The language of a decree in chancery must be construed in
reference to the issue which is put forward by the prayer for
relief and other pleadings, and which these show it was meant to
decide. Hence, though the language of the decree be very broad and
emphatic -- enough so, perhaps, when taken in the abstract merely,
to include the decision of questions between codefendants -- yet
where the pleadings, including the prayer for relief, are not
framed in the way usual in equity when it is meant to bring the
respective claims and rights of codefendants before the court, but
are framed as in a controversy between the complainant and
defendant chiefly or only -- such general language will be held
down to these two principal parties alone.
These were appeals from decrees of the Circuit Court for
Wisconsin, sustaining demurrers to two bills of complaint. Both
bills and the essential question in each were the same, certain
small differences between the bills being noted further on. The
case was this:
In September, 1857, the La Crosse & Milwaukee Railroad
Company, a company organized to build a railroad from Milwaukee to
La Crosse across the State of Wisconsin, but whose road was not
then completed, entered into articles of agreement with Chamberlain
for the double purpose of insuring the completion of the road and
securing to him a large debt alleged to be due from the company. By
this contract the road was leased to Chamberlain in consideration
that he would apply the income to the working and extension of the
road, to the payment of interest on debts of the company, and to
the payment of Chamberlain's own debt, on satisfaction of which,
either by application of the income or otherwise, the road was to
be restored to the company. After the execution of this contract
and in the following month, the company confessed a judgment in his
favor for $629,089.72. Afterwards, and in the same month,
Page 70 U. S. 705
Cleveland obtained a judgment against the company for
$111,700.71.
To enforce the satisfaction of this judgment by sale of the road
and other property of the La Crosse Company, as for brevity the
corporation was usually styled, Cleveland filed his bill in the
District Court of the United States for the District of Wisconsin
against that company and Chamberlain, with whom were joined some
other defendants.
In this bill, according to the account given of it by the
complainants in the present cases, Cleveland insisted that the
lease to Chamberlain and the judgment confessed in his favor were
without consideration and in fraud of creditors, and that they
hindered the collection of his judgment, and he prayed that they
might be declared void. The La Crosse Company and Chamberlain
answered denying all fraud, and Cleveland took issue by
replication.
The court found against the respondents, and at January Term,
1859, decreed that the articles of agreement between the La Crosse
Company and Chamberlain "be and hereby are
vacated,
annulled, and made
void, so that the same shall not
be of
any force and effect whatever," and that
"the judgment and all executions and proceedings thereon be and
hereby are
vacated, annulled, made void, and
set
aside so that the same shall have
no effect
whatever."
The decree also "perpetually enjoined and restrained"
Chamberlain from "controlling or meddling with the railroad or
anything belonging to it under the articles of agreement."
In 1860, a company -- called for brevity the Minnesota Company
-- succeeded, through a purchase and through a subsequent
organization, such as is allowed by the statutes of Wisconsin, as a
railroad company, in order to take and manage the property acquired
by the purchase, to all the property, franchises, and rights of the
La Crosse Company, subject, however, to prior encumbrances.
This Minnesota Company, being thus interested in the matter,
alleged by their bill below (the first of the two cases now under
review) that by this decree the agreement and the
Page 70 U. S. 706
confessed judgment were made absolutely void not only against
Cleveland, the judgment creditor,
but also as between
Chamberlain and the La Crosse Company, and that Chamberlain,
notwithstanding this decree, having purchased the Cleveland
judgment, remained in possession of the road, receiving large sums
of money, amounting altogether to more than $200,000, for which he
was bound to account. They prayed, therefore, that Chamberlain
might be ordered to apply to the payment of the Cleveland judgment,
from the money so received, a sum sufficient for that purpose; that
he might be ordered to account; that he might be credited with the
sum applied to the Cleveland judgment; that the balance be
ascertained; that the Cleveland judgment be ordered to be
cancelled; and that the ascertained balance, if against
Chamberlain, be paid to the Minnesota Company, or, if in his favor,
by the Minnesota Company to him. They also prayed further
relief.
The bill of Scott & Graham -- the second of the two bills
below and now here for review -- was, as already signified,
essentially like the first, that of the Minnesota Company. Like it,
it did not seek specifically to set aside Chamberlain's lease, but
while prominently making its alleged fraudulent nature inducement
in this case, went on the assumption that the lease and judgment
were already vacated as to everybody and for all purposes by the
decree of January, 1859. The bill, however, in this second case,
did allege also that the lease was
ultra vires and void,
therefore, on its face, as also void because, by its terms,
hindering creditors; but its general tenor was, as already
mentioned, and as in the first bill the Minnesota Company asked
that the fund arising from the working of the road should be
applied in satisfaction of the Cleveland judgment, for an account
&c., so the only prayer of Graham & Scott was that the same
money might be applied in payment of
their debt.
The essential question in both cases, therefore, considered by
the court was this: whether the lease made to Chamberlain, and the
judgment confessed in his favor by the La Crosse Company, in 1857,
was annulled as between the
Page 70 U. S. 707
parties to the lease and judgment by the decree of the
District Court of the United States for the District of Wisconsin
at the January Term 1859, or only as against Cleveland, the
judgment creditor, in whose suit against the company and
Chamberlain the decree was rendered?
The court, it may here be said, had been informed by the counsel
for the Minnesota Company and for Graham & Scott, as well as by
the counsel for Chamberlain, that there was now pending in the
Circuit Court of the United States for the District of Wisconsin a
suit brought by the company against Chamberlain for the specific
purpose of setting aside the contract between Chamberlain and the
La Crosse Company.
Page 70 U. S. 709
THE CHIEF JUSTICE delivered the opinion of the Court.
These two appeals present the same controlling question to be
decided upon the same facts and principles. That question is were
the lease made to Chamberlain and the judgment confessed in his
favor by the La Crosse Company annulled as between the parties to
the lease and judgment by the decree of 1859, or only as against
Cleveland, the judgment creditor, in whose suit against the company
and Chamberlain the decree was rendered?
Page 70 U. S. 710
It was the manifest intention of the Minnesota Company, in the
bill filed by it, as the pleadings show, to seek a decree in this
suit only upon hypothesis of the nullity of the Cleveland judgment,
and the prayer for particular relief was framed accordingly. We are
also informed by counsel that there is now pending in the Circuit
Court of the United States for the District of Wisconsin a suit
brought by the company against Chamberlain for the direct object of
setting aside the contract between Chamberlain and the La Crosse
Company. In disposing of the cause before us, therefore, we shall
not inquire whether that contract was or was not one which the La
Crosse Company could legally make, nor whether the contract and the
judgment were or were not in law void absolutely or as against
creditors only. These matters may be better and more regularly
investigated and passed upon in the cause now before the circuit
court, and if necessary, upon appeal from the decree in that cause.
At present, we shall only inquire into the effect of the decree of
the district court upon the article of agreement and the judgment
which it declared to be void.
We have seen already that, according to the allegation of the
Minnesota Company in their bill now before us, the issue between
Cleveland, the complainant, and the La Crosse Company and
Chamberlain, the respondents in the cause in which that decree was
made, was upon the question whether the agreement and judgment were
or were not void as against Cleveland and his judgment. The decree
was evidently intended to determine that issue. It was, as
evidently, not intended to determine the question whether the
making of the agreement was beyond the corporate powers of the La
Crosse Company, for there are no terms which affirm its inherent
invalidity without regard to intent. It is our duty to construe the
decree with reference to the issue it was meant to decide. Its
words are very broad and very emphatic, but we cannot say that they
were intended by the district court to have any greater effect than
to avoid and set aside, as against Cleveland, the agreement and the
judgment impeached by his bill. We think, on the contrary, that a
decree
Page 70 U. S. 711
having such an effect could not have been properly rendered upon
the pleadings and issue in that cause. Neither the La Crosse
Company nor Chamberlain sought to avoid the agreement or the
judgment, nor asked any relief whatever as against each other.
Indeed, the case shows that both regarded the agreement and the
judgment as essential to their respective interests. We cannot
ascribe to any court an intention, by a decree on such pleadings,
to annul such an arrangement as between the parties to it, nor
could we approve such action even were the intent clear beyond
question. No question was made between Chamberlain and the La
Crosse Company, nor could any question arise between them of any
such nature as that between those parties and Cleveland, nor could
they be required, in a suit prosecuted by Cleveland to enforce
satisfaction of his judgment by setting aside their arrangement as
void against creditors, to submit that arrangement, as between
themselves, to the action of the court.
It is true that it is the constant practice of courts of equity
to decree between codefendants upon proper proofs, and under
pleadings between plaintiffs and defendants, which bring the
respective claims and rights of such codefendants between
themselves under judicial cognizance. In the case of
Farquharson v. Seton, cited by counsel, the pleadings
showed that Farquharson, as a co-defendant with Seton in another
suit, had, by answer, set up the same case against him that he
afterward set up by bill. In the former suit, the decree had been
against Farquharson, and he afterward sought to renew the
litigation by an original proceeding, and it was held properly that
the former decree, though between codefendants, was a bar. So in
the case of
Chamley v. Lord Dunsany, the general
litigation was for the settling and marshaling of encumbrances, and
it was held that where a case was made out between defendants, by
evidence arising from pleadings and proofs between plaintiffs and
defendants, a court of equity was entitled to make a decree between
the defendants. In this case, the decree was between defendants who
asserted adverse interests in the encumbered estate.
Page 70 U. S. 712
But neither of these cases assert the doctrine maintained here
for the appellants that a court of equity may decree between
defendants when neither pleadings nor proofs show any controversy
or adverse interest between them. Nor have we been referred to any
case which does assert that doctrine.
We think, therefore, that the decree of the district court in
the case of Cleveland against the La Crosse Company and Chamberlain
must be regarded as having made void the arrangement between the
company and Chamberlain only as against the judgment creditor,
Cleveland, and not as having determined anything between those
parties.
Nor do we intend here to determine anything as between them. We
leave all questions concerning the validity of Chamberlain's
judgment and its lien on the railroad, or touching the validity of
the articles of agreement between Chamberlain and the La Crosse
Company, or relating to the rights of parties in or to
Chamberlain's receipts under that agreement, to be investigated and
determined in the suit now pending in the circuit court.
Nor do we understand the decrees dismissing the bills in the two
cases before us as determining anything on either of these points,
but only as determining that the Cleveland decree adjudged nothing
between Chamberlain and the La Crosse Company, and therefore cannot
be regarded as evidence of the annulment of the contract between
them in another suit where the validity of the contract is directly
in controversy.
In the second of the cases before us, that of Graham and Scott
v. Chamberlain and The La Crosse Company, there are averments in
the bill which would require an answer if the general structure and
the special prayer of the bill and the absence of a general prayer
did not show that in this case, as in the case of the Minnesota
Company, the real object of the suit was to establish the Cleveland
decree as an absolute bar to the assertion by Chamberlain of any
right whatever under his agreement and judgment. We do not think it
such a bar, and therefore, without prejudice to any
Page 70 U. S. 713
suit which is now pending or may be hereafter brought to
determine any other controversy of the La Crosse Company or of its
creditors or of its successors in right or interest, we shall
affirm the decrees of the circuit court in the two cases now before
us by appeal.
Affirmance accordingly.
