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Decisions of the Superior Courts of New South Wales, 1788-1899

Chapman v. Davidson [1847] NSWSupC 11

bills of exchange, procedure, appeals from Port Phillip

Supreme Court of New South Wales

Stephen C.J. and Therry J., March 1847

Source: Sydney Morning Herald, 25 March 1847, in Supreme Court Collection, Vol. 1, pp 97-98

Special Banco Sittings.

 

Before their Honors the Chief Justice and Mr. Justice Therry.

 

CHAPMAN AND OTHERS v. DAVIDSON AND ANOTHER.

 

The Chief Justice pronounced judgment in this case as follows.

This is an appeal, by the defendant Davidson, from an order of his Honor Mr. Justice Therry, then Resident Judge at Port Phillip, made in Equity, on the 23rd October, 1845, overruling the said defendant's demurrer to the bill. The answer to the appeal was filed on the 30th December following; but, whether from the pressure of other business in this Court, during the earlier part of the year, or from other reasons, the case did not come on for hearing until the 24th November last. The appeal was argued on that day, by Mr. Windeyer and Mr. Gordon for the appellant, and Mr Donnelly and Mr. Broadhurst for the respondents.

The facts, as they appear from the bill, are the following. The plaintiffs Chapman and Ducros are the holders, by indorsement from Messrs. Willis and Birkmyre, of a bill of exchange for one thousand pounds, drawn by one Rucker in November, 1838, upon and accepted by H. N. Carrington, in favour of Willis and Garrett, by whom the bill was indorsed to the said Willis and Birkmyre. The bill of exchange in question is one of three, of the same amount and tenor, given by Carrington in payment of a purchase made by him from Rucker, of certain land at Port Phillip. It is stated by the plaintiffs, that Rucker was largely indebted to Willis and Garrett, and that he sold the land for the express purpose of procuring funds to pay them. The bills being given, a conveyance of the land to Carrington was executed by Rucker, in which they are described; and it was by the deed declared, that until duly satisfied and paid, the said bills should remain and be a lien on the property. Then followed this additional provision: "And if any one of the said bills shall not be duly paid and honored, the said Willis and Garrett, or the holder of the bills or bill so dishonored, shall be at liberty, and they or he are and is authorised to sell the said property, or so much thereof as will pay the said bills or bill." The plaintiffs state that two of the bills were paid by Carrington; but that after mortgaging the land to one Mackay, who assigned to the defendant Davidson, the said Carrington became insolvent; and that the third bill remains wholly unpaid. The indorsements already mentioned are then stated; and it is alleged that the several parties intended thereby to transfer, and that they did thereby transfer, their several liens over the said land; and that the right of lien thereon was then effectively vested in Chapman and Ducros, as the holders of the said third bill. Full notice of such lien is charged, against Davidson; and applications to him for payment are stated. And the prayer is, that the said Chapman and Ducros may be declared entitled, by virtue of the lien, to a charge on the land, and to be paid the amount of the bill, in preference to any claim of the said defendant; and that, in default of payment, the land may be sold. The plaintiffs are the said Chapman and Ducros, and Messrs. Willis, Garrett, and Birkmyre; and the defendants are the said Davidson, and one Faulkener; who is Carrington's assignee, under the insolvency. The first named defendant demurs, first for want of equity generally; and secondly on account of the nonjoinder of Rucker. And he insisted ore tenus, on the argument of the demurrer, that if Rucker, the drawer of the bills, was not a necessary party, then it was improper to join the several indorsers as parties.

It was insisted, that the plaintiff's allegations, that Rucker had no interest in the bills of exchange, and that the right of lien was vested, or that the parties intended it to vest, in Chapman and Ducros, were of no avail: that the demurrer here admitted only the facts, as against the defendant himself: and that, if further proof was necessary against any other party, that party ought to be joined. For this, Penfold v. Nunn, 5 Sim. 405, was cited. It was asked, why it should be assumed that Rucker had no interest? It was suggested, that he might in fact have paid part of the bill. As to the want of equity, the defendant's counsel objected, first, that there was no consideration for the lien, from any of these plaintiffs. It was an agreement, between Rucker and Carrington merely, or Rucker and his indorsees; and he alone could enforce it. A lien for unpaid purchase money would attach, no doubt, at the suit of the vendor, in whatsoever hands the property might be. But the lien would not pass, said they, to the vendor's assignee: or if it could be transferred, it was not transferrible by a mere transfer of bills, representing the purchase money. As to the stipulation on that head, introduced into the conveyance, they maintained that it was inoperative; or, at any rate, was not one which could be enforced by the assignee, as no consideration for it moved from him, and he was not even a party to the deed. On the other hand, the plaintiffs maintained that Rucker was clearly not a necessary party; that he could not have been made a defendant, as nothing could have been prayed against him; and that the only use of making him a plaintiff, (which they admitted he might have been,) would have been to dispense with the proof, as to his cessation of interest. But they insisted, that the defendant could not, on this argument, dispute the allegation as to Rucker's interest; since, by his demurrer, he admitted the statements of the bill to be true. And, that being so, the case stood thus: that Rucker had no lien on the land, and never had any; that there was here an express lien, or equitable mortgage, created in favour of the parties suing; and that, though all of these need not have joined, yet they had at least a right to do so. Rucker, however, had never any interest in the matter; and certainly had none, in the object of the suit. There was, no doubt, one event in which he had an interest; namely, in the result of the sale prayed for, though not in its proceeds. Finally, it was submitted, the defendant could not possibly be injured by Rucker's non-joinder; since he was no party to the bills, and therefore never could be liable personally to any one.

The following were the cases and authorities cited, on either side:- Macartney v. Graham, 2 Sim. 285; Davies v. Quarterman, 4. Y. and Coll. Ex. 257; Horrocks v. Ledsam, 2 Coll. C. C. 208; Hobson v. Mellond, 2. M. and R. 342; Dryden v. Frost, 3. M. and Cr. 670; Mare v. Malchy, 1. M. and Cr. 577; Walwyn v. Coutts, 3. Sim. 14; Garrard v. Lord Lauderdale, ibid. 1; Ryan v Anderson, 3 Madd. 174; Davies v. Dodd, 4. Price 176; and 3. Sugd. V. and P. 214; Calv. on Parties, 11; 240; 5. Jar. Byth. 109; 2. Pow. 968; 1048; 1. Dan. Pr. 293; 399.

We have looked into these authorities, and several others; and we are of opinion, that the demurrer in this case was properly overruled, and that the objection taken ore tenus is not sustainable. It is very difficult to deduce, from the cases, any inflexible and certain rule respecting parties. One thing, however, appears clear; that the mere circumstance of there being some other person interested, (that is to say, incidentally or indirectly interested, or interested in the subject matter only,) is not a valid objection on the score of non-joinder. It seems to us equally clear, that the rule as to the effect of a demurrer, in admitting matters of fact, must be the same in equity as at law. In Earle v. Holt, 23. May, 1845, 9 J. Jur. 773, the Vice-Chancellor (Wigram) throws some doubt on Penfold and Nunn, as reported; and says expressly that a defendant by demurring admits the facts alleged, for all purposes. He refers to Kemp v. Pryor, 7 Ves. 237; and adopts the rule there given, that if the facts stated in the bill, on being proved or confessed would entitle the plaintiff to relief, the demurrer must be over-ruled. In Earle v. Holt, the plaintiff was the acceptor of a bill of exchange, drawn on him by one Bott: and the suit was against the holder of the bill, and his immediate indorser, (between whom collusion was alleged,) praying to have the same delivered up to be cancelled. The plaintiff stated, that the bill had been paid through Bott himself, to the first indorsee; and that Bott had never since had, or pretended to have, any claim on the said bill. It was held, that Bott was not a necessary party. In Dalton v. Hayter, 7 Beav. 321, the Master of the Rolls says that a defendant must show, that according to his own case another party is wanted. Applying that rule here, what part of the defendant Davidson's case can show, as the facts now stand, that Rucker is a necessary party? The only interest which the latter could have, would be acquired by his taking up the bill. As to his indirect interest, the answer was given at the bar; that there are many cases in which persons have such an interest, who yet were never supposed to be necessary parties. That of a suit by a mortgagee, against the heir of the mortgagor, is one instance. It can hardly be said, that there the executor is not interested, or the legatee; yet, they are not made parties. In Brown v. De Tastet, Jac. 290, A. B. and C. were in partnership; and A. sold to D. half his share. It was held, that A. might sue D. for an account, without making the other parties. The case of Slater v. Wheeler, 9 Sim. 156, and Stainbank v. Fernley, in the same book 556, show distinctly that indirect interests are disregarded. The same may be collected, from Delabere v Norwood, 3 Swanst. 144, in notis; and from the case cited, of Macartney v Graham, 2 Sim. 285.- Mr. Calvert states the rule as to parties to be, that all should be joined who have an interest in the object of the suit. He says, however, (p. 10,) that not all have such in interest, who are concerned in the subject matter; but only those who are concerned in the very thing demanded; the matter petitioned for in the prayer. Now the object here is, to establish a lien on the defendant's estate; by reason of a stipulation on that point, of which he had notice, in the conveyance through which he claims title. It is true, that a sale is asked, under that stipulation. But this will flow as a consequence, from the establishment of the lien. In that object, it does not appear to us that Rucker, within the rule stated, has any interest. At the very moment of the sale, the persons interested were Willis and Garrett. The consideration of the sale, in fact was a payment to them; not to Rucker. Carrington's undertaking was, to pay the bills then drawn, in Willis and Garrett's favour; and the stipulation was, that the bills thus payable should form the lien. Perhaps, for the sake of facilitating or dispensing with proofs, as in Ryan v. Anderson, 3. Madd. 174, or because he might possibly be thereafter called on to take up the bill, now said to be dishonored, and lying wholly unpaid, he might have been made a party. It seems to us, however, that on such a state of facts, and with the allegation admitted on the record, that the bill remains unpaid in the hands of Chapman and Ducros, the holders, it was clearly unnecessary to make him so. It is not so clear to our apprehension, considering the terms and nature of the stipulation in their favour, that Willis and Garrett could have been dispensed with; but we have no doubt, that they had a right to join, as also had their immediate indorsees, if they thought fit.

Of the plaintiffs' equity, we think it sufficient to say, that it stands unshaken by any case that has been cited, and is unimpeached by any principle or authority that we know of. The arrangement was a peculiar one; and no case, therefore, is likely to be found precisely in point. Carrington agrees to buy from Rucker an estate, on credit. The latter would, therefore, have had a lien in equity on the estate, for his purchase money. But Rucker, is indebted to Willis and Garrett; and, by agreement between the three, Carrington agrees to pay them in his stead, and to give them the lien, to which otherwise Rucker alone would have been entitled. Rucker transfers his claim, by the method usually adopted for that purpose, and recognised by the law as a valid one; that is to say, by bills of exchange accepted by Carrington, in Willis and Garrett's favour. Finally, though those gentlemen are not parties to the deed, by which the arrangement is effected, Carrington and Rucker agree, that the lien shall from time to time be transferred with those bills, as often as the bills themselves shall be transferred. We see no reason why such a lien should not, in so far at least as Willis and Garrett are concerned, be taken to be a perfectly valid one, under the circumstances; and, as such, enforceable by them and their assignees, in a Court of Equity.

The order of the Resident Judge, overruling the demurrer in this case, is consequently affirmed; and the appeal against it dismissed with costs to be taxed by the Master. Such costs are to be paid within ten days after demand thereof; and the cause is remitted to the now Resident Judge, to make such order or orders, and otherwise proceed in the same cause, as shall be consistent with this present order, and to his Honor shall seem meet.

We have reserved to this place the objection, which was raised on the argument, to the jurisdiction of the three Judges at Sydney, to entertain appeals from the Resident Judge, in any suit or matter in Equity. The question depends on the words and meaning of the 5th section of the Act, passed for the more effectual Administration of Justice. By that Act, section four, the Governor was empowered to appoint one of the four Judges of this the Supreme Court of the colony, to reside at Port Phillip; and on such Judge, while so there resident, were then conferred all the powers of the Court, in and for that portion of the colony. But, by section 5, his decisions (in matters, only, which would in Sydney properly belong to the full Court,) are made subject to the review of his brethren at Sydney. It was submitted, that a decision in Equity was not a matter, properly belonging to the full Court-but to one member of the Court, only; that is to say, the Primary Equity Judge: -and, therefore, that from such decisions there was no appeal.

On considering the words of that section, and especially the latter portion of it, (in which it is provided, that no appeal shall lie from any order for a re-hearing only,) and reading it in connection with the 20th section, we are clearly of opinion that matters in Equity, within the meaning of the Act, do properly belong to the full Court; and that, consequently, the decisions of the Resident Judge in such matters are appealable. Independently of the force of the exception in section 5, -using a term peculiarly applicable to proceedings in Equity, and showing, therefore, (by reasonable, if not necessary intendment,) that appeals in Equity, not being from a mere order for a re-hearing, were in contemplation; -the 20th section shows that no substitution of authority, residing in the Equity first instance Judge, was created. The Equity jurisdiction remains, where the Act of Parliament placed it; with the full Court. The Primary Judge has power to determine, without the assistance (the Act does not say, to the exclusion,) of the other Judges, causes and matters in equity. He sits, therefore, in the exercise of a delegated or representative power; and the Decrees and Orders pronounced and made by him, have effect as the Decrees and Orders of the Court. An opinion to this effect was intimated, by this Court, in McLaughlin v. Little, on the 6th February 1842. (Res. Judge. 20.) It will be observed, that the 5th section does not use the word 'belonging' only; but the words properly belonging. It may well be, that the decisions in question belong, in a sense, to one Judge alone, and yet are properly appurtenant to the Court. To hold that there was no appeal designed in Equity Causes, (or none, as was suggested, except after a Rehearing,) when appeals are plainly provided for in all other Jurisdictions, would in our opinion be to put on the Act a very unreasonable construction; in support of which, we have heard no good reason, and which the true principles of construction appear to us to oppose.

Published by the Division of Law, Macquarie University