a separate cause of action upon the personal obligation of the makers. Such cause of action is in no manner affected by the cause of action of the owner of some other bond. The amount payable by the makers of the bonds pursuant to their personal obligation to the owner of one bond is in no way dependent upon what is due from them upon their personal obligation to the owner of another bond. Each owner has a separate individual right against the makers upon the personal obligation to him. Kelley v. Gill, 245 U.S. 116, 120, 62 L ed 185, 188, 38 S. Ct. 38, 40 Am Bankr Rep 421. There is no joint or common interest in the payment, which the makers of the bond have personally obligated themselves to make. Nahte v. Hanson,106 Minn. 365, 366, 119 N.W. 55.

A separate money judgment is demanded in favor of each plaintiff for the amount due from the defendants upon their personal obligation to such plaintiff. If judgments are obtained there will be no common interest in the judgments; each judgment will belong solely to the plaintiff who as owner of a particular bond or bonds is awarded recovery thereon.

There is not a suggestion that it is sought to enforce the written agreement of January 6, 1938 or to recover damages for breach thereof. The amount sought to be recovered by each plaintiff is the amount which it is alleged is due upon the bond or bonds owned by him. The trustee, who is one of the parties to the agreement of January 6, 1938, is not even made a party to the action. No right or interest of the owner of any bond can be affected in any manner by the success or failure of the owner of any other bond. No right or interest of the owner of a bond can be affected by whether the owner of any other bond brings action to recover the amount due on the bond, or whether he brings action to recover damages for the breach of the agreement of January 6, 1938, or whether he brings action at all.

In my opinion our laws do not authorize joinder of actions such as has been attempted here. Section 7403, Comp. Laws 1913 limits the union of parties as plaintiffs to those "having an interest in the subject of the action and in obtaining the relief demanded." Under this section, "all who would unite must be interested in the subject of the action and in the relief." Though one may be interested in the matter or thing concerning which the action is brought, "unless he is also interested in the relief which is sought by another, he is not permitted to unite with him." Bliss, Code Pleading, 2d ed, § 76. Here each plaintiff seeks separate and individual relief. As was well said by the Chief Justice in his dissenting opinion in this case: "No common relief is sought. . . . They (plaintiffs) do not have a common interest in either the subject of the action or in the relief demanded."

Section 7466, Comp. Laws 1913, (relating to Joinder of Actions), in harmony with § 7403, supra, provides that in order to be united in the same complaint, the causes so united "must affect all the parties to the action."

Under this section, "separate causes of action against the same defendant in favor of several persons cannot be united, even though their causes of action arise out of the same transaction." 14 Standard Enc. of Procedure, pp 677, 678; 1 Am Jur 466, Actions, § 79; Noroian v. Bennett, 179 Cal. 806, 179 P. 158; 1 CJS pp 1274 et seq.

The limitations on the joinder of actions prescribed by § 7466, supra, are not removed by the proviso in § 7406, Comp. Laws 1913, that "when the question is one of a common or general interest of many persons, or when the parties are very numerous and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole."

Said § 7406, supra, does not relate to joinder of causes of action; it relates to parties. It was not intended by this section to provide for the joinder in one action of separate causes of action owned by different plaintiffs against a common defendant. Brenner v. Title Guarantee T. Co. 276 N.Y. 230,11 N.E.2d 890, 114 A.L.R. 1010; Pemberton v. Board of Education,67 Ohio App. 175, 36 N.E.2d 170. See also Rogers v. Boston Club,205 Mass. 261, 91 N.E. 321, 28 LRA(NS) 743; Burke v. Scheer, 89 Neb. 80, 130 N.W. 962, 33 LRA(NS) 1057; Kelley v. Gill, 245 U.S. 116, 62 L ed 185, 38 S. Ct. 38, 40 Am Bankr Rep 421; Van Auken v. Dammeier,27 Or. 150, 40 P. 89.

The rule embodied in said § 7406, supra, "is in harmony with the requirement that all the parties plaintiff must have a joint or common interest, and the interest of the parties represented must appear to be such as to entitle them, were they all before the court, to maintain the action in thir own names." Bliss, Code Pleading, 2d ed p 121.

"The right which the suit is brought to assert must in some manner or degree belong to all who are represented by the actual plaintiff; and all the persons who are represented by the actual defendant must have some interest adverse to the demand for relief set up by the action." Pomeroy, Code Remedies, 5th ed, p 441.

As said in the majority opinion, § 7406, Comp. Laws 1913 was borrowed from New York. In construing and applying such provision in the Code of New York (Brenner v. Title Guarantee T. Co.276 N.Y. 230, 18 N.E.2d 890, 114 A.L.R. 1010, supra), the New York Court of Appeals said:

"Its purpose was not to provide for the joinder in one action of separate causes of action owned by different plaintiffs. Its purpose was rather to retain `in the new practice the same rules by which to determine whether the proper parties were before the court, which then prevailed in the court of chancery.' McKenzie v. L'Amoureaux (1851) 11 Barb. 516, 518. In those cases where it applied, one person may prosecute a cause of action or interpose a defense for the benefit of others, who are not parties to the action, but only where they might properly be joined as parties because they have a common or general interest or are united in interest."

There is no common or general, or union of, interest on the part of the several plaintiffs in the several individual causes of action which it is sought to unite in the complaint in this case.

As said, according to the allegations of the complaint the 30 named plaintiffs are the owners of 49 bonds. But they are not joint owners, they are several owners, each of his own. The cause of action in favor of the owner and against the makers of each of the several bonds upon the promise to pay is not joint, and does not belong to the owners of all the bonds. There is a separate written agreement to pay between the makers, and the owner, of each bond. The owner of each bond has a cause of action for the breach of the personal obligation of the makers, and the owners of the other bonds have no interest therein. If the owner of a bond brings action against the makers of the bond for breach of their agreement to pay, the owners of other bonds will not be necessary parties to such suit.

Here 30 persons, owning separate and individual causes of action against two common defendants seek to join them in one action. There is no warrant under the laws of this state for such joinder.