Nixon v. Clear Creek Lumber Co.

43 So. 805, 150 Ala. 602, 1907 Ala. LEXIS 434

• Court: Supreme Court of Alabama
• Decided: May 6, 1907
• Status: Published

Opinion

SIMPSON, J.

The bill in this case was for a discovery. and for the injunction of certain judgments, until the amount of complainant’s set-off could be ascertained and applied against said judgments. The bill is filed by appellant (complainant) against appellee (defendant), and alleges that said defendant had obtained certain judgments against the complainant, which were based on the fact that the firm of Robert Nixon & Co .had taken up certain ’ logs of the defendant, which were adrift in the river; that said defendant was also indebted to complainant on account of logs of complainant’s, which were also adrift and .had' been taken up by defendant, and also by a judgment in the magistrate’s court, but that said defendant had brought suit against complainant individually, in place of against the firm, and in the actions of detinue and trover, for the express purpose of preventing complainant from pleading as set-offs the amounts due by defendants to said firm of Robert Nixon & Co., although said firm had offered to enter into an accounting and duly account for such logs as it had taken up, and was solvent and able to respond. The bill also alleges that the firm of Robert Nixon & Co. has been unable to discover or ascertain how many of its logs were taken by said defendant, although it has made diligent efforts to secure said information, and has in vain tried to induce the defendant to enter into an accounting, in which each should account for such logs as it has taken up. It is also alleged that before the filing of this bill said account and judgment of said firm of Robert Nixon & Co. have been assigned to complaintant, and are now his property, and he offers the same as set-offs to said judgment held by defendant against them.

The able opinion of the judge of the city court of Montgomery, in equity, gives an interesting history of the doctrine of bills of discovery in equity, and reaches the conclusion that, inasmuch as this jurisdiction was originally assumed because of the inadequacy of the powers of courts of law, yet that, since the stautes have provided for the examination of parties, the effect has been to take away from courts of equity its ancient jurisdiction in that matter. Tn this conclusion we are not able to concur. It is a principle that has passed into an axiom of our laws that, "when certain matters have been within the, jurisdiction of courts of equity, subsequent statutes conferring like jurisdiction upon courts of law are merely cumulative, and do not deprive the chancery court of its original jurisdiction, unless the statute specifically does so. It- is true, however, that upon this particular point there is a sharp conflict in the decisions of other states. Mr. Pomeroy, in his work on Equity Jurisprudence, states that where Codes of Civil Procedure have been adopted, by which the distinction between proceedings at law and .in equity has been abolished, the method of equitable discovery has been “practically’-’ destroyed; but he goes on to state that in states where separate tribunals of law and of equity are preserved “it has generally been held that the Legislature has not abridged nor affected the auxiliary equitable jurisdiction to entertain suits for more discovery of evidence and production of documents, and that such equitable jurisdiction still exists where not expressly abolished by the. statute's.”: — 1 Pomerov's Eq. Jur. (1st Ed.) pp. 385, 186, § 193. He goes on to state this conclusion is not universal. He states in a subsequent section that “a suit for discovery will be maintained in aid of another cause in equity, -" * ':f or proceedings in any common-law court of general jurisdiction, * * which is, or Avas by its original modes of procedure, unable to compel the needed disclosure.” — Page 188, § 196. In section 230 the learned author is discussing only the principle that, AA-hen a court of equity has taken .original jurisdiction for discovery in regard to a purely legal controversy, it AAÚ11 proceed to do complete justice by deciding the entire case; and he argues against the rule, as it existed both in this country and England, intimating that there never was any reason Avhy the case should not have been left to the court of law to decide after the discovery had been accomplished, and finally expresses an opinion that “this particular doctrine” has been swept aAvay by statutory enactments, and he is particular in his note to make it clear that, his remarks are only as to this particular doctrine. — 1 Pomeroy’s Eq. Jur. §§ 223, 230, and note on page 238. ■

Without expressing any opinion as to Avhether, even as to this particular doctrine, the learned author is as logical as he usually is, our oavu court has held the opposite AueAV, as Avill be seen by authorities hereafter cited. As heretofore remarked, the cases in other jurisdictions are.in conflict, and can be seen by reference to 1(5 (Yntur.v Digest, under the title. “Discovery,” § 4, to 14 Cyc. p. 309, and to a note to Cargill v. Kountze Bros., 24 L. R. A. 183. But we think the best-considered cases, as well as the reason of the law, sustain the proposition that the statutory provisions do not interfere with the. equitable jurisdiction in matters of discovery, unless it is so specially provided in the statute.—Howell v. Ashmore, 9 N. J. Eq. 82, 93, 94, 57 Am. Dec. 371; Shortwell's Adm'r v. Smith, 20 N. J. Eq. 79; Miller v. U. S. Casualty Co., 61 N. J. Eq., 110, 116, 117, 47 Atl. 509. In our own state, in addition to the general statute making parties witnesses, section 1850 of the Code of 189(5 provides (as did previous (hides) for filing interrogatories to the opposing party, and section 3859 (enacted December, 1894) provides for requiring the parties to produce books or writings in their possession or power. This general subject came before our court in 1872, and the court said: “We do not. think that, because our present law of evidence enables the plaintiff to examine the defendant as a witness, his right to proceed in equity is thereby taken away.”—Cannon v. McNab, 48 Ala. 99, 102. This court said again: “It is quite clear, however, that this well-established jurisdiction of equity in matters of discovery is not ousted, or in any wise affected, by the statutory changes in the common-law rules of evidence, by which parties to ponding suits are authorized to be examined as witnesses in the courts of this state.”—Shackelford v. Bankhead, 72 Ala. 479. In mother of these cases was there any question about the production of a book, but the principle evidently was, just- as in the cases from other states cited, that, altlumgh the statutes had provided a cumulative method by which the discovery could be obtained, yet the original jurisdiction remained in the court of equity.

Again, in a case wherein it was sought to compel an administrator “to discover important facts, alleged to lx1 indispensable to justice,” and to remove the settlement into the chancerv court, while it is true that among the facts sought to be discovered mention is made of the contents of a book containing memoranda, yet the decision of the court is not based on the lack of power to compel the production of the book; but, on the contrary, it refers to Continental Life Insu. Co. v. Webb, 54 Ala. 697, which states that that end could be accomplished by a subpoena duces tecum, and states: “Nor is this head of jurisdiction (i. e., discovery) affected by statutory provisions authorizing the examination of the defendant as a witness in proceedings at law.”—Handley v. Heffin, 84 Ala. 600, 602, 603, 4 South. 725. Again, in a case where a party sought to discover as to the number and value of lots which it was claimed had been sold, and in which complainant had an interest, this court said: “The well-established jurisdiction of a court of equity to compel a discovery from a party, is not affected by the statutory provisions which permit an examination of the parties to a suit as witnesses in a court of law. The jurisdiction remains the same as before the adoption of the statute.—Wood v. Hudson, 96 Ala. 469, 471, 11 South. 530. This court also in a matter of account held that “discovery is 'an acknowledged independent source 'of equitable jurisdiction and is not affected by statutory provision” ; also that the court, having obtained jurisdiction for discovery, “will proceed to settle and adjudicate all the matters in controversy, granting complete relief, though it may involve the adjudication of purely legal questions..”—Va. & Ala. Mining & Mfg. Co. v. Hale & Co., 93 Ala. 542, 545, 546, 9 South. 256.

We cannot see that the force of these decisions is weakened in the least by the fact that they were delivered before the passage, of the last statute on the subject of discovery, and that statute has been readopted with this interpretation on it. Section 159 has been added to the previous law, without any intimation that any different interpretation was to be given to it; and, besides, in the case now under consideration there is no question about the. production of books and papers. We hold, then, that the statutory provisions are. cumulative, and do not interfere with or abridge the jurisdiction of courts of equity in matters of discovery. Upon the subject of the right to resort to equity to enforce a set-off, the principle laid down by this court is stated by Chief Justice Stone in these words: “There is a rule that when a cross-demand, rightfully held, cannot be made available' by suit at law, and yet, ex aequo et bono, ought to be received as payment, chancery, in the exercise of its restraining powers, will intervene, and compel the one having the legal advantage to do justice.”—Farris v. Houston, 78 Ala. 250.

In the case now under consideration, the two debts arose out of identically the same circumstances between the two parties, one a corporation and the other a partnership. There is no doubt that, upon an’accounting between the two, which complainant alleges that his firm has vainly endeavored to bring about, each would have been entitled to the right of set-off as to these mutual demands. But the bill alleges that, for the purpose of preventing the set-off, the suits were brought against him in his Individual capacity, and one of them in the form of detinue, and these suits haye now resulted in moneyed judgments against him. The case of Farris v. Houston, supra, states that “cases of insolvency furnish illustrations of this rule”; but in that case there Avas no insolvency, but the equity lay in the fact that the party against whom the set-off Avas claimed was a married Avoman. In other cases it is'stated that, in the absence of any other equity, it is necessary to aver insolvency; but in the case now under consideration the equity is furnished in the necessity for a discovery, and the court, having acquired jurisdiction on that ground, will go on and decree equity and justice between the parties.—Va. & Ala. Mining & Mfg. Co. v. Hale & Co., supra. It may be said, also, that while the bill does not, in terms, allege the insolvency of the defendant, yet it sIioavs that all of its property is covered by mortgages of such large proportions that they Avouhl amount to a practical bar against the realizing of any judgment Avhich complainant might obtain against defendant. Even if it were necessary to more specifically allege the insolvency of the defendant, that Avould be an amendable defect,- and avouIc! not justify the dismissal of the bill.—Owen v. Gerson, 119 Ala. 217, 24 South. 413.

The suit being against a corporation, it was proper to join some officer of the corporation as defendant, and, as the gravamen of the prayer for discovery is that the complainant does not know, it would he unreasonable to require him to state what the officer knows. He is entitled to have an answer from any officer of the corporation who is acquainted with its business.—1 Pomeroy’s Eq. Jur. p. 194, § 199; Gulf Red Cedar Co. v. Crenshaw, 138 Ala. 134, 144, 35 South, 50.

The decree of the court is reversed, and the cause remanded.

Tyson, <\ J., and Haralson and Denson, JJ., concur.