CHADBOURNVo COE.
823
cure a judgment thereon j that Whitcombhas ·no property in t,he state of Colorado, where he resides, or inth'e state of ,Wisconsin, where' the complainants reside, or 1na11y other' state or territory,as complainants are informed and believe; out of which the complainantscil.n .collect their debt, except the prop'erty described in the bill; which property, both personal and real, the transferred to fendant Coo with intent to hinder and delay and defraud his creditors; that complainants are witho1!lt remedy at' law to collect the debt; that the property so transferred to Coe was of the value of several thousand dollars ill .of tbat the property was taken byCoe,with intent to delay and .defraud the creditors of said Whitcomb, and especially the CdIl1plainantB; tbat Cae paid no consideration for theprqperty ,at the' titl'le of'theconveyance, excepta'ri0U1inal amount oione dolllil','l1nd at tM of'the of the 'copy of which is set, forth Jnthe bill;' that the purpose. Qf,the tl;"anster to(JQe was to pre-, vent thecortJplainants and other(lreditors from collecting debts, and to said Whitcomb to manage, Cdntrdl,:dispose:of, and handle said property,for his ovviluseandbimefit"fteefrom cllinns of creditors, arid these compiainants; I1nd tha(W:hltcOInb has, until about the year 1887, received the proceeo's and crops 'from the real estate, and has sold a portion of the real estate; and'that said trust agreement W!li'l never recorded. Said trtist·:agreementj 'omitting the description of the property, is as follows: "Knowallmllfl ,by thesifprllsentB that I,James N. Coe. oftbe city of Roch. nLy uf Olmsted ofJ4il\nes{)ta, fQrand ester, in the tiQn of theconv,eyance Orlen P. of !laid city of Hochester of the followijtgdescritied rea,l, estate Situated:: couIlty'ofOlmsted and state of .Minnesota, and known and designatedM follows, to-wit, .. .. .. do hereby covenant: for myself and' my heirs to 'arid with the said Whitcomb, his heirs and aasi,gna; to hold saul 'premises intrust for the said Whitcomb for the following purposes. viz.: To real estate, or any part or J!Qrtion thereof, to. :per:son or Ilersons, anq.:fer sucb prices, as the said WbitcQil!.b shall direct; to make lUI such ances on and ont, oO,he of Uie sl!Ie of for said real estate to pay to. the creditors of sald'Wltitcorubsuch proportion thereof as be shall direct, and toaccotint' to and'with 'the 'said Whitcomb on demand, for and on account of all' moneys' 'or:s6curitielJ' receLved on said sales, ,less any taxes or expe:nlJe8 incurred in the premises; and I further covenant that I will not C9nve! said,; real estate, or any: I?ar;t, except as requested by sai<J b;. and in oith\, premises an(l 0lle. dollar to me in hand paid bY.8aid Whitcomh, the receipt Whereof is herebyacknow1l¥lged, I bereby and agioee fol'royself aJid;'tny heirstaand With the said Whitcomb; bis heirs and ,assigns, to conveynpon demand to: saill Whitcomb, his heirs or,ll.slJign8, by good and 'sufficient deea.,all of tIle real estate hert-inbefore describe<J, except sucb ;8sshall hav.' been by his requ 'llt; upon being paid .the Mid and upon being paid all taxes and expenses, if in the There is, also an: agreement' set forth in the bill by which Orlen P. Whitcomb transfers .,' to, saidl' deftmdantCoehis .personal property,consisting of stock, etc., with power of', attQrney to man-
824
FEDERAL REPORTER,
vol. 45.
age,control,sell, exchange,or dispose of the property as directed by said Whitcomb, and to account to the said Whitcomb therefor. This agreement was notrecordedj and it is alleged that the deeds of conveyance to Coo and the agreement were made and accepted with intent to delay, hinder, and defraud Whitcomb's creditors, especially the complainants,and to cover up and secrete the real and personal property of Whitcomb,and to prevent the creditors of Whitcomb from applying the same upon their debts. The defendant Coe demurs to said bill upon tbreegrounds, as follows: .. (1) That said bill of complaint does not, since tlie allowance of the said plea of the said Orlen P, Whitcomb, .state or set forth such a ca""e as doth, or entitle the complainants to;the relief thereby sought and prayed for this 4efendant. (2), That the said Orlen P. Wbitcomb havby of this COllrt djsn;tissed out of this suit, apd no adjudication having been' obtained against him that he is. in ahy way indebted to the Bald complainant; no relief can Mhad against this defendant to discover ot:alppropriate property in this'defendl\nt's hands to tbepayment of any supposed ,claim against the said OrlenP. Wbitcomb. (3) That the said Orlen in thesaidbillof.coJ;J:lplaint uamed, is by the complainants' a proper party to any suit which may be brought defendantjn thiscou.rt, touching any of the. pretended matters of hi sa'ld bill. II '. ' J)f1.V'is..".Ke'lj,ogg &: $ever.ance, fpr. plaintiffs. for defendaats. THOMAS, J., mating the facts as abo.v6.) This demurrer was argued before Judge NELSON and myself at the January l.erm of this court, and taken advisemi'lnt. After a 'careful consideration of the fucts, and on eXl!.minat,ion oftpe ll.uthorities cited, together )tith many others, r havecom¢ to the conclusion that thisdemurrer must be sustained. r unable to see this case can:be determined according to equitableprinciples without the presence of the said Whitcomb. It is his debt which is sought to be collected; He has Mt had hIs day in court, and he <mnnot be brought in in this action, and compelled to set up his ,if he has one. Thjs coqrt 'no jurisdiction over him. He is to be it is that he has disposed of his eritytothedefendant Cae, both. personal and real, with intent to hinder and delay his creditors; and that the agreement between him and Coe, alleged and set forth in the' bill, is 'a secret trustor' device, adopted in l1iQ, ,or furtherance oftbescheme to defraud the creditors,- All these areirilpc):H\lnt matters, which said Wh,itcQ,mb is directly interested. They are important to the derelldant Coe.. ,Whitcomb COllld not and would not be bound by the decree. His interests are so intimately connected with the interests of the 'parties to the suit now before the court that I think he must' be beld to be an illdispensable party to the complete termination of the controversy. The .conveyances and agreements are fair upon their faces;snd the fact that .they were not recorded, though a circumstance that would or might be taken into· consideration in determining the; question of fraud if all the parties were before the court,.
how
CHADBOURN
,1)., COE.
825
does not show fraud. In o,therwords, taking the transaction between Whitcomb and Coe as disclosed by the bill, independently of a purpose orintent to defraud, which must be established by the complainants, the com" could not find that the transfer was made or received by either with a fraudulent purpose. It is contended by the learned counsel for the complainants that the point made by the counsel for the defendant Coe "that, if· Coe is compelled to pay the claims of theplaintifi's in this action out of the property of Whitcomb, he might again be compelled to pay it to Whitcomb, is not well taken, for the reason that the bill alleges that the property was conveyed to Coe in fraud of Whitcomb's creditors; that the purpose and object of the conveyance was to hinder and delay the creditors of Whitcomb and the grantor." And he claims that when a party makes a conveyance for this purpose he cannot, under any circumstances, recover back the property conveyed, or any part of it, that the door of a court of equity is always closed to such; the complainants citing: F'reernanv. Sedwick, 6 Glll,28; Bolt v. Roder8, 3 Paige, 156; Nellis v. Olark, 20 Wend. 24; M08cleyv. Moseley, 15 N. Y. 334;, Peck v. Burr, 10 N. Y. 294; (kyppeU v. Hall,7 WalL 542; Blennerha88ett v. Sherman, 105 U. S. 100; Sweet v. Tinslar, 52 Barb. 271; Loker8Dn v; Stillwell, 13 N. J. Eq. 358; Marlatt v. Warwick, 19 N. J. Eq. 439. The proposition is Bound in law, and, when properly applied, is controlling. Whether or not the transaction was fraudulent is the important question for the court to determine. Whitcomb is not before the court, and we cannot assume a fraudulent purpose on qis part. A decree in this case withdutJhe presence of Whitcomb would not and could not bind him in ahy sUQsequent action against C o e , ' ' This court is asked to determine that Whitcomb was indebted to the complainants upon notes setfortb in the'bill in the Slml of $5;000iLnd over; that Whitcomb is insolvent; and that he has placed his property in the band.s Of the gefendant Coe by D;Jeans ofa certain deed and. a ,cet,tain trust with intent to pinder, delay, and his the presence of Whit·comb; and upon the determination of these facts in favor of the complainantHtis asked to decree that the deeds of transfer by WhiteQmb toCoe be set aside aSf$udulent and vOid as against the complainants, and that the said secret trustand agreement be declared' void, and that the conveyance to said defendant Coe of said p'ersonal property .be declared void, and that Coe render an itemized account, properly-stating all the sums received by. him from proceeds of said lands, or the sale of personal property, oHhe sale of any lands; that he be required to pay over to the complainants, to the amount of their claim, all SUD;J8 in, his hands belonging to Whitcomb, and received from the whole of said. farms, personlll property, or the crops and· proceeds of th'e farms; that said real estate be spld, and the proceeds thereof applied to the payment of complainants' claim; and for a l,'eceiver. Upon well-settled of jurisprudence I think the court ought to decline to proclled .to t1e determination ,of these this action unless Whitcomb. is mad.e
,826
vol. 4.5.
a·patty.The fact that' h13:iS::a citizen and a resideilt of the state of 001oralio, ;and process that wilil render him subject ,1;()!Jtlhejul'isdictionof thiscburt in this action, does not relieve the complil'.inantstofthe difficulty. The act of February 28, 1839, and the fortyseventh rule in equity cannot be invoked to aid the complainants. Notwithstimding the act and:rnle, this conrt: can make no decree affecting the rights oLany absent person,. and can' ,make no decree between the parties before the court,whirh.so far iJ;lvolvesor depends upon the rights of an absent person thatooinplete or final justice cannot be done between the parties to the suit without affecting those rights. ' Mallow v. Hinde, 12 Wheat. 193-198; Banuyv. Baltimore City, 6 Walt 280-285. The rightllof Whitcomb respecting the amount due; if anything, on the notes, bisalleged the alleged fraudulent purpose and intent in transferring the property to the. defendant Ooe, lie at the very foundation of the claim: afright by the cOplplainants, f,tnd no final or complete deterand demination can b& made iuthis fendant Goe without affecting the 'rights of Whitcomb. Not only the rights of Whitcomb are,llfl'ected by the decree, but the rights bf Ooe, who may be called upon to account to Whitcomb for the property and interests placed in his hands; No decree oright to be rendered that would not protectCoe; i As. !Wall in MalloW v. Hinde, supra:' "We do not put this case upon .the groun<lof jurisdiction,;but upon a mucb whicbmust e.liuaUy apply, to ail courts of equity, whatever may be ,strll.<:ture astoj llrisdiction put it upon .the ground that no directly llpon a person's,.rights \\'ithout tbll party being oourt .can either actually or constructively .bllfore ,the court." . . In Ba'mey Baltimore 0iJJy, gupra, the court, speakingthroup;h Justice Mij:LLER, says: l.·. " , . "Thelearnipg on the suits in cbancery, is copious, and. Within, al.jrW.te,d e.x:ten t,the pri.nc.i.Ples. Wh.iCb., goverDth,eir i.D.trodUCtio n are . . dexiblei ,r.fhere is a claSs of pei'sons ha¥ing sucb relations to the in orontroversy;merl!ly forma)ofotherwise,tMt; While tbey may be called proper parties; the'cou'rt will take no account of the omission to make them parties. There is imother.iclas8 of persons whose relations to the suit are sucb that if tbeir interest:andtheir ahllenjle, are formally brought to the attention of the conrt it will1;eQllire theJIl. to:J?,e.;made parties ifwilbinjtsjuri.,diction, before deciding tMcase; but ifth1". cR·nnot be dpne, itwilI proceed ,to administer .sucb relief 8S may be in itsp0W'6r between the parties before it. And there is a third class, wh"dse interests in the of ,the suit and in the relief sought· are lio bOund up Jwith'tbat of the 'otberparties, that their legal presence as pjU'ties Ito the proceeding is an absolute necessity. without Which the courteanno.t 'Jl,FPQel'ld. Insu.ch. cases the, col1rt refuses to entertain the suit 'w-pen thesllpartiel' cannot be sj!bjected, to its '. We think the fa;cts of this case as disclosed by the bill come clearly within the third subclivisiori M the above rule. 'I'he case of Elmendorf Y. Taylot, 10 Wheat. '152, 'Cited by' cOlnplainants' couDsel to sustain the bill, Ma!low'V:Bitnde,BUplra.Inthat case the supreme oourt,speakingothrough Justic'e TRIMBLE; says: '. ' "In thatcasEithe right of the party before the court did not depend llpOn the party not before the court. Each ot ,their rights stood upon i t8 owninde-
v.
:: ,CHADBOURN' tl. COg.,
827
pendent basis. but the ground upon: wbiehlt was necessary;according'to general principle, to have both parties before the court, was to avoid amultiplicityof 8uits,and to have the And the court further says in that case: . "Thougl, the rules !lste'> patties in'equityare;somewhat'ftexihle.. yet where the court can make no decree between parties before it upon their own rights, which are independent of the rights of those not before it, it will not act." We do not think the case of Northwestern Pat'ement Co. v. Norwegian Semina,ry, 43 Minn. 449,45 N. W. Rep. 868, inconsistent with this opinion. In that case the subcontract()r brought'$uit to enforce a mechanic's lien, and named the contractor, Evans, as one of the defendants, but no summons was served on ,Evans. " It was suggested that Evans was a necessary party, and, as he had not been served with summons, the defend ant corporation claimed that it was to judgment on themerHs; In answer to defeodant's suggestion, 'the couft,:speakingthlQugh Ml'XCHELL, J., says: "Inasmllch as the contract relation between the owner and the original,contractor and the contract relation and state of accounts between the origi_ naland subcontractor must be adjudicaredupon before the lien can be established in favor of the subcontractor, and the 'judgment In any action between a subcontractor and the owner woUld Dot be conclusive on the intermediate contractor, we think the better and proper rule is that,.in an action;by; a to enforce'a Hen, the contractor is a necessary party defendant; ... "\Ie ... but th'13 fa!lt'that the contractor is not made a party will the owner to a judgment on the merits. Where he is not named not must be taken by. as a defendant in the title of the action. the r;teiect of demurrer or answer. Where'he'is so named, but has not in fact been made a party by the service of summOns, it may not be entirely clear how the defect can bif taken advantage of. It certainly cannot be by den;lUrrer, and there seems to be a difficulty in the way of requiring it to be done by answer. We think the proper practice is, when the plaintiff moves the case for trial, for the court; upon its attention hE'ingcalled to the'defect, tocontiulle the action or delay the trial until the contractor is brought in as a plll'ty. If the plaintiff has unreasonably delayed in making service of the summons on him it might be good grounds for a motion to have the action dismissed." If Whitcomb was before the court, I do not think the fact that no judgment has been obtained on the alleged indebtedness would necessarily avail the defendant. Case v. Beauregard, 101 U. S. 688-690. I think the view I take of this case.is fully sustained by the following additional authorities: Shielda v. Barrow, 17 How. 130; Gregory v. Swift, ,39 Fed. Rep. 708; WilliamB v. Bankhead, 19 Wall. 563 j BeU v. Donohoe, 17 Fed. Rep. 710; Dormitzer v. Bridge Ce., 6 Fed. Rep. 217. It follows from the conclusion reached that judgfuent dismissipg the complaint must be entered, but it may be without ,prejudice, and it is accordingly 50 ordered. NELSON, J. I coneudn the foregoing opinion. Whitcomb is 'all in. dispensable party, and must be before the court to insure a fair trial. Hisinterests are directly involved. Even his indebtedness is not fixed, but is open to controversy; and, as stated by the supreme court in Ribcm v. Railroad Co8., 16 Wall. 450:
828
FEDERAL REPORTER"
"T,mHu!e in equity as to parties defendant is that all whose interests will by the decree'sought to be ()btained must be before the court; ani if such persons cannot, be reached by process .. .. .. the bill must be dismissed." , This case is not withinthe to ,this rule.
McCALLA ''IJ. BANE
et al.
(CircUit Oourt, D. O1'e(Jrm. Aprll20, 1891.) ..4-ct ;FElb. 25, 1889 (Sess. Laws, 75,) .entitled "An act to amend sllction 8101 · · · of the' Annotated taws of Oregon;" in' which said section is set out as amended, is not in conflict with either section 20 or 22 of article 4 of the constitution of Oregon, 8l! expounded by the supreme court of the state in State v. Phenline, 16 Or. 107, 17 Pac. Rep. 572. ; 9. lDEM. Said section, as amended, not only,makes an illegitimate child the heir of its but legitimates it, so that it may inberit tbrough its mother, provided the patetlts were "formally married, "-married in form,-and "lived and cohabited as husband and wife, " althOugh such marnage may be void iillaw. 8. DEBDjDll:LlVERY OF. , .:Jiha delivery of a deed by the grantorw.a third person, to be given to the grantee at."llce, or, on the happening of some future event, as his own death, isa good present d'elivery to the grantee, and vests in him the estate of the grantor; but it is otherWise if the grantor reserves to himself any future control over the deed. " -INTEREST :nt SUBJEOT-MATTER OF' SUIT.
L
AJul'lDATORY : A O T . "
....,
,
The plaintiff having conveyed to another the "undivided one-half" of the property ,in this suit before the commencement of the same, .and it appearing that she clairQ:s .as the heir of her father, and that as such heir she could not be entitled to more than one sucb half, she is without interest in'the SUbject-matter of the . suit, and cannot maintain the same.· .
5.: COyglDEUTION INDEED., TlIe eOnlliderationiI). a CllnuQt be or disproved under the grantor,by matter subsequel;lt, as by descent, for the by one, l?urpose Of impairing the effect or operatiQn of the same.. , . 6. CASE IN ';funcniIENT.', ' .· . ," ' Plaintiff itt her bill aIlegM that her father, James R Stephens, ,being old and incapable of transactingbl1siness, was induced by the defendants to convey all his property. tb them, to the exclusion of the plaintiff, his lawful heir, and that Raid deeds were void;i'oj:' wllnt of capacityin,the grantor, and therefore onghtto be set aside, and the plaintijtaamitted t<> her inheritahce. Found, that the plaintiff, years before her father's.(leath;aud continuously thereto, h'ad so conducted herself as to incur his and that such conveyances were made by him after long and careful consideration, free from the influence, persuasion, or sugg-estion of any onet for the,purpose of bestowing his ,property on the defendants, his relatives ana friends, :for reasons satisfactory to himself, and commendable generally, and to exclude'the,plaihtiff from any benefit thereof; that at the time of signing said deedS, Stephens was' both mentally and Ilhyslcally capable of executing the same, and fully comprehended the nature and effect thereof, the :det,alls of which he had planned in his mind longbe;i'bre, and then and there duly delivered the same to a third person, for the grantees therein named. (SyllabUS by the Oourt.)
John Gearin, and William B. Gilbert, for plain tiff. James, K.; Kelly,Ernmet B. Willia'l1l8" a.Q.d Paul R. Deady, for defendants. :!
In Equity. . ,
W. &ott