Equity Pleading and Practice, Master, Bill, Answer, Decree, Appeal. Equity Jurisdiction, For an accounting, Mistake, Circuity of action.
A bill in equity alleged that, to secure the repayment of cash advances by the defendant to the plaintiff, the plaintiff gave to the defendant in 1900 his promissory note for $58,000 and a conveyance of certain real and personal property; that in 1903 the defendant gave to the plaintiff a statement of their account which showed a balance due to the defendant of $51,000 "and the value of six hundred shares" of the capital stock of a certain corporation; that, relying on the accuracy of that statement, the plaintiff and the defendant entered into an agreement which contained an acknowledgment that the amount due to the defendant was $51,000 and the value of the six hundred shares of stock, and made some readjustments of securities; that the statement, because of a mutual mistake of the parties, was inaccurate in that the amount of balance was in excess of that owed to the defendant, "said excess amounting to more than $12,000 and the six hundred shares of" stock; and that the defendant refused to comply with a request by the plaintiff to rectify the mistake. The prayers of the bill were for a cancellation and surrender of the agreement of 1903, a restoration of the parties to the status quo, and "that an accounting may be held between the plaintiff and the defendant, and that the amount now due from the plaintiff to the defendant may be determined." The answer contained an averment that the statement of 1903 was accurate and that the obligation of the plaintiff to deliver the shares of stock "was expressly excepted from said agreement [of 1903] by apt words therein contained." The case was referred to a master and, after it had been pending before him for a year and four months, and before he made his report, the plaintiff amended his bill among other respects by adding a prayer for "an accounting of all transactions between the plaintiff and the defendant." By a written stipulation filed with the master, it was agreed that but five matters were left in controversy, one of which was whether the plaintiff was bound to deliver the shares of stock to the defendant. The master found that the plaintiff should deliver to the defendant the shares and the dividends that had accrued thereon. The plaintiff excepted to the report on the ground that the finding was beyond the scope of the pleadings. Held, that the exception must be overruled, since the finding was within the scope of the pleadings.
Ordinarily, if a defendant in a suit in equity desires affirmative relief, he must resort to a cross bill; but in suits to settle the affairs of a partnership, or for the foreclosure or redemption of a mortgage where a statement of accounts is involved, or in a suit for an accounting, both parties are actors and a defendant may have a decree in his favor without the aid of a cross bill.
In a suit in equity for an accounting of transactions, among others, between the plaintiff as a stockbroker and the defendant as his customer, the question of whether the plaintiff should deliver to the defendant certain shares of stock of a corporation was put in issue by the pleadings. There was no cross bill. A master to whom the suit was referred found that the defendant was "entitled to these shares of stock with all dividends which have been paid upon them." Exceptions of the plaintiff to the report were overruled and a final decree was entered which stated "that there exists an unfulfilled and unliquidated obligation on the part of the plaintiff to deliver to the defendant" the shares of stock "and to pay to the defendant the amount of all dividends which have been paid them." There was no order that the plaintiff should deliver the stock or pay the dividends. The plaintiff appealed, but the defendant did not. Held, that the decree establishing the obligation of the plaintiff as to the shares of stock was within the scope of the pleadings, and that the plaintiff's appeal must be dismissed; and it seems, that to avoid further litigation, the defendant, if he had asked for it, might have been granted affirmative relief by an order to the plaintiff to deliver the stock and pay the amount of the dividends.
BRALEY, J.
The case having been referred to a master, the plaintiff alleged several exceptions to the report, of which only those relating to the six hundred shares of Reading stock having been argued, the others may be considered as waived. It appears, upon evidence not reported, that the master determined that the defendant was entitled not only to the shares, but to the dividends which had accrued, and been paid to the plaintiff. The argument is, that the finding, being beyond the scope of the bill, is not justified by the pleadings. If the prayers for relief were limited to a cancellation of the agreement which it was alleged had been fraudulently procured and a reconveyance of the land and an assignment to the plaintiff of an outstanding mortgage and note held by the defendant, with an accounting to determine what amount the plaintiff owed the defendant, the fourth paragraph of the bill alleges that the value of the shares in dispute was included in the gross amount due from the plaintiff under the instrument. But after reference to the master and a partial hearing before him, the plaintiff amended his bill by adding another paragraph containing allegations as to other transactions, and a general prayer, in which he asked for an accounting of all transactions between them, and that his rights be determined in all claims of whatsoever nature he had against the defendant. It would seem sufficiently plain, that the title to the shares had been put in issue by the pleadings, when the defendant in his answer to the original bill avers, that by the terms of the agreement the indebtedness is in addition to the obligation of the plaintiff to deliver the shares. If any doubt however remained, it is removed by the statements in the report, that under a written stipulation of the parties but five matters were left in controversy under the bill as amended, one of which was, whether the plaintiff was bound to deliver the shares to the defendant. By the order of reference, unless waived at the hearing, the master was required to pass upon the issues presented by the pleadings, and until the right of property in the shares had been determined, the account could not be stated. The interlocutory decree overruling the plaintiff's exceptions to the report must be affirmed.
It is further contended, that so much of the final decree as declared that it is the duty of the plaintiff to deliver the stock to the defendant and pay over the dividends received, is erroneous. The plaintiff does not controvert the general principle, that where a court of equity obtains jurisdiction of a controversy on any ground, it will, to avoid multiplicity of suits, administer complete relief by the adjustment of all equities connected with the subject of the suit, which may be authorized by the pleadings. Richards v. Todd, 127 Mass. 167. Rathbone v. Warren, 10 Johns. 587. If, however, a defendant desires affirmative relief, he must resort to a cross bill. Andrews v. Gilman, 122 Mass. 471. But in suits to settle the affairs of a partnership, or for the foreclosure or redemption of a mortgage where a statement of accounts is involved, or in a bill for an accounting, both parties are actors, and a defendant may have a decree in his favor without the aid of a cross bill. Goldthwait v. Day, 149 Mass. 185. Worthington v. Waring, 159 Mass. 421, 428. Done's case, 1 P. Wms. 263. Glenn v. Hebb, 17 Md. 260. Wyatt v. Sweet, 48 Mich. 539. Jenks v. Smith, 14 R.I. 634. Raymond v. Came, 45 N.H. 201. The defendant's claim to the stock is not independent of the bill, for by putting the title in issue the plaintiff admits the defendant's right to have the ownership settled. The master explicitly finds, that the transactions, out of which the shares in issue remained, consisted not only of occasional balances in money the defendant owed the plaintiff, but of stocks bought for the defendant and owned by him, although standing in the name of the plaintiff, the value of which largely exceeded the pecuniary indebtedness. The report further states, that having pledged these stocks to secure his personal loans, the plaintiff being unable to deliver them, the defendant advanced the money for redemption after receiving as security a mortgage on certain real estate of the plaintiff. If with the defendant's consent the stock had been sold and the proceeds received by the plaintiff, the balance due would have been the avails of the sale for which the defendant would have been entitled to a decree. Goldthwait v. Day, 149 Mass. 185. If an accounting has been held to mean the acknowledgment of an existing debt, from which the law implies a promise to pay sufficient to maintain an action, yet where the dealings between the parties comprise the purchase of stocks which are to be accounted for, as well as the receipt of money, it also includes, if the balance is found against him, not only payment of the money by the accountant, but the delivery of the specific property in his possession or control. Buxton v. Edwards, 134 Mass. 567, 578. Doucette v. Baldwin, 194 Mass. 131. The mutual account between the parties by their method of dealing having consisted of items of stock as well as of money, there is no sufficient reason why a different course should be pursued in a settlement of their differences when presented to the court. The demands due from one to the other were none the less mutual, whether expressed in shares of stocks or units of money. Whitwell v. Willard, 1 Met. 216-218. It is not the adjustment of an unliquidated claim based on their value with which the plaintiff is charged, but the specific shares in which the defendant had an unqualified ownership. Instead of a sum of money to be paid in settlement, the accounting results, after a balance has been struck, in shares of stock with the accrued dividends, due to the defendant upon closing the account.
The final decree, therefore, after establishing the legal title might have granted affirmative relief by ordering the plaintiff to make delivery of the stock, and to pay over the dividends to the defendant, which would have avoided further litigation. Laeber v. Langhor, 45 Md. 477. But the defendant has not appealed, and the final decree having been in conformity with the pleadings and master's report, is affirmed.
Ordered accordingly.