Joseph Kennedy, Trustee of Henry Shultz, An Insolvent Debtor, and For the Creditors of the Said Henry Shultz, and Henry Shultz, Appellants v. the Bank of the State of Georgia, the City Council of Augusta, John Kinne, and Gazaway Lamar

• Decision Date: 01 January 1850
• Citation: 12 L.Ed. 1209,49 U.S. 586,8 How. 586
• Parties: JOSEPH J. KENNEDY, TRUSTEE OF HENRY SHULTZ, AN INSOLVENT DEBTOR, AND FOR THE CREDITORS OF THE SAID HENRY SHULTZ, AND HENRY SHULTZ, APPELLANTS, v. THE BANK OF THE STATE OF GEORGIA, THE CITY COUNCIL OF AUGUSTA, JOHN McKINNE, AND GAZAWAY B. LAMAR
• Court: U.S. Supreme Court

49 U.S. 586 8 How. 586 12 L.Ed. 1209 JOSEPH J. KENNEDY, TRUSTEE OF HENRY SHULTZ, AN INSOLVENT DEBTOR, AND FOR THE CREDITORS OF THE SAID HENRY SHULTZ, AND HENRY SHULTZ, APPELLANTS, v. THE BANK OF THE STATE OF GEORGIA, THE CITY COUNCIL OF AUGUSTA, JOHN McKINNE, AND GAZAWAY B. LAMAR. January Term, 1850

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THIS was an appeal from the Circuit Court of the United States for the District of Georgia, sitting as a court of equity.

As the decision of the court turned upon some collateral points, it is not necessary to state all the facts in the case, which were extremely complicated. The Reporter therefore refers the reader to the opinion of the court, which was delivered by Mr. Justice McLean, and which contains a recital of all the facts necessary to an understanding of the points decided.

It was argued in conjunction with another case between the same parties, involving the same principles of law, and with nearly the same state of facts. The two cases were argued by Mr. Waddy Thomspon, Mr. Butler, and Mr. Webster, for the appellants, and, upon the part of the appellees, by Mr. Davis, representing Lamar, Mr. McAllister and Mr. Johnson (Attorney-General), representing the bank, and Mr. Sergeant, representing the city of Augusta.

The arguments of the counsel continued for several days, and it is therefore impossible to give a full report of them, or to do more than merely state the points and authorities.

The points raised on behalf of the appellants were the following, as stated in the briefs of Mr. Webster and Mr. Thompson.

On the 9th day of May, 1821, one Christian Breithaupt and the said Henry Shultz filed their bill in the Circuit Court against the Bank of the State of Georgia, praying that the bridge across the Savannah River at Augusta, and other property therein named, might be decreed to be first liable to the redemption of the bills issued by the Bridge Company aforesaid, and for an injunction restraining the Bank of Georgia and other creditors of the said John and Barna McKinne, as well as the creditors of the said Bridge Company, from enforcing executors and selling the bridge and other property of the said Bridge Company.

Amongst various interlocutory orders in said cause, was one ordering the bridge aforesaid to be sold by two commissioners therein named; and it was sold accordingly, and the Bank of the State of Georgia became the purchaser. The said Henry Shultz consented to the sale in writing; but the said John McKinne refused to give such assent.

On the 6th of May, 1830, a decree, drawn up by the consent of counsel, was signed by the Hon. W. Johnson and J. Cuyler, which will be found in the record.

It is alleged by the present complainant, the assignee of Henry Shultz, that the order of sale aforesaid is not binding, in

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so far as those whom he represents are concerned. First, because John McKinne, the joint tenant of the said Henry Shultz, refused his consent. And secondly, that the creditors of the Bridge Company were not parties to said suit; and that the decree of the 6th of May, 1830, presents no bar to the claim of your orator, John W. Yarborough,⁴ as it purports on its face to have been made by the consent of the counsel of the said Henry Shultz, two years after he had made an assignment of all his estate, and specifically of the bridge aforesaid, to Thomas Harrison, for the benefit of his creditors, and therefore he had no power or authority in the premises, and also because the court had no jurisdiction of the cause.

The bill prays that the bridge and other property of the Bridge Company may be decreed to be first liable for the redemption of the bills issued by the said Bridge Company, and afterwards to refund the creditors of Henry Shultz the amount, with interest, which he paid for the redemption of said bills after his retirement from the Bridge Company.

To this bill of complaint John McKinne answers, admitting all the material allegations of the bill. The other defendants filed demurrers.

The complainant submits to this honorable court, that the sale of the bridge, by the interlocutory order of the court, is void as to him, and those whom he represents, the creditors of Henry Shultz, who were not parties to the suit. 2. That the said sale was made without the consent of the said John McKinne. 3d. That the court, at the time of the said order, had no jurisdiction of the case, as proper parties were not before the court.

2. That the consent decree of the 6th of May, 1830, has no binding efficacy on the complainant or those he represents, as they were not parties in said suit, and that the consent of the said Henry Shultz was without authority, as regards the claims of his creditors, as he had previously assigned all his interest in the premises, under the insolvent debtor law of South Carolina, to Thomas Harrison, Esq.; and because the court had not jurisdiction of the case.

3. That the mortgage by John and Barna McKinne to the Bank of Georgia was void, as violating a statute of Georgia, and secondly, as appropriating the assets of the partnership to the payment of the individual debts of the partners, in violation of the general law on that subject, as well as the special terms of this particular copartnership.

4.

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That if the said mortgage be valid, the defendants, never having foreclosed, are to be regarded as mortgagees in possession, and chargeable with rents, issues, and profits.

5. That if the court should be of opinion that, as regards the interest of the said Henry Shultz, the sale made under the interlocutory order aforesaid be valid, it is void as to the interests of the said John McKinne, the joint owner of said bridge.

6. That the mortgage, if a valid lien, has been more than paid off, and the residue is subject to division amongst the creditors of Henry Shultz.

7. That a release by the Bank of Georgia to John McKinne, one of the two joint owners of the bridge, and partners with the Bridge Company, is, in law, a release of the said Henry Shultz.

The following authorities will be relied on in the argument: 3 Ves., 255; 2 Kent Com., 400; 2 Story Eq., 304, §§ 446-449, 463, 1039, 1040; Jac. Law Dict., tit. Estate; 3 Mod. 46; 2 Story Eq., 527, §§ 1287, 240, 976; 2 Treadw., (S. C.), 674; 3 Taunt., 976; 2 Story Eq., 491, § 1244; Mill on Eq. Mort., 123; Law Lib., 47; 1 Story Eq., 383, § 395; Mill on Eq. Mort., 76, 79, 80, 81; 1 Story Eq., 625, § 675; 2 Id., 500, § 1253; 3 Kent Com., 65; 1 Story Eq., 588, § 633; 3 Laws United States, 482, § 6; 10 Wheat., 1, 20; 2 Cranch, 33; 3 Wheat., 591; 2 Marsh (Ky.), 11; 1 Bland (Md.), 20; 6 Leigh (Va.), 400; Story Eq., § 10; 13 Pet., 691, 729; 8 Cranch, 9, 22; 2 Pet., 157, 163; 10 Pet., 449, 475; 10 Wheat., 199; Gov. Deg. 974-976; 9 Pick. (Mass.), 259; Story Eq., §§ 329, 330, 349, 380, 403, 425, 354; Mitf. Eq. Pl., by Jeremy, 97, 98; 7 Paige (N. Y.), 287, 290; Story Eq., §§ 466, 499, 500, 503, 505, 507, 508, 513, 519, 521, 526; Barton Suit in Eq., 131; 1 Pet., 329; 2 T. R., 282; 4 Ves., 396; 3 Atk., 809, 811; 5 Ves., 3; 2 Stat. at L., 159 and n.; Story Eq. Pl., 443; 1 Ves. & B., 536; 19 Ves., 184; 2 Story Eq. Jur., 1520 and n.; 1 Pet., 329; 10 Id., 480; 11 Wheat., 1.

Mr. Davis contended, on behalf of Lamar, that the Bank of the state of Georgia was a purchaser at a judicial sale, under a decree of a court having jurisdiction of the cause, the parties, and the subject-matter,—the sale being unimpeached for either fraud or irregularity, and so entitled to the bridge, and to convey it to Lamar.

To this it is replied, in substance, that the decree was erroneous, considered as pronounced in adversum.

Lamar rejoins,——

I. That the decree of the 21st of December, 1821, was by

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consent of all parties in interest,—Shultz and McKinne, joint owners and partners, the bank as mortgagee, and Breithaupt and others, creditors of said Shultz; and,——

1. That they and all claiming under them are estopped, by such consent, to insist on error in the decree. Webb v. Webb, 3 Swanst., 658; Bradish v. Gee, Amb., 229; 2 Dan. Ch. Pr., 617; Downing v. Cage, Eq. Cas. Abr., 165, § 4; Toder v. Sansam, 1 Bro. P. C., 469, 473, 476; Harrison v. Rumsey, 6 Ves., Sr., 488; Wall v. Bushby, 1 Bro. Ch., 484, 485, 489; Norcot v. Norcot, 7 Vin. Abr., 398; Bernal v. Donegal, 3 Dow., P. C., 133; Mole v. Smith, 1 Jac. & W., 665.

2. That there is no sufficient averment that McKinne did not consent to the decree of December, 1821, but only that he never consented to, or executed any power or authority to the commissioners to make said sale, or to execute any title to the purchaser; and that, after consent to the decree, his objection could not stop the sale, nor was a power of attorney requisite. Bradish v. Gee, Amb., 229; Webb v. Webb, 3 Swanst., 658.

3. The language of the bill, on the contrary, imports an express averment that the decree was in fact made 'by consent of the parties, complainants and defendants.'

4. Were there a direct denial, still a party cannot controvert the consent recited in the decree,—unless, perhaps, for fraud in its insertion. Downing v. Cage, Eq. Cas. Abr., 165, § 4; Norcot v. Norcot, 7 Vin. Abr., 398; Mole v. Smith, 1 Jac. & W., 665; Biddle v. Watkins, 1 Pet., 686.

5. A fortiori, not as against a purchaser under the decree, such party never having objected to the decree or sale, nor moved to have the 'consent' stricken out, though before the court always, after twenty-four years from the decree of sale, and fifteen from its formal ratification and final decree. Voorhees v. Bank of United States, 10 Pet., 449, 473; McKnight v. Taylor, 1 How., 161; Lupton v. Janney, 13 Pet., 385.

6. McKinne not seeking as complainant the avoidance of the decree and sale on that ground, Shultz cannot avail himself of the error, as against McKinne, to enable him to avoid his own consent and acts. Thomas v. Harvie's Heirs, 10 Wheat., 146; 6 Cond. R., 44, 47; Whiting v. Bank of United States...