Garner v. Harmony Mills — 6 Abb. N. Cas. 212

Majority

p. 212

GARNER v. THE HARMONY MILLS.

N. Y. Superior Court;

Special Term, November, 1878.

Again, General Term, March, 1879.

Headnote

Demurrer.—Joinder of Causes of Action.—Requisites of Order Overruling a Demurrer.—Appeal.—Interlocutory Judgment.—Code of Civ. Pro., § 1847.

Although all the defendants are not jointly connected in every act of a breach of trust alleged in a complaint, but there is a series of acts on their part, produced by the same fraudulent intent which contributed to the injury of the plaintiffs, and the statements are not made as separate and distinct causes of action against the several defendants, and a cause of action is alleged, by which they are all affected, and in respect to which they are necessary parties:—the several matters may be joined in one complaint.

The prayer for judgment in a complaint is not demurrable.

If the issues presented in a complaint constitute but one subject-matter of action, although the reliefs growing out of the bill and prayed for in respect to the several defendants, are according to their respective liabilities, they are not required to be separately tried by a court of equity.

An order overruling a demurrer should give leave not merely to an-swer, but also to withdraw the demurrer.

An order overruling a demurrer is not appealable before judgment (interlocutory or final) thereon.^[1]

Interlocutory judgment defined.

I. Demurrer to complaint.

This action was brought by Harriet H. Garner, widow of Thomas Garner, Jr., deceased, and her daughter, Fanny M. Garner, the only child of Harriet H. and Thomas Garner, Jr., against The Harmony Mills, William E. Thorn, Samuel W. Johnson, John I. Lawrence, and the three infant daughters of William T. Garner, deceased, viz., Marcellite T. Garner, Florence

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J. Garner and Edith M. Garner, for the purpose of securing and protecting a trust of $1,000,000. •

A concise statement of the complaint is as follows :

Thomas Garner, Sr., by a bequest in his will, gave to his son, Thomas Garner, Jr., the sum of $1,000,000, to be paid to him within eighteen months after the father’s death. His son, William T. Garner, qualified as sole executor, and by the terms of the trust was bound to make payment of this fund out of his father’s estate, which was estimated at more than $6,000,000 at the time of his death, when the $1,000,000 was locked up in the firm of Garner & Co., composed of William T. Garner and Thomas, Jr. After the expiration of eighteen months, and before the legacy had been paid, Thomas Garner, Jr., died, leaving to his wife and daughter, the plaintiffs, the legacy of $1,000,000, independent of his interest in the firm, and appointed his brother, William T., and the defendant, Thorn, executors and trustees. They both qualified, and became chargeable with the responsibilities of the trust to collect and receive, and William T. as executor of his father’s will to pay, but instead of doing so, the money was retained in the firm, and never separated from the estate of his brother Thomas.

When Thomas, Jr., died, the firm was carried on by William T. and the defendant, Johnson, and the former, as executor of his father, by entries in the firm’s books, debited the estate of his father, and credited the estate of his brother with the amount of the legacy, by giving to himself and Thorn, as trustees, a mortgage of $90,000 on property belonging to him in Monroe County, and procuring the Harmony Mills (a manufacturing company of which he was the president, and owner of the stock) to execute another bond for $710,000, out of the $990,000 to himself and Thorn as trustees of his brother’s estate, and charged the rest as

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payments, which, according to the allegations of the complaint, had not been made.

This was alleged to be an improper investment of trust funds ; that the property covered by the first mortgage of $90,000 was part of the estate of Thomas Garner, Sr., and acquired by William T. as residuary devisee under his father’s will; that the Harmony Mills was in name a corporation, but owned by Garner & Co., and that the mortgage thereoh was not lawfully executed, and that both pieces of property were subject to two mortgages of equal amounts without priority, the one over the other, to the estate of Anna Garner, who, by the will of Thomas Garner, Sr., was also bequeathed an equal legacy of $1,000,000; that the property covered by the mortgages was wholly inadequate, the security precarious, and the whole trust fund imperiled, and that the object of the whole arrangement was not to take care of the trust but to appropriate the trust money for the use of Garner & Co.; that the death of William T. Garner left the whole trust property and his whole ¡estate, including the $1,000,000 of the trust fund, in the hands of Johnson, as surviving partner, subject to the perils of the business, under a will by which, during the lifetime of a daughter named, the business is to be carried on by Johnson, as survivor, and by the executors, Thorn, Lawrence, and Johnson.

The complaint then set forth the legal rights of the plaintiffs and the liabilities of the defendants in respect to the trust fund, and acts of malfeasance and hostility on the part of the defendant, Thorn, as trustee, and that he was chiefly concerned to promote the interest of Garner & Co. instead of that of the trust, and concluded with a prayer for relief in various forms adapted to the-liability set forth in the complaint.

Separate demurrers to the complaint were inter

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posed by all the defendants except the infant children of William T. Garner.

By these demurrers it was claimed that there were, at least, nine distinct and ununi table causes of action joined, including as defendants the representatives of several different wills.

Joseph II. Choate and Hugh L. Cole (Cole & Kingsford, attorneys), for plaintiff.

There is no improper joinder of causes of action in the complaint. The subject matter of the suit is the trust, and the cause of action is the spoliation of which it has been the subject. The whole matter of multifario nsness is a matter of discretion in the court, to be applied to the circumstances of each particular case as it transpires (Brinkerhoff v. Brown, 6 Johns. Ch. 139 ; Fellows v. Fellows, 4 Cow. 682 ; Whaley v. Dawson, 2 Sch. & Lefr. 370; Getty Devlin, 54 N. Y. and p. 9 in 69 Id. ; Story Eq. Pleadings, §§ 285, 285a, 286, 286a, and cases cited, and also 278a, and §§ 530-535. The demurrers interposed by the defendants and their arguments in support of them seem to rest upon the two fallacies of confounding distinct prayers for relief with distinct causes of action; and of confusing the question of proper or necessary parties to a suit in equity with that of the misjoinder of causes of action.

Luther P. Marsh (Marsh & Wallis, attorneys), for defendants Thorn and Harmony Mills.

Homer A. Nelson, for executors of Garner.

Nathaniel S. Smith, for S. W. Johnson.

[After stating the facts.]—It is apparent from the foregoing concise statement of the complaint, that the one subject matter of the action is the trust, and the cause of action, the several violations and misappropriations of which it has been the subject.

The object of the suit is a legitimate one, and

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peculiarly appeals to a court of equity to accomplish its purpose. If the allegations are true, and as such they are to be taken on this demurrer, this is an unjustifiable and inexcusable disregard of the plain performance of a duty voluntarily assumed by executors and trustees, and a willful and fraudulent appropriation by them and the other defendants of funds devoted in terms for the protection and support of the beneficiaries of the trust.

It is clear that the plaintiffs are entitled to the protection and relief of the court. The only question here is, whether they must seek it by separate suits against each of the individuals implicated in the transactions, or whether they are at liberty to bring them all into court in one suit.

The complaint rócites but one connected history of this trust fund. It begins with its origin under the will of Thomas Garner, Sr., and comes down in one unbroken line through the various trustees and other defendants to the present time.

Although it appears that all of the defendants were not jointly connected fin every act of wrong, there are a series of acts on the part of the persons concerned in its management, and produced by the same fraudulent intent which contributed to the injury of the plaintiffs.

The question is, whether the several matters charged are so distinct and unconnected as to render the joining of them in one bill a ground of demurrer. Chancellor Kent, in Brinkerhoff v. Brown, 6 Johns. Ch. 139 ,—a leading case—says, after citing several cases: “The principle to be adduced from these cases is that a bill against several persons must relate to matters of the same nature and having a connection with each other, and in which all the defendants are more or less concerned, though their rights in respect to the general subject of the case may be distinct.” Again he says : “ The remedy would of course be varied and adapted

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to the case of each individual defendant if the general charge of fraud should be established, and if it should only be established in part as against some of the defendants, and not as against others, the decree would also then be adapted to the proof. I do not see that this circumstance can create any difficulty in sustaining the bill. It is cheaper and best for the interest of all parties that the subject of all the fraud, in all its parts, should be investigated and settled in one suit” (See also Fellows v. Fellows, 4 Cow. 682 ; Story’ s Eq. Pleadings, 285, 285a, 286 and 286a, and cases cited). The whole doctrine seems to be summed up in section 539.

The general rule in equity pleading being thus established, it follows that demurrers of this kind should be cautiously received. The pleader in every complicated case, embracing a series of fraudulent transactions among various defendants, intimately and more remotely connected, as the present one, must find much difficulty and peril attending the selection of proper parties.

We have here four several demurrers interposed to the complaint—in substance the same—specifying nine supposed different causes of action. It is now well settled that the Code has not essentially altered the rules of equity pleading as it regards multifariousness. Indeed, the comprehensive, vague and uncertain language of section 484 seems to be intended to apply to equitable actions, which frequently embrace complicated acts and transactions relating to the subject matter of the action, which it would be desirable to settle in a single controversy, and should not interfere with settled doctrines of equitable procedure, pleadings, parties and remedies (Pomeroy on Remedies and Remedial Rights, 496; Wyles v. Suydam, 64 N. Y. 198 ).

The objection is taken that here there is an improper joinder under section 484 of the Code. The objection

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is based upon the fallacy of supposing that the cause of action is the trust fund, whereas the cause of action, •as before stated, being the violations and misappropriations of the trust, it is plain that these causes arise out of transactions connected with the same subject matter of action, which is the trust itself. The error consists, I think, in not clearly distinguishing the question of proper or necessary parties- to a suit in equity, from the question of misjoinder of causes .of action, and of confounding the distinct prayers for relief with distinct causes of action. An attentive reader of the different branches of the prayer for judgment, and the nine supposed different causes of action specified in the demurrer, will show that the real grounds of demurrer are founded upon the several grounds for relief. • The latter may be wholly omitted in the complaint, yet the plaintiff would be entitled to such relief as he could éstablish upon proper proof of alleged facts. The prayer for judgment is not demurrable.

Among other examples ; the counsel takes the case of Harmony Mills as being improperly joined as defendant. The prayer is that by an interlocutory judgment or otherwise, it' may be compelled to execute a suitable instrument, ratifying and confirming the mortgage of $710,000, and that the defendants, Johnson and Thorn, and the executors and trustees of William T. Garner, deceased, as stockholders, may be compelled to give their written consent thereto. It appearing in the complaint that this mortgage was executed without the assent of the stockholders by the trustees, and was intended as a money payment of the trust fund on the books of Garner & Co., that the stock of the corporation was in fact nearly all owned by that- -firm, and is wholly an insecure and improper investment and constituted as it stands a security for. the trust money ;—can there be a question but that it

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is a proper and necessary party, and that a separate suit is not necessary to secure the relief asked for in the bill % It is true an action might be brought against the firm of Garner & Co., or against the estate of Thomas Garner, Sr., to rescue the trust money from their hands, and correct the informality in the mortgage, but a court of equity, in view of the conduct of the several defendants, as set forth in the complaint, will not, I apprehend, consent to any measures of delay, or unnecessary expensive litigation, whereby the whole fund may be absolutely squandered and lost to these plaintiffs. These statements are not made as separate and distinct causes of action, against the several defendants, but a cause of action is alleged, by which they are all affected, and in respect to which they are necessary parties.

It is claimed by defendants’ counsel, that the main and primary object of the suit was the removal of the defendant Thorn as trustee, and that is the cause of action set forth. In this I think the learned counsel are mistaken. As before stated, and which clearly appears from the complaint, the cause of action consists in the several violations and misappropriations which the trust estate has suffered in passing through the hands of the various defendants, and with which they have been more or less connected. The restoration and preservation of the trust fund is the primary and important subject matter of the action. If the court, in the exercise of its equitable powers, should conclude on the whole case that the removal of Thorn is necessary for the protection of the fund, it will then remove him.

The issues presented in the complaint are not such as are required to be separately tried by a court .of equity, and although the reliefs growing out of the bill, and prayed for .'in respect to the several defendants, are according to their respective liabilities, it is still but one subject-matter of action.

II

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After the foregoing decision the following order, omitting the preliminary recitals, was entered.

“It is ordered and decided that the demurrers of the defendant, William E. Thorn, surviving trustee under the last will and testament of Thomas Garner, Jr., deceased ; and of the defendant, the Harmony Mills, be, and the same hereby are overruled, with costs to the plaintiffs.

“And it is further ordered and decided that the demurrer of the defendant, Samuel W. Johnson, be and the same hereby is overruled, with costs to the plaintiffs.

“And it is further ordered and decided that the demurrer of the defendants, Samuel W. Johnson, John J. Lawrence, and William E. Thorn, as executors and trustees of the last will and testament of William T. Garner, deceased, be, and the same hereby is overruled, with costs to the plaintiffs.

“And it is further ordered and decided that the plaintiffs have judgment against the several defendants, as above specified, for costs herein, and for the relief demanded in the amended complaint herein, according to the prayer thereof; unless the several defendants, as above specified, within twenty days from the entry of this order, and notice thereof, pay the costs herein, to be taxed, and serve their answer.”

All the demurrants, except the Harmony Mills, submitted to that decision and answered the complaint. The latter having appealed from the order, the plaintiffs, respondents, moved to dismiss the appeal.

Hugh L. Cole (Cole & Kingsford, attorneys), for plaintiffs, respondents, and motion to dismiss the appeal.

An order of the special term, overruling or sus

The demurrer should be overruled and judgment ordered for the plaintiffs, with costs.

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taining a demurrer, is not appealable (Lacustrine Fertilizer Co. v. Lake Guano and Shell Fertilizer Co., 16 Hun, 484 —Supreme Court, Fourth Dep’t, Gen’l Term, October, 1878; Miller v. Sheldon, Hun, 220). The Code of Procedure, section 349, specifically authorized an appeal from an order of the special term, from a single judge, to the general term of the same court, sustaining or overruling a demurrer, but the Code of Civil Procedure, section 1347, which takes the place of section 349 of the old Code, has altered all this, and does not authorize an appeal from suoh an order. It is well settled that an order sustaining or overruling a demurrer is not appealable to the court of appeals ; final judgment must first be rendered, before the question arising upon a demurrer can be brought before that court in any case (Ferris v. Aspinwall, 10 Abb. Pr. N. S. 137; Ayres v. Western R. R. Co., 45 N. Y. 260 ; People, &c. v. Benedict, 47 Id. 667; Barker v. Cocks, 50 Id. 689; Note to § 1350, Code of Civ. Pro. Throop’s Ed.). The defendant’s remedy, in a case like the present, is by appeal from the judgment, whether final or interlocutory, entered upon the decision of the issues of law raised by the demurrer. In the case at bar no judgment, final or interlocutory, was entered. An order overruling the defendant’s demurrer was duly entered. As the Code has made no provision for an appeal from this order, the conclusion is obvious.

Luther R. Marsh and Homer A. Nelson {Marsh & Wallis,^attorneys), for ^defendants, appellants, opposed.

An appeal lids from an interlocutory judgment (C ode of Civ. Pro. § 1349). This is an interlocutory judgment; it is more than an order ; it is a decree of some kind. An interlocutory judgment, on overruling a demurrer, can be granted (Miller v. Sheldon, 15 Hun, 220 ). If defendant does not pay costs

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and answer, then, all that remains is for plaintiff to enter the final judgment authorized by this interlocutory judgment (Hoffman v. Barry, 2 Hun, 52 ). This is a judgment both in substance and in form (Bentley v. Jones, 4 How. Pr. 335 ; King v. Stafford, 5 Id. 30). The two cases of Miller v. Sheldon, 12 Hun, 220 , and Lacustrine Fertilizer Co. v. Lake Guano, &c. Co., 16 Hun, 484 , were appeals from orders simply. There was no interlocutory judgment under the old Code, it was abolished (Code of Pro. § 245). It only recognized a final judgment; everything else was an order merely (Code of Pro. § 400 ; Report of Comm’rs, cited 1 Barb. Ch. Pr. 36, note 3 ; Belmont v. Ponvert, 3 Robt. 693, 696). It expressly authorized an appeal from an order overruling or sustaining a demurrer (Code of Pro. § 349). But the new Code restores the old law, defines an interlocutory judgment and recognizes it all through (Code of Civ. Pro. §§ 1200, 1231, 1241, sub. 3, and 1349). The definitions of interlocutory judgment or decree clearly embrace the present judgment (Webster’s Dict.; Burrill’s Dict. ; 1 Barb. Ch. Pr. 326.

It is agreed that under section 1347 of the Code Civil Procedure, the direction of the court, unless it is an interlocutory judgment, is not appealable. The words are “it is ordered . . . that the demurrers of the defendant,” &c., &c.; “and of the defendant, The Harmony Mills, be, and the same hereby are overruled,” and “it is further ordered and decided that the plaintiffs have judgment against the several defendants, as above specified, for cofets herein, .. . according to the prayer thereof; unless the several defendants, as above specified, within twenty days from the entry of this order, and notice thereof, pay the costs,” &c., “and serve their answer.”

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Under any circumstances the form of this is imperfect. As it stands, the service of an answer would leave á demurrer upon the record undetermined, or an implied determination in defendants’ favor. A better form, perhaps, would have been, with leave to the defendants within, &c., on payment of costs, to withdraw the demurrer and serve an answer.

Except, perhaps, in some cases, not like the present one, an interlocutory judgment on an issue as to the merits is a final determination of part of the issue, which leaves the rest of the issue to be thereafter adjudged. It cannot be a judgment of any kind, if on its face it does not determine some part of the issue. Merely overruling a demurrer is essentially removing an obstacle, which the demurring party has interposed to the other side proceeding to judgment upon the facts. In and of itself that does not give the other side a judgment. It leaves him at liberty to proceed to judgment. Beyond this an order asserting that the plaintiff have judgment is not a part of the judgment which he may have. The judgment is yet to come. When it is entered, it adjudges the existence of certain things ; for instance, in a case like this, it would determine that a trust existed, that the trustees took the mortgage made by the defendants, that the defendant knew the terms of the trust, and if the court so held—for this is said only as illustration— that the defendants cause to be procured the consent in writing, &c., it would or would not leave some part of the issue undetermined, according to circumstances. y

In the present case, it is ordered that the plaintiff have judgment and nothing more. The judgment in whole or in part is not pronounced. Indeed, if it is at all a judgment, it is a final judgment, if it were not for the clause “unless, &c.” But this clause, unless the defendants serve an answer, goes back of the order

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that plaintiffs have judgment. If an answer be served, that prevents a judgment being entered. In that case the order, in substance, is, that the plaintiffs do not enter judgment, but proceed to trial of the issue of fact.

If, however, it should appear that the defendant allowed the twenty days to pass, without serving an answer, there would be nothing then but an order overruling the demurrer. Before the defendant is entitled to appeal, judgment must be entered, and this judgment will be final or interlocutory according to its terms and the contingencies of the facts.

The motion to dismiss appeal is granted with costs. The order is to be settled upon notice.

Footnotes

* Present Sedgwick and Yak Yoest, JJ.

Cases cited

Brinkerhoff v. Brown 6 Johns. Ch. 139 N.Y. Ch. 1822-06-10 p. 215, p. 216
Fellows v. Fellows 4 Cow. 682 N.Y. p. 215, p. 217
Ayres v. Western Railroad 45 N. Y. 260 N.Y. 1871-04-04 p. 221
Bentley v. Jones 4 How. Pr. 335 N.Y. Sup. Ct. p. 222