Nelson v. Hill

THIS was an appeal from the Circuit Court of the United States for the Southern District of Alabama.

The suit originated in the District Court of the United States for the Middle District of Alabama, from which it was carried, by appeal, to the Circuit Court, and thence was brought to this court.

In 1834, the appellants, consisting of two mercantile houses in New York, became the creditors of two firms in the State of Alabama, namely, the firms of Whitsett, Gray, & Co. and of Whitsett & Gray; the former composed of William H. Whitsett, Thomas Gray, John J. Hill, the latter of William H. Whitsett and Thomas Gray.

The debts of these Alabama houses to their New York creditors set forth as follows:--

Whitsett, Gray, & Co. to Nelson, Carleton, & Co., a note dated May 17th, 1834, for $1,061.36, at 9 months; Whitsett, Gray, & Co. to Parish, Marshall, & Co., two notes, one dated May 10th, 1834, for $1,470.95, at 9 months, and one, same date, for $1,470.95, at 11 months; a bill of exchange drawn by Whitsett, Gray, & Co. on John C. Sims & Co. for $1,901.56, at 4 months; and a note to White, Brothers, & Co., by Whitsett, Gray, & Co., for $331.46, at 12 months.

Of the individuals composing the two Alabama firms, William H. Whitsett died in October, 1835, and administration of his estate was committed to Lipscomb & Hardin. Thomas Gray died in 1835, and administration of his estate was granted to James Gray and Ann R. Gray, the widow of Thomas, who afterwards intermarried with Lorenzo Sexton.

Upon three of the above notes, judgments were obtained in December, 1835, against Hill, as surviving partner of Whitsett, Gray, & Co. In January, 1840, a bill was filed on the equity side of the District Court of the United States for the Middle District of Alabama by the New York firms, which, in August, 1841, was amended. The amended bill included, as defendants, James Gray, Lorenzo Sexton and Ann R. Sexton (formerly Ann Gray), administrators of Thomas Gray, deceased, Absalom Hardin, John P. Lipscomb, and Joseph J. Hill, administrators of William H. Whitsett, deceased.

The bills recited the above fact; stated that execution had been sued out against Hill, but that no property could be found; that the estate of Whitsett had been reported to the County Court as insolvent, but that the estate of Gray was fully able to pay the debts of the partnerships; praying for a discovery and payment, &c.

Lipscomb and Hardin answered the bills, denying generally the merits of the claim.

Hill answered separately, and concluded his answer with denying the right of the complainants to unite their claims in one suit.

Gray filed a separate demurrer, assigning therefor the following causes:--

I. That the said complainants have not by their said bill and amended bill made such a case as entitles them in a court of equity to any discovery from this defendant or any relief against him as to matter contained in the said bill and amended bill, &c.

II. That the complainants have joined in their bill and amended bill distinct matters which, according to law and the practice of this court, ought not to be joined, &c.; that is to say, have joined matters against the late firm of Whitsett & Gray, composed of Wm. H. Whitsett, deceased, and Thomas Gray, deceased, with matters against the late firm of Whitsett, Gray, & Co., composed of the said Whitsett & Gray and one John J. Hill, the said John J. Hill having no interest in the matter against the said late firm of Whitsett & Gray. They have joined matters of debt against said late firm, Whitsett & Gray, created by note, payable to certain persons using the name and style of White, Brothers, & Co., to which debt the said complainants, or either of them, have not any interest, as far as appears by their said bill or amended bill, and in which the said defendant, Hill, is in no wise interested, nor in any wise liable, &c.

III. The complainants' bill and amended bill do not show that complainants had exhausted their remedy at law before coming into this court in such manner as to entitle them to the aid of this honorable court as a court of chancery, &c. Wherefore, for the foregoing causes, and for divers other causes of demurrer appearing in the said bill and amended bill, this defendant doth demur thereto; and he prays the judgment of this honorable court whether he shall be compelled to make further and other answers to the said bill; and he humbly prays to be dismissed from hence with his reasonable cost in this behalf sustained.

In December, 1841, the cause came before the District Court, which sustained the dumurrer.

The complainants appealed to the Circuit Court, which in March, 1843, affirmed the decree of the District Court. From the decision of the Circuit Court the complainants appealed to this court.

The cause was argued by Mr. Dargan, for the appellants, and Mr. Crittenden, for the appellees.

Mr. Dargan.

The decree, rendered on the demurrer of James Gray, dismissed the bill as to all the defendants, and they were adjudged to recover their costs. This was the necessary result upon sustaining the demurrer of James Gray, for he being a joint administrator with Sexton and wife, the suit could not proceed without him. The appeal was taken against all the defendants, and the cause was pending properly in this court, when Gray died; his death did not abate the suit or render it defective, for his entire interest survived to Sexton and wife, and the administrator of James Gray has no interest in the suit. Therefore the cause is not out of court or abated by the death of James Gray, nor is it necessary to make his representatives parties. The only question that can be raised against the bill is, that it is multifarious.

The bill is not multifarious because it is filed in the name of Parish, Marshall, & Co. and Nelson, Carleton, & Co., two distinct firms.

It is well settled that when a creditor seeks the aid of a court of equity to subject the assets of a deceased debtor to the payment of his debt, he may sue for himself and all other creditors who will make themselves parties to the suit, unless his application to a court of equity be founded on a specific lien on a specific chattel, or on particular real estate, as a mortgagee. But in the absence of any specific lien, that would give him an exclusive right as against the thing bound by the lien, he may sue for himself and all other creditors. Story's Equity Pleadings, §§ 99, 100, and the cases cited.

Indeed, if the bill seeks to subject the real estate of the decedent, it is said the creditor must sue in behalf of all; here two firms sue for themselves and all other creditors who will join in the suit.

The bill is not multifarious because it seeks to obtain satisfaction of debts due Nelson, Carleton, & Co. and Parish, Marshall, & Co. by Whitsett, Gray, & Co., and also debts due Parish, Marshall, & Co. by Whitsett & Gray alone. The debts due the complainants by Whitsett, Gray, & Co. had been sued at law against Hill, the surviving partner, and executions have been returned,-'no property'; of course the complainants can come into equity against the assets of the deceased partners on those debts, for they have done all at law they can do. Now, if it be true that, as to the two debts due by Whitsett & Gray alone to Parish, Marshall, & Co., they have a perfect remedy at law, or if they have as yet no equity, because they must proceed at law first against the administrators of Whitsett, the question will then be raised,-if complainants seek to enforce an equitable right, and in the same bill state a different and legal right, as to which equity will afford no relief, and this is apparent on the bill, will the statement of this legal right and prayer for relief, which by possibility cannot be granted, render the bill defective as to the equitable right? To hold that a bill thus framed would be defective, would be a rigid rule, not perhaps productive of benefit or convenience; would it not go to the full extent, that a complainant must recover on all causes of actions or suits stated in his bill, or he could not recover at all? I have not found a case that goes thus far, and I submit that no case can be found where a bill is held to be multifarious because it states and seeks relief as to a clear equitable right, and also states and seeks relief as to a different and distinct legal right; but relief would be granted as to the equitable right; and so far as it sought relief on a legal title the bill would be dismissed at the hearing. If I am right in this view, the demurrer should not have been sustained, even if the debts due by Whitsett & Gray alone to Parish, Marshall, & Co. cannot be enforced in equity against the representatives of Gray, or if their remedy on these two debts is at law. As to the doctrine of multifariousness, see Gaines v. Chew et al., 2 How., 619; Story on Eq. Pl., 515-517.

This view is submitted on the supposition, that the court may hold that Parish, Marshall, & Co. have a perfect right at law on the two debts not sued at law, and due by Whitsett & Gray alone to them. But I think the rule is now well established, that a creditor may file his bill in the first instance against the assets of a deceased partner, notwithstanding the surviving partner may even be solvent. See 1 Myl. K., 582. This seems to be a well considered case, and maintains this position; also Story on Partnership, § 362, pp. 513, 514; also the case of Devaynes v. Noble, 1 Meriv., 589. I admit that formerly the reverse was held to be the law; but since the decision in the case of Devaynes v. Noble, the rule seems to be settled, that a creditor may go into equity in the first instance against the assets of a deceased partner, although the surviving partner may be solvent. The text writers have adopted this rule without objection. If the court should hold this to be the rule, then Parish, Marshall, & Co. would be entitled to relief against the administrators of Thomas Gray, although no suit was brought against Whitsett's representatives who had survived Gray; and in that aspect of the case, could Thomas Gray, administrator, demur, because Parish, Marshall, & Co. sought to enforce debts chargeable on the estate, because the deceased was liable on them,-on one jointly with A., the other jointly with B. The estate is bound for both, they are both merely debts, and due to the same complainant. The same authorities show that when a bill is thus filed against tha representatives of the deceased partner, the surviving partner, whether solvent or insolvent, is a necessary party to the bill, although no decree can be rendered against him, for the remedy as against him is at law.

In conclusion, if the remedy on the bill and note to Parish, Marshall, & Co., due by Whitsett & Gray, is at law exclusively; or if, as yet, Parish, Marshall, & Co. are not entitled to equitable relief as to these two debts, then the demurrer is too broad, and should not have been sustained. But if they go into equity in the first instance against the assets of Gray, these two debts are merely debts due by Gray; and what inconvenience will result from uniting them with other debts due the same complainant by Gray? For the reasons above stated, the court erred in sustaining the demurrer.

Mr. Crittenden referred to the complicated nature of the suit, brought by two firms against two other firms, and contended that it was objectionable on account of multifariousness, misjoinder of parties, and causes of action. That a judgment should have been obtained against the surviving partner at law, before resorting to equity. For these principles, he cited 2 Madd. Ch., 294; 2 Anstr., 447; Hardr., 337; 2 Ves., 323; 1 Story on Part., 512-514.

Mr. Justice DANIEL delivered the opinion of the court.