Chancery. Strictly, in chancery practice, though it is different
in some of the states of the Union, no exceptions to a master's
report can be made which were not taken before the master, the
object being to save time and to give him an opportunity to correct
his errors or to reconsider his opinions. A party neglecting to
bring in exceptions before the master cannot afterwards except to
the report unless the court, on motion, see reason to be
dissatisfied with the report and refer it to the master to
reexamine it, with liberty to the party to make objections to
it.
Exceptions to the report of a master must state, article by
article, the parts of the report which are intended to be excepted
to.
Exceptions to the report of a master in chancery proceedings are
in the nature of a special demurrer, and the party objecting must
point out the errors; otherwise, the parts not excepted to will be
taken as admitted.
In a reference to a master for any purpose, the order need not
particularly empower him to take testimony if the subject matter is
only to be ascertained by evidence. And in taking evidence,
although the better plan is to take the answers in writing upon
written interrogatories, he may examine witnesses
viva
voce, the parties to the suit being present personally or by
counsel, and not objecting to such a course.
The twenty-eighth rule prescribed for the practice of courts of
equity of the United States provides for bringing witnesses before
the master for their compensation; for attachments; for a contempt,
when witnesses refuse to appear on a subpoena, and the last clause
allows the examination of witnesses,
viva voce when
produced in open court. The same reasons which allow it to be done
in open court permit it to be done by a master.
The allowance of costs is a matter of practice which need not be
a part of the decree or judgment of the court, although it often is
so, as the payment of costs is in most cases made to depend upon
the rules, and when rules do not apply, upon the court's order in
directing the taxation of costs.
If any rule has been made by the District Court of Louisiana
abolishing chancery practice in that court, it is a violation of
those rules which the Supreme Court of the United States has passed
to regulate the courts of equity of the United States. Those rules
are as obligatory on the courts of the United States in Louisiana
as they are upon all other courts of the United States, and the
only modifications or additions which can be made by the circuit or
district courts are such as shall not be inconsistent with the
rules prescribed. When the rules prescribed by the supreme court do
not apply, the practice of the circuit and district courts shall be
regulated by the practice of the High Court of Chancery in
England.
The Supreme Court has said upon more than one occasion, after
mature deliberation upon able arguments of distinguished counsel
against it, that the courts of the United States in Louisiana
possess equity powers under the Constitution and laws of the United
States. That if there are any laws in Louisiana directing the mode
of procedure in equity causes, they are adopted by the Act of 26
May, 1829, and will govern the practice in the courts of the United
States. But if there are no laws regulating the practice in equity
causes, the rules of chancery practice in Louisiana mean the rules
prescribed by the Supreme Court for the government of the courts of
the United States under the Act of Congress of May 8, 1792.
The correct rule as to interest is that the creditor shall
calculate interest whenever a payment is made. To this extent the
payment is first to be applied, and if it exceed the interest due,
the balance is to be applied to diminish the principal. This rule
is equally applicable whether the debt be one which expressly draws
interest or on which interest is given as damages.
The mandate issued by the Supreme Court in a case decided by the
Court is to be interpreted according the subject matter, and it is
in no manner to cause injustice.
The general rule in chancery proceedings is that all persons
materially interested in a suit ought to be parties to it either as
plaintiffs or defendants, that a complete decree may be made
between these parties. But there are exceptions to this rule, and
one of
Page 38 U. S. 360
them is when a decree in relation to the subject matter in
litigation can be made without a person's having his interest in
any way concluded by the decree.
When a complainant omits to bring before the court persons who
are necessary parties, but the objection does not appear on the
face of the bill, the proper mode to take advantage of it is by
plea and answer. The objection of misjoinder of complainants should
be taken either by demurrer or on the answer of the defendants. It
is too late to urge a formal objection of the kind for the first
time at the hearing.
On the second of March, 1837, the following decree of the
Supreme Court of the United States was produced in open court in
the District Court of the United States for the Eastern District of
Louisiana. The cause had been taken by Mrs. Livingston, executrix,
by appeal to the Supreme Court, and the decree of the district
court reversed.
36 U. S. 11 Pet.
351.
"This cause came on to be heard on the transcript of the record
from the District Court of the United States for the Eastern
District of Louisiana, and was argued by counsel. On consideration
whereof it is ordered, adjudged, and decreed that the decree of the
said district court dismissing the bill of the complainant be and
the same is hereby reversed and annulled, the court being of
opinion that the transaction of 25 July, 1822, between John A.
Fort, Benjamin Story and Edward Livingston was a loan to the said
Edward Livingston secured by a pledge denominated an antechrisis in
the law of Louisiana. And it is hereby further ordered, adjudged,
and decreed that the cause be sent back for further proceedings in
the court below, with directions that the cause be referred to a
master to take an account between the parties. And it is hereby
further ordered, adjudged, and decreed that in taking said account,
there be allowed to the defendant all advances which shall be shown
to have been made by him, or paid on account of a loan made to
Edward Livingston on 25 July, in the year 1822, with the interest,
which the said Edward Livingston agreed to pay of eighteen percent
per annum, to be calculated upon cash advances from the time it was
made until 5 August, 1823, and after that time at legal interest;
and further that in taking said account, there be allowed to the
defendant all reasonable expenditures made by the defendant and
John A. Fort in building, repairing, and safekeeping of the
property pledged by the said Edward Livingston, to secure the loan
made to him on 25 July, 1822, and that the complainant be credited
in such account with all such sums as the defendant, or John A.
Fort, or either of them, have received from the said property, and
that in taking such account, the rents and profits be applied
first, to the payment of the sums necessarily incurred in building
and repairing; secondly, to the payment of the interest on the sums
which shall appear to have been advanced on the said loan, or in
the improvement of the lot; and thirdly, to the discharge of the
principal of the said loan. And if on taking said account it shall
appear that there is a balance due from the complainant,
Page 38 U. S. 361
it is hereby further ordered, adjudged, and decreed that the
defendant pay to the complainant such balance within six months
from the time of entering the final decree in the cause, and shall
surrender and reconvey the said property to the complainant or such
person or persons as shall be shown to be entitled to the same, and
if upon the taking of said account it shall be found that any
balance is due from the estate of the said Edward Livingston,
deceased, to the defendants, it is hereby further ordered,
adjudged, and decreed that on paying, or tendering to the defendant
the said balance, he shall deliver up the possession, and reconvey
to the person or persons who shall appear to be entitled to the
same, the property so pledged to secure the aforesaid loan. And it
is further ordered, adjudged, and decreed that in case a balance
shall be found due to the defendant, and shall not be paid within
six months after a final decree of the district court upon the
master's report, then the property shall be sold, by order of the
district court, at such time and notice as the said court shall
direct, and that the proceeds be first applied to the payment of
the balance due the defendant, and the residue thereof to be paid
to the complainant."
The mandate of the Supreme Court, conforming to this decree, was
filed in the district court by the counsel for Mrs. Livingston, and
by an order of the district court the case was referred to a master
in equity, Duncan N. Hennen, Esq., to examine into and report upon
the account according to the principles and rules established on
the judgment of the Supreme Court.
Various proceedings took place in the district court, after the
order of reference to the master for an account.
The counsel for the defendant moved to strike from the docket,
the complainant's suit; because,
1. Edward Livingston, the former complainant herein, departed
this life on the ___ day of _____ and before the hearing of this
cause in this Court at the spring term thereof, in 1836.
2. The said Livingston departed this life before the making or
enrollment of the decree herein at the spring term of the year
1836; consequently the court could not then entertain and
jurisdiction of the cause.
3. This cause has never been regularly revived in the name of
the present complainant -- nor could it be so revived by the laws
and usages of chancery, the complainant claiming as a devisee.
On 18 December, 1837, the district court, after argument
overruled this motion.
On the same day, the report of the master was filed. This report
contained, at large, all the evidence produced before the master,
with an account by which a balance of thirty-two thousand nine
hundred and fifty-eight dollars and eighteen cents, was found due
by Benjamin Story to Mrs. Livingston, executrix, on the first of
November, 1837.
On the second of January, 1838, exceptions to the master's
report were filed by Mr. Story.
Page 38 U. S. 362
1. Because chancery practice has been abolished by a rule of
this Court, and such proceeding is unknown to the practice of the
court.
2. The master has erred in not allowing to the defendant the
thousand dollars, with interest, paid to Morse, or some part
thereof.
3. The master's report does not show that it reports all the
evidence taken before the master.
4. The master, in making his estimates and calculations, has not
pursued the mandate of the Court.
5. It appears from the master's report that the stores were
rented from November to November, and he erred in assuming 1 April
as the period of payment of annual rent.
6. A reasonable allowance should have been made to Story for the
costs and risk of collecting the rents.
7. The master erred in all his charges against the defendant and
failed to allow the defendant his proper credits.
These exceptions were overruled by the district court, and the
court decreed that Benjamin Story do pay to the complainant the sum
of thirty-two thousand nine hundred and fifty-eight dollars and
eighteen cents, and that the master's report be in all other
respects confirmed and that the defendant conform to the decree of
the Supreme Court in this case.
A petition for a rehearing was afterwards presented to the
district court by the counsel for the defendant, which, after
argument, was overruled, and the district court made the following
decree:
"The petition for a rehearing having been overruled, it is
ordered, adjudged and decreed that the defendant, Benjamin Story,
do further surrender and reconvey the property described in the
bill of complaint as"
"all that parcel of ground situated on the batture of the suburb
St. Mary, between Common and Gravier Streets, measuring eighty-two
feet fronting Common Street; one hundred and twenty-six feet, or
thereabouts, fronting Tchaptoulas Street, one hundred and forty-six
feet, or thereabouts, fronting New Levee Street, and bounded on the
other side by the lot of ground belonging to Messrs. Livermore,
Morse, Miller and Pierce, containing one hundred and twenty feet or
thereabouts, together with the buildings, improvements, and all
other appurtenances to the same in any wise belonging or
appertaining to Louise Livingston, widow and executrix and devisee
of Ed. Livingston, deceased, and to Cora Barton, daughter, and
forced heir of said Ed. Livingston, in conformity to the decree of
the Supreme Court of the United States and to the decree heretofore
made in pursuance thereof by this Court."
The case having been transferred to the Circuit Court of the
United States for the Ninth Circuit and Eastern District of
Louisiana, the defendant prosecuted this appeal.
Page 38 U. S. 364
MR. JUSTICE WAYNE delivered the opinion of the Court.
This cause having been before this Court as its term in 1837, it
was then decreed that the decree of the district court dismissing
the bill of the complainant should be reversed, that the cause
should be sent back for further proceedings in the court below with
directions that it should be referred to a master to take an
account between the parties. The mandate then recites the
principles upon which the account was to be made; provides the time
within which any sum that may be found to be due to either of the
parties should be paid after the entry of a final decree in the
court below; directs, if a sum shall be found due to the
complainant, a surrender and reconveyance of the property from the
defendant to the complainant, or to such person or persons as shall
be shown entitled to the same, and further orders, in the event of
a sum being found to be due to the defendant, if it shall not be
paid within six months after a final decree of the district court
upon the master's report, that the property shall be sold by order
of the district court, at such time and notice as the court shall
direct, and that the proceeds be first applied to the payment of
the balance due the defendant, and that the residue thereof be paid
to the complainant.
In pursuance of the mandate, the district court appointed Duncan
N. Hennen master, to examine into and report upon the account
according to the rules and principles established in the judgment
of this Court. The master was sworn in open court, faithfully to
perform the duties of his appointment. On the same day the master
ordered a meeting to be held on 6 March, which was adjourned to the
8th, when he commenced the reference by taking testimony in behalf
of the complainant, and it was adjourned to the next day. The
meeting was then adjourned to 24 March, when other testimony was
taken; was then adjourned to 1 April; thence, on the application of
the defendant, was adjourned to 15 April, and the reference was
closed the day after. All the meetings were attended by the
parties, the complainant being represented by counsel, and the
defendant having been personally present, aided by counsel. After
these proceedings were had, the defendant's counsel, in November
following, obtained an order from the court upon the complainant to
show cause why the "suit
Page 38 U. S. 365
should not be stricken from the docket, the bill of the
complainant dismissed, or the suit abated," which rule was
returnable on 1 December. The grounds relied upon to sustain this
motion were,
1. That Edward Livingston, the former complainant, departed this
life on ___ day of _____ and before the hearing of the cause in
this Court, at the spring term thereof in 1836.
2. The said Livingston departed this life before the making or
enrollment of the decree at the spring term of the year 1836;
consequently the court could not then entertain any jurisdiction of
the cause.
3. This cause has never been regularly revived in the name of
the present complainant, nor could it be so revived by the laws and
usages of chancery practice, Mrs. Livingston claiming as a devisee.
This rule was continued from time to time under sundry orders of
the court until 18 December, when the court rejected and overruled
the motion. This motion we have noticed not only because it was a
singular attempt to oust the jurisdiction of the court over the
cause, after it had been decided on its merits in the Supreme
Court, and the court below was acting under its mandate, but
because from the time when it was made and when the rule was
granted, the defendant having not before objected to the reference
to the master and having joined in all the proceedings under that
reference, it cannot be viewed in any other light than an attempt
to prevent the master's report from being returned to the court
instead of contesting its conclusion, and the master's proceedings
under the mandate, by regular exceptions. It presents an anomaly
without any parallel in the history of chancery proceedings,
placing an inferior tribunal, acting under the mandate of a
superior, in the attitude of reversing the judgment of the latter
-- calling upon it to disregard the mandate altogether -- to revoke
its own proceedings under such mandate -- and in effect to act in
contradiction to the sole authority by which the district court was
in possession of the cause. But the motion being overruled, on the
same day the master presented his report to the court, which was
read and filed. The following exceptions were then made to the
report of the master by the defendant: :
1. That chancery practice has been abolished by a rule of the
court, and such proceeding is unknown to the practice of the
court.
2. The master has erred in not allowing to the defendant the
thousand dollars, with interest, paid to Morse, or some part
thereof.
3. The master's report does not show that it reports all the
evidence taken before the master.
4. The master, in making his estimates and calculations, has not
pursued the mandate of the court.
5. It appears from the master's report that the stores were
rented from November to November, and he erred in assuming 1 April
as the period of payment of annual rent.
6. A reasonable allowance should have been made to Story for the
costs and risk of collecting rents.
Page 38 U. S. 366
7. The master erred in all his charges against the defendant;
and failed to allow the defendant his proper credits.
All of these exceptions, except the third, are irregularly
taken, and might be disposed of by us without any examination of
them in connection with the master's report. They are too general,
indicate nothing but dissatisfaction with the entire report, and
furnish no specific grounds, as they should have done, wherein the
defendant has suffered any wrong or as to which of his rights have
been disregarded. Strictly, in chancery practice, though it is
different in some of our states, no exceptions to a master's report
can be made which were not taken before the master, the object
being to save time and to give him an opportunity to correct his
errors or reconsider his opinion. Dick. 103. A party neglecting to
bring in objections cannot afterwards except to the report,
Harr.Ch. 479, unless the court, on motion, sees reason to be
dissatisfied with the report and refer it to the master to review
his report, with liberty to the party to take objection to it. 1
Dick; 290; Madd. 340, 555. But without restricting exceptions to
this course, we must observe that exceptions to a report of a
master must state, article by article, those parts of the report
which are intended to be excepted to. Exceptions to reports of
masters in chancery are in the nature of a special demurrer, and
the party objecting must point out the error; otherwise the part
not excepted to will be taken as admitted.
Wilkes v.
Rogers, 6 Johns. 566.
The court directed the master to amend his report so as to state
that it contained all the evidence given under the reference, which
the master did by his certificate and this responses of the
defendant's third exception. To that certificate the defendant's
counsel did not object. In the subsequent proceedings in the court
upon the report, it was treated by both parties as conclusive of
the fact that all the evidence had been disclosed in the report as
it was originally made. The report was then before the court upon
exceptions by the defendant, which were argued by the counsel of
the respective parties, and the court overruled the exceptions on
15 January and decreed the defendant to pay to the complainant,
within six months from that day, thirty-two thousand nine hundred
and fifty-eight dollars eighteen cents, the sum found by the master
to be due by the defendant to the complainant, and further "decreed
that the master's report be in all other respects confirmed, and
that the defendant conform to the decree of the supreme court in
the case." After this decree was made, the defendant filed a
petition for a rehearing. The grounds taken in the petition are
reasons against the confirmation of the report on account of the
court's proceedings upon it, by which the defendant alleges he had
been deprived of an opportunity to except to the report as it had
been amended. That the cause upon the report had not been docketed
regularly for trial, on account of the master's having taken
testimony
viva voce when it should have been by
depositions upon interrogatories; that the court in its decree had
not disposed of the question of costs, and
Page 38 U. S. 367
that the court, in its general direction to the defendant to do
all things directed by the mandate of the supreme court, had left
it uncertain to whom the defendant was to surrender and to convey
the property. The court, after this petition had been answered by
the complainant, heard an argument upon the motion. The judge,
finally overruled the application for a rehearing and decreed that
the defendant should surrender and reconvey the property described
in the bill of complaint to Louise Livingston, widow and executrix
and devisee of Edward Livingston, deceased, and to Cora Barton,
daughter and forced heir of said Edward Livingston, in conformity
to the decree of the Supreme Court of the United States, and to the
decree heretofore made, in pursuance thereof, by this Court. This
decree was made on 6 February, 1837.
The cause is now regularly before this Court on an appeal from
the decree of the district court overruling the defendant's
exceptions to the master's report and confirming the same. But
before we consider the exceptions, we think it proper to notice the
petition for a rehearing. Upon any matters in that petition not
directly touching the master's report, but assuming what this Court
did or did not decide or direct to be done by its mandate, it is
only necessary to repeat what this Court said in
Ex
parte Story, 12 Pet. 343. "The merits of the
controversy were finally decided by the Court, and its mandate to
the district court requires only the execution of its decree." As
to the objection that the defendant had not an opportunity to
except to the master's report as it was amended, it is founded upon
a misconception of the fact, for the defendant's third exception,
that the report did not show that it reports the evidence, and the
court simply allowed the master to certify that it did. If this
certificate had not been allowed by the court, the exception could
not have prevailed unless the several allegations that the evidence
did not appear in the report had been accompanied by a
specification of the particulars in which it was deficient. On such
an exception, supported by the oath of the party making it or
without oath if the opposite party joins in the exception without
requiring the exception to be verified by affidavit, the court
would call upon the master to report the evidence. We have noticed
this exception as a point of practice. The truth of the exceptions
not appearing on the face of the proceedings and not being
supported by affidavit or otherwise, the court cannot notice the
exceptions.
Thompson v. O'Daniel, 2 Hawk. 307.
The next objection in the petition for a rehearing, that the
master, under the order of the court, did not possess the power to
take testimony and that if he did possess such power, then it was
irregularly exercised because it should have been by depositions
upon interrogatories, we notice also as points of practice not now
to be settled, but which have been long since determined. In a
reference to a master for any purpose, the order need not
particularly empower him to take testimony if the subject matter is
only to be ascertained by evidence. And in taking evidence,
though
Page 38 U. S. 368
the better plan is to take the answers in writing upon written
interrogatories, he may examine witnesses
viva voce, the
parties to the suit being present personally or by counsel, not
objecting to such a course (as was the case in this instance) and
joining in the examination. Such is the general rule in chancery.
In many if not in most of the states in this Union, however, it is
the practice for the master to examine witnesses
viva voce
and to take down their answers in writing. But the objection in
both its parts is answered and overruled by the twenty-eighth rule
of practice for the courts of equity of the United States. That
rule provides for bringing witnesses before the master, for their
compensation, for an attachment for a contempt, when a witness
refuses to appear upon subpoena, and the last clause of it,
allowing the examination of witnesses
viva voce when
produced in open court. We think the same reasons which allow it to
be done in open court permit it to be done by a master. But it is
said the decree of the district court does not provide for the
payment of costs. This too is a point of practice which we remark
need not be a part of the decree or judgment, though it often is
so, as the payment of them in most cases depends upon rules, and
when rules do not apply, upon the court's order in directing the
taxation of costs.
We now proceed to examine the exceptions taken by the defendant
to the master's report. The first, "That chancery practice has been
abolished by a rule of the District Court of Louisiana, and that
such proceeding is unknown to the practice of the court," is not an
exception to the report, but a denial of the propriety of the
reference to the master, also of the court's authority to make such
a reference under the mandate, and involves the assertion that the
rule, if any such exist, may control the mandate and set it aside
as a nullity. No such rule appears in the record. If any such
exist, it certainly was disregarded in this instance (as it should
be in every other by the court) or was not deemed applicable to a
case like the one before it. We think the occasion, however, a
proper one for this Court to remark, if any such rule has been made
by the District Court in Louisiana, that it is in violation of
those rules which the Supreme Court of the United States has passed
to regulate the practice in the courts of equity of the United
States. They are as obligatory upon the courts of the United States
in Louisiana as they are upon all other United States courts, and
the only modifications or additions which can be made in them by
the circuit or district courts are such as shall not be
inconsistent with the rules prescribed. Where the rules prescribed
by the Supreme Court to the circuit courts do not apply, the
practice of the circuit and district courts shall be regulated by
the practice of the High Court of Chancery in England. The parties
to suits in Louisiana have a right to the benefit of them; nor can
they be denied by any rule or order without causing delays,
producing unnecessary and oppressive expenses, and in the greater
number of instances an entire denial of equitable rights.
This Court has said upon more than one occasion,
Page 38 U. S. 369
after mature deliberation upon able arguments of distinguished
counsel against it, that the courts of the United States in
Louisiana possess equity powers under the Constitution and laws of
the United States; that if there are any laws in Louisiana
directing the mode of procedure in equity causes, they are adopted
by the act of 26 May, 1824, and will govern the practice in the
courts of the United States.
34 U. S. 9 Pet.
657. But if there are no laws regulating the practice in equity
causes, we repeat what was said at the last term of this Court in
Ex parte Poultney v. La
Fayette, 12 Pet. 474,
"That the rules of chancery practice in Louisiana mean the rules
prescribed by this Court for the government of the courts of the
United States under the Act of Congress of May 8, 1792, chapter
137, section 2."
These rules recognize the appointment of a master; the court
below in making this reference, acted under them and the mandate,
and it could not, therefore, sustain the exception to the master's
report. On the second exception, we need only remark that the
master apprehended rightly the decision and mandate of the court.
The payment to Morse by the defendant was not considered an
expenditure on account of the property, nor on account of
Livingston. It was intended to be excluded from the credits to
which the defendant was entitled.
The third exception has been already disposed of. It was only a
permission to the master to certify that his report contained all
the evidence taken under the reference.
The fourth and seventh exceptions, on account of their
generality and indefiniteness, may be considered in connection. The
first of them is that the master, in making his estimates and
calculations, has not pursued the mandate of the court, and the
seventh is that the master erred in all his charges against the
defendant, and failed to allow the defendant his proper credits. In
what particular the mandate has not been pursued is not stated. It
is a general objection to the whole report, imputing to the master
a misconception of the principles upon which the account was to be
taken, and amounts to this, that if the court shall see upon the
face of the report and the master's proceedings, error against the
defendant, it will correct it though no exception has been filed.
In this view of it, the defendant shall be protected if the court
shall detect error in the report. As to error in charges and a
denial of proper credits to the defendant, we remark that without
some specification of erroneous charge and of disallowed credit, it
is impossible to determine what the defendant objects to as a
charge or claims as a credit. Was any credit refused which was
claimed, except that of the $100 to Morse? That, we have said, was
rightly refused. Was he not allowed all other credits on the
general account of expenditures? Did the defendant, whilst the
reference was in progress, or after the report upon it was made,
claim any credit by the exhibition of any account? Did he ask to
introduce any evidence to the master in support of any credit? Did
he claim any other credit than such as are to be found in the
account, giving, on his own oath, a statement
Page 38 U. S. 370
of his expenditures, and of the rents of the property, from 10
August, 1822, to 26 January, 1829? Nothing of the kind appears. On
the contrary, there is in the report a statement by the master
which is conclusive of the fact, as it has not been denied, that
the defendant, though repeatedly called upon, and after having
repeatedly promised to give an account, and having had five weeks
to furnish it, refused to give any account.
The parties were summoned to the reference by the master, on 6
March. On the 8th, the defendant, Story appeared in person,
accompanied by counsel. Upon his suggestion, however, that one of
his counsel was absent from the city, and that he had been so much
occupied as not to have had leisure to complete his account, with
his request that the hearing should be postponed, though it was
opposed by the complainant's counsel, the master adjourned the
reference to give the defendant time to furnish his account and to
surcharge the account of the expenditures and rents up to the last
of January, 1829. The right to correct any errors in that account
was conceded to him; the account was given in evidence subject to
such concession. Two witnesses were then sworn on the part of the
complainant without objection, and were examined by both parties.
The meeting was then adjourned to the next day, the parties again
attended, but the witnesses who had been summoned not being
present, the defendant again suggested the propriety of adjourning
for a few days, when he should be ready to present his account,
which he had almost ready. It was assented to. The meeting was
adjourned to 24 March. On that day the parties appeared before the
master, a witness was examined on the part of the complainant, and
the defendant again declared he had been prevented by important
business from completing his account, and he requested a little
more time to make it complete. The complainant's counsel consented
to an adjournment to 5 April. On that day, the defendant again
requested further time; the case was continued to 15 April, and
then the defendant said, he did not intend to furnish any account,
but urged that as the account of expenditures and rents up to the
last of January, 1829, had been received as evidence, that it must
be considered as conclusive of the expenditures which had been made
on account of the property. This was allowed to be correct. We have
then the refusal of the defendant to furnish an account and proof
that he did not claim any other credit than those in that account.
With what propriety can a denial of credits be urged as an
exception to the report? The defendant was the only person who
could furnish an account of the credits to which he supposed
himself to be entitled. He refused to do so. To allow him to say
there is error in the report in this respect would permit him to
take advantage of his own wrong and to defeat the complainant's
right by artifice. Nor is the account of expenditures and receipts
up to the last of January, 1829, now examinable (except as to mere
errors in computation), either as regards the principal or
interest, the defendant being concluded by his admission of it,
Page 38 U. S. 371
when he claimed the expenditures as a setoff against his own
statement of the rents.
What has been said of the fourth and seventh exceptions applies
to the fifth, which is that a reasonable allowance should have been
made to the defendant for the costs and risk of collecting the
rents. If under the mandate any such allowance could be made, the
claim for it should have been presented to the master supported by
evidence of what was the customary compensation for such services
if the service is not compensated by a law of Louisiana. A mere
claim for a reasonable allowance cannot give a right to any, and of
course is no valid exception to the report. It is the case of a
party before a master who merely claims for general expenses,
without stating particulars. Under such a claim he will be allowed
nothing.
Methodist Episc. Ch. v. Jacques, 3 Johns.Ch.
81.
Six of the exceptions having been disposed of, the seventh only
remains to be considered. It is
"that it appears from the master's report that the stores were
rented from November to November, and he erred in assuming 1 April
as the period of payment of annual rent."
It was said in argument that computing the payment of annual
rent in extinguishment of the defendant's debt on 1 April is in
effect to deprive him of interest for a part of the year, as the
aggregate of the rent was not in fact received; that it is to allow
interest upon rents and profits, contrary to the mandate, and
established decisions. This would certainly be so if the rent had
only been received at the end of the year. But if the rents were
payable at intervals in the year and were actually so received, and
if the half or any other portion of the ascertained annual rent
shall extinguish the interest upon the debt when it was received,
and reduce the principal, why should the whole debt continue to
draw interest? Surely, to allow this would be to vary the
obligations of these parties to each other differently from what
would be their respective rights in any other case of a debt
drawing interest upon which a payment had been made, which paid the
interest and part of the principal. Is there any difference in the
effect of a payment whether made in person by the debtor or if it
arises from the income of his property?
The correct rule in general is that the creditor shall calculate
interest whenever a payment is made. To this interest the payment
is first to be applied, and if it exceed the interest due, the
balance is to be applied to diminish the principal. If the payment
fall short of the interest, the balance of interest is not to be
added to the principal so as to produce interest. This rule is
equally applicable whether the debt be one which expressly draws
interest or on which interest is given in the name of damages.
Smith v. Shaw's Admin., 2 Wash. C.C. 167; 3 Cowen Note A.
87. This then being the rule, if the fact is probable in this case
that the income of the property received at any time in the course
of the year did pay interest and a part of principal, the defendant
cannot complain, he being the receiver of the money and refusing to
give any account of the aggregate or its parts when received,
Page 38 U. S. 372
if the master has taken a date for the computation of the
aggregate rent as payment which places the parties upon an
equality.
Besides, the mandate does not restrict the right of the
complainant to a credit for the aggregate of the rent at the end of
the year. It does not allow interest upon the rent, but directs the
rents to be applied to the payment of the sums incurred in building
and repairing; secondly, to the interest on the sums which have
been advanced on the loan, or in the improvement of the lot; and
thirdly to the discharge of the principal of the loan. The fair
inference from the silence of the mandate as to the time when the
rents are to be credited is that are to be so when they are
received if the interest and part of the principal are paid. This
is the general rule for the application of payments, and is the
rule of equity which does substantial justice.
What then is the case of the defendant in this particular? He
has a debt drawing five percentum interest, yielding annually
$1,135.55, and is in possession of the property of the complainant,
giving a rent annually, after deducting $700 for repairs and taxes,
of $8,000. But, it may be asked, by what means or evidence did the
master ascertain the amount of rents, and that they were paid at
such times and in such amounts as to justify the computation of the
annual aggregate as a payment before the expiration of the
year?
First, he must have known that leases of houses are not made,
either in Louisiana or elsewhere, for the payment of the entire
rent at the end of the year; next, he had an account made by the
defendant, verified by his oath, showing that for seven years the
rents of this property were received by him, principally in monthly
payments, in the year 1828 altogether so, and then, at intervals of
two, three, or four months, in sums over seventeen hundred dollars
up to three thousand. The rents received in January and February,
1828, exceeded the amount of interest upon the principal debt or
loan by six hundred dollars. The rent in that account, received on
26 January, 1829, was $950, and the account states a thousand as
due on 1 February, 1829. The amount of the annual rent the master
ascertained from the tenants, who were witnesses before him, not to
be less than eight thousand dollars.
Let it be remembered that the question now is not whether the
defendant shall pay interest upon rents and profits, but the time
when he shall credit a payment upon the debt which discharges the
interest and a part of the principal. His debt was carrying
interest, and therefore his receiving the rents of the property at
any time in a sum sufficient to pay the interest and part of the
principal, should be applied at the date when it was received. The
defendant could not claim an exemption from the operation of this
general rule in virtue of any relation between himself and the
complainant, as trustee, bailiff, attorney, or agent of the latter,
who was always ready to pay when called upon, who had not mingled
the rents with his own money and not used it as his own, or that it
had been kept on hand to abide the decree of the court. If he had
been in either of these attitudes, especially the latter, his own
oath, if not
Page 38 U. S. 373
controlled by other testimony and the circumstances of the case,
would have entitled him to a continued accumulation of interest
upon the debt, without any credit of the rent, until the final
decree had directed a sum to be paid to the complainant.
Under the circumstances of this case, the defendant refusing to
give any account, yet admitting that he had received the rents, at
intervals in the year, when we consider such to be the usual way of
renting houses, he having agreed that the certificates of the
tenants should be received as evidence of the amount of rents
respectively paid by them -- the tenants having proved the amount
of the annual rent of the premises -- we conclude that the master
did right in assuming an intermediate point in the year for the
computation of the annual amount of rent, in the absence of all
proof when its parts were paid, and that it was the fairest way of
carrying out the substantial intention of the mandate of this
Court. But suppose, as was urged in argument, that the mandate had
directed an annual application of the rent of the premises to the
payment of the debt of the defendant, without specifying that the
interest was to be calculated to a date contemporaneous with the
last payment of the rent, and the debt was one carrying interest
de die in diem. The mandate could only be executed
according to the general rule in the case of such a debt by making
every receipt for rent in discharge first of the interest, then of
the principal.
Raphael v. Boehm, 11 Vesey 91. The mandate
is to be interpreted according to the subject matter to which it
has been applied, and not in a manner to cause injustice.
This is not like the case of a decree directing annual rents
with the view of compounding interest. The question now under
consideration has been ruled as it is now decided in
Bennington
v. Harwood, 1 Turner & Russell Ch. 477, a case upon a
master's report of an account, under a decree that the master
should set an annual value by way of rent upon the premises, the
mortgagee being in possession; the Master of the Rolls decided that
a mortgagee can never receive more than his principal and interest,
and said:
"Now if in the early part of the year a payment is made to him,
exceeding the interest which is then due, and he is nevertheless
allowed interest on the whole of his principal down to the end of
the year, what is the profit which he derives from his mortgage, in
the interval between the date of that payment, and the date of the
annual rent? It is clear that a part of his principal has been
repaid to him, and yet he receives interest upon the whole of it;
in other words, he gets more than five percent on the sum for which
he is actually a creditor. Suppose that the sum paid to Eadon on 2
February had been equal to the whole of the �500, with the arrears
of interest calculated to that day, would he have been entitled to
interest up to 5 July? Is it possible that such should be the
effect of a direction to make annual rents? The sums which a
mortgagee in possession receives in respect of the mortgaged
premises, at times intermediate between the dates of the annual
rents,
Page 38 U. S. 374
must be applied, when they exceed interest, to the reduction of
the principal, and in the present case that course is clearly
prescribed by the very words of the decree."
Now what was the decree in
Bennington v. Harwood? It
was the usual decree against a mortgagee in possession, containing
the common directions that the master should tax him the costs of
suit and so set an annual value by way of rent upon the premises,
with further directions that the sums received in February 1805,
were to be applied forthwith, first to the discharge of the then
existing arrear of interest, and next to the diminution of the
principal. The master made the rest on 5 July instead of doing so
in February, and the counsel contended in that case -- as counsel
have done in this -- that a direction for annual rents excludes all
rents which are not annual. But that position was not sustained by
the Master of the Rolls on general principles, though he concludes
by saying in the present case, "that course is clearly prescribed
by the words of the decree." The defendant here is substantially a
mortgagee in possession, having a debt due to him, carrying
interest
de die in diem, and must abide the general rule
for the application of payments to it.
This, then, is not a case in which the defendant has been
deprived of a day's interest by the master's report, nor one in
which interest has been allowed upon rents, and profits, but a case
in which the application of a sum received by the creditor is made
to prevent his whole debt from drawing interest after a part of it
was probably paid. Of this there is a violent presumption. The
general principle is, as it was ruled in
Breckenridge v.
Brooks, 2 A.R.Marshal 341, that a mortgagee in possession is
not to pay interest upon rents, but as the Chief Justice said in
that case,
"We will not say there may not be special circumstances which
would justify allowing interest upon rents received by a mortgagee.
We say in this that whenever a mortgagee in possession, having a
debt due to him, carrying interest
de die in diem, shall
collect an amount of rent, which will extinguish the interest and a
part of the principal, that he is bound so to apply it."
In
Fenwick v. Macey's Executors, 1 Dana 286, rents
received by a mortgagee were directed to be applied as they
accrued, to keep down the interest. In
Reed v. Lansdale,
Hard. 7, it was ruled that the equitable rule in redeeming when the
mortgagee is in possession is to charge the profits of the
mortgaged property against the principal and interest.
Having thus disposed of the exceptions to the report and
considered the principal argument of counsel against its
confirmation, we remark that there is nothing on the face of the
report adverse from the defendant's rights which should cause it to
be set aside. Even with the computation of the rents as a credit on
1 April, he is still a gainer, for the difference between the
calculation so made and what would have been the amount he would
have received if the rents had been credited on 1 November is more
than compensated by the use of large sums of money received by
Page 38 U. S. 375
him as rent after the total extinguishment of his debt. The
complainant, however, took no exception to the report, and it must
stand good against her.
We notice in conclusion an objection to the report urged in the
defendant's petition for a rehearing and in the argument of the
case. It is that the decree of the court below is inconclusive as
to whom the property is to be reconveyed. This is not an objection
which the defendant can be permitted to urge. When he shall obey
the decree in reconveying and surrendering the property, his
responsibility will be at an end. As to the defendant, the decree
of the court is conclusive against all persons who may legally
claim from him any interest on the property as devisee or heir of
Edward Livingston. As to those, the law of Louisiana fixes their
respective rights, and upon those rights this Court has not nor
does it intend to adjudicate in this cause. The general rule
certainly is that all persons materially interested in a suit ought
to be parties to it, either as plaintiffs or defendants, that a
complete decree may be made between those parties.
Caldwell
v. Taggart, 4 Pet. 190. But there are exceptions to
this rule, and one of these is where a decree in relation to the
subject matter of litigation can be made without a person who has
an interest having that interest in any way concluded by the
decree.
Bailey v. Inglee, 2 Paige 122.
See also Joy
and Wurts, Wash.C.C. 577, where the rule is comprehensively
expressed in respect to active and passive parties and where a
party is not amenable to the process of the court or where no
beneficial purpose is to be effected by making him a party, such
interest must be a right in the subject of controversy which may be
affected by a decree in the suit.
Such is the case as to Cora Barton in this cause. The subject
matter is to obtain from the defendant money decreed to be due to
Edward Livingston and the surrender and reconveyance of property
forming a part of the real estate of Edward Livingston. After his
death, his widow, as executrix, was made a party to the bill, and
the decree in that suit cannot in any way determine the rights of
Cora Barton in her father's estate. Besides if there was any force
in the objection, it comes too late, for where a complainant omits
to bring before the court persons who are necessary parties, but
the objection does not appear upon the face of the bill, the proper
mode to take advantage of it is by plea or answer. If the objection
appears on the face of the bill, the defendant may demur.
Mitchell v. Lenox, 2 Paige 280. The objection of a
misjoinder of complainants should be taken either by demurrers or
in the answer of the defendants; it is too late to urge a formal
objection of this kind for the first time at the hearing.
Trustees of Watertown v. Cowen, 4 Paige 510. So also it
was ruled in 3 Paige 222.
We might crowd this opinion with decisions to the same point
from the English and American chancery reporters. But further the
objection cannot prevail, for it does not show that the process of
the court could reach Cora Barton. In
Mallow v.
Hinde, 12 Wheat. 193, it was
Page 38 U. S. 376
ruled that wherever the case may be completely decided as
between the litigant parties, an interest existing in some other
person whom the process of the court cannot reach, as if such
person be a resident of another state, will not prevent a decree
upon the merits. And, in the same case it was decided, where an
equity cause may be finally decided as between the parties litigant
without bringing others before the court who would generally
speaking be necessary parties, such parties may be dispensed with
in the circuit court if its process cannot reach them, as if they
are citizens of another state. But when the rights of those not
before the court are inseparably connected with the claim of the
parties in the suit, the peculiar constitution of the circuit court
is no ground for dispensing with such parties.
25 U. S. 12
Wheat. 194. In whatever point of view, therefore, the objection is
considered, whether as to the interest of Cora Barton in the suit,
the time when the objection has been made, or the manner in which
it is made, in not showing that the process of the court could have
reached her, is of no moment in this case.
This Court, in regard to her, only directs her name to be
inserted in the reconveyance, it having been ascertained by the
master that she is a forced heir of Edward Livingston, and that
fact being admitted by the defendant, and the admission of its
correctness being the foundation of his objection. The decree of
the court below affirming the master's report, and directing a
reconveyance of the property, is
Affirmed.
The cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Eastern
District of Louisiana and was argued by counsel. On consideration
whereof it is ordered adjudged and decreed by this Court that the
decree of the said circuit court in this cause affirming the
master's report be and the same is hereby affirmed. And this Court
doth order, adjudge, and decree that the defendant do, on or before
the tenth day of the ensuing term of the said circuit court, pay to
the complainant, Louisa Livingston, the sum of thirty-two thousand
nine hundred and fifty-eight dollars and eighteen cents, with
interest thereon, at the rate of five percent per annum from 15
July, 1837, to the time of payment. And this Court doth further
order, adjudge, and decree that the said defendant Story do on or
before the 10th day of the next term of said circuit court, by deed
convey to the said Louise Livingston and Cora Barton all the right,
title and interest in and to the premises in controversy derived to
and acquired by him by the deed of conveyance made by the said
Edward Livingston, with covenants of warranty against himself, and
his heirs and all persons claiming by, through, or under him, the
said Benjamin Story and that he deliver said deed into said court
and that he deliver the possession of the premises to said Louisa
Livingston, her agent or attorney, on or before the tenth day of
the next term of said circuit court. And this cause is remanded to
the said circuit court with instructions to carry this decree
Page 38 U. S. 377
into effect. And it is further ordered, adjudged, and decreed
that said circuit court retain this cause upon the docket for the
purpose of ascertaining, and decreeing the amount of the rents of
the premises from the first day of November, 1837, to the time when
possession thereof shall be surrendered according to this decree,
and with power to make such orders and decrees as may be necessary
for that purpose, and for the payment of the said rents from the
said first day of November, 1837, to the time of the surrender of
the possession, with five percent interest on the said rents from
the time said rents were received to the payment thereof. And this
Court doth further order, adjudge, and decree that the defendant do
pay the costs in this Court upon this appeal and the costs of the
reversal of the decree of the said circuit court by this Court at
its January term, 1837, and also such costs of the proceedings in
the said circuit court in this cause as the said circuit court
shall tax and order to be paid, and that the said circuit court do
issue execution therefor.