Lilly v. Dunn

• Court: Indiana Supreme Court
• Writing for the Court: Niblack, J.
• Citation: Lilly v. Dunn, 96 Ind. 220 (Ind. 1884)
• Decision Date: 18 June 1884
• Docket Number: 10,882
• Parties: Lilly et al. v. Dunn, Administrator, et al

96 Ind. 220

Lilly et al. v. Dunn, Administrator, et al

No. 10,882

Supreme Court of Indiana

June 18, 1884

From the Superior Court of Marion County.

The judgment at general term is reversed, with costs, and the cause remanded with instructions to affirm the judgment at special term.

F. Rand and J. M. Winters, for appellants.

G. W Galvin, for appellees.

OPINION

Niblack J.

Complaint by William Max Dunn, administrator of the estate of John P Dunn, deceased, Margaret E. Dunn, the widow, and William M. Dunn, William Dunn, Isaac Dunn, Margaret Dunn and Priscilla B. Dunlevy, the children of the decedent, against John O. D. Lilly, Mary E. Lilly, Charles T. Wesley, Henry J. Swift and George W. Atkins, charging that in the lifetime of the said John P. Dunn, that is to say, on the 25th day of January, 1855, one Allen May, who was then the owner of the real estate hereafter described, and his wife Sinah May, executed and delivered to the said John P. Dunn, together with James P. Drake and Michael G. Bright, a mortgage on block number eight (8) in Drake's addition to the city of Indianapolis in this State, with other real property, to indemnify and secure him, the said John P. Dunn, and his co-mortgagees, for large sums of money advanced to him, the said Allen May, to wit, the sum of $ 10,000, and to protect them, the said Dunn, Drake and Bright, and each of them severally, from further loss and damage as the sureties of the said Allen May, which mortgage was duly recorded; that at divers times, subsequent to the execution of said mortgage, the said John P. Dunn was compelled to pay and did pay large sums of money as the surety of the said Allen May, amounting in the aggregate to the sum of $ 20,000; that to pay said last named sums of money the real estate of the said John P. Dunn was levied upon and sold for one-fifth of its actual value, whereby he suffered loss and sustained damage in the sum of $ 100,000; that no part of the said several sums of money so paid by the said John P. Dunn were ever repaid to him; that the said Allen May, about the time the real estate of the said John P. Dunn was being levied upon and sold as herein above stated, departed this life utterly insolvent; that in the year 1861, one Griffin Kelley caused a certain mortgage held by him, which was older, and prior to the mortgage above described, to be foreclosed in the Marion Circuit Court upon said block number eight (8) in Drake's addition to the city of Indianapolis and other property, making parties defendants to his suit of foreclosure all parties having an interest therein except the said John P. Dunn; that under the decree of foreclosure Lewis Jordan and Isaac C. Johnson became the purchasers of said block number eight (8) for the sum of $ 1,100, receiving a deed therefor on the 4th day of January, 1862; that the defendants in this action hold said block number 8 through and by virtue of titles derived from said sale to Jordan and Johnson; that the said John P. Dunn died on the 31st day of December, 1868, and letters of administration upon his estate, unadministered, were, on the 29th day of April, 1877, issued to the plaintiff William Max Dunn. Wherefore the plaintiffs demanded that they be allowed to redeem said block number eight (8) from the sale under Kelley's decree of foreclosure; that a commissioner be appointed to ascertain and report the amount the defendants are entitled to receive as redemption money in the premises, tendering and offering to pay the amount necessary to redeem said real estate, and demanding all other proper relief.

The condition of the mortgage upon which the plaintiffs based their right of action was as follows: "Provided, however, and these presents are on this condition, that if the said Allen May shall well and truly pay all * * * sums of money for which said Dunn, Drake and Bright, or either of them, are or shall become liable as drawers, endorsers or acceptors, or sureties in any way for said May, as the same falls due, and shall fully indemnify and save them harmless from all loss or damages and costs by reason of their liabilities in any way for the accommodation of said May, then this indenture to be void. Otherwise to remain in full force and virtue in law. And it is hereby acknowledged that said Drake, Dunn and Bright, jointly or individually, are liable at this time as accommodation drawers and endorsers for said May for forty thousand dollars, or thereabouts."

The defendants at special term answered in seven paragraphs. The first was in general denial and the rest set up special matters in defence.

Issues were formed upon the second, third and seventh paragraphs, and the plaintiffs replied, first, special matter, and, secondly, in denial to the fourth and fifth paragraphs. The defendants demurred to the first paragraph of that reply, but the cause was finally disposed of at special term without any decision upon the demurrer to that paragraph.

The sixth paragraph of the answer pleaded the six years' statute of limitations in bar of the action, and, on the 23d day of January, 1882, a demurrer was overruled to that paragraph, and the plaintiffs were then ruled to reply.

On the 23d day of March, 1882, the plaintiffs having failed to reply to said sixth paragraph of answer, final judgment was rendered against them on account of their failure to reply to that paragraph.

The plaintiffs appealed to the general term, where the judgment rendered against them as above was reversed for errors imputed to the special term: First. In overruling the demurrer to the sixth paragraph of the answer; Secondly. In rendering final judgment against the plaintiffs, as upon default, while issues of fact as well as of law remained undisposed of, and this appeal is by the defendants from the judgment at general term.

The first point made by the defendants is that the administrator of John P. Dunn was the only proper party plaintiff in the proceedings below, and that the complaint was bad in not showing a right of action in all the plaintiffs; that, as the complaint was bad, the appellees were not, in any event, injured by the overruling of the demurrer to the sixth paragraph of the answer.

An administrator is a trustee of the personal estate, and it is the duty of the trustee to protect and defend the title to the trust estate. As the legal title is in him, he alone can sue and be sued in a court of law concerning the estate in his hands as trustee. Hill Trustees, 545; Perry Trusts, sections 328, 520.

In equity, however, a different rule prevails. Trustees and cestuis que trust are the owners of the whole interest in the trust estate, and, therefore, in suits in equity in relation to the estate by or against strangers, both the trustees and cestuis que trust, must, or, at least, generally ought to be parties representing that interest. Hill, supra; Perry Trusts, sections 873, 874, 881.

The code of 1852, in force when this suit was commenced, provided, nevertheless, that "An executor, administrator, a trustee of an express trust, or a person expressly authorized by statute, may sue, without joining with him the person for whose benefit the action is prosecuted." 2 R. S. 1876, p. 34, section 4; R. S. 1881, section 252.

Under this section of the statute, the widow and children of John P.Dunn were unnecessarily joined as co-plaintiffs in this action, but as the proceeding was strictly an appeal to the equity jurisdiction of the court below, it can not be held that they had no interest in the subject-matter of the action. As we construe the provision of the code set out as above, it did not absolutely prohibit beneficiaries from being joined as co-plaintiffs in cases in which they might have been theretofore properly joined, or required to be joined, but only dispensed with the necessity of joining beneficiaries in such cases. Rinker v. Bissell, 90 Ind. 375.

We can not, therefore, sustain the objection made to the sufficiency of the complaint. The general rule may be said to be that the lien created by a mortgage may be enforced, although the debt which the mortgage was given to secure has been barred by the statute of limitations. This rule is recognized in many, if not most, of the States, upon the theory that statutes of limitations are applicable only to proceedings in the courts of law, and hence not to suits in chancery. The general rule may be further stated to be, that a court of equity is not precluded in a suit for the foreclosure of a mortgage given to secure a debt, from rendering a decree against the mortgagor for any remainder of the debt not satisfied by the sale of the mortgaged property, notwithstanding the debt is barred. This is upon the ground that such a decree is only an incident to the decree of foreclosure, and that when a court of equity once takes jurisdiction of a cause, it will retain its jurisdiction until complete relief is afforded.

In some of the States, however, the statutes limit suits in equity in the same manner as actions at law, and in those States the mortgage is held to be in effect extinguished when the mortgage debt is barred.

In the case of Lord v. Morris, 18 Cal. 482, the court said: "We do not question the correctness of the general doctrine prevailing in the courts of several of the States, that a mortgage remains in force until the debt, for the security of which it is given, is paid. We only hold that the doctrine has no application under the statute of limitations of this State." It was further said, in the same case: "Here a mortgage is regarded as between the parties, as well as with reference to the rights of the mortgagor in his dealings with third persons, as a mere security, creating a lien or charge upon the property, and not as a conveyance...