Gardner v. Brown - 88 U.S. 36 (1874)
U.S. Supreme Court
Gardner v. Brown, 88 U.S. 21 Wall. 36 36 (1874)
Gardner v. Brown
88 U.S. (21 Wall.) 36
APPEAL FROM THE CIRCUIT COURT FOR
THE MIDDLE DISTRICT OF TENNESSEE
1. Though statute may enact that a trustee to whom property is assigned in trust for any person, "before entering upon the discharge of his duty, shall give bond" for the faithful discharge of his duties, his omission to give such bond does not divest the trustee of a legal estate once regularly conveyed to him.
2. Accordingly when A., of one state, mortgages by way of trust deed to B., of another, lands in that other in trust for C., of this same other state, authorizing B. upon default in the payment of the mortgage debt to take possession of the mortgaged premises and sell them upon certain specified conditions, B. is a necessary party in any proceedings in the nature of foreclosure, though by statute of the state, B. may have been required to give bond such as abovementioned, and may not have given it. And if C., the creditor, have filed a bill fur foreclosure against A. and B., A. cannot transfer the case from the state court to the circuit court under the Act of July 27, 1866. The suit is not one in which there can be a final determination of the controversy, so far as it concerns him, without the presence of B., to whom the trust deed was made.
The Code of Tennessee [Footnote 1] enacts that every trustee to whom property is conveyed in trust for any person, "before entering upon the discharge of his duty shall give bond," &c., for the faithful discharge of his duties. But the act does not declare that if he does not give the bonds, he shall cease to be trustee.
An Act of Congress of July 27, 1866, [Footnote 2] enacts as follows:
"If in any suit . . . in any state court against an alien or by a citizen of the state in which the suit is brought against a
citizen of another state . . . a citizen of the state in which the suit is brought is a defendant &c., . . . or if the suit is one in which there can be a final determination of the controversy, so far as it concerns him, without the presence of the other defendants as parties in the cause, then and in every such case the alien defendant or the defendant who is a citizen of a state other than that in which the suit is brought may, at any time before the trial or final hearing of the cause, file a petition for the removal of the cause as against him into the next circuit court of the United States, . . . and it shall be thereupon the duty of the state court to . . . proceed no further in the cause as against the defendant so applying for its removal, . . . and the copies being entered &c., in such court of the United States, the cause shall there proceed in the same manner as if it had been brought there by original process against the defendant, who shall have so filed a petition for its removal as above provided."
This provision of the code and this act of Congress being in force, one Gardner, a citizen of New York, but owning land in Tennessee, conveyed it in trust (the deed of trust being only another form of mortgage) to a certain Walker, a citizen of Tennessee, to secure certain promissory notes, a debt which he owed to Vassar, now deceased, and of whose estate Brown, also a citizen of Tennessee, had become administrator. Walker, as trustee, was authorized, upon default of payment of the debt, to take possession of the mortgaged premises and sell them, upon certain specified terms and conditions.
In this state of things, Brown, the administrator, and as already said a citizen of Tennessee, filed a bill of foreclosure in a chancery court of Tennessee, against Gardner, the debtor, and of New York, and Walker, the trustee, of the same state with himself, for the foreclosure of the mortgage or deed of trust executed by Gardner. The service on Gardner was by publication.
The bill charged
"that Walker had never given bond as trustee of said trust, and had taken no steps to foreclose the trust, and did not wish or intend to execute the same, and that the complainant had the right to have the trust closed by a sale of the lands free from the equity of redemption,
and have the proceeds applied, after the payment of all costs incident to the foreclosure, to the satisfaction of his debts."
The answer admitted what was here said as to Walker's not having qualified &c.
An amended bill, alleging that all that was said about Walker in the original bill was true and affirming it, alleged that the deed of trust was written by Walker, and along with the promissory notes which it secured signed, executed, and acknowledged in his presence; that immediately, with the notes, it was delivered to him, and that he received and accepted the notes and deeds, and accepted the trust.
The state court granted the motion and made the order of removal, but the circuit court, being of the opinion that Walker was a necessary party to the relief asked against Gardner, refused to entertain jurisdiction and remanded the cause, and from this, its action, Gardner took this appeal.
THE CHIEF JUSTICE delivered the opinion of the Court.
The order of the circuit court dismissing this cause and remanding it to the state court is affirmed.
By the terms of the mortgage, a deed of trust, Walker, as trustee, was authorized, upon default of payment of the debt, to take possession of the mortgaged premises and sell them upon certain specified terms and conditions. It is claimed in the bill that he had not qualified himself under the laws of Tennessee to act under this power, and the suit was brought to foreclose the mortgage in chancery, without reference to the special power of sale. Walker, the trustee, was made codefendant with Gardner, the mortgagor, the object
being to reach the property in his hands as trustee and subject it, through the ordinary powers of a court of chancery, to the payment of the debt it was given to secure.
The motion of Gardner, the mortgagor, to transfer the cause, as to himself, to the circuit court under the provisions of the Act of July 27, 1866, could not be granted unless there could be a final determination of the cause so far as it concerned him without the presence of the other defendant as a party. And we think that the circuit court was right in its opinion that Walker was a necessary party to the relief asked against Gardner and in refusing to entertain jurisdiction and in remanding the cause. The bill prayed a foreclosure of the mortgage by a sale of the land. This required the presence of the party holding the legal title. The complainant had only the equitable title. Walker held the legal title. The final determination of the controversy, therefore, required his presence, and as the cause was not removable as to him, under the authority of Coal Company v. Blatchford, [Footnote 3] it could not be removed as to Gardner alone.
Order of the circuit court affirmed.
14 Stat. at Large 306.
78 U. S. 11 Wall. 172.