Minnesota Company v. Chamberlain Graham Scott/Opinion of the Court

These two appeals present the same controlling question to be decided upon the same facts and principles. That question is, Were the lease made to Chamberlain and the judgment confessed in his favor by the La Crosse Company, annulled as between the parties to the lease and judgment by the decree of 1859, or only as against Cleveland, the judgment creditor, in whose suit against the company and Chamberlain the decree was rendered? It was the manifest intention of the Minnesota Company, in the bill filed by it, as the pleadings show, to seek a decree in this suit only upon hypothesis of the nullity of the Cleveland judgment, and the prayer for particular relief was framed accordingly. We are also informed by counsel that there is now pending in the Circuit Court of the United States for the District of Wisconsin, a suit, brought by the company against Chamberlain, for the direct object of setting aside the contract between Chamberlain and the La Crosse Company. In disposing of the cause before us, therefore, we shall not inquire whether that contract was or was not one which the La Crosse Company could legally make, nor whether the contract and the judgment were or were not in law void absolutely or as against creditors only. These matters may be better and more regularly investigated and passed upon in the cause now before the Circuit Court, and, if necessary, upon appeal from the decree in that cause. At present we shall only inquire into the effect of the decree of the District Court upon the article of agreement and the judgment which it declared to be void.

We have seen already that, according to the allegation of the Minnesota Company in their bill now before us, the issue between Cleveland, the complainant, and the La Crosse Company and Chamberlain, the respondents in the cause in which that decree was made, was upon the question whether the agreement and judgment were or were not void as against Cleveland and his judgment. The decree was evidently intended to determine that issue. It was, as evidently, not intended to determine the question whether the making of the agreement was beyond the corporate powers of the La Crosse Company, for there are no terms which affirm its inherent invalidity without regard to intent. It is our duty to construe the decree with reference to the issue it was meant to decide. Its words are very broad and very emphatic; but we cannot say that they were intended by the District Court to have any greater effect than to avoid and set aside, as against Cleveland, the agreement and the judgment impeached by his bill. We think, on the contrary, that a decree having such an effect could not have been properly rendered upon the pleadings and issue in that cause. Neither the La Crosse Company nor Chamberlain sought to avoid the agreement or the judgment, nor asked any relief whatever as against each other. Indeed, the case shows that both regarded the agreement and the judgment as essential to their respective interests. We cannot ascribe to any court an intention, by a decree on such pleadings, to annul such an arrangement as between the parties to it, nor could we approve such action even were the intent clear beyond question. No question was made between Chamberlain and the La Crosse Company, nor could any question arise between them of any such nature as that between those parties and Cleveland, nor could they be required, in a suit prosecuted by Cleveland to enforce satisfaction of his judgment by setting aside their arrangement as void against creditors, to submit that arrangement, as between themselves, to the action of the court.

It is true that it is the constant practice of courts of equity to decree between codefendants upon proper proofs, and under pleadings between plaintiffs and defendants, which bring the respective claims and rights of such codefendants between themselves under judicial cognizance. In the case of Farquharson v. Seton, cited by counsel, the pleadings showed that Farquharson, as a co-defendant with Seton in another suit, had, by answer, set up the same case against him that he afterward set up by bill. In the former suit the decree had been against Farquharson, and he afterward sought to renew the litigation by an original proceeding, and it was held properly that the former decree, though between codefendants, was a bar. So in the case of Chamley v. Lord Dunsany, the general litigation was for the settling and marshaling of incumbrances, and it was held that where a case was made out between defendants, by evidence arising from pleadings and proofs between plaintiffs and defendants, a court of equity was entitled to make a decree between the defendants. In this case the decree was between defendants who asserted adverse interests in the incumbered estate. But neither of these cases assert the doctrine maintained here for the appellants, that a court of equity may decree between defendants when neither pleadings nor proofs show any controversy or adverse interest between them. Nor have we been referred to any case which does assert that doctrine.

We think, therefore, that the decree of the District Court in the case of Cleveland against the La Crosse Company and Chamberlain must be regarded as having made void the arrangement between the company and Chamberlain only as against the judgment creditor, Cleveland, and not as having determined anything between those parties.

Nor do we intend here to determine anything as between them. We leave all questions concerning the validity of Chamberlain's judgment and its lien on the railroad, or touching the validity of the articles of agreement between Chamberlain and the La Crosse Company, or relating to the rights of parties in or to Chamberlain's receipts under that agreement, to be investigated and determined in the suit now pending in the Circuit Court.

Nor do we understand the decrees dismissing the bills in the two cases before us as determining anything on either of these points, but only as determining that the Cleveland decree adjudged nothing between Chamberlain and the La Crosse Company, and, therefore, cannot be regarded as evidence of the annulment of the contract between them in another suit where the validity of the contract is directly in controversy.

In the second of the cases before us, that of Graham and Scott v. Chamberlain and The La Crosse Company, there are averments in the bill which would require an answer if the general structure and the special prayer of the bill and the absence of a general prayer did not show that in this case, as in the case of the Minnesota Company, the real object of the suit was to establish the Cleveland decree as an absolute bar to the assertion by Chamberlain of any right whatever under his agreement and judgment. We do not think it such a bar, and therefore, without prejudice to any suit which is now pending, or may be hereafter brought, to determine any other controversy of the La Crosse Company, or of its creditors, or of its successors in right or interest, we shall affirm the decrees of the Circuit Court in the two cases now before us by appeal.

AFFIRMANCE ACCORDINGLY.