Bank of Rochester v. Emerson — 10 Paige Ch. 359

Majority

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The Bank of Rochester vs. Emerson and wife.

1843. October 17.

Headnote

Where there is a decree over against the mortgagor for the deficiency, in a foreclosure suit, upon the coming in and confirmation of the master’s report of the sale, and of the amount of such deficiency, no proceedings can be had upon such decree, to compel the payment of the deficiency, until the report has been filed and duly confirmed. And where an execution has been irregularly issued upon such a decree, before the report was confirmed, the court will not allow the report to be filed and confirmed nunc pro tunc, to the prejudice of other creditors who have obtained lions on or interests in the defendant’s property in the mean time.

The court of chancery is authorized to correct the errors, and to supply the omissions, of its registers, clerks and other officers, when it can be done without detriment to the rights of third persons, and where substantial justice requires it to be done.

Where a solicitor is not entitled by law to a credit, by the register or clerk, for services to be performed for such solicitor, the solicitor must pay the fees allowed by law for such services, before the register or clerk is authorized to perform such services. And the solicitor has no right to presume that the register will violate the law by performing the service when the fees are not paid, although requested to do so.

The enrolled decree must be signed by the chancellor, or vice chancellor, and also by the register, or clerk, before it can be filed so as to authorize the issuing of an execution thereon; and it is irregular to file it without such signatures.

It is a settled principle of the court of chancery, that equality among creditors is equity. And although a vigilant creditor will not be deprived of a preference over other creditors which he has obtained by his superior diligence, yet the court will not correct the mistakes of his solicitor for the mere purpose of securing to him such a preference at the expense of other creditors who have acquired rights in consequence of such mistakes.

This was an-appeal by the defendants from an order of the vice chancellor of the eighth circuit, directing the master’s report of the sale of the mortgaged premises, and of

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the deficiency, to be filed as of the day when it was left in the clerk’s office by the complainant’s solicitor ; and that the order to confirm the report be entered, nunc pro tunc, as of that time. The complainant’s solicitor resided in Rochester, where the clerk’s office was kept, and he had been informed by the clerks in the office that his papers could not be filed, nor could other servicesbe performed for him, unless the fees therefor were first paid. On the 18th of December, 1841, he carried the master’s report to the clerk’s office to be filed, together with the draft of an order of confirmation, and laid them on the clerk’s table, to be filed and entered. But as the fees were not paid, the report was not filed, nor was the order to confirm the report entered until the 15th of January thereafter, when such fees were paid. In the mean time, the solicitor, supposing that the report of the master had been filed and confirmed, issued an execution for the deficiency, returnable the 14th of January ; which execution was returned unsatisfied. The complainants thereupon filed a creditor’s bill, against the defendant Emerson, to obtain satisfaction of such deficiency. An application was then made to the vice chancellor to set aside the execution for irregularity, upon an affidavit of these facts, and of the further fact that the enrolled decree on file had neither been signed by the vice chancellor nor by the clerk. The vice chancellor denied the motion, and his decision was submitted to by the defendants. Emerson afterwards pleaded in bar of the creditor’s bill, that the report of sale and of the deficiency was neither filed nor confirmed when the execution was issued ; which plea was allowed by the vice chancellor, and his decision was affirmed upon appeal to the chancellor. The complainants thereupon filed a replication to the plea, denying the truth thereof; and then made the application in this cause, to have the report filed and the order of confirmation entered nunc pro tunc, to enable them to show that the plea of the defendant in the creditor’s suit was false. In the mean time Emerson had made a conditional assignment of his furniture and other personal property, and of a claim which he held against

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the state, for the purpose of paying debts due to other creditors j which assignment was to take effect in case the creditor’s bill should be dismissed. He had also offered to the complainants to have such assigned property applied, rateably, to the payment of the deficiency in this cause and of the debts for the payment of which it had been conditionally assigned.

The following opinion was delivered by the vice chancellor :

Whittlesey, V. C. It would seem proper that any court should have power to supply omissions and cure defects in its proceedings and process, when they are merely clerical, and when the party was ignorant of their existence, and has gone on in good faith in the belief that no such omission or defect existed. This would seem to be more strikingly proper, when the omission or defect was the act of the officers of the court in which it occurred. Courts of law have gone a great way to cure such defects, even when they might in some measure affect the rights of third persons. ( 3 John. Rep. 526 . 3 Cowen, 39, 42.) Courts of chancery, too, very frequently correct such clerical mistakes in proceedings before them ; as is every day’s practice in relation to master’s reports and even final decrees.

The solicitor for the complainants has evidently acted in good faith, in the belief that the master’s report was filed on the 18th of December, 1841, when he left the papers at the clerk’s office; and as no objection was then made to the reception, I am inclined to think that he had a right to suppose that they were received. By the terms of the decree of sale in this cause, an execution could not properly issue until the report of sale was filed and confirmed. By the statute, (2 R. S. 191, ^ 152,) the court has power, on the coming in of the report of sale, to make a personal decree for the deficiency, and issue execution therefor. It would seem- that the decree of sale in this case was made upon a bill taken as confessed, in which case the clerk was

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entitled to no fees for filing the report, though he would be for entering the order to confirm. The withholding of the fees should therefore have been no objection to the filing of the report, and as that paper was laid on the table before the clerk, it was without doubt such a coming in of the report as would satisfy the statute, so that the granting of the order asked is not contravening the provisions of any statute. If the clerk declined to receive the papers because the fees were not paid,, he should have made that objection at the time; and as it is assumed it was not made, the solicitor might reasonably believe that the papers were received. This belief would materially be strengthened by the subsequent sealing of the execution by the clerk, as he is not to suffer any such process to pass the seal without it is authorized. And this execution would not be authorized unless the report had been previously filed and an order entered for its confirmation.

It does not appear that any third person is to be injured by the amendment. If the injunction issued upon the creditor’s bill does not hold, the defendant can make a more satisfactory disposition of his assets, both as to himself and to some of his creditors, who may thus be benefitted. But this is not an injury which the law can take notice of, nor have such preferred creditors as yet acquired any rights which can be affected. The defendant may possibly be affected as to the costs by having the plea, upon which issue is joined, proved against him, by reason of this amendment. But if it does not affect the question of costs, a proper provision can then be made as to them.

The only question with me is, as to the delay in making application for this amendment. It would seem that it should have been applied for early after the necessity was discovered. (Rogers v. Rogers, 1 Paige, 188.) This however may be deemed to be excused by the fact that the complainants, though knowing the fact's, did not admit the necessity of amendment, and believed it was sufficient as it stood. This erroneous impression has been corrected by the recent decision of the chancellor, on an appeal involving

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that question ; and they make this application immediately after such decision.

Upon the whole, I think the complainants are entitled to have the defect cured as asked by their notice. And it is ordered that the master’s report of sale, and the order of confirmation, actually filed and entered January 5, 1842, be deemed to be filed and entered as of December 18, 1841, upon payment to the defendant of the costs of opposing this motion.

S. Matthews, for the appellants.

E. F. Smith, for the defendant.

There is no doubt as to the right of this court to correct or supply the errors or omissions of its clerks and other officers, whenever it can be done without detriment to the rights of third persons, and where substantial justice requires it. As no fee was chargeable by the clerk upon filing the master’s report in a foreclosure suit where the bill had been taken as confessed, it would have been the clerk’s fault, that the report was not filed 'at the time it was left in his office, if the solicitor had informed him of that fact. But the .clerk had no right to enter the order to confirm such report, until the fee allowed by law for that service was paid ; unless he chose to pay the fee himself which belonged to the state. And as the solicitor had previously been told that services could not be performed for him in the office until the fees for such services were paid, he had no right to presume that the clerk would violate the law, by entering the order of confirmation, unless the fee for entering it was previously paid; or that the clerk would pay such fee for him. Nor was it necessary for the subordinate clerks in the office to inform him, every time he came there to have any thing done, that the fees must first be paid ; when they knew he was already aware of that fact. It was an error of the clerk, however, to seal the execution without examining the minutes of proceed

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ings in the cause, for the purpose of seeing whether the report of the master had been duly confirmed. It was also his mistake that the enrolment of the decree was filed without having been previously signed by himself and by the vice chancellor.

Although the solicitor swears that he supposed the report was confirmed at the time he issued the execution, and that all the proceedings in this suit, after the 18th of December, 1841, were had in good faith, and in confidence that the clerk had filed the report and entered the order for confirmation on that day, it appears that he afterwards learned that such was not the fact. And he does not state that he was not aware of the fact, that the order of confirmation was entered after the return day of the execution, at the time the proceedings in another suit were instituted, by the filing of a creditor’s bill. On the contrary, I think it is fairly inferrible from his own affidavit, and from that of Murdock which was read in opposition to this motion, that the complainants’ solicitor learned that the report had not been filed and confirmed, at the time he paid the fees, on the 15th of January ; and that he paid the fees at that time because he was then informed that it was necessary that the same should be paid before the report could be filed and the order for confirmation entered. If the complainants had not notice of the irregularity at the time of filing the creditor’s bill, it must therefore have been the fault of the solicitor in .this suit, in neglecting to inform the officers of the bank, or the new solicitor who filed that bill, of the true state of facts. The new solicitor, however, does not state in his affidavit that, at the time that bill was filed, he was ignorant of the fact that the order to confirm the report was entered after the return day of the execution. And from my recollection of the language of that bill, which was before me in February last upon the appeal, I am induced to believe that the person who drew it was aware of the fact that the report had not been confirmed when the execution for the deficiency issued. For there was no distinct averment that the report was filed, and an order entered for its

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confirmation, on the 18th of December, 1841, (which was stated in the bill as the time when the master made his report showing the amount of the deficiency on that day,) although the bill was so carefully drawn as to leave it to be inferred that such was the fact.

But if no injury would result to any one by the order to file the report and enter the order of confirmation nunc pro tunc, so as to overreach the issuing of the execution, the court perhaps should not permit the complainants to be prejudiced by the neglect of the solicitor. The necessary effect of the order appealed from, however, will be not only to subject the defendant to the costs of having his plea overruled as false, when such plea was in fact true at the time it was put in issue by the replication, but also to give these complainants a preference over other creditors, who are now entitled to payment of their debts, out of the assigned property, if the creditor’s bill which had been prematurely filed should be dismissed.

It is a settled principle of the court of chancery that equality among creditors is equity. And although this court will not deprive a vigilant creditor of any preference he may have obtained, over other creditors, by his superior diligence, it would be a violation of that principle of equity, to correct the .mistakes of his own solicitor, for the sole purpose of giving him a preference in payment j at the expense of other creditors, for whose benefit the debtor has made such a contingent assignment of his property as is mentioned in the affidavit of the appellants.

The order appealed from must therefore be modified, so as to make the permission to file the report, and to enter the order of confirmation nunc pro tunc, depend upon the condition that the complainants, within ten days after service of notice of the order, shall stipulate that the appellant may withdraw his plea to the creditor’s bill, without costs; and that the contingent assignment for the benefit of other creditors, referred to in the affidavit of Emerson, shall in no way be prejudiced by the creditor’s bill referred to, but shall have the same effect, so far as the interests of

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those creditors are concerned, as if that bill had been dismissed. And that if such stipulation is not given, within the time required, the application of the respondents must be denied with costs, including the costs of the appellant on this appeal.