It is not irregular for two mercantile firms to unite as
complainants in equity in a creditor's bill.
An objection that a bill is multifarious must be made before
answer, and can be tested only by the structure of the bill
itself.
The creditor of a partnership may, at his option, proceed at law
against the surviving partner or go in the first instance into
equity against the representatives of the deceased partner. It is
not necessary for him to exhaust his remedy at law against the
surviving partner before proceeding in equity against the estate of
the deceased.
Where there were two mercantile firms and some of the members
common to both, a creditor's bill was not multifarious when filed
against the personal representatives of two of the deceased
partners of the two firms and also against the surviving partner of
one of the firms.
The suit originated in the District Court of the United States
for the Middle District of Alabama, from which it was carried by
appeal to the circuit court and thence was brought to this
Court.
In 1834, the appellants, consisting of two mercantile houses in
New York, became the creditors of two firms in the State of
Alabama, namely the firms of Whitsett, Gray & Co. and of
Whitsett & Gray, the former composed of William H. Whitsett,
Thomas Gray John J. Hill the latter of William H. Whitsett and
Thomas Gray.
The debts of these Alabama houses to their New York creditors
set forth as follows:
Whitsett, Gray & Co. to Nelson, Carleton & Co., a note
dated May 17, 1834, for $1,061.36, at 9 months; Whitsett, Gray
& Co. to Parish, Marshall & Co., two notes, one dated May
10, 1834, for $1,470.95, at 9 months, and one, same date, for
$1,470.95, at 11 months; a bill of exchange drawn by Whitsett, Gray
& Co. on John C. Sims & Co. for $1,901.56, at 4 months; and
a note to White, Brothers & Co., by Whitsett, Gray & Co.,
for $331.46, at 12 months.
Of the individuals composing the two Alabama firms, William H.
Whitsett died in October, 1835, and administration of his estate
was committed to Lipscomb & Hardin. Thomas Gray died in 1835,
and administration of his estate was granted to James Gray and Ann
R. Gray the widow of Thomas, who afterwards intermarried with
Lorenzo Sexton.
Page 46 U. S. 128
Upon three of the above notes judgments were obtained in
December, 1835, against Hill as surviving partner of Whitsett, Gray
& Co. In January, 1840, a bill was filed on the equity side of
the District Court of the United States for the Middle District of
Alabama by the New York firms, which, in August, 1841, was amended.
The amended bill included, as defendants, James Gray Lorenzo Sexton
and Ann R. Sexton (formerly Ann Gray), administrators of Thomas
Gray deceased, Absalom Hardin, John P. Lipscomb, and Joseph J. Hill
administrators of William H. Whitsett, deceased.
The bills recited the above fact, stated that execution had been
sued out against Hill but that no property could be found, that the
estate of Whitsett had been reported to the County court as
insolvent, but that the estate of Gray was fully able to pay the
debts of the partnerships, praying for a discovery and payment
&c.
Lipscomb and Hardin answered the bills, denying generally the
merits of the claim.
Hill answered separately, and concluded his answer with denying
the right of the complainants to unite their claims in one
suit.
Gray filed a separate demurrer, assigning therefor the following
causes:
"I. That the said complainants have not by their said bill and
amended bill made such a case as entitles them in a court of equity
to any discovery from this defendant or any relief against him as
to matter contained in the said bill and amended bill &c."
"II. That the complainants have joined in their bill and amended
bill distinct matters which, according to law and the practice of
this Court, ought not to be joined &c. -- that is to say, have
joined matters against the late firm of Whitsett & Gray
composed of Wm. H. Whitsett, deceased, and Thomas Gray deceased,
with matters against the late firm of Whitsett, Gray & Co.,
composed of the said Whitsett & Gray and one John J. Hill the
said John J. Hill having no interest in the matter against the said
late firm of Whitsett & Gray. They have joined matters of debt
against said late firm, Whitsett & Gray created by note,
payable to certain persons using the name and style of White,
Brothers & Co., to which debt the said complainants, or either
of them, have not any interest, as far as appears by their said
bill or amended bill, and in which the said defendant Hill is in no
wise interested, nor in any wise liable &c."
"III. The complainants' bill and amended bill do not show that
complainants had exhausted their remedy at law before coming into
this court in such manner as to entitle them to the aid of this
Honorable Court as a court of chancery &c. Wherefore, for the
foregoing causes, and for divers other causes of demurrer appearing
in the said bill and amended bill, this defendant doth demur
thereto, and he prays the judgment of this Honorable Court whether
he shall
Page 46 U. S. 129
be compelled to make further and other answers to the said bill,
and he humbly prays to be dismissed from hence with his reasonable
cost in this behalf sustained."
In December, 1841, the cause came before the district court,
which sustained the demurrer.
The complainants appealed to the circuit court, which in March,
1843, affirmed the decree of the district court. From the decision
of the circuit court the complainants appealed to this Court.
Page 46 U. S. 131
MR. JUSTICE DANIEL delivered the opinion of the Court.
Amongst the causes assigned for the demurrer in this case no
objection is urged as founded upon the joinder of the different
complainants in the bill and amended bill, unless it be supposed
that an objection may be implied in the general language of the
first assignment -- namely that the complainants had not by their
bills made such a case as entitled them to relief. From a statement
thus vague and indefinite it would be difficult to deduce anyone
objection rather than another; but could this assignment be
understood as pointing specifically to the structure of the bills
as multifarious, from the number or relative position of the
complainants, it is certain that no valid exception could on either
of those grounds be sustained.
These bills are formally as well as substantially creditors'
bills, by which the complainants are regularly and properly united
in seeking satisfaction from subjects against which, as creditors
of the defendants, they can properly claim. As to the nature and
regularity of such a proceeding,
see Mit. Eq.Pl., 166,
167; Story Eq.Pl., §§ 99, 100, and the authorities there
cited.
Page 46 U. S. 132
From a want of perspicuity in the statements contained in the
bill and amended bill, in the former especially, there might seem
at first view some plausibility in the second cause assigned for
the demurrer -- namely the multifariousness of the bills from the
joinder of parties as defendants who are supposed to be unconnected
in interest and in liability. The objection of multifariousness is
one of which it is said by the authorities a defendant can avail
himself by demurrer or exception taken to the pleading only. That
being designed for his protection against the vexation and expense
of answering to matters irrelevant to the true controversy existing
between him and the complainant, if instead of arresting the
irregularity at the commencement and claiming the exemption
intended for him, he will go on and answer the bill, the reason for
the exemption designed by the rule no longer exists, and although
at the hearing the court may,
sponte sua, make an
objection for multifariousness, it is no longer in the power of a
party, after answer, to do so.
See Whaley v. Dawson, 2
Sch. & L. 370, and
Ward v. Cooke, 5 Madd. 80. From the
character of this objection, then, and from the established
requisition as to the time and mode of making it by a defendant, it
must of course be tested and determined by the structure of the
bill alone, and cannot be enforced, explained, or removed by
proceedings posterior to the bill and demurrer, nor by the
evidence. From some obscurity in the bill and amended bill, as has
already been observed, there might seem to be a want of connection
in interest and in liability between the defendants such as would
not warrant their being joined in the same suit. This objection,
however, will entirely vanish upon a closer examination of the
relative positions of the parties.
The complainants consist of two sets of creditors. First, the
firm of Nelson, Carleton & Co.; secondly, the firm of Parish,
Marshall & Co. To each of these firms the co-partnership of
Whitsett, Gray & Co. became indebted. The debt contracted to
the former house was evidenced by the note of Whitsett, Gray &
Co. The debts (for there were several in the second instance) due
to Parish, Marshall & Co. were evidenced by two notes of
Whitsett, Gray & Co., by a bill drawn by Whitsett, Gray &
Co. on Sims & Co. (which it is alleged was not accepted), and
by a note of Whitsett & Gray payable to White, Brothers &
Co., and passed in some mode not distinctly set forth by Whitsett,
Gray & Co. to Parish, Marshall & Co. The firm of Whitsett,
Gray & Co. was composed of William H. Whitsett, Thomas Gray and
John J. Hill; that of Whitsett & Gray was composed of William
H. Whitsett and Thomas Gray. Thus it appears that Thomas Gray was a
member of both firms. The complainants allege the deaths of both
Whitsett & Gray, leaving Hill as surviving partner of the firm
of Whitsett, Gray & Co. They aver that Lipscomb & Hardin
administered upon the estate of Whitsett, and had reported that
estate
Page 46 U. S. 133
to the county court to be insolvent; that Ann R. Gray widow of
Thomas Gray and who had intermarried with L. Sexton, had,
conjointly with James Gray taken administration of the estate of
Thomas; that upon judgments obtained on the notes of Whitsett, Gray
& Co., against Hill the surviving partner, executions had been
sued out and returned
nulla bona. There is, in the next
place, charged a belief of frauds and concealment on the part of
Hill and the administrators of Whitsett, and also the perfect
solvency of the estate of Thomas Gray, the whole concluding with a
prayer for accounts of the effects of Whitsett, Gray & Co., of
William H. Whitsett, and of Thomas Gray in the hands of their
representatives, and for satisfaction.
It is now a rule of law too well settled to be shaken that the
creditor of a partnership may, at his option, proceed at law
against the surviving partner or go in the first instance into
equity against the representatives of the deceased partner.
See the several cases on this point collected in Story on
Partnership, § 362, note 3. This being conceded, there can be
no valid exception to the prosecution of this suit immediately
against the representatives of Thomas Gray, and it is to the
advantage of his estate, that the representatives of Whitsett and
the surviving partner, Hill should both be called in, that they may
be required to contribute from any appropriate means in their
possession towards the discharge of their joint and several
obligations. Here, then, will be perceived the answer to the third
cause assigned for the demurrer -- namely that the complainants had
not exhausted their remedy at law before going into a court of
equity. It is the right also of the representatives of the deceased
partner, Whitsett, and that of the surviving partner, Hill to
participate in settlements in which their interests are directly
involved, and an omission in the bills to convene these joint
parties in interest for this purpose, with the representatives of
the other deceased partner, Gray would have exhibited a palpable
and material defect in the proceedings of the complainants.
According to the case made in the bill and amended bill, there
are no visible partnership effects, and it may be the fact that the
surviving partner, Hill and the estate of the deceased partner,
Whitsett, are both insolvent. Should this turn out to be true, then
the separate estate of the partner, Gray said to be solvent, must
be responsible to the creditors of each of the firms of which he
was a member. In order to ascertain the precise extent of Gray's
responsibility, accounts would be proper not only between the two
firms and their respective creditors, but also between these firms
themselves. Accounts would likewise be proper of the separate
effects of the deceased partners. This view of the case removes the
ground set forth in the second assignment of causes of demurrer. We
are of opinion that the court could, in equity, properly take
cognizance of this cause without the necessity for further
previous
Page 46 U. S. 134
proceedings at law; that the bill and amended bill of the
complainants were not exceptionable for multifariousness; that the
decree of the circuit court dismissing those bills for either of
the causes assigned for the demurrer is erroneous. The decree is
therefore
Reversed and this cause is remanded to the circuit court
with directions to be there proceeded in conformably with the
principles here established.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Southern
District of Alabama and was argued by counsel. On consideration
whereof it is ordered and decreed by this Court that the decree of
the said circuit court in this cause be and the same is hereby
reversed with costs and that this cause be and the same is hereby
remanded to the said circuit court with directions to proceed
therein conformably to the opinion of this Court.
