Vanderveer's Administrator v. Holcomb. VANDERVEER'S ADMINISTRATOR vs. HOLCOMB and others. 1. An interlocutory decree made at the hearing in a foreclosure suit, on bill and the answers of two defendants, one of which charged that the mortgage of the other defendant was void for usury, does not adjudicate upon the validity of such mortgage by not directing an account to be taken of the amount due upon it. The question between the two defendants is still open, and is proper to be brought up by a cross-bill. 2. A cross-bill against a complainant should, in general, be filed at the time of filing the answer, and in all cases before closing the testimony. But the first rule does not apply to a crosss-bill by one defendant against another, nor does the last to cases in which no testimony has been taken. The argument was upon a demurrer filed to the bill in this case, which was a cross-bill by one of the defendants in a former suit pending in this court. Mr. Emery and Mr. Richey, in support of the demurrer. Mr. Ransom, contra. THE CHANCELLOR. The cross-bill was by one of the defendants in a foreclosure suit against another defendant, for the purpose of establishing the validity of a mortgage held by the complainant in the cross-bill, to which the owner of the equity of redemption had, in his answer in the original suit, set up the defence of usury. The complainant in this suit, in his answer in the foreclosure suit, had set up his mortgage as a valid, subsisting lien, but did not notice the defence of usury. Both defendants admitted the complainant's mortgage; no replication was filed or testimony taken, but the cause was brought on for hearing on the bill and answers. The Chancellor, by an interlocutory order, directed a reference to a master to ascertain the amount due on the mortgage of the complainant, and on the encumbrances of other defendants, some of which were posterior to the mortgage of the complainant in Vanderveer's Administrator v. Holcomb. the cross-bill. He did not direct the master to ascertain the amount due on the mortgage of the complainant in the cross-bill, or determine directly whether it was, or was not, a valid mortgage. The interlocutory decree was silent as to that. From this decree an appeal was taken, and it was affirmed in the Court of Appeals, (Vanderveer v. Holcomb, 2 C. E. Green 547,) on the ground that if it did, by implication, hold that the mortgage of the complainant in this bill was invalid, such judgment was right on a hearing upon bill and answer only, as the facts stated in Holcomb's answer setting up the usury, must be taken as true, and no denial of them was contained in the defendants answer; and on the other hand, if the decree appealed from did not, by implication, declare the mortgage void, but left the question open, there was no error. I think that interlocutory decree did not affect the mortgage of the complainant in this suit. It simply directed the master to ascertain the amount due on the other encumbrances, which, no doubt, it was thought would be all that would be requisite to a final decree; as the cause then stood, it was all that was requisite; there was nothing to controvert the facts set up in Holcomb's answer; but if, before the final hearing, by cross-bill or otherwise, evidence should be placed before the court to show that the plea of usury was not true, then this report would have been insufficient, and a further reference might be ordered before the final hearing. It is insisted, on the part of Holcomb, that this cross-bill is filed too late. The rule is, that in general a cross-bill should be filed at the time of the answer, as it is a part of the defence. And the old rule in England was, that it should be filed before publication, which would be substantially, in this state, before the closing of the testimony. But this last rule does not apply to this case, because there was no testimony taken. Nor does the rule first mentioned apply, for that relates to cases where the cross-bill is against the complainant; and in such case it is evidently proper that the cross-bill should be filed at the time of putting in Monmouth Co. Fire Ins. Co. v. Hutchinson and C. & A. R. R. Co. the answer, to which it is an auxiliary. But where the dispute, as here, arises between two defendants, one of them cannot know what defence the other will put in until answer filed, and his own answer must be filed within the same time. A cross-bill is proper in a case like this, between the defendants, and I do not know of any rule or reason, why it should not be filed after an interlocutory decree which does not determine the question. The complainant in this suit ought to be permitted to call upon Holcomb to prove the defence of usury by other evidence than his own allegations in his answer, which, under the rule laid down in the statute, would be conclusive on the final hsaring, and would warrant a decree that this mortgage was void for usury. Demurrer overruled. THE MONMOUTH COUNTY MUTUAL FIRE INSURANCE COMPANY vs. HUTCHINSON AND THE CAMDEN AND AMBOY RAILROAD AND TRANSPORTATION COMPANY. 1. Where an insurance company pays the insured for a loss by fire occasioned by the fault of a railroad company, and the insured afterwards receives the amount from the railroad company, in satisfaction of his damages, he holds it in trust for the insurers, and they may recover it from him by suit in equity. 2. If the railroad company does not pay the insured his damages, or pays them knowing that he has received the amount insured from the insurance company, the railroad company is liable to the insurance company in a suit at law, which it has the right to bring in the name of the insured, without his consent, to compel repayment of the damages to the amount of the sum paid by it; and a release by the insured to the railroad company would be no defence to such suit. 3. But these two remedies cannot be pursued in one suit; neither the insured nor the railroad company is a proper or necessary party to a suit against the other; and in no way are they jointly liable so that a decree could be made, or a judgment given against both. 4. When the suit is by bill against both, if the only prayer were for a Monmouth Co. Fire Ins. Co. v. Hutchinson and C. & A. R. R. Co. decree for the payment of the money, a demurrer would be sustained for the misjoinder. But under the general prayer for relief, the bill will be retained to give such equitable relief as the facts may warrant. 5. A release by the insured to the railroad company, when the railroad company knew that the insured had received the amount of the insurance, would be a fraud upon the insurance company, and would be void for the fraud. And in such case, the insurance company has the right to have the release declared void before commencing a suit in the name of the insured against the railroad company. In such a suit against the railroad company which holds the release, the insured would be a proper, if not a necessary party. 6. Courts of equity have, peculiarly, cognizance of matters of fraud, and have jurisdiction over instruments affected by fraud, and will declare them void on that account, even though the fraud is such as might be proved at law so as to avoid the effect of the instrument. This cause was argued upon separate demurrers, filed by each defendant to the complainants' bill. Mr. Emery and Mr. Richey, for Hutchinson. Mr. C. E. Green and Mr. Stockton, for the railroad company. The bill alleges that, on the 11th of June, 1861, The Monmouth County Mutual Fire Insurance Company delivered to Hutchinson, one of the defendants, a policy of insurance, by which they agreed to indemnify him "for all damages or loss which he might sustain" for a specified time, "not exceeding the sum of $1200, by reason of fire happening" to the house insured. That they insured also another house for $400, and a shed for $200. That, on the 5th day of March, 1866, the houses and shed described in the policies were destroyed, and were a total loss. That, on the 21st day of March, 1866, Hutchinson made oath to the destruction of the property by fire, and that it was worth, at the time, $4000, and that the fire did not take place from any cause which invalidated the insurance. That on the 9th of May, 1866, the insurance company paid Hutchinson $1800, in accordance with their agreement. Monmouth Co. Fire Ins. Co. v. Hutchinson and C. & A. R. R. Co. The bill further alleges that, since that payment, they have discovered that the fire was caused by the carelessness, mismanagement, negligence, and default of The Camden and Amboy Railroad and Transportation Company. After stating in what respect the railroad company were negligent, the bill states that, by reason thereof, Hutchinson had an action for damages caused by the said fire against The Camden and Amboy Railroad and Transportation Company, for the full value thereof, which complainants charge were worth $4000. Complainants further show, by their bill, that, after the happening of the fire and their payment of the $1800, they became entitled to all the rights of action which Hutchinson had against the Camden and Amboy railroad, to the extent of the sum of $1800, and had a right to be subrogated to the rights and remedies he had against The Camden and Amboy Railroad and Transportation Company, to the same extent. That the payment of the $1800 to Hutchinson, operated as an equitable assignment to complainants of so much of the claim of Hutchinson against the company, as was necessary to reimburse them; and that Hutchinson became a trustee for them for so much of the claim as was necessary to reimburse them; and that he had no right to release The Camden and Amboy Railroad and Transportation Company from any right of action complainants had against the said railroad company. It is further alleged, on information and belief, that, on the 13th of November, 1866, the railroad company paid Hutchinson the sum of $2000 as satisfaction of the damages sustained by him on account of the said fire, and that Hutchinson holds the said money as trustee for complainants to reimburse the said $1800 paid by them. That if Hutchinson gave a receipt and release, it was a fraud on complainants, and the railroad company were cognizant of it, and cannot lawfully set up the release as a discharge. The bill prays, that defendants may be decreed to account to complainants for the $1800, and for general relief. |