Grand United Order of Odd Fellows Joint Stock Ass'n v. Merklin

Alvey, C. J., delivered the opinion of the Court. In this case the bill was filed by the appellants against the heirs and personal representatives of James Dew, deceased, for the purpose of having a certain deed and a lease declared to have the effect and operation of. a mortgage only. The deed was made by Charles H. Dutton and others to James Dew, on the 2d of May, 1866, for certain premises on Lexington street, in the City of Baltimore; and on the same day a long renewable lease of the same premises was made by Dew to Dutton and others, the grantors in the deed. The deed professes to be made for the consideration of $4000, and by the lease an annual rent is reserved of $400, payable semi-annually.

The lease contains a covenant or condition that the lessor, his heirs, personal representatives, or assigns, shall and will, ■at any time after the expiration of two years from the date of the lease, at the request and expense of the lessees, their heirs or assigns, on payment, or tendering ■payment, of the sum of $4000, with all arrearages of rent, make and deliver to the lessees, their heirs or assigns, a good and sufficient deed, in fee simple, of the premises demised, free, clear and discharged of and from the rent reserved. At the time of this transaction the appellants were an unincorporated body or association, and the grantors in the deed and lessees in the lease, being members, had acquired and held the property described in those conveyances for the xise and benefit of the association. Subsequently the appellants became incorporated, and then, on the 12th of November, 1868, the lessees in the lease from Dew made an assignment of the lease, and of the demised premises, to the appellants, and the latter have held the same ever since, paying the rent ⁵⁸² reserved down to the 1st of November, 1878. They now charge that the whole transaction was in fact and reality , a mortgage, devised and intended simply as a security for money loaned, and by which an excessive rate of interest,, in the form and under the denomination of rent, was; reserved.

It is charged that the amount actually received, by way of loan, from Dew, was only the sum of' $3600, instead of $4000, recited as the consideration of ■ the deed; and that the sum of $400 was’retained by.Dew as a bonus for the loan. It is alleged that the balance' actually due on the loan was tendered to Dew in April, 1879. The appellees, by their answers, deny th.e allegations-of the bill in respect to the nature of the transaction with Dew, and insist that the deed and lease must be taken for what they profess to be on their face. James Dew died in June, 1879.

The only witness examined in the case was Charles II. Dutton, one of the grantors in the deed and one of the, lessees in the lease, and he was examined on the part of the appellants to prove the najbure of the transaction with Dew. He is objected to, however, by the appellees, as-being incompetent to testify for the appellants, by reason of the fact that he was a party to the contract with Dew, who has sinpe died. Dutton, the witness, obtained his discharge under the insolvent law of the State in 1885 ;. and he has -not been made a party to this suit, though it is insisted that he ought to have been made a party.

The-Court below dismissed the bill, but upon what ground the-record does not disclose. - It is clear, we think, that Dutton was not a necessarjr party to this suit. By the assignment to the appellants, he divested himself of all interest in the property; and by his discharge in insolvency, shown in evidence, he was fully discharged and released from all obligations ⁵⁸³ created by the lease, for the payment of rent or otherwise. And being thus divested of all interest or title in the subject-matter of the suit, there was no necessity or utility in making him a party, either plaintiff or defendant. The true principle would seem to be, says Judge Story, (Eq.

Plead., sec. 153,) “that, in all cases, where the assignment is absolute and unconditional, leaving no equitable interest whatever in the assignor, and the extent and validity of the assignment is not doubted or denied, and there is no remaining liability in the assignor to be affected by the decree, it is not necessary to make the latter a party. At most, he is merely a nominal or formal party in such case.” And in the case of Brace vs. Harrington, 2 Atk., 235, it was said by Lord Hardwicks, that it was not necessary, in every case of assignment, where all the equitable interest is assigned over, to make a person, who has the mere legal interest, a party. See, also, Blake vs. Jones, 3 Anst., 651, and Whitney vs. McKinney, 7 John. Ch., 144.

And not being a party in fact, nor a necessary party, to the suit, was Dutton, under the circumstances of the case, a competent witness to testify for the appellants in relation to the transactions with Dew, under which the deed and lease were made? The-appellees insist that he was not competent; but they failed to file any such sufficient exception in the Court below as to entitle them to insist upon the exception in this Court. It is true, the examiner was required by the appellees to note at the examination, and he