Nelson v. Hill - 46 U.S. 127 (1847)
U.S. Supreme Court
Nelson v. Hill, 46 U.S. 5 How. 127 127 (1847)
Nelson v. Hill
46 U.S. (5 How.) 127
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF ALABAMA
It is not irregular for two mercantile firms to unite as complainants in equity in a creditor's bill.
An objection that a bill is multifarious must be made before answer, and can be tested only by the structure of the bill itself.
The creditor of a partnership may, at his option, proceed at law against the surviving partner or go in the first instance into equity against the representatives of the deceased partner. It is not necessary for him to exhaust his remedy at law against the surviving partner before proceeding in equity against the estate of the deceased.
Where there were two mercantile firms and some of the members common to both, a creditor's bill was not multifarious when filed against the personal representatives of two of the deceased partners of the two firms and also against the surviving partner of one of the firms.
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 17, 1834, for $1,061.36, at 9 months; Whitsett, Gray & Co. to Parish, Marshall & Co., two notes, one dated May 10, 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 demurrer.
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.
MR. JUSTICE DANIEL delivered the opinion of the Court.
Amongst the causes assigned for the demurrer in this case no objection is urged as founded upon the joinder of the different complainants in the bill and amended bill, unless it be supposed that an objection may be implied in the general language of the first assignment -- namely that the complainants had not by their bills made such a case as entitled them to relief. From a statement thus vague and indefinite it would be difficult to deduce anyone objection rather than another; but could this assignment be understood as pointing specifically to the structure of the bills as multifarious, from the number or relative position of the complainants, it is certain that no valid exception could on either of those grounds be sustained.
These bills are formally as well as substantially creditors' bills, by which the complainants are regularly and properly united in seeking satisfaction from subjects against which, as creditors of the defendants, they can properly claim. As to the nature and regularity of such a proceeding, see Mit. Eq.Pl., 166, 167; Story Eq.Pl., §§ 99, 100, and the authorities there cited.
From a want of perspicuity in the statements contained in the bill and amended bill, in the former especially, there might seem at first view some plausibility in the second cause assigned for the demurrer -- namely the multifariousness of the bills from the joinder of parties as defendants who are supposed to be unconnected in interest and in liability. The objection of multifariousness is one of which it is said by the authorities a defendant can avail himself by demurrer or exception taken to the pleading only. That being designed for his protection against the vexation and expense of answering to matters irrelevant to the true controversy existing between him and the complainant, if instead of arresting the irregularity at the commencement and claiming the exemption intended for him, he will go on and answer the bill, the reason for the exemption designed by the rule no longer exists, and although at the hearing the court may, sponte sua, make an objection for multifariousness, it is no longer in the power of a party, after answer, to do so. See Whaley v. Dawson, 2 Sch. & L. 370, and Ward v. Cooke, 5 Madd. 80. From the character of this objection, then, and from the established requisition as to the time and mode of making it by a defendant, it must of course be tested and determined by the structure of the bill alone, and cannot be enforced, explained, or removed by proceedings posterior to the bill and demurrer, nor by the evidence. From some obscurity in the bill and amended bill, as has already been observed, there might seem to be a want of connection in interest and in liability between the defendants such as would not warrant their being joined in the same suit. This objection, however, will entirely vanish upon a closer examination of the relative positions of the parties.
The complainants consist of two sets of creditors. First, the firm of Nelson, Carleton & Co.; secondly, the firm of Parish, Marshall & Co. To each of these firms the co-partnership of Whitsett, Gray & Co. became indebted. The debt contracted to the former house was evidenced by the note of Whitsett, Gray & Co. The debts (for there were several in the second instance) due to Parish, Marshall & Co. were evidenced by two notes of Whitsett, Gray & Co., by a bill drawn by Whitsett, Gray & Co. on Sims & Co. (which it is alleged was not accepted), and by a note of Whitsett & Gray payable to White, Brothers & Co., and passed in some mode not distinctly set forth by Whitsett, Gray & Co. to Parish, Marshall & Co. The firm of Whitsett, Gray & Co. was composed of William H. Whitsett, Thomas Gray and John J. Hill; that of Whitsett & Gray was composed of William H. Whitsett and Thomas Gray. Thus it appears that Thomas Gray was a member of both firms. The complainants allege the deaths of both Whitsett & Gray, leaving Hill as surviving partner of the firm of Whitsett, Gray & Co. They aver that Lipscomb & Hardin administered upon the estate of Whitsett, and had reported that estate
to the county court to be insolvent; that Ann R. Gray widow of Thomas Gray and who had intermarried with L. Sexton, had, conjointly with James Gray taken administration of the estate of Thomas; that upon judgments obtained on the notes of Whitsett, Gray & Co., against Hill the surviving partner, executions had been sued out and returned nulla bona. There is, in the next place, charged a belief of frauds and concealment on the part of Hill and the administrators of Whitsett, and also the perfect solvency of the estate of Thomas Gray, the whole concluding with a prayer for accounts of the effects of Whitsett, Gray & Co., of William H. Whitsett, and of Thomas Gray in the hands of their representatives, and for satisfaction.
It is now a rule of law too well settled to be shaken that the creditor of a partnership may, at his option, proceed at law against the surviving partner or go in the first instance into equity against the representatives of the deceased partner. See the several cases on this point collected in Story on Partnership, § 362, note 3. This being conceded, there can be no valid exception to the prosecution of this suit immediately against the representatives of Thomas Gray, and it is to the advantage of his estate, that the representatives of Whitsett and the surviving partner, Hill should both be called in, that they may be required to contribute from any appropriate means in their possession towards the discharge of their joint and several obligations. Here, then, will be perceived the answer to the third cause assigned for the demurrer -- namely that the complainants had not exhausted their remedy at law before going into a court of equity. It is the right also of the representatives of the deceased partner, Whitsett, and that of the surviving partner, Hill to participate in settlements in which their interests are directly involved, and an omission in the bills to convene these joint parties in interest for this purpose, with the representatives of the other deceased partner, Gray would have exhibited a palpable and material defect in the proceedings of the complainants.
According to the case made in the bill and amended bill, there are no visible partnership effects, and it may be the fact that the surviving partner, Hill and the estate of the deceased partner, Whitsett, are both insolvent. Should this turn out to be true, then the separate estate of the partner, Gray said to be solvent, must be responsible to the creditors of each of the firms of which he was a member. In order to ascertain the precise extent of Gray's responsibility, accounts would be proper not only between the two firms and their respective creditors, but also between these firms themselves. Accounts would likewise be proper of the separate effects of the deceased partners. This view of the case removes the ground set forth in the second assignment of causes of demurrer. We are of opinion that the court could, in equity, properly take cognizance of this cause without the necessity for further previous
proceedings at law; that the bill and amended bill of the complainants were not exceptionable for multifariousness; that the decree of the circuit court dismissing those bills for either of the causes assigned for the demurrer is erroneous. The decree is therefore
Reversed and this cause is remanded to the circuit court with directions to be there proceeded in conformably with the principles here established.
This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Southern District of Alabama and was argued by counsel. On consideration whereof it is ordered and decreed by this Court that the decree of the said circuit court in this cause be and the same is hereby reversed with costs and that this cause be and the same is hereby remanded to the said circuit court with directions to proceed therein conformably to the opinion of this Court.