Ellsworth v. Curtis — 10 Paige Ch. 105

Majority

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Ellsworth vs. Curtis and others.

1843. January 23.

Headnote

A defendant cannot, by a disclaimer, deprive the complainant of the right of requiring a full answer from him, unless it is evident that the defendant ought not, after such disclaimer, to be continued a party to the suit.

Where the complainant is entitled to an answer, and the defendant puts in a simple disclaimer, the proper remedy is to move to take the disclaimer off the files. But where the disclaimer is accompanied by an insufficient an. swer, the proper course appears to be, to except to the answer on the ground of its insufficiency.

Where a corporation is made a party to a suit in which it has no interest, and to which it ought not to have been made a party, an officer of the corporation who has no personal interest in the controversy, and who is not charged with any fraud or misconduct, cannot be compelled to answer matters as to which he is a mere witness.

This was an application by the complainant to take the defendant’s answer and disclaimer off the files' of the court. An original bill had been filed by Curtis and two others of the defendants, as assignees of a bond and mortgage given by Ellsworth to the North American Trust and Banking Company, an association under the general banking law of 1838, to foreclose the mortgage j in which suit Talmadge, the president, and Leavitt the receiver of the property and effects of the company, were made defendants, as having or claiming some interest in the subject matter of that suit. The complainant in this suit thereupon filed his cross bill against Curtis and his co-assignees, and against Talmadge and Leavitt, charging, among other things, that the North American Trust and Banking Company was not duly organized, that the bond and mortgage which was given to a former president of that company, or one who claimed to be president, was improperly obtained by him, and was assigned to Curtis and his co-assignees without authority. The bill prayed a discovery of various matters stated in the cross bill relative to the transactions of the company; and that the right of the defendants, or of any of them, to the bond and mortgage, might be determined by an issue to be tried by a jury; that such bond and mortgage might be deliver

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ed up and cancelled ; and that Curtis and his co-assignees, Talmadge as president of the Company, and Leavitt as the receiver, be decreed to release all interest in the mortgage or mortgaged premises, upon such terms and conditions as should be just j or for such other or further relief as should be agreeable to equity.

To this bill the defendant Talmadge put in an answer and disclaimer, stating the organization of The North American Trust and Banking Company, under the articles of association set forth in a schedule annexed to the bill, and that at the time of the appointment 'of Leavitt as receiver of the property and effects of such association, Talmadge was the president thereof. He then set out the appointment of Leavitt as receiver, and the injunction issued by the chancellor restraining the association and its officers and agents from exercising any of its privileges or franchises ; and an order of the court directing the association and its officers to transfer and deliver over to the receiver all the property and effects of the "association; under which order the association, by its president and1 cashier, had assigned and transferred to the receiver all its property and effects. The answer admitted the execution of the bond and mortgage by Ellsworth,, to the former president of the company, and an assignment thereof by such president to Curtis and his, co-trustees, And the defendant insisted that if any beneficial interest remained in the association, after such assignment, in the bond and mortgage, the same passed to and became vested in Leavitt the receiver, by virtue of his appointment and the assignment to him under the order of the court 5 so that no estate or interest legal or equitable remained or was vested in the said Talmadge as president of such association or otherwise, after that time. And the defendant also averred that he had not as president of the association, or otherwise, at any time since the appointment of the receiver and the assignment to him, owned, or claimed, or pretended to have, own, or claim, any right or interest in the complainant’s bond and mortgage or in the mortgaged premises, or in the

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moneys secured or alleged to be secured thereby, and he thereby disclaimed all right or interest therein; concluding Ms answer and disclaimer by a denial of confederacy, and with a general traverse as in an ordinary answer.

J. Ellsworth, complainant, in person.

O. L. Barbour & N. Hill, jun. for defendant.

The answer and disclaimer in this case are the whole bill; and if there is any allegation that the complainant is entitled to have answered, his proper course is to except to the answer for insufficiency. For the defendant cannot, by a disclaimer, deprive the complainant of the right of requiring a full answer from him, unless it is evident that the defendant ought not, after such disclaimer, to be continued a party to the suit. (Welf. Eq. Pl. 255. Glassington v. Thwaites, 2 Russ. Rep. 458.) In a recent case before Lord Cottenham, where the defendants, who attempted to disclaim, were charged with having by a false claim prevented the complainant from obtaining a fund, in the hands of trustees, without the aid of the court of chancery, which charge if proved would have rendered them liable for costs, his lordship seemed to think it a proper case for a motion to take the answer and disclaimer off the file. (Graham v. Coape, 3 My. & Cr. Rep. 642.) But that was a mere intimation at the close of the argument, and is not supported by the case of De Beauvoir v. Rhodes, which he afterwards referred to as having been decided by Sir John Leach. That was, a case of simple disclaimer, unaccompanied by an answer j according to the statement of it by Lord Cottenham. Exceptions cannot be filed to a simple disclaimer. The only remedy of the complainant who is entitled to an answer, in such a case, is to move to take the disclaimer off the files. But where the disclaimer is accompanied by an insufficient answer, the proper course appears to be to except to the answer, on the ground of insufficiency. Upon the merits also I am inclined to

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think that the complainant is wrong. The defendant’s disclaimer and answer appears to have been filed in good faith. He has answered, so far as he deemed it necessary to show that although, as president of the association, he once had an interest in this bond and mortgage, if the assignment to the trustee by his predecessor was invalid, such interest had been entirely divested by the subsequent appointment of a receiver, and the assignment of the whole effects of the association to that receiver for the benefit of its creditors and stockholders. And I do not find any thing in the complainant’s bill charging the defendant Talmadge with having violated his duty as president of the association, so as to entitle the complainant to a decree against him personally, even for costs. I doubt, therefore, whether the complainant can even except to this answer successfully. For if the association has no interest in this controversy, and ought not to have been made a party after all its rights and interests had been transferred to the receiver, it seems to follow that an officer of such association who has no personal interest in the controversy, and who is not charged with any fraud or misconduct, cannot be compelled to answer matters as to which he is a mere witness. (How v. Best, 5 Mad. Rep. 19.)

The motion to take the answer and disclaimer' off the files, is therefore denied, with $8 costs. But the complainant is at liberty to except to the answer, within the usual time after this decision, if he shall be advised to do so.