aUlilT t1. FISHER.
801
HURT 11. FISIlER
and others. 7, 1887.}
{OGrcuit Oourt, 1. S.
W; D.Tenne8868. I
REMOVAL OF CAUSES-STAYING PROCEEDINGS OF STATE COURT-REV. ST.
U.
Notwithstanding the prohibitions of Rev. St. U; S. §720; if the preliminary injunction staying the proceedings of the state court be granted by a state court, the ell-use will not be removal to the federal court. If there be parties interested in the subject,matter of a suit in equity, which has been removed to the federal court, who have been intentionally omitted from the bill, upon their application, the plaintiff will be compelled to amend his bill, and bring them in, 9n pain of remanding the cause to the statecoUI't; where the,llause cali be consolidated with other suits there pending, to wpic4 the applicants are parties, or of.hll-ving his bill dismissed. OF CAUSlllS-NEW PARTnl:S-PLAUiTxFF COM" ,
, , '
2.
,EQUITY PELLED TO MAKE.
8.
COURTB"'-sTATE AND ,FEDJmAIr-JURISDICTION TO VACATE DEOREES.
,Nei,ther state nor federal cOlU"ts will undertake to review or correct the 81"-. rors Of eacb, other, but either, ,as 'will any court of equity, may inquire into a, titleprol}ured through judicial proceedings in the other,and, if found based on the fraudulent pr!i:cticesof the parties, the latter will be restrained'from: taking any advantage under such proceedings. '" '
4.
JUDICIAL SALES-INADEQUACY. OF PRICE. ,
Where title to property worth many thousands of dollars was purch1lSed at a judicial sale for $100, the purchaser was restrained from taking anytitle·by the purchase, because the faots sho:wed that the Bale ,was made under adverse circumstances, when crel;iitqrs jointly intere'stedwere 110t partiell,: and, the decree was procured, and the sale made, in, a court distant from that in which the land was situated. ., . CREDITORS-PROPER PARTIElI TO FORECLPSE
G. EQUITy-ASSIGNMENT
Where a partner conveyed his interest to another -upon the iien of a contract that ilie latter would pay his debts. mentioned in the contract, and hUnself an annuity, the creditors should be made parties to any foreclosure bill, unless some reasonable excuse be given for omitting them; and one creditor alone will not be permittedio procure a sale, binding on the others, which it would be .inequitable to sustain because of an inadequacy of the price realprice, the omitted creditors might be remitized. If the purchaser pay a ted to a remedy against the fund; but, if not, they can pursue the land in his . handS, and enforce their lien. , ' Where a debtor conveyed his property to secure his debts, and, by the slime conveyance, secured himself an annuity, he occupies a dual relation to the parties to the contract; and, if the bill be filed by one creditor to foreclose the lien for his sole benefit. the fact that the assignor is made a defendant in his capacity of debtor only does not preclude him from filing a'bill, in his capacity of credito1',to avoid the sale for inadequacy of price. The esto'{lpel must be confined to the scope of the bill, lP,nd not comprehend anythmg beyond that scolle. ,
6.
SAMJll-,-DuAL RELATION OF CREDITOR AND DEBTOR-EsTOPPEIr-RES ADJUDICATA. .
'i.
AsSIGNMENT ,FOR BENEFIT OF CREDITORS-ELECTION :BY AsSIGNEE OF THOSE TO BE PAID-CONSTRUCTION OF STIPULATION TO THAT EFFECT.
Where it was provided by a contract that the assignee should pay a certain class of creditors to a given amount, and might" elect» such as should be paid,
lA judicial sale ,will be set aside for.grQIIS inadequacy ofprice, accompanied by fraud, oppression, or otber unfairness in .the conduct of the safe. Davis v. McGee, 28 Fed. Rep. 867; Bea.n Hoffendorfer, (Ky.) 2 S',W. Rep. 556, and note. See, also, Ca.rden v. Lane. (Ark.) 2 S. W.Rep. 709.
v.
.
v.29F.no.16-51
it was held that, on the whole instrument, it was not intended to secure only those selected by the assignee, nor was such "election" necessary to fix
the right to the lien,provided, but the stipulatit>nwas simply a protection to the assignee against being compelled to pay more than the given amount, and actual payment would bEl conclusive on any creditors remaining after the amount to be paidshotild be exhausted.
1I1;Eq,uity. lowing contract: "J:,.toh,n.W. Walker, have. tbisday bargained and sold, and do hereby alien', convey, and confirm, to M:artha C. Walker, her heirs and assigns, forher sole and use llnd benefit, with full and complete power of .alienation, as thouglJ. a feme sole, the following described real estate, personal property, chosll8 in. action, claims anqrights, etc., viz.: The real property lyingand beingdn the county of Decatur, state of Tennessee, known as the -Brownsport Furnace Property,' now belonging to the firm of Young & Walker, tny interest in said firm being one-third, and which said real estate is designated as follows: One tract of eight thousand and acres, more 01' less, and m,ore particularly described in a deed made ...by])avid Dick, .Tr., to the firm of Young &W.alker, whicll deed is dated the fourth day of December, Hl66, is .registered in the regiSter's office of Decatur county, in Book No. 5,pages 645 and 646; also Iline hundred and forty-four and one-half acres, conveyed tQ said Yonng & Walker, by'William He,nl'Y. bydElell dated Deceru,ber 9,18l}7,.and registered in. said office, Book No.5, pages and 751; also one other tract of thirty acres, conveyed to saidfirm'lby,David Welsh, and datedtbenineteenth of February, 1872, and registered in said office, Book No'. 6, page 441; also another tract of sixtyfour acres, conveyed to said firm on'the sixteenth day of April, 1872, bydeed of Joseph Marion, and registered insaid office in Book No.6, page 483; also nine hundred and forty-one and on&:half acres, conveyed by Mack Murphy to said firm by de. day of April, 1872, a.nd registered in said office in No.6, pages 4S4, 485, 486, 487; also a tract of four hundred and twenty-eight and one-half acres,conveyed to said firm by Jonathan Leister, iu 1867, and registered in said office, and is bounded by the lands of said Walker & Young on the south and east of said Henry tract. All of the deeds of said lands as registeredareltere,referred to and adopted for a more particular description olthe same, arid all of said lands constitute twelve thousand acres, more or less, and are in part bounded by the Tennessee river On the eitst;andon the north by the' hinds of the heirs of Wallace Dixon and Paul Fisher and and!lre bounded on the lands of Woo. Yarborough's heirs, P.Ferguson, John Blount, and .J. J. Steagold; on the south by lands of Jonathan Leister, James Mancey, W. D. Wyatt, James Yarborough, Mrs. Yarborougb, Gannaway Jennings, J. G. Yarborough, L. D. Crowley, and the lands of Thomas McClanahan,-to have and to hold to the said :Martha Walker,her heirs a.nthssigns, f()rever. And I covenant thatI am lawfully seized and possessed of ene-third' interest in said land, and have a good right to sell the same·.'.Also I convey to the said :Martha C. Walker, to her sole use as hereinbeforespe9ified, my entire interest of one-third in alI the. merchandise in the store-houSe at said furnace, together. with all bookaccounts. notes, etc., now,owfDgtOsaidfinns, both due and undue. Also aU my interest of one-third in mules, harness, oxen, wagons, tools, iron ores, charcoal, wood, pig-iron, bills receivable, cash, etc., and all other personal propeonnected with said furnace, and necessary to its operation, and now upon said premises; myinteption herebY being t.o assign and set over and convey to said :Martha C. Walker 'all' my in said firm arid copartnership, and sub. OpApril.6, 1874,Johp W. Walker and his wife entered into the fol-
FisHER."
803
stitute hertqall rights therein, iwfully and cOMlllete11 i can or maY', with this exception: Young & Walker have this day conveyed fifty acresqt by deed. of this djlote; fifty: reserve, and do not in, ,thi!!!. conveyance, tbe same is .the general aries. . , . .' "In con.c;ideration of' tbe premises. the said Manh4' C,' Walker agrees and and pay, (11' have paid. all the'just and legal debts of binds said .,firm. so far as J obn W. Walker's interest of one-third partner is bound . therefor, and llbe takes his shoes in respect to the same fully and completely; l\Ild.to make certain the payment of said firm'sdebts, said Walker, for himself and on behalf of said creditors, reserves \10, full, complete, aud perfect lien lipou all the property herein couveyed until said debts are paid, and the rights of said creditors are to be In nowise atfectedby these conveyances, and. as to them. their rights; or they. are to be as thongh these conveyances had. never been made. Infu:rther consideration. the said Martha C. Walker and assumes to payor have p\lid the Individual debts of said John W. Walker to a sum notexceeiling fifteen thousand dollars. and. in the said Martha C. is to elect which of said. debts she will pay. and the same is to.be such times as she and the said creditors may agree upqn; and. in order to 'secure the payment of these debts. a full, complete and perfect lien Is reServed upon the real estate herein conveyed, and any balance of said sum of fifteen thousand dollars ·not used in the mentof Said debts is to be paid to said Walker. In further consideration. the sai4 MarthaO. Walker is to pay to the said John W. Walker, for and during the term of his life. the suw. of one thousand dollars a year, to be paid half-yearlyftoIIl the date of the acknowledgment and' prObate of this conveyance. in installments of five hundred dollars; and. to secure the payments of this annuity, said Walker retains a lien upon the-realty conveyed. In further consideration of this conveyance said Martha C. Walker hereby releases all the estate. present or future, of l:iaid John W. Walker. from any claim she now has or may. have as his wife, his widow. or otherwIse; and said Walker hereby declares the said Martha: C. a feme sole, as regards all the property herein conveyed, or its proceeds. and forever renounces all his rights to any estate she now has. or may hereafter aequire. either as husband. survivor. or otherwise. and confess full and complete power of alienation" of aU or any part thereof upon her. without his assent thereto. that being given herein. and to be exercised by her alone; subject, however. to aU the liens herein reserved. which liens are to continue until the several s.ums Secured thereby are paid and discharged. "This,A,Pril6. 1874. JOHN W. WALKER. [Seal.] "MARTHA C. WALKER. [Seal.] ..Acknowledged before thecJerk of the county court of Davidson county, by both parties. on the ninth of April, 1874. IiegiElteredin register's office of Decatur county. in Book No.7. page 220. on the sixteenth of April. 1874." · Prior to this contract, Walker and Charles B. Young, as Young & Walker, had carried on a successful iron-manUfacturing business, but domestic troubles arose, which it was the object of this contract to end. Soon after it was executed there was a divorce. Mrs. Walker married Young. and they carried on the business in the same firm name, paying Walker" his annuity, and certain of the debts, until they failed, and Young, on the-sixth ofMarcb, 1876, filed his petition. and was adjudged a bankrupt. There was a composition in bankruptcy, and Young conveyed the whole properly; his wife joining to convey her one-third, held nncl.etthe foregoing contract, to trusteed under the composition. These
inr
as
804
FEDERAL REPORTER.
were authorized to borrow moneYi and conduct the business, which they dJdfdisastrously. . The mortgagees under,tilis' arrangement filed their bill in the federal coutt ofbankruptcy dn March'18,1881, to foreclose the mortgages made by the. wa.s done on April 27, 1882, and the ;l;It;lot,: became the purchaser at a saJe made plamtlff here, July 1, 1882. Long prior to this, however, 00 May 16,1876, Walker, whose annuity was in arrears f filed his bill for the execution of the forein the chanoorycourt ()f Decatur county,. where the propertywassituated. die(iij1878, and his administrator, Jacob F. Fisher, continued to suit f of sale f for the ,amounts due on the to t1;le creditorsfboth partnership and individual, whci had come into that suit, and also into an administration'sttit filed July 11'1 18801 in the same court; upon an allegation of insolvency. This decree was made March 22, 1883. Bntan September the receIver fora bank at NashvillefhOlding an individual debt against Walker, had filed, his bill in Davidson county, where Young and wife resided, against them, Walker and the bankrupt trustoos f alleging that his debt had been "elected " by Mrs. Young under the foregoing contract f and he prttyedto have it paid by a sale of the property.','One or two other creditors came infand claimed to be also "elected" byM:;rl;l:,Young, and there was decree of sale. The'creditors in this degree agreed to buy for joint aqcQunt, and one Hunt became the purchaser for $100; but he assigned his bid to the plaintiff here f Samuel F. Hunt,and the title was decreedtohirn, he also being the assignee of all the deb,ts interested in the decree. This decree of sale was made June 22, 1880, and the sale was had oriN'9yember 5, 1881. AfterWalkerfs death, and Qn October 31, 1879, upon, sc1,teJacias duly served, this suit had been revived against Fisher f Walker had filed an answer before he died, admitting the contracts, and setting up certain defenses he claimed against the right of the Baxter debts to share in the security. Fisher, the administrator, paid no attention to the"scirejaeWs served on him, nor to the suit at Nashville. It is proved that he was quite an ignorant man, and he did not comprehend the proceeding. Elizabeth Trafford, as administrator of Gaylord f filed petitions f and they we"re admitted as credito?-,s, and these and the Baxter debt are assigned to the plaintiff here; Having thus acquired title to the whole property under the bankruptcy bill,'and, to this one-third under the Baxter bill, Samuel F. Hunt on July 24,1883, filed his bill in the chancery court of Decatur county, setting up his title, and praying that Fisher, the administrator of Walker, should be, enjo}pe.d from under his decree of sale. This bill was filed only against Fisher ,and the clerk and master who had been appointed to make the sale. He obtained the fiat of the chancellor for the injunction,and,then removed the cause to this courtl where a motion to remandwhich;,was.over,ruled. Thereupon the creditors whose claims had been allowedj» the ,decree which had been enjoined, filed a petition, askdefenqant f and for leave to file a cross-bill, claiming to
a
HUNT 11. FISHER.
805
ing a benefit! under the contract, setting up the inadequacy of price, a. combination of bidders, and other matters alleged against Hunt's title. The court made an order requiring the plaintiff to amend his bill, and make these petitiohersparties defendant,on pain of remanding the cause to the state court, or dismissing it, as the ,defendants might elect. The amended bilL was filed, and leave given the defendants to file a cross-bill, which they did, setting up their claims under the contract and the state court proceedings, attacking the plaintiff's title, asking that he be restrained from claiming under it, and for an execution of the contract. The proof shows that the property was, at the time of the sale, very valuable, the WittleSSes differing in their estimates; and that now it has greatly increased invalue,some estimates making it as high as $200,000. The other facts appear in the opinion of the court. J. O. Bra,dJord, for plaintiff. piJts & HaY8 and PorteJjield,Jc Hawhins, for defendants. HAMMOND,J. ' But .for Bondurant v. Watson, 103 U. S. 281, 287, I should have. remanded this case; as to retain it would seem a violation of section 720 of the Revised Statutes, which prohibits the courts of,tpe United States from staying proceedings in the state courts. It has seemed to me that the reason of that statute, the mischief sought to be prevented by it, and its prohibition, apply as wall to a final decree staying a state court proceeding as to that stay which comes of a preliminary injunction, and that it operates, to exclude from the broad language of the act of March 3, 1875, (18 St. 471, 472; Rev. S1. [2d Ed.] § 738.,) allcases sought to be removed which have for their object any., stay, of the proceedings in a state court. Otherwise the federal courts acquire, by removal, a power heretofore denied to them, for substantial reasons, which all commend, and without any directly manifested intention of congress to repeal the prohibition. Yet the case first cited, and Smith v. Schwed, 6 Fed. Rep. 455, confine the statutory prohibition wholly to preliminary injunctions; so that, while we cannot stay the state court's proceedings in the beginning of a cal"e, we may at the end of it.-a distinction certain+Y not indicated by section 720 of the Revised Statutes, and, possibly, not contemplated by the removal act of 1875. This. is now referred to becap.se the plaintiff, who brought this case here from the state court, insists that we cannot sit as a supervising court to review tbe proceedings of the chancery court of Davidson county, through which, by a sale" he acquired his title; yet this title he seeks to protect by asking us to enjoin the further proceedings of the chancery court of Decatur county, wherein the defendants have procured a decree of sale. Undoubtedly it would have been better for all parties to have remained in the state court. By the consolidation of this case with tbatthe defendants· had brought through the administrator of Walker, or by the concurrent hearings of the two cases, tbis controversy mightbave been settled. But, separated, as they have now been, by the plainti,tr's removal of. this case, that metbod of bringing the parties tpgether not available; and the defendants thereupon objected here
'806
thafthey,shoul!lnot be ,ehjoined: trom proceeding in the state court, unless they were .given ltnopportutiity here to make defense,and, by cross'bill, to seek 'therelief,by foreclosure sale, thatthey were there attempting to prqcure. But the difficUlty was that the plaintiff had not made them' parties to his bill; amd, on their motion he was required to amend il:nd bring.them in. Of that order he now complains, and asks to be allowed to dismiss the amendment. Blit, aside from the prohibition' of the statute already referred to, there can be no doubt of'our jurisdiotion, or that of any court of equity, to .grant the relief prayed, either by the bill or cross-bill. It is a controver8y over the title to the property, and· the fact that either side claims through jUdicial proceedings is immaterial. Mr. Justioe BRADLEY shows this conclusively when he says: "In such cases the court does not act as a court of review, nor does it inquire into irregUlarities or errors of proceeding in another court j but it will scrutinize the conduct of the parties, and, if it finds that they have been guilty of fraud in;obtainingll jndgment or decree, it will deprive them of the benefit of it, and of any inequitable advantage which they have derived under it." Johnson Waters,'U1 U.E? 640. 669, 4 Sup. Ct. Rep. 619; Barrow v. HuntOn, 99 U. S. 80. 83;
But the difficulty of giving that full relief which, in cases as complicated as this has been, a court of equity desires to grant, could only be overcome by the order that was made, that the parties in interest who 'had been leftont of the bill should be brought into it. Although the administrator of Walker was a party defendant to plaintiff's bill, and it was he that was injured by it, yet the real actors were the creditors who were seeking to realize their debts by enforcing the security Walker had provided for them. These. the plaintiff left out, and now insists that this administrator niust stand 'for Walker, and in his shoes, so far as necessary to enable plaintiff to estop him, in that capacity, from prosecuting his suit in behalf of the estate of Walker, but that he does not represent the creditors, and cannot set up their under the contract. For this very reason they should. have been made parties to this bm, particularly as they were parties to the proceedings sought to be enjoined, . -ifnottechnicaUysuch) substantially so, by the filing and prosecution of their claims in. that suit. The notion that Walker's administrator can be brought into this bill to represent \Valker himself, but may be left out as a representative of the creditors, and that, the creditors theu1selves beil1g also left, out. the plaintiff has the advantage of excluding all consideration oftheir rights until they take some independent proceeding, is wholly untenable. The truth- is, these new deiEmdants should have been mad\3parties tothe Baxter bill, filed in Davidson dounty, under which plaintiff claims title, either as defendants or as plaintiffs, in whose 'behalf as wen ItS hisownBaxter should have' proceeded, and the failure to make them such is the very foundation of their right to complain against him. Whatever else may be'said of the contract by Walker, of April 6, 1874. as between him and his creditors, it was an assignment for their benefit. One of them, ignoring the others) ina county distant from that
BUNT V. FISHER.
807
in which the land lay, and from his residence, finding other parties to the contract there, filed a bill against Walker, his lately divorced wife, and her new husband, to foreclose the security for bis own benefit alone. She was not a trustee for the creditors in any sense that she represented them as a party to the snit, but was a purchaser from and aguarantor to Walker, the debtor. Walker did not represent those creditors in any sense whatever. The bill was not filed in behalf of the plaintiff creditor, and others who might come in, nor did it give any excuse for not making them parties,-8uch as that they were too numerous, or were unknown !tfter diligent inquiry to discover them, or were non-residents, or the like. .This was clearly a violation of that procedure which governs a court of equity in such cases, and enabled that creditor to do what is here insisted upon shall be continued, namely, exclude the other beneficiaries, and take the property. The other creditors should have been made parties. Jones, Mortg.§ 1394 et seq.; Id. 1398; 1 Daniell, Ch. Pro (1st Ed.) 329; Id. (5th Ed.) 190 et seq. It is tru6,the holders of the legal title being before the court, the ir- . regularity was such that, possibly, if a purchaser had bought at an adequate price, and paid his money into court, his title would not have been disturbed, but the diacarded beneficiaries would have been left to follow theproceeds, as in Be Howard, 9 Wall. 176, and Wdliama V. Gibbe8, 17 How. 239; and consult MYel'a v. Fenn, {) Wall. 205, and 2 Daniell, Ch. Pr. (5th Ed.) 1205. But in this case. it is urged that the creditors should be left to assert their rights against the purchaser by SOme independent proceeding, while he, in the manner already suggested, shall be allowed to restrain the administrator on the ground that, Walker having been a party, the administrator cannot be allowed to seek another sale. In addition to what has been already said on that subject, it may be remarked that the administrator{under the Tennessee system, or creditors, may proceed to enforce such securities, and the administrator possesses a dual capacity of representation,-one for the debtor, and the other for the creditor. If he be estopped in one, it does not necessarily follow that he is estopped in the other, and certainly not that the creditors are estopped in a case like this, they have a specific lien to sue in their own behalf; and, as already shown, it is a proper practice to compel a plaintiff to bring in proper parties. I . But here there was another abundant reason. The plaintiff is a nonresident of Tennessee, where this land lies, and, if he were the only necessary party, there might be difficulty in filing a bill against him in this state, and hence the land could be reached only by the roundabout way ofa bill against him in Ohio to compel him to convey it, or share it with the other beneficiaries. So, when he comes here to file his bill, it is eminently proper that the other parties in interest should be·allowed to come in, and make themselves parties, and that he should not be allowed to exclude them by the simple process of leaving them. out, in continuation of the policy of exclusion inaugurated when the bill under which he claims titlewas filed.
808
FEDERAIl".REPORTER.
The result ,is that the mOtion of the plaintiff to be allowed to dismiss his amended hill, and to vacate the order compelling him to file it, should be denied. A plaintiff has not always the privilege of dismissing his bill at pleasure.' Steverunv. Railroads; 4 Fed. Rep. 97. The decision ofthis question,'Upon the foregoing reasons, almost disposes of the plaintiff's case; That he is not entitled to restrain the other creditors, who had an equal right with the plaintiff in the suit through which he acquired his title, .from proceeding to realize their share of the security in the same way that that plaintiff realized his share,is too plain forany argument; They, not being parties to the decree of sale l,mder which he bought, are not bound by it;. and why, then,should they be enjoined from acquiring ·any title they may; ,in hostility to the plaintiffs? The only possible ground on which the plaiiritiff could appeal to a court'of equitY is .that, after a purchase of the legal title,-if he can be said to have acdJ.Uired that title on the facts of this case relating to the circum. stance that this was partnership land, into the complications of which we need not go,-he should have been made a party to the proceedings of the chancery court of Decatur county, in which the decree of sale he seeks to:enjoin was had. But one branoh of that proceeding menced before the bill under which heolaims was filed, and the other--,the insolvent proceeding-;-before he purchased, and he it was who bought pendente ;lite as to both. those prooeedings. Besides, the other creditors had a right to proceed, treating his title as a nullity, until they , or the purchaserundertheir sale, should acquire whatevertitle they might, and try concluSions with him,inan aotionof ejectment. . PerhaPs another contention of the plaintiff should be noticed here, if only to annotlDCe a conclusion of the court already intimated at the argument; that is, that theseiCreditors do not show that they were ever "elected" by MrS. Walker, and, not having done so, are entitled to no share in the security,and.should, for that reason, be enjoined. This is a misconception of the instrnment, we think. It was not the intention to be gathered from the deed that only such creditors as she might choose should be paid. It was not a power conferred on her for that purpose, but simply a privilege, given as a protection against paying more than $15,000, if there' should be a larger amount due, or, in other words, t.hat, having paid creditors to the extent of $15,000, she should not be compelled to pay any others; and, in that sense, she would have "eleeted" to pay those who had received payment from her, and the fact of payment would be conclusive of the right io receive under this stipulation. It was a convenient,way of protecting her against payments; but, evidently, the parties contemplated that not so much was really due, and provision is made that the balance of the $15,000 should go to Walker himself. Therefote no creditoreould be exoluded under this stipulation, unless it could be shown that the $15,000 had been exhausted, which would be the same thing as showing that she had "elected" the creditors she would pay. Nothing like that is shown here, but, on the contrary, the inference is that it has not been exhausted by any payments made by her. In this view that stipulation does not aid the plaintiff.
l:rUNT ". FISHER.
809
We come next to the question of inadequacy of price, and about that a statement of facts leaves but little else necessary to be said. That property, worth then and now many thousands of dollars, should be sold for $100, seems impossible, but more impossible is it that a court of equity should establish the title on the facts of this case. Clark v. Trust Co.,100 U. S. 149, 152; Eyrev. Potter; 15 How. 42, 60; Erwin v. Parham, 12 How. 197" (L.C. Pnb. Co. Ed. and note;) 2 Abb. Nat. Dig. (Ed. 1885,)592, § 14, and cases cited. Young had become bankrupt in March. In May, Walker filed his bill in Decatur county, where the land was situated, for the execution of the contract. In June there was a bankruptcy composition, and in August a deed byYoung and'wife to trustees in pursuance of its terms. In September, the bill under which plaintiff cla:ims was filed, under the circumstarices already stated, in Davidson county. Walker, who was only interested as a creditor for his annuity,and any share of the $15,OOO-llot ,exhausted in paying debts, and who already had a bill of his qwnpending in Decatur county. filed an answer in October. Then fo116wedthe efforts 'of the trustees under the bankrnp'tcy composition to extricate the property by a mortgage, and a Continuance of business with the fUrnace, which proved futile and disastrous. Meantime; Walker had died, insolvent, and, as the proof shows, was never at any time able to protect the property or his interests, either in his own behalf, or in that of those creditors who had been ignored by the bill under whi()h plaintiff 'claims. Young and wife were not able to protect it or the creditors; 'The bankruptcy trustees had only further involved it. Fisher, the administrator of Walker, as the proof shows, was an ignorant man, and did not comprehend the scire jauias served upon him, and neglected it. But, suppose he had comprehended it, what could he h9.vedolle? The estate was insolvent, and he had no funds, either to carry on 'the litigation or to purchase at the sale. So, when the sale took place in November, none of the joint beneficiaries were in a position to interests at the sale by forcing a larger price, and making the property; sell for enough to pay all the debts secured, nor were they in such a relation to the case as to be bound to do that, and to be preeluded, iithe property did not bring enough, as of their own fault. The circunlstanbes were calculated to deter bidders, and depreciate the property. Leaving others interested out of the bill was in itself sufficient to secure a small price for the property, and drag it down at the sale. Again, Baxter's bill was constructed on the erroneous theory that no creditor, natl/elected" by Mrs. Walker, [young], could share in the$i5,000. Butthis did not apply to Walker himself, whose interest in that que8tion'might be identical with Baxter's, since he would get the surplus. Nobody was made a pnny to contest that theory, and it could not be settled by that bill. Hence, any person contemplating to becom.e purchaser, being well advised, would conclude that the bill, in the ab8ence of all proper parties, was so ill framed as to render the title doubtful,/lJld this would iuvite inadequacy. An advanta.ge of asmaH price, gained under'such circumstances, cannot be maintained· under any rule upon 'tbatsubject known to the books.
810
FEDERAL REPqRTER.
But let :us look a moment somewhat further, at the attitude of Walker, and of his administrator. Why was he a party defendant to that DavidSOn county, bHl at all; and what relief could be had upon its allegations as against him, and as to whicb he or his administrator is now estopped by the,re8 adjudicata? The legal title was not in him, nor any title. He was fl, creditor for his annuity,postponed to all other. creditors, and had of which he had the same right to pursue the a lien, for land by his bill in the county where the land was that the plaintiff in the Davidson county bill had to pursue it there, where the Youngs resided. Being made a party defendant did not affect that right or his bill. If the Davidlloncounty go alone, so could he,and neither could affect the other creditors ,01' represent them. As ¢e debtor, he was a proper party, no doubt, ontbe 'defendants' side of.thecase, but as It creditor he belonged ,to the plaintiff's side; but he was not bound to assume that suit" ,having a bill in DecaturcountYt J;Ued before this Davidson county bill was filed. If the first bill filed Q-btained the juris<iiction, the Davidson county plaintiff should have gOI)etheJ,'e, rather than bring Walker to his forum. As a debtor, him could 1;Ie only for the debt, and to that extent the would be Ql>lUl,d, and not furt1.ler. Indeed, the prayer of the bill-seeks him, nor is there in it any,alleglttion or statement no to bind him'aB a .creditQr to tf;l.kehis share of the lien under that proceeding; pOl' Idoes: the decree of J,une22. 1880, give any relief against him, and there is nothing in it to· preclude him from following any remedy he may against the land to enforce his lien. He was enjoined, along with the Youngs and the bankruptcy trustees, from disposing of t1.lEl interer;Jt, but, as .far as I can see, there was not in the bill, to bind him in his capacity as a creditor or for hisannuit)t. !.So iar.as lca,n see, he might have l(jtthe bill go by default, without the least injury to his rights, except to, preclude him from denying the Baxter debt as a proper charge against him, and as .enin security he had prOVided for it and the. other debts. titled to Baxter did re<)ognizehim as a creditor, did not invit(j him to share futheproceeds as such, nor sue in his behalf, any more than he did in that of other creditors. He did not attack his claims 1,mder the contract, nor suggest anything against his right to a shareiPf the common security, nQr,asl\ any decree against him in that regard; and yet now the plaintiff,! claiming through Baxter and a sale under his bill, asks that Walker) ,or his representativEi,be excludtld froin all share in the security,as ifthere was something within the scope ofhisbillt() preclude him from doing so, on the prineipleof rea adjudicata. ButJhere is not. Why, therefot:e, should he be enjoined, then or now, from' prosecuting his Delllltur>county bill to secure his annuity, or the balance of the $15,· 000, after tbapltyment of his iDdividual debts? There ill absolutely not the slightest reason arising out of the Baxter bill, on any principle of estoppel, or, reB' adjudicata. When, ther.efore, Walker's relation to the plaintiff in thiB. etUe, in his capacity of purch(},8erof the one-third interest, comes to be examined, his administrator stands just as any other cr,editor would, having a lien under
811 theconbact,and just as the other defendants here do'., ·The·notionthat there is'llnything in -thE' bill of Ba'.der, Retlv'r; v. 'YOU?igand 'others) or the proceedings subsequent to the bill, to bind him to the purchase any further than the other beneficiaries are bonnd, is wholly illusory, and grows out of the bare fact that he was a defendant to that bill. But being a defendant did not bind him to anything except the relief sought and decreed against him,and there is nothing decreed against him as a creditor and co.,;beqeficiary. I thought at the hearing) and so intimated, that hell at least, could notpnrsue the lien in his favor, as against the plaintiff here,the purchaser. But it only requires the inspection of the record carefully to see that he is bound no further than I have indicated, namely, as a debtor. and that, a8 a creditor, he was not bound to take his share of the secnrityin that ease. He was not asked to c1Qso, and take elsewhere was not denied.· Prior to that bill he had filed his own,. and this did not interfere with him. If the purchaser, as before stated, hadgi"¢en a' fair and· adequate price, he might have had the equity of saying to Walker and the other beneficiaries that they must pursue the fund paid into court, or tlle creditors who had unduly appropriated a. too large shate of it, for a refunding of their share; but, having paid only $100, he is precluded frolnthat equity, and, as against Walker or the other co-beneficiaries, he :can now take nothing by his purchase because of an inadequacy, under circumstances which avoid the sale, as giving an undue advantage;-By thecomplicatioDs growing out of the facts already stated, and the bankruptcy proceedings and I!!ale in that court, to say nothing of the agreement among the creditors interested in the Baxter bill to bid; jointly for the property, it was sold under such adversecircumstances that it is not wonderful that it brought only $100. Uutno court can· sustain the plaintiff's title, either as against the other secured creditors or Walker. . . I need not say' that the fact that the plaintiff has become the assignee. of all the-debts sued fori in the Baxter bill does not strengthen his position on this question of inadequacy. . He cannot tack the relation ofcreditor to that of pttrchasl!lr, for obYious reasons, and thereby better his, title. The parties secured by the contract had the right to have the property sold under such propitious circumstances as would bring the most money, and the plaintiff here, not having advanced his bid or given a fair price, cannot have the property. The utmost equity he can claim is to come in as a secured creditor along with the rest, take his place in the line of rank to which he belongs, under the contract of April 6, 1874, and recelvehis share of the preceeds of a fair foreclosUre sale. As a purchaser at the bankruptcy sale, he represents Young and wife as to this one-third, as well as the other two-thirds -taere purchased; and, if thereshol;lld re-: main a surplus after paying altthe claims secured by the contract·to be foreclosed, the plaintiff would be entitled to that. Again, it may be worth nothing ofinsolvency of Walker's estate was made January 1,1880, and before the decree onthe Baxter bill, and (if it were necessary to strengthen the position of the defendants) operated, possibly, as a statutory injunction, under our in-
81.2
J'EPERAL .REPORTER.
solvent Iaws,4gainst any further prooedure with the Baxter bill except by leave of the insolvency court. But 1 do not deem it necessary to go into that, . . Having teached this conclusion, the next matter to be determined is the nature of the decree to be rendered. My own judgment was and is that, strictly and technically, the decree should be simply to dissolve restrain him from claimthe plaintiff's injunction, and on the controing the benefit of any title he here sets up to the property versy"as against any of the defendants, thus allowing them to proceed with their decree in the Decatur county chancery court, and leaving the plaintiff to protect himself as best be may, by application to that court, where the first .bill was filed; toexeoute the contract. This seems to me thebetteroou'liSe, because of those.;considerations growing out of the possession by the state courts of the jurisdiction which has been impeded by this bill" and that resultingcomity'which I so like to:preserve and. observe. in all .cases. But the parties on both sides are averse to this, and anxioJIs,to, close the litigatiriln:here and now, in a court where, for the: ,first those interested in the property are met upon equal termsllSto their opportunities to· respective claims. Yielding to this deMre, Tam willing to gQ further than indicated, and, upon the cross-bill,ito execute the contrar-tas it has been suggested the rights of the parties require. , At first I thought that perhaps the partnership creditors claiming here f .should be postponed until the others had been satisfied, on the ground that they do not show why they have not been otherwise paid out of the partnership assets; but I can see, from the record, that there is a strong presumption' that these assets have been applied to other partnership debts, or wasted. without fault of those here presenting their claims. This was originally partnership property, and, by the contract, partnership creditors stand first, and the individual creditors next. and then . Walker for his surpl:us of the $15,000, if any, and the annuity unpaid up to his death. The claims represented. by the plaintiff will take their place in either class to which they belong·.' The plaintiff will be declared the trustee of the legal title for the benefit of all concerned, under the decree of this court; and, unless he choose to pay the amounts due, and the costs properly chargeable, within. 90 days from the date of the decree, the property involved will be sold by John Eo Clough, as special commissioner, upon such terms as to the time and place. and mode.of the parties may agree upon in the decree to be entered, or to be hereafter fixed by the oourt. And, if the parties cannot agree as to the amounts to be, so paid by the. plaintiff, and to be fixed by the decree, there may be a reference to said 'commissioner to report instanter, from .theproof, the said amounts, and the costs properly chargeable, including the costs of this case, $0 that the decree may definitely ascertain the said amounts. And he willlikewise report the order of priority. So ordered·.
IN RE S'rEW ABD.
818
:En' ((Jlreu£t,OO'llll'I, 8. D. NtJUJ York. February 11,1887.) WITNESS -MAsTER APPOINTED IN ONE DISTRICT COMPELLING A'M'ENDANCB IN ANOTHER.' . .' . . :
Th,eUnited .States circuit c()Urt in one district has power, under rule 78 iJ;l equity, .to issue a subpoona requiring:. a person living in that district to appear and testify before an examiner. or before a maste! appointed in anl)ther circuit, and who is discharging the duties of his office ip the former and may also, under that rule. the witness for refusing to' obey the.sllbpeena. ' ,
In EqUity.' Robert G. IngersoU, for the motion. Tlwrnas Thacher, against the motion. SHIPMAN, J. The circuit court of the United States for the district ofIndiana appointed A. J". Ricks,Esq., special master, to take and state the accounts of a receiver:jn two cases pending before said court, and, among other things, to inquire ,and report into the amount, consideration, and ownership or any receiver's certificates which may have been iss,uedby.: said officer. ,The p\aster found it necessary to take thetestimQny in the city of New York.afsome witne8ses living in said city, obtained an orderofthis court for asubprena, which was du1y issued by theclefk, and was duly served upon Herbert Steward, ,a perso? has his legal domicile in Connecticut, but who lives in this district. ,Steward personally attended before the master on the day, but not at the hour hour, named in the subprena, tl:nd promised to attenda"ain appointed by the master, but did not do so. By or4er of this court he was again Bubprenaed to appear and testify before the master, at a named place in' ,said city, and on a named day, and, in,de(lItult of was directed to appear before this court on another day to show cause why he should not be punished for contempt. Thesubprena and notice were duly served, Steward did not obey the supprena, the parties have now appeared, and the question at issue is as to the power of this court, by itssubprena, to compel Steward's attendance before the special master appointed by another circuit court in a cause pending therein. Itis and the has been in accordance with the decision, that a circuit court in one district has power, under the sixtyseventh ruie in equity, toaPl?oihta special examiner to take testimony in another circuit. Railroad Co"v. Drew, 3 Woods, 691. Tbedecision is founded upon the literal language of the rule,and is justified by the fact th,at a different would prevent th'e conv;enient taking of wstimoIl;Y. If circuit such power,! am opinion that under rule 78 this court has power to issue a 8ubprena commanding a perthis district to appear and testify before an examiner, or son and who is before a tnast,er who has beert, aJuminted by ano.ther, the duties of his office in this district, 'and is' also enabled