Where a sale of mortgaged property in Louisiana was made under
proceedings in insolvency, and the heirs of the insolvent filed a
bill to set aside the sale on the ground of irregularity, it was
necessary to make the mortgagees parties. They had been paid their
share of the purchase money, and had an interest in upholding the
The fact that such persons are beyond the jurisdiction of the
court is not a sufficient reason for omitting to make them
Neither the act of Congress nor the 47th rule of this Court
enables the circuit court to make a decree in a suit in the absence
of a party whose rights must necessarily be affected by such
decree, and the objection may be taken at any time upon the hearing
or in the appellate court.
The facts are sufficiently stated in the opinion of the
Page 60 U. S. 114
MR. JUSTICE NELSON delivered the opinion of the Court.
The bill was filed in the court below by two of the heirs of J.
J. Coiron against Alexander Lesseps, Laurent Millaudon, and others
to set aside a sale of a plantation and slaves to the two
defendants named in 1834 in pursuance of proceedings in a case of
insolvency before a parish court in the City of New Orleans.
The father of the complainants, having become insolvent in 1833,
applied to the court for liberty to surrender his property for the
benefit of his creditors, and that in the meantime all proceedings
against his person or property might be stayed, which application
was granted and the surrender of his property accepted.
Theodore Nicolet was appointed syndic of the creditors, and such
proceedings were had that a sale of the plantation and slaves was
directed in March, 1834, when the two defendants became the
purchasers. The inventory of the debts of the insolvent, which
accompanied his application to the parish court, exceeded $177,000,
and of his assets, $137,000. The assets sold for some $77,000, and
after satisfying the charges and expenses of the proceedings, the
balance was distributed among the creditors under the direction of
the court. This amount, some $60,000, fell short of satisfying the
claims of the two principal creditors, Van Brugh Livingston, and
Harriet, his wife, of New York, and the firm of Nicolet & Co.,
of New Orleans, which were secured upon the estate by
The object of this suit is to set aside the sale on the ground
of irregularities in the insolvent proceedings which are set forth
in detail in the bill.
The court below, after hearing the case upon the pleadings and
proofs, decreed against the complainants and dismissed the
The record is quite voluminous, but we have stated enough
Page 60 U. S. 115
of the facts to present the questions upon which we shall
dispose of the case.
According to the law of Louisiana, on a surrender by the
insolvent of his property for the benefit of creditors, the estate
vests in the latter sub modo,
and is disposed of by them
through the agency of the syndic, under the supervision and control
of the court before whom the proceedings take place. 2 Rob. 193,
They appoint the syndic and fix the terms and conditions of the
sale, and have the charge of the estate in the meantime between the
surrender and final disposition.
The creditors therefore are the parties chiefly concerned in
these proceedings, and as it respects those to whom the proceeds of
the estate have been distributed, they are directly interested in
upholding the sale, for if it is set aside and the proceedings
declared a nullity, they would be liable to refund the share of the
purchase money each one had received in the distribution.
A court of equity, in setting aside a deed of a purchaser upon
grounds other than positive fraud on his part, sets it aside upon
terms, and requires a return of the purchase money or that the
conveyance stand as a security for its payment. 1 J.Ch. 478; 4 J.
This constitutes the essential difference between relief in
equity and that afforded in a court of law. A court of law can hold
no middle course. The entire claim of each party must rest, and be
determined at law, on the single point of the validity of the deed,
but it is the ordinary case in the former court that a deed not
absolutely void, yet, under the circumstances, inequitable as
between the parties, may be set aside upon terms.
Nicolet & Co. and Van Brugh Livingston and wife, the
mortgage creditors or their legal representatives, were therefore
necessary parties to the bill, as any decree made in the case
disturbing the sale may seriously affect their interests.
This objection has been anticipated in the bill, and an averment
made that these parties were out of the jurisdiction of the court.
But it is well settled, that neither the Act of Congress of 1839, 5
Stat. 321, sec. 1, nor the 47th rule of this Court enables the
circuit court to make a decree in a suit in the absence of a party
whose rights must necessarily be affected by such decree, and that
the objection may be taken at any time upon the hearing or in the
appellate court. 58 U. S. 17
130; 26 U. S. 1
We think the decision of the court below was right in dismissing
the bill, and therefore
Affirm the decree.