Wayne County MI Archives Court.....Graham, V. Elmore 1837
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Deb Haines http://www.genrecords.net/emailregistry/vols/00003.html#0000719 August 9, 2008, 7:52 am

Source: Cases In Chancery
Written: 1837

CASES IN CHANCERY.
FIRST CIRCUIT.

Graham and another v. Elmore and another.

Solicitor; signature by one who is not. Where a solicitor has appeared in a 
cause, and a demurrer is filed, signed by solicitors who have not appeared, 
the demurrer may be treated as without signature and as a nullity.

But where the demurrer in such case was treated as a nullity by the 
complainants, and a default was entered for want of an answer, and it appeared 
that the signature of the wrong solicitors Was put to the demurrer by mistake, 
and that injustice would be done if the defendant should not be permitted to 
answer, the default was set aside on terms.

Decree: Cause cannot be severed. Where there are joint defendants the 
complainant cannot, upon a pro confesso obtained against one, before the cause 
is at issue or in readiness for hearing against] the other, enter a final 
decree and issue execution thereon against the party against whom the bill has 
been taken as confessed, and leave the cause to proceed against the other 
defendant.

A final decree, or an interlocutory decree, which, in a great measure, decides 
the merits of the cause, cannot be pronounced until all the parties to the 
bill, and all the parties in interest, are before the court.

This court will not adjudge upon a part of the case; it will not make a final 
decree until the case is properly presented in such form as will enable the 
court to make a final disposition of the case, and do justice to all the 
parties.

Where a cause is in readiness for hearing against one defendant, and there is 
another defendant as to whom the cause is not in readiness, the defendant who 
has appeared and answered cannot notice the cause for hearing, but must move 
to dismiss the bill for want of prosecution if the complainant fails to 
expedite it.

Solicitor; motion by one who is not. It is no objection to an order that it 
purports to be made on the application of one who is not the solicitor in the 
cause. It is not necessary that an order should show on whose motion it is 
made.

Setting aside default. A. decree by default may be set aside, on motion, 
without petition, where the facts upon which the motion is based appear by the 
record.

The bill in this case charged that the defendant, William H. Elmore, had 
obtained goods of the complainants, who are merchants in New York, to the 
amount of about $600), on the credit of one Frederick W. H. Elmore, by 
representing to the complainants that he was the agent of F. W. H. Elmore to 
purchase goods for him on credit; that this representation as to the agency 
was entirely false, and that William H. Elmore purchased these goods on this 
fraudulent representation for his own benefit, and that he executed to the 
complainants two notes for about $300 each, subscribed with the name of F. W. 
H. Elmore, in his assumed capacity as agent; that after these goods were 
obtained, they were forwarded to Detroit, where William H. Elmore for some 
time carried on mercantile business under the name of F. W. H. Elmore; that 
subsequently, an assignment of this store of goods was made by an instrument 
in writing, signed F. W. H. Elmore, by W. H. Elmore, his attorney, to Hicks, 
and in which was also a covenant that it passed all right and title of W. H. 
Elmore to the goods. The bill charged that when this assignment was made, 
Hicks had knowledge of the fraud of Elmore in obtaining complainants' goods; 
and the bill contained, also, a charge in relation to the assignment of the 
goods in the store, in the following terms: " among which said merchandise, 
your complainants' charge was included, the merchandise, so as aforesaid, 
purchased of your complainants, or the portion of them which remained 
undisposed of by the said William H. Elmore, but which particular part or 
portion of the same, complainants were ignorant."

The bill further charged that complainants parted with their goods in the 
confidence in the truth of this representation; that they did not discover the 
fraud until after the notes were due and until after they had demanded payment 
of them at the store where William H. Elmore had traded; that after 
discovering the fraud, they demanded a return of the goods of Hicks and 
Elmore, or the unsold portion of them, which they refused to return; that 
complainants had commenced no legal proceedings against defendants, except the 
filing of this bill.

The first prayer of the bill was that defendants might answer, the defendant 
Hicks under oath, but the defendant Elmore without oath, from an inspection of 
the inventory, invoices and books, what goods were obtained from complainants, 
and what portion of them were assigned to defendant Hicks; what portion of 
them were sold by William H. Elmore before the assignment, and what portion by 
Hicks since the assignment, and for what; that a receiver, with the usual 
powers, might be appointed, of complainants' goods in the hands of defendants, 
or either of them, and that the unsold portion of them be delivered to the 
complainants; that Elmore be liable for the interest of the whole goods, to 
the time of the assignment to Hicks, and for the amount of goods sold by him; 
that both defendants, or either of them, account for the goods sold by Hicks 
since the assignment, and the interest upon the unsold portion of them since 
the assignment, and be personally liable therefor; that defendants be enjoined 
from assigning or disposing of the goods or their proceeds, and for such other 
and further relief herein as the court may order.

Or secondly, that defendants might answer and be enjoined as aforesaid; that 
they be decreed to return the unsold portion of the goods to complainants, and 
to account and be personally liable, as aforesaid, and for complainants' 
costs. The complainants prayed for general relief. Their prayers were all in 
the disjunctive.

The bill was taken pro confesso, and after the cause had been set down on the 
orders pro confesso for a hearing, and notice for a final decree, H. N. 
Walker, for defendant Hicks, applied on affidavit to the chancellor for leave 
to have the order, pro confesso, against him opened, and leave to answer. The 
affidavit stated that previous to the entry of the default, H. N. Walker gave 
notice of retainer for Hicks, and that a demurrer had been filed on the part 
of Hicks, and that by mistake the name of the firm of Bates, Walker & Douglas 
was signed to the demurrer; that complainants' counsel had treated the 
demurrer as a nullity on that account, and had entered the default. The 
affidavit was accompanied by an affidavit of merits, and an answer proposed to 
be put in. The chancellor granted an order that the complainants show cause 
before him at his chambers why the demurrer should not be withdrawn, the 
order, pro confesso, opened, and defendant Hicks have leave to answer; and 
that defendants' solicitor serve on the complainants' solicitor the affidavit 
of merits, the answer prepared to be filed, and a copy of the order to show 
cause at least four days before the time of hearing.

B. F. Cooper, for complainants, read an affidavit, from which it appeared that 
on entering the order, pro confesso, the complainants had served a notice upon 
the defendants' solicitor of the entry of such order, and offered to open the 
same without costs, provided a full and sufficient answer were served before 
the first day of the term, for which the cause had been set down for a hearing 
on the orders pro confesso; that no answer had been filed, and that two 
special terms had elapsed since the entry of the orders pro confesso; and that 
defendants had taken no previous steps in the case, and insisted:

1. That the application of the defendant was now too late. (2 Johns. Ch.. 242; 
4 Paige, 288, 439.)

2. That the affidavit of merits was not sufficiently full, and gave no 
sufficient excuse for the delay; that the answer was exceptionable for 
insufficiency; he examined the whole case upon the bill and answer served, and 
insisted on the authority of the decision in 6 Paige, 371; 5 Ib., 164; 1 
Hoffman, 7, 551, that the order pro confesso should not be opened, as from the 
answer presented it appeared that the defendant, although attempting to 
interpose the defense of a bona fide purchaser without notice, had 
nevertheless admitted and shown such a knowledge of facts and circumstances 
relating to the fraud as charged as to put him on inquiry, and to charge him 
with constructive notice of the fraud; that no injustice, therefore, would be 
done to the defendant by refusing this motion, but injustice would be done to 
the complainant if it were granted.

3. That the opening of the order is a matter resting in the sound discretion 
of the court, who is to see that no injustice is done. If it be now opened, 
the defendants should be required to pay all costs of the suit subsequent to 
the proceedings to take the order, pro confesso, and the costs of the motion. 
They should put in a sufficient answer, and submit to such equitable terms as 
the court may impose, to expedite the cause, and to ascertain the facts of the 
case. In this case, the defendants should, as equitable terms, be required to 
stipulate that the complainants under the issue may, if they shall so elect, 
examine the defendant Elmore as a witness, without a waiver of any liability 
to them; and if complainants shall so elect, they may themselves also be 
examined as witnesses in the cause, and that a commission may be taken out to 
obtain their testimony. The tendency of chancery practice in modern times is 
to let in evidence from all quarters, to satisfy the conscience of the court.

H. N. Walker, for defendant, cited 3 Chit. Gen. Pr., 525; 7 Paige, 370; 6 Ib., 
371; insisted that the demurrer was regular, and a valid proceeding in the 
cause until set aside. That if the demurrer were irregular he should be 
allowed to answer on terms.

The Chancellor.—The demurrer, having been signed by solicitors whose 
appearance had not been entered in this case, might, where another solicitor 
had appeared for this defendant, be treated as without signature, and as a 
nullity. (3 Chitty's Gen. Prac., 524.)

But the demurrer having been filed in this form by mistake the court would 
relieve the party from the consequences, if satisfied that injustice would be 
done if the party should not be permitted to answer.

The answer discloses: First, that, as defendant Hicks believes, W. H. Elmore 
was authorized to purchase the goods in the name of F. W. H. Elmore. If this 
be true, no fraud was committed. Second, that he purchased the goods without 
any knowledge of the complainants' claim. (See Mowry v. Walsh, 8 Cow., 238.)

The answer further discloses such circumstances in relation to the knowledge 
of F. W. H. Elmore of the manner in which the business was conducted, as must, 
in all probability, establish his liability, if any doubt existed on that 
subject.

The circumstance of the defendant Hicks having taken a separate guaranty of W. 
H. Elmore, is urged as strong evidence of fraud. It may, perhaps, lead to a 
conjecture that Hicks was suspicious that W. H. Elmore had some individual 
interest in the property; but, accompanied as it is by the positive denial of 
Hicks of any knowledge of the complainants' claims, and, also, the statement 
in his answer, that, according to his knowledge and belief, the goods were 
really the property of F. W. H. Elmore, cannot be regarded as such a badge of 
fraud as would render the sale to him fraudulent and void.

The answer is objected to, as not being full and perfect. The rule laid down 
in Hunt v. Wallace, 6 Paige, 377, and which has before been recognized in this 
court, in the case of the Bank of Michigan v. Williams, ante, 219, is, that 
the defendant must either furnish the answer which he proposes to put in, or 
state his defense so fully in his affidavit that the court may see that 
injustice would probably be done if the order, taking the bill as confessed, 
is permitted to stand.

The court should require a full answer, and, if satisfied that the answer was 
intentionally evasive, would refuse to set aside the order.

Such is not the case here. The answer discloses sufficient to show that 
injustice would probably be done if the order is permitted to stand. Should 
the court undertake to look into a further or amended answer, it would involve 
a re-examination of the papers, which may as well be done by a master. 
Besides, the court is not fully satisfied that the answer will be found 
insufficient; but, as the court is inclined to think the complainant may be 
entitled to a further discovery in some particulars, the defendant should be 
compelled to answer such exceptions as may be allowed promptly.

The order, taking the bill as confessed, must be set aside upon payment of 
costs of entering the order, and of this motion, and the defendant's 
undertaking to answer such exceptions as may be allowed by the master, within 
five days after the same may be filed, and upon stipulating that the 
complainants may be examined as to the particular goods sold to Elmore, saving 
all exceptions, except as to the competency of receiving such testimony.

After the order of the chancellor, directing the opening of the order, pro 
confesso, entered against Hicks, and after Hicks had filed and served a copy 
of his answer, denying the fraud charged against Elmore, and setting up the 
defense of a bona fide purchaser without notice, etc.,

B. F. Cooper, for complainants, moved, ex parte, on the order, pro confesso, 
against Elmore, for want of appearance, for a final decree. He cited 1 Smith's 
Ch. Prac, 64, 174, 175.

No person appearing for defendant Elmore, the complainants took their final 
decree, ex parte, against Elmore, for the full amount claimed in the bill, and 
costs, and afterwards proceeded against him by creditor's bill.

Henry N. Walker gave notice of retainer for defendant Elmore, and moved (on 
the affidavit of Elmore, of irregularities, etc.) for an order for 
complainants to show cause why the final decree entered December 8, against 
Elmore, should not be set aside for irregularity. The chancellor granted the 
order to show cause.

B. F. Cooper, for complainants, showed cause.

I. The decree in this cause cannot be set aside on the ground of the 
insufficiency of the papers on which the motion is founded.

1. Because after the entry of an order, pro confesso, it is a general rule 
that it cannot be set aside without a production of the answer intended to be 
filed. The exception in the books was in the case of a non-resident, and then 
the motion was made before enrollment. (5 Paige, 164; 6 Paige, 377.) The last 
case was before decree entered.

2. After the enrollment of the decree, the rule is now believed to be 
universal, that the application to set it aside must be on the production of 
the sworn answer proposed to be filed, with a full affidavit of merits. (1 
Hoffm. Pr., 551; 1 Johns. Ch., 541, 631; 1 Paige, 430; 3 Ib., 407; 2 Ves. & 
Beam., 184; 3 Johns. Ch, 424.)

II. If the papers on which the motion is founded be not insufficient in their 
character, they,, are too defective to allow the relief sought for by the 
defendant.

1. The paper served as an affidavit is in form a petition.  Petitions must 
always be sworn to, and an exact copy with the jurat served. (1 Hopk., 101; 3 
Paige, 280.)

2. If the paper is an affidavit, an exact copy, including the jurat, should be 
served; it should be governed by the rules relating to equity pleadings under 
oath. (1 Hopk., 101; 3 Paige, 280.)

3. It is entitled in the cause of complainant against Elmore and Hicks. It 
asks for relief in two causes, viz : complainant against Hicks and Elmore, and 
complainant against Elmore. This is entirely irregular. The relief sought for 
should have been confined to one cause, or the papers should have been 
entitled in both causes, or there should have been two sets of papers and two 
motions. No indictment would lie on this affidavit for any false swearing as 
to matters in the case of Elmore alone. (2 Cowen, 509; Graham's Pr., 2d ed., 
678.)

4. The notice for this motion is signed H. N. Walker, who is only solicitor in 
the case of Hicks and Elmore, and is entitled in that cause alone. It differs 
from the order to show cause. The notice rests upon irregularity alone.

5. The order to show cause is entered on motion of Douglass and Walker, who 
are not solicitors in the cause in which the papers and notice of motion is 
entitled. The order as entered is irregular, and if not a nullity should be 
vacated. None save the solicitors in a cause can make motions therein. (Hopk., 
369.)

III. The decree cannot be set aside for the want of proper evidence that 
defendant Elmore has a good and sufficient defense.

1. The affidavit and petition have none of the usual formula of an affidavit 
of merits.

2. It does not directly state that defendant has merits, but states it in such 
a manner as to leave it doubtful what he does mean.

3. The affidavit misstates the effect of Hicks's answer; the answer really 
states that Hicks is a bona fide purchaser without notice; it alleges that he 
knew nothing of the representations made to complainants, but believes Elmore 
had authority.

4. Defendants have no defense under this answer, as the fraudulent 
representations are not in issue. It is a defense independent of them, and 
good, whether they were made or not. The defense arises from a distinct 
matter, and subsequent to Elmore's fraud.

5. The affidavit shows that Elmore's neglect to appear and answer, as required 
by the order and practice of the court, was the result of deliberation and 
design—a mode of defense selected as well calculated to embarrass complainants 
as a regular defense, according to the rules and orders of the court.

6. It appears that this was done by the advice of counsel. Hicks, it seems by 
his defense, is to defend Elmore, and Elmore to be saved the expenses of a 
solicitor. Elmore is to take the chances of successful defense by Hicks, and 
get rid of the debt and the trouble of litigation and its costs. If Hicks 
fails at the end of a protracted litigation, then Elmore seems to suppose he 
may come in, renew the fight, and take the chances of war. In the meantime, 
these two complainants are to stand and see these two defendants use up their 
goods without paying for them, and encounter the delays and losses and 
vexations of litigation. Will a court of equity listen to an affidavit of such 
a character as this? It would be a stain on the administration of justice.

IV. The cases of opening decrees are all limited to the opening the 
enrollment. After creditor's bill is filed, no such application has been or 
should be granted. (6 Paige, 254.) The affidavit of complainants shows that 
the order to answer is nearly out in the creditor's bill. The order to stay 
proceedings and show cause is served after defendant is on his examination to 
discover his property. After taking the chances of the first suit, he has 
taken all the chances of the second, to the time when he is about to be 
compelled to discover his property. If this motion be granted, its effects in 
other suits will be most disastrous. Defendants will lie by until called to 
answer or discover, when they will thus seek to come in, after a great lapse 
of time. In the meantime, their property will be either fairly or fraudulently 
disposed of, and the complainants will be thrown back to the filing of the 
bill, to fight a defendant who has thus managed to delay his proceedings and 
discover his strength.

V. If the decree, pro confesso, can be set aside after filing a creditor's 
bill, there is no sufficient ground for it shown on this application, either 
in the complainant's mode of proceeding, or in the merits disclosed by the 
defendant's affidavit.

It is objected, first: That the affidavit shows execution put in the sheriff's 
hands on the return day. Affidavit of complainants denies it; it was some days 
before the return. If it were not, no collusion is charged by defendants; 
without this charge, the return of the sheriff cannot be impeached. (2 Paige, 
408.)

It is objected, second: That the decree against Elmore was entered up while 
the cause was not even at issue against Hicks: Answer, there is a decree, pro 
confesso, against Hicks, not yet opened.

Answer 2. That bill for fraud is like an action on the case at law, for a 
tort. There one defendant may suffer judgment by default, another may give a 
cognovit; one may be found not guilty by verdict, and the other guilty ; in 
such case the tort is joint and several. So in this bill for fraud; there may 
be an order pro confesso, against one defendant, and a decree, while the cause 
may proceed against the other, who may have a decree in his favor. (Smith's 
Pr., 174, 175; 2 Paige, 102; 7 Johns. Ch., 194.) This bill is, in substance, 
an action on the case. Why wait, after an admission by Elmore of the fraud? (7 
Paige, 448; 1 Peters, 80.)

VI. If either of the two last mentioned grounds are sufficient to set aside a 
decree after enrollment, it can only be on a bill of review, or on appeal. If 
there is error, the error is one of law. (Cooper's Pl., 88-90.)

H. N. Walker, for Elmore.

1. The defense of one party avails his co-defendant, if the cause depends upon 
the same facts. (1 Hoff. Pr., 554; 10 Johns. Rep., 534.)

2. A cause cannot be heard against several defendants in the absence of the 
rest, although no decree be asked against them. The bill must first be 
formally dismissed as to them. (2 Paige, 572; 1 Paige, 548, 549; 5 Paige, 638; 
2 Johns. Ch., 614.)

The Chancellor—The principal question involved in this case is whether, where 
there are joint defendants, upon a pro confesso being obtained against one 
defendant, and before the cause is at issue, or in readiness for a hearing, 
against the other defendant, the complainant may enter a final decree, and 
issue execution against the party against whom the bill has been taken as 
confessed, and leave the cause to proceed against the other defendant or 
defendants. After a very careful examination, I have been unable to find any 
case in which this question has been distinctly presented. It is the uniform 
rule that a final decree, or an interlocutory decree which in a great measure 
decides the merits of the cause, cannot be pronounced until all the parties to 
the bill, and all the parties in interest, are before the court. (5 Wheaton, 
542.)

This rule is usually applied to cases where the complainant has not made 
proper parties to his bill, or where, the proper parties having been made to 
the bill, the complainant has not taken the necessary steps to bring them 
before the court; but does not the reason of the rule apply to a case like the 
present? The party who has answered in this cause, although as to that part of 
the bill which relates to Elmore alone he denies the allegations upon his 
knowledge and belief, has put in issue the whole merits of the bill.

Before the cause is ready for a hearing, the complainant enters his final 
decree against the defendant who has not appeared, and issues his execution 
thereon for the full amount claimed, leaving the cause to proceed against the 
other defendant, before the parties, or rather before the merits of the cause 
are before the court, so as to enable it to make a final decree upon the whole 
case, when it may perhaps become the duty of the court, upon the hearing, to 
declare that the complainants have no equity whatever. I think the rule above 
stated goes to the extent that the court will not adjudge upon a part of the 
case in this way. It will not make a final decree until the cause is properly 
presented in such a form as will enable the court to make a final disposition 
of the cause, and do justice to all parties to the suit. In 2 Paige, 572, City 
Bank v. Bangs, it is decided that where the defendants, or any of them, deny 
the allegations in the complainant's bill, or set up distinct facts in bar of 
his right to file the bill, he must file a replication, give rules to produce 
witnesses, and close the proofs before the cause is heard. It is settled that 
although a cause may be in readiness for a hearing against one defendant, when 
there are other defendants as to whom the cause is not in readiness, the 
defendant who has appeared and answered cannot notice the cause for a hearing, 
but must move to dismiss the bill for want of prosecution. (Vermillyea v. 
Odell, 4 Paige, 122.) This he cannot do if the cause is in such a situation 
that it may be noticed for a hearing by either party. This is confirmatory of 
the rule that the court will not grant a final decree until the cause is in 
readiness for a hearing as to all the parties.

It has been urged that the court cannot interfere in this way, but that the 
defendant must be left to his appeal or a bill of review. And this brings us 
to another objection to this form of proceeding. I do not see how an appeal 
can be taken in this stage of the cause. This case is still pending and 
proceeding in this court as against one defendant, while it may be proceeding 
in the appellate court, upon appeal, against the other defendant, if the 
appeal could be sustained by the supreme court. It would render the practice 
and proceedings anomalous and inconvenient if this court were to pursue this 
course and render final decrees, in succession, against several defendants in 
this way, as fast as the complainant should perfect his proceedings against 
each of the several defendants. A decree by default may be set aside on motion 
(1 Hoffman's Pr., 419); and the court decides on motion, where the facts 
appear, and there is nothing to dispute about but the law of the case. (Ib., 
420.)

Some other questions were raised at the argument. It is objected that the 
order to show cause was entered on motion of Douglass and Walker, when H. N. 
Walker is the solicitor of record. The papers are signed and notices given by 
H. N. Walker, solicitor in the cause, and the order to show cause being 
granted on motion of Douglass and Walker is immaterial. The complainants could 
not have been misled, and the order would have been valid without the 
insertion of the name of any solicitor. The fact that the jurat annexed to the 
petition was not annexed to the copy served would prevent its being used as 
proof of the facts alleged in the petition, as the party is bound by the copy 
served. But the motion is founded upon the record and proceedings in the 
cause, as well as upon the petition, which disclose the facts in the same 
manner. The objection that the papers, being only entitled in the case of 
Elmore and Hicks, cannot be used in the case against Elmore alone, is 
technically correct, and the order must be confined to that case. But from the 
view I have taken that the decree taken against Elmore in the case of Elmore 
and Hicks was irregularly entered, and must be set aside, it must follow that 
all proceedings founded upon that decree must fall with it. After the 
defendant has omitted to make his defense, as has been the case here, I 
interfere in this way with reluctance. But the case being presented, I am 
bound to settle the practice of taking decrees against one of several 
defendants in this manner, either in one way or the other; and of the 
inconvenience and irregularity of this course of proceeding I entertain no 
doubt. The final decree entered in this cause against Elmore must be set aside 
and vacated, leaving the order taking the bill as confessed against him, of 
force, so that no obstacle may exist to taking a decree whenever the cause 
shall be in readiness for a final disposition; or if the complainant shall so 
elect, with leave to set aside the pro confesso, and require an answer.

Decree set aside.

Additional Comments:
CASES DETERMINED IN THE COURT OF CHANCERY FOR THE STATE OF MICHIGAN
BY ELON FARNSWORTH, Chancellor 

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