Riley v. First National Bank

Roberts, J.,

delivered the opinion of the Court.

Some of the preliminary stages of this -controversy will be found to have received consideration in the case of Riley v. Carter and Aiken, trustees, reported in 76 Md. 581 . In that case, the decree was neither affirmed nor reversed, but the case was remanded for further proceedings under Art. 5, sec. 36 of the Code, in accordance with the views of this Court therein expressed. After the case had been remanded the Circuit Court of Baltimore City overruled the demurrer to the bill of complaint, and the defendants therein answered the same. At this juncture the counsel for plaintiffs filed orders with the Clerk of that Court directing him to enter the case dismissed as to' all of the attaching creditors, but the same counsel continued in the management of the case representing certain co-plaintiffs, who were general creditors of Nicholson & Sons, and conducted said case to final decree. The legal effect of the manner adopted by counsel in seeking the dismissal of the attaching creditors as parties to said proceeding is a question on this appeal to be hereinafter considered. In the further progress of the case in the Circuit Court of Baltimore City, replications were filed to the answers, and the case was heard upon the pleadings and testimony. The Court, by its decree, declared that the deeds of trust which had been executed by Johns H. R. Nicholson to Carter and Aiken, trustees, were not fraudulent in law or in fact as against the creditors for whose benefit the same were executed, but as against the claim of the permanent trustee in insolvency they were void and inoperative ; and said Carter and Aiken, trustees, were directed to deliver to said trustee in insolvency all the assets and property conveyed to them by said Nicholson, which they did: In accordance with the practice sanctioned by this Court in Buschman v. Hanna, 72 Md. 1 , the trustee in insolvency intervened as claimant in all of the attachment suits and procured judgments in his favor, whereby the litigation under the attachments was transferred to the Insolvent' Court for its decision. The trustee in insolvency, in accordance with *25 legal requirement, transferred the assets received by him from Carter and- Aiken, trustees, to the. Circuit Court for Baltimore County, for distribution, where Nicholson had been declared an involuntary insolvent. An audit having been filed in said insolvent case, which distributed the assets thereof pro rata and without preference to the creditors who had proved their claims in said case, the attaching creditors filed objections to the final ratification of the Auditor’s Account, on the ground that they were severally entitled to priority in the distribution of said assets and should not be dealt with upon the same equality as that of general creditors of said Nicholson & Sons; and further, because the said deeds of trust were fraudulent in fact and presented no legal bar to their right to have judgments of condemnation entered in said attachment suits which would establish their right to preference in payment out of said trust fund.

The Circuit Court for Baltimore County overruled the objections to the Auditor’s Account and ratified the same, and this appeal is taken from the order of that Court. Many interesting questions arise on this appeal, but it will not be necessary to give all of them consideration. Those which are requisite to a proper determination of the rights of the parties are few, but not free of some difficulty.

It will be proper in the first instance to consider the legal status of those attaching creditors, who, through the intervention of the plaintiffs below, had been made parties defendant in Riley and others v. Carter and Aiken, trustees, by an order of the Court based upon a petition of the plaintiffs, in which it is averred that, in consequence of said attachments, they were necessary parties. Nothing in the progress of the case occurred to render them less necessary parties, so far, at least, as the reasonable purposes of the cause indicate; yet, after having remained parties litigant during the progress of this case on the appeal in 76 Md. 581 , and until the demurrer filed to the bill of complaint had been overruled, plaintiffs’ counsel, without the authority *26 of the Court in which the case stood for hearing, filed with the Clerk of that Court two orders of the same date, one of which sought to dismiss the bill as to certain plaintiffs, and the other order sought to deprive the case of not less than sixty defendants by dismissing the bill as to them. This statement suggests a question of importance in the practice of Courts of Equity in this State, and one of consequence to the decision in this case. We have given it careful consideration, and we all agree that after the case had progressed to the extent it had, counsel for plaintiffs had no authority to file an order with the Clerk of the Court directing the dismissal of the bill as to certain plaintiffs or defendants, without having previously obtained the permission of the Court to make such'an order. We cannot conceive of a practice better calculated to lead to unsatisfactory results than that followed in this case. After a bill has been filed and proceedings had under it, when counsel have appeared and costs have been incurred, it would be an unfair advantage to allow to the plaintiffs’ attorney the right to dismiss his client’s complaint as to parties, either plaintiff or defendant, without the previous sanction of the Court. Our practice of allowing amendments as to parties, would be practically nugatory and without purpose if the mode pursued in this case were to obtain.

Mr. Daniel, in his work on Chancery Pldg. and Pr. 790, says, “When there has been any proceeding in the cause, which has given the defendant a right against the plaintiff, the plaintiff cannot dismiss his bill as of course ; thus, where a general demurrer has been overruled on argument, Lord Cottenham was of opinion that the plaintiff could not dismiss his bill as of course.” Wiswell v. Starr, 50 Me. 384 ; Camden and Amboy R. R. Co. v. Stewart, 4 C. E. Green, (19 N. J. Eq.) 69. As having some bearing on this subject, it will be found by reference to the case of Roberts v. Gibson, extr., et al., 6 H. & J. 117 (1826), that the names of certain parties had, by methods somewhat similar to those adopted in this case, been stricken out of the bill, but Kilty, *27 Chancellor, said, “ that, with respect to the parties, he must consider those originally named as being still the complainants, notwithstanding the writing filed by one and the deposition by another, inasmuch as they had not applied to the Court to be struck out of the bill." What would be the inevitable result if a practice different to that just indicated were allowed to prevail ? Courts could never know with certainty -who the parties actually were at any particular stage of the case, without looking to the record of proceedings to ascertain the fact whether the plaintiff’s attorney may not have allowed a few plaintiffs and as many defendants permission to retire from the case, since the cause was last before the Court. The legal status of those creditors whose names appear in the two orders hereinbefore mentioned, and who sought thereby to escape the effect of the decree finally passed in said cause, has been in no respect changed or affected, but they are, for all legal purposes, concluded to the same extent as if said orders had not been filed with the Clerk of said Court, professing to dismiss the bill as to them. But independently of the views expressed, we have here a list of attaching creditors who were parties to the cause and fully advised of the nature and character of the controversy, who continued as such as long as they thought it beneficial for them to do so, and when they had reached a certain stage in the progress of the cause, the plaintiff’s counsel, without the sanction of the Court, filed his order with the Clerk of the Court dismissing the bill as to said parties. Here is a case in which the creditors named had been by order of Court made parties because they were necessary to a just determination of the interests of all parties concerned. To tolerate such a practice would be, in' effect, a substantial denial of the doctrine so often recognized by the Court, “ that persons who are directly interested in the suit and have knowledge of its pendency, and who refuse or neglect to appear and avail themselves of their rights, are concluded by the proceedings as effectually as if they were parties named in the record.” Albert v. *28 Hamilton, 76 Md. 311 ; Robbins v. Chicago, 4 Wall (S. C.) 672; Parr v. Cockey, 71 Md. 233 . It follows from what has been said, that the attaching creditors are estopped from setting up in the Insolvent Court any defence, which was appropriate for them to have interposed in the Circuit Court of Baltimore City, or of now controverting any question which has been settled and determined by the decree of that Court. If they were aggrieved by the action of the Circuit Court of Baltimore City, an appeal to this Court was open to them. There are other questions in the record which do not now demand consideration and are not requisite to the decision of this case.

(Decided March 26th, 1895.)

The order of the Court below, overruling the objections to the audit and ratifying the same, must be affirmed.

Order affirmed with cbsts.