11th July, 1859.
Cadwalader, J.
Ludlow & Co., of Philadelphia, gave to S. Beebee Ludlow, of San Francisco, a letter of credit, authorizing him to draw upon them to an unlimited amount. He drew from time to time, under this authority, selling his drafts upon them at San Francisco, and investing the proceeds in bullion, and in bills of [7] other drawers in California upon other drawees on the Atlantic side of the continent. He remitted by mail to Ludlow & Co. these bills of exchange endorsed by himself to their order. He shipped the bullion deliverable at New York to Beebee & Co., his receiving and forwarding agents, to whom he transmitted the bills of lading, with orders to send the several shipments to Ludlow & Co. at Philadelphia; and he advised Ludlow & Co., in every instance, by letter, that the bullion was thus transmitted to them. They received these remittances in bills and bullion, by every semi-monthly mail steamer; collected the amounts of the bills when due, crediting him with the proceeds ; and caused the bullion to be coined at the mint, crediting him with the mint certificates of its product, as cash. These arrivals of the remittances of each description were thus credited in the same general account in which they charged their payments of his drafts upon themselves at maturity. After some time, his remittances having been of less value than the amount of his drafts upon them, and his account with them being largely overdrawn, they failed in business, and refused, from thenceforth, to honor his drafts. He continued to draw and remit semi-monthly, until the news of their failure was received at San Francisco, when he also failed, and ceased transacting business. He and Ludlow & Co. were permanently insolvent. If Ludlow & Co. had received all of his remittances, and credited their full avails, and had paid all of his drafts, he would, in the end, have been largely in their debt. Ludlow & Co. after their failure, but before the arrival of any of the remittances which came after it, subscribed an appropriation of these remittances, in the form of an unsealed assignment of them to W. Taylor in trust to secure the payment first of the balance due by S. B. Ludlow to themselves, and their outstanding acceptances of his drafts, and secondly of his drafts upon them at sight, and on time. If the avails of the remittances which afterwards arrived had been thus applied, there would, after payment of the balance due to Ludlow & Co., have been a large surplus for the holders of the accepted and other drafts. Before the arrival of any of these remittances Ludlow & Co. [8] wrote to S. B. Ludlow, informing him of the appropriation, and advising him to confirm it. When the first remittance reached New York, they wrote to certain of the draft holders, informing them of the appropriation, and stating its effect; and, not long afterwards, wrote to Beebee & Co., the receiving and forwarding agents at New York, informing them that it had been made. Ludlow & Co., moreover, endorsed bills of exchange which composed a part of the' first remittance, making them payable to the order of Taylor as assignee. Taylor also endorsed them; describing himself as assignee; and sent them by mail to be presented for acceptance. After all these recognitions of this appropriation, and acts under it, when more than twelve days had elapsed since its date, and more than a week since the arival of the first of the appropriated remittances at New York, Ludlow & Co. cancelled the paper by which the appropriation had been made, and executed other papers, whose intended effect was to appropriate this remittance, and the remittances expected, in payment of a debt of their own to Beebee & Co., the receiving and forwarding agents of S. B. Ludlow, in the discharge of which he was not in any manner interested. Beebee & Co. desired and suggested this misappropriation of the funds. It was at first opposed by Ludlow & Co. But their opposition soon ceased; and they became, under an expectation of receiving pecuniary assistance from Beebee & Co., direct participants in the measures by which it was carried into effect. Ludlow & Co. while prosecuting these measures, wrote to S. B. Ludlow requesting him to destroy their previous letters to him, and, instead of remitting to Taylor, to remit, as formerly, to Beebee & Co. S. B. Ludlow, after the receipt of this communication destroyed Ludlow & Co.’s previous letters. His remittances had ceased before its receipt. He had, before its receipt, received intelligence of their previous appropriation of his remittances in the form of an assignment to Taylor, and had written a letter to them approving of it. He never, so far as appears, did anything manifesting a disposition to impair the effect of this letter of ratification. But, this letter was not written by him at San Francisco until after the present suit had [9] been instituted, and was not received until after some important proceedings in the suit had occurred.
The same draft holders who had been informed by Ludlow & Co. of the existence and effect of their appropriation to secure the drafts were complainants. An indorsee of some of the drafts of which they were payees was a co-plaintiff. When the bill was filed, there had, since the date of that appropriation, been three semi-monthly arrivals from California. The complainants may have suspected that the remittances received, in this interval, had been, in part, misapplied; but they do not appear to have known that the writing of appropriation had been cancelled, or to have suspected the character, or extent, of the intervening malappropriation which had occurred. Ludlow & Co. were the only defendants in the original bill. Its purpose was to secure the funds, and ascertain and enforce the rights and interests of the draft holders. The complainants asserted that, independently of the writing, the remittances had been expressly or impliedly appropriated for the security of the drafts; and even insisted that the drafts ought to be paid before the reimbursement of the balance due to the defendants in general account. But the bill was framed so as to render the appropriation made by this writing available for the security of the draft holders, if it was required, and so far as might be required for the purpose. The answer of the defendants disclosed the cancellation of the writing, without giving any information as to the remittances except so far as the avails had been actually credited by them to S. B. Ludlow in cash before their failure. It was, in many particulars, evasive, and manifested a disposition to suppress material truths as to the past, and conceal their purposes as to the future. A receiver was, therefore appointed; and the case was referred for investigation, under specified heads, to a master, who was authorized to take testimony and examine the parties. Pending this reference, the general replication was filed, Taylor was made a party defendant, and an order was made that the bill, as to him, should be taken as confessed. The master examined one of the original defendants upon interrogatories, and took the depositions of Taylor and [10] S. B. Ludlow as witnesses. The deposition of Taylor had been thus taken before he was made a party. Witnesses at New York and in California had been examined, and their depositions returned, and much documentary evidence had been adduced, when an agreement of parties was made, and reported by the master, that he should report merely the testimony taken, without making any other report. The evidence taken was returned accordingly, with his report.
The defendants, notwithstanding this agreement, objected, at the subsequent hearing, to any use of the testimony thus, reported being made for the general purposes of the cause. This objection was overruled. On particular questions which arose, the court was of opinion that the original defendants having been partners in the transactions which were the subject of controversy, the examination of one of them could be used at the hearing, on the same footing with admissions in an answer, as evidence against both; also, that the deposition of Taylor, who, though a party had no interest in his own right, and against whom no decree was to be executed, could be read. When the suit was brought, S. B. Ludlow was beyond the jurisdiction of the court, and therefore could not have been made a party. The complainants allege that he is now a citizen of Pennsylvania, residing in the other district of the State. In order to make him a party, they have instituted proceedings of which the sufficiency for the purpose is contested. In consequence of these proceedings, his deposition can be used in the cause for a very limited purpose only; and perhaps ought not to' be used at all. His deposition, that of Taylor, and the answers of the defendant who was examined before the master, might be excluded entirely from consideration, without affecting any result in the cause, as all the material facts are proved by the other testimony, and by the papers in evidence.
Portions of the bullion which arrived before the suit was commenced, and a small quantity which arrived afterwards, are alleged to have been arrested and detained at New York under foreign attachments, at the suit of draft holders interested in the present proceedings. Of course, no draft holder plaintiff in [11] an attachment under which any portion of the remittances in question may have been detained, can be permitted to participate in the benefit of any decree in this cause without accounting for the amount thus detained as an addition to the fund for distribution. But no competent evidence of the existence of any such attachment has been adduced, as yet, either in court or before the master. The remitted bills which arrived after the present suit was commenced, were taken into the custody of the receiver. All of the remitted bills which arrived before the suit was brought, and all of the remittances in bullion except such portions as may have been detained under attachments, passed into the hands of Beebee & Co., and were converted by them to their own use. They credited the avails to Ludlow & Co., in an account which exhibits all of the amounts misappropriated except those alleged as above to have been detained under attachments.
The subjects of controversy are, first, the amounts credited by Beebee & Co., to Ludlow & Co., on account of their debt to Beebee & Co.; secondly, the amount or value of such bullion as may have been detained under attachments through the defendant’s omission to reclaim it, or so much of its amount or value as may be taken into account for the adjustment of equities among the draft holders in the distribution of amounts not attached; and thirdly, the fund in the hands of the receiver. The specific products of the remittances from which the first two subjects were derived cannot be traced. Cognizance of them is, therefore, to be taken with a sole view to the question of the personal accountability of the original defendants to the draft holders. But the third subject is composed of specific product of S. B. Ludlow’s remittances which arrived after the present suit was instituted. This fund involves distinct considerations with reference to the question whether distribution of it can be decreed until S. B. Ludlow shall have been made a party.
Independently of this question, the case was very fully investigated, with an extended reference to authorities, in an opinion which, for a reason hereafter mentioned, was nevér formally read or filed, though its effect was orally stated in [12] court. The propositions of law and fact, directly or incidentally involved in it, are here abstracted as follows :
1. The defendants, having accepted some of the drafts in question, and having engaged, by the letter of credit, to honor the others, though principal debtors to the draft holders, were, as to S. B. Ludlow, sureties, whom he was under an obligation to keep indemnified against these liabilities, by seasonable remittances.
2. There was no direct original appropriation, express or symbolical, of the remittances for the security of the drafts. The draft holders, therefore, had no cognizable independent interest, in their own right, in the subjects of controversy.
3. Though there had been such a direct appropriation for the security of the drafts, the defendants would, on paying any of them, with funds of their own, have been entitled to reimburse themselves before applying any subsequently received avails of the remittances to the payment of other drafts. Consequently, the balance due by S. B. Ludlow to the defendants in general account, having arisen from such advances, must, at all events, have been first paid out of the funds which were the subject of controversy.
4. As between S. B. Ludlow and the defendants, his letters of advice, and other parts of his correspondence, his endorsement and transmission of the bills of exchange, and the shipment by him of the bullion to middlemen, with orders for its ulterior transmission to the defendants, had constituted an appropriation of the remittances to secure to the defendants the reimbursement of their advances, and their indemnification against liability under the acceptances and letter of credit. This appropriation had vested in the defendants the qualified interest only in the remittances, which was required for their intended security.
5. This interest was vested in them from the commencement of the transit of the remittances from California. It was independent of the lien which, for a like purpose of security, was an incident of the defendants’ agency, but could not attach to the remittances until in their actual possession.
[13] The appropriation, which thus took effect before such a mere lien could attach, continued, moreover, to operate after the lien might have expired. Thus, if their agency had been such that their lien, like that of simple bankers, would not have prevented S. B. Ludlow from drawing occasional cash bal-naces to his credit out of their hands, and leaving their accruing liabilities for him unsecured, the appropriation would have enabled them to retain such balances for their security.
6. Subject only to this qualified interest of the defendants, the ownership of the remittances was in S. B. Ludlow, who, on payment of their advances, and of his accepted and unaccepted drafts upon them, so as to exonerate them from their liabilities on his account, could have revoked their agency, and resumed the possession of his remittances, including even that of the bills remitted with his endorsement upon them, if no rights of other persons had intervened.
7. The duty of the defendants, under their agency, to apply the funds, after the reimbursement of their advances, to the payment of his drafts, was coincident and co-extensive with their interest under the appropriation for their security. So long as they continued to honor, and punctually pay the drafts, they would, from the special character of their agency, or from the particular course of the transaction of its business, have been at liberty, if the balance of their account had, at any time, been in his favor, to use, as their own, such avails of his remittances, bearing interest, as they duly credited to him, in cash, or its equivalent. But this right ceased when they ceased punctually to honor his drafts. They were bound afterwards to apply the specific proceeds of the remittances remaining after the reimbursement of their advances, to the purposes of their agency alone.
8. Their inability, after their failure, to continue to honor the drafts, had, beyond this, no effect upon the rights or interests of the parties other than resulted from the non-payment of the drafts.
It did not prevent the original appropriation of the remit[14] tances from taking effect, as intended, for the security of the defendants.
Had no letter of credit existed, S. B. Ludlow’s account with them not been overdrawn, and his remittances, arrived and in transit, not been of inadequate value to secure their advances and liabilities, the consideration of the irrevocability of the intended security might, by the dishonor of the drafts, have so failed as to have justified him in countermanding the delivery to them of the subsequent remittances. But if he had not thus countermanded the delivery, or otherwise revoked the appropriation, it would, with its incidents, continue even then to subsist for his benefit, in order that the remittances might be turned to account for his profit, and their avails applied afterwards in the mode originally intended, to the payment of his drafts, notwithstanding their dishonor. Other persons, at all events, could not then, on account of the dishonor of the drafts, have contested the existence of the defendants’ qualified interest in the remittances.
As, however, his account with the defendants was overdrawn, and their accrued and accruing liabilities for him were inadequately secured by the remittances, including those in transit, the relation betwen them of debtor and creditor had so been superadded to that of principal and surety, as to render him, independently of any effect of . the letter of credit, incapable of revoking the appropriation of the remittances in transit, until the defendants’ advances had been reimbursed, and other adequate provisions for their liabilities had been made.
The effect of.the letter of credit was, at all events, notwithstanding the dishonor of the drafts, to render the appropriation, so long as any-one of them remained unpaid, irrevocable by S. B. Ludlow without the defendants’ consent. When the drafts were negotiated, value was obtained on the Pacific side of the continent through the use of the defendants’ commercial credit and standing. Their engagement, in the letter of credit, to honor the drafts, had thus been an executed part of the consideration of the intended security. The defendants, in consequence of S. B. Ludlow’s failur.e to make adequate and seaso[15] nable provision for their indemnification, would not have been .suable by him for a breach of this engagement. He could not successfully sue for it without averring and proving that he had thus provided for their indemnity. But they were not, for this reason, the less liable to be sued for breach of the engagement by the parties to whom the drafts had been, on the faith of it, negotiated. The liability of the defendants, under this engagement, having been thus absolutely incurred, the consideration of the intended security could not wholly fail, whether they were, •or were not, as between themselves and S. B. Ludlow, justifiable in afterwards refusing to honor the drafts.
9. A surety is entitled, in equity, to the benefit of every security which, even without his knowledge, the principal debtor may have given to the creditor; but the creditor has no such equitable right of his own to the benefit of a security which the principal debtor has given to the surety. The latter of these two propositions is peculiarly applicable where the surety is an agent, and the subject of his agency is also the subject of the security. When the relation of principal and surety, and that of principal and agent, are thus combined in the same parties, as was the case with S. B. Ludlow and the defendants, they may l)y mutual agreement, revoke such an appropriation’ as that in •question, and make any new arrangement as to the subject of it, without the concurrence of creditors in the relation of these -draft holders, and without any regard to the present or ultimate security of such creditors. While the relations between S. B. Ludlow and the defendants were such as they could thus, by mutual consent, revoke or modify, the circumstance that the remittances were, as between these parties, appropriated for the ■security of the defendants, vested no cognizable interest in the draft holders.
10. S. B. Ludlow having no right, against the will of the defendants, to take from them any part of his remittances without first repaying their advances, and exonerating them from lia-T)ility to the draft holders, and the defendants being unable, without his consent, to apply the proceeds of his. remittance remaining after the reimbursement of their advances, to any pur[16] pose other than the payment of the drafts, the relations between him and the defendants were not revocable by either party, without the concurrence of the other, and, unless rescinded or modified, by his and their mutual agreement, enured incidentally to the benefit of all, or some of the draft holders, though not in any right of their own.
If it had, in any manner, become relatively impossible for S. B. Ludlow and the defendants to concur in any different arrangement for the disposition of the remittances, the draft holders could not be deprived of the benefit thus incidental to the original appropriation. This appropriation, though the draft holders were not privy to it, would then become cognizable in a court of equity, as an indirect security for their benefit. In order to prevent circuity of remedy, or work out equities of the original parties, or of parties derivatively interested, which could not be othewise reached, the security might then be rendered available for the benefit of the draft holders in a proceeding in equity at their own suit.
This might have occurred through the insolvency of S. B. Ludlow and the defendants, and the death of him, or of them, or such a judicial or conventional divestiture of interest in their lifetime, as would occasion an administration of the fund on the footing of a recognized insolvency.
The jurisdiction of the court might then be exercised at the suit of the draft holders, as a means of reaching equities vested not in themselves, but in the original parties to the appropriation, which could not be otherwise adjustable between their estates.
The mere insolvency of these original parties, without any divestiture of the former interests, gave, however, to the draft holders no such derivative right of suing.
Consequently, the present proceeding cannot be sustained at their suit, unless they acquire an interest in the subject of controversy through the appropriation for their security made by the writing which the defendants, for a time, acted upon, as-above, but afterwards cancelled.
ii. Between S. B. Ludlow and the defendants, as parties to [17] this writing, his ratification of it, operating retroactively to its date, gave to it the effect of his and their concurrent act of appropriation. The submission of it for his ratification having been thus acted upon, before any countermand of it can have been received by him, such a countermand, if any was ever sent, could not alter, or qualify this effect of it as a concurrent act.. .
If the destruction of their letters had, in any respéct, involved this part of the case in obscurity, the rule of evidence as to the spoliation of papers would sanction the utmost latitude of presumption, on the point of doubt, in favor of the draft holders.
12. But, except between S. B. Ludlow and the defendants as parties to the paper, it was not operative as his act until his ratification. As to such intervening transactions with other persons as were not immediately dependent upon his potential ratification, its effect, therefore, was that of an act of the defendants alone.
13. Though neither he, nor the defendants, could, without the other’s consent, have made an effectual appropriation of the remittances for any purpose different from that expressed in this writing, yet, an appropriation of them for that purpose-might have been effectually made either by him alone, or by them alone.
If made by him alone it would, whenever made, have the same effect as if the remittances had been appropriated for that purpose when they left California.
If made by the defendants alone, it could only take effect in subordination to the requirements of the duties of their agency. They could not, without his authority, delegate the performance of its functions for any other than ministerial purposes; and could much less without his approval, substitute for it a trust permanently vested in another person. The confirmation of the writing in question by S. B. Ludlow, was, therefore, indispensable to its validity as an assignment of the subject of their agency.
But the defendants having a qualified interest of their ozvn in the remittances, coincident and co-extensive with the beneñcial purposes expressed in the paper, it would, in equity, though [18] never confirmed by S. B. Ludlow, have been effectual from its date, not as an assignment, but as a declaration by them of a trust attaching to the ultimate avails of the remittances, when they should be received in cash, or its equivalent. The effect of such a declaration of trust was to render the defendants, from its date, incapable of concurring, as they otherwise might have concurred, with S. B. Ludlow, in any different disposition of the remittances. Unlqss he or the defendants paid the drafts from other sources, no such different disposition could be made. While they were unpaid, the security for their holders in the surplus of the proceeds of the remittances that might remain after the reimbursement of the defendants’ advances could not be frustrated.
As an equitable appropriation, this writing, therefore, took effect sufficiently for its intended purpose, through the original qualified interest of the defendants in the remittances. Upon this derivative support it rested until complete effect was after-wards given to it, as an assignment, by S. B. Ludlow’s ratification. From its date until this ratification, as well as afterwards, the defendants thus had, under it, an interest which was cognizable in a court of equity.
14. The debts and liabilities which it secured sufficed, as a consideration, to support it without a seal.
15. As it imposed upon the draft holders no burden, and required of them no relinquishment of any right, or performance of any condition, in order to entitle them to the benefit of the security, their acceptance of its benefit was legally presumable without any proof of their actual assent, or even of their knowledge of the existence of the paper.
16. Had this been otherwise, and had the appropriation made by it been revocable by the defendants before it was acted upon or its existence made known, it nevertheless became irrevocable when they communicated its existence to parties interested, in a manner to induce reliance upon its availability, and acted upon it in other modes as an existing security.
17. The appropriation having taken effect, the subsequent cancellation of the writing, and attempted annulment of the [19] security which it had created, could not prevent or impair its continued operation.
18. As the writing, when ratified, became effectual as an assignment, and as the draft holders benefited by it were creditors, it was, in one sense, an assignment for the beneñt of creditors. But within the meaning of the legislation of the State as to instruments of this denomination, it was neither an assignment, nor a partial assignment for the benefit of creditors. This legislation is not applicable to an assignment of what cannot be transferred at the assignor’s option for the benefit of other creditors than the parties particularly secured. Here, though the draft holders had no previous interest in their own right, they would have derived incidentally the same benefit of the previous appropriation, if it had never been revoked, as was by this writing secured to them irrevocably. It created, therefore, no new security, so far as the interests of general creditors might be concerned. Had it never been executed, and had the defendants and S. B. Ludlow severally made general assignments for the benefit of their respective creditors, the funds in question could not, as we have seen, have been distributed as a part of the general estate under either assignment. The writing in question appropriated them in the very mode in which a court of equity would have made the distribution, under such circumstances, if no such writing had existed.
The writing, in whatever sense it may be denominable an assignment, being therefore unaffected by this legislation, the question whether the parties in the cause were not placed, by the writing, in such a relation of privity of interest as would have here excluded the application of these laws of the State, does not arise.
The opinion which has been thus, in part, abstracted, defined particularly the purposes of such a reference for an account, and report of distribution, as, according to the principles from which these propositions resulted, would have been ordered at once, if the cause could have been decided between the draft holders and the original defendants. But an imme[20] diate decision of the cause, according to these principles, was prevented by the necessity for considering an objection which had been suggested — that a decree could not be made until S. B. Ludlow should have been brought into court as a party. This objection is the subject of present consideration.
S. B. Ludlow is not a person against whom, as a party, an enforcement of any decree by judicial process would be necessary. The question whether he was a necessary party, depended, therefore, upon the species of necessity which is determinable with a sole reference to the right of contestation recognized by courts of equity as belonging to every person who has an interest in the subject of controversy.
The act of 28th February, 1839, provides that where, in any suit at law, or in equity, commenced in any court of the United States, there shall be several defendants, any one or more of whom shall not be inhabitants of, or found within the district where the suit is brought, or shall not voluntarily appear thereto, it shall be lawful for the court to entertain jurisdiction, and proceed to the trial and adjudication of such suit between the parties who may be properly before it; but the judgment or decree rendered therein shall not conclude or prejudice other parties not regularly served with process, or not voluntarily appearing to answer; and the non-joinder of parties who are not so inhabitants, or found within the district, shall constitute no matter of abatement, or other objection to said suit. Under this act a decree might have been made, without S. B. Ludlow as a party, so far as the amounts for which the original defendants were pecuniarily liable to the draft holders were concerned. But such a decree, if these defendants were still insolvent, might have been of little avail to the complainants. The question principally considered, therefore, has been whether under the act, or independently of it, the objection could be disregarded as to the fund in the hands of the receiver. Of this fund, the resulting ownership is in S. B. Ludlow, who, if the complainant’s case were fully sustained, has an option to [21] redeem the fund by payment of the drafts in question from other sources. Independently of this right, he has an interest entitling him to contest every allegation of the bill on which a decree in favor of the draft holders might be founded, and to avoid, if he can, the effect of the complainants’ allegations, by introducing new matter. The act of 1839 does not sanction a décree that may affect such an interest unless its proprietor is before the court as a party. Shields v. Barrow, 17 Howard, 130; Coiron v. Millaudon, 19 How. 115, and Green v. Sisson, 2 Curtis, 177, show that the present case, as to the fund in the receiver’s hands, must, therefore, be determined independently of that act.
In the Circuit Courts of the United States, in consequence of “the peculiar structure of their limited jurisdiction over persons,” the general rule of equity practice, that all persons interested shall be brought in as parties, has not been applied without some qualification. Its unqualified application, in cases not within the act of 1839, would often divest these courts of their jurisdiction as it is defined in the Constitution and acts of Congress. Therefore, if a plaintiff has done all that lies in his power to bring every person interested before the court, a decree upon the merits may be made, though an interest exists in some person whom, as the resident of another State, the process of the court cannot reach, if the case may be completely decided as between the parties in court. But this relaxation of the rule has been admitted only where “the right of the party before the court did not depend upon the right of the party not before the court; each of their rights stood upon its own independent basis; and the ground upon which it was necessary, according to the general principle, to have both before the court, was, to avoid multiplicity of suits, and to have the whole matter settled, at once.” No exception from the rule has ever been allowed where the rights of the parties before the court are not separable from, and independent of, the rights of the person who is not made a party. In such a case there can be no adjudication affecting the subject of his interest. This appears from the case of Mallow v. Hinde, 12 Wheaton, 197 to 199, cited in [22] Shields v. Barrow, and in other decisions which might be mentioned.
According to these rules of decision, the objection of the want of S. B. Ludlow as a party prevented a decree from being-entered in favor of the complainants. For any reason other than to facilitate an appeal from a decision in support of this objection, the court was not willing to dismiss the bill hastily upon the objection. As between the complainants and the original defendants, this fund had been rightly taken into the custody of the court for the purpose of preventing its malappropriation. There was no want of jurisdiction between these original parties; and at the stage of the cause at which the receiver was appointed, the objection of the want of other necessary parties would not have prevented his appointment. (See 12 Wheat. 198; 2 Russell, 149, 152; 3 Hare, 62, 63.) It might then have been expected that S. B. Ludlow, when apprised of the proceeding, would become a co-plaintiff. If, in an ulterior stage of the proceeding, the court found itself unable, without having him before it as a party, to make a decree upon the merits, the suggestion of the difficulty was by parties who did not support the objection upon any equity of their own. Whether a decree of dismissal could have been made at the instance of these defendants, without some provision for the future security of the fund in court, is a question which it was not necessary immediately to decide. The fund could not be restored to them, to be handed by them to Beebee & Co., under the wrongful acts of appropriation which have been mentioned, without permitting a palpable violation of honesty. Certainly, no decree, other than one in favor of the draft holders, would have been proper while there was any probability that, if the cause were retained, the impediment in the way of such a decree on the merits might be removed. In the above cited case of Mallow v. Hinde, an injunction against proceeding under judgments at law had been granted in an early stage of a suit in equity, in which the objection of want of parties finally prevailed. The necessary parties who could not be served with process were named Taylor and the Beards. [23] The Supreme Court said: “We have no doubt the Circuit Court had jurisdiction between the complainants and the defendant Hinde, so far as to entertain the bill, and grant an injunction against the judgments at law, until the matter could be heard in equity. And if it had been shown to the Circuit Court, that from the incapacity of that court to bring all the necessary parties before it, that court could not decide finally the rights in contest, the court, in the exercise of a sound discretion, might have retained the cause, and the injunction, on the application of the complainants, until they had reasonable time to litigate the matters of controversy between them and Taylor and the Beards in the courts of the State, or such other courts as had jurisdiction over them; and if then it was made to appear, by the judgment of a competent tribunal, that the complainants were equitably interested with the rights of Taylor, the trustee, and the cestuis que trust, * * * the Circuit Court could have proceeded to decree upon the merits. * * * Such a proceeding would seem to be justified by the urgent necessity of the case, in order to prevent a failure of ’justice. (12 Wheat. 198, 199.)
The court suggested its readiness to dismiss the bill without prejudice, founding the dismissal upon the want of S. B. Lud-low as a party, if such a dismissal would expedite an appeal from such a decision of the point. But the complainant’s counsel intimated no desire of an immediate decision for this purpose. The cause was retained, therefore, with a suggestion, however, from the court, that perhaps it could not be thus retained indefinitely.