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Statement of the Case.
filed in this court on October 18, 1886, and an addition thereto, by stipulation between the parties, on January 14, 1990. The appeal bond runs to Fosdick and Fish, trustees, “ for the use and benefit of themselves and for the use and benefit of each and all parties affected or to be affected by the appeal in the condition hereunder written to this obligation.” The bond recites that the appeal is from the decree of June 30, 1884, made on the original and supplemental bills of Fosdick and Fish, the cross-bill of Elwell, the cross-bill of The Chicago and Eastern Illinois Railroad Company, and another cross-bill.
The Chicago and Eastern Illinois Railroad Company now moves to dismiss the appeal of Elwell, trustee, by The National. City Bank of Ottawa, on the ground, among others, that Elwell, trustee, on the 16th of October, 1884, before the appeal was allowed, executed and delivered to the Chicago and Eastern Illinois Railroad Company, a written release of all errors had or committed in and concerning such decree, and especially releasing and waiving his right as such trustee to appeal from the decree; which release, on the 15th of November, 1884, was filed in the office of the clerk of the Circuit Court. A duly certified copy of such release is presented to this court as part of the moving papers. Its execution and authenticity are not denied on the part of the bank. It is entitled in the bill filed by Fosdick and Fish, and in the crossbill brought by The Chicago and Eastern Illinois Railroad Company. It contains this statement:
“Comes now James W. Elwell, trustee, etc., one of the defendants in the above entitled cause and cross-cause, and says that of the one million convertible mortgage bonds referred to in said original bill, secured by trust deed, of which he is sole trustee, as therein charged, forty-five of said bonds, of · one thousand dollars each, have not been issued by the com
pany, and are now deposited with the clerk of said court. Fifty-eight of said bonds, representing fifty-eight thousand dollars, were issued in exchange for coupons, under the funding contract or scheme referred to in said original bill and decree. That all of said coupons have been paid out of the proceeds of sale of said railroad and property, as provided by
Argument against the Motion.
said decree. And that the holders of six hundred and seventeen of the balance of said bonds, amounting to six hundred and seventeen thousand dollars, do not desire further litigation in said cause and cross-cause; and that the holders of the balance of said bonds have hitherto declined to contribute to the cost of this litigation, or to protect him, as such trustee, against loss or the payment of costs or counsel fees. Now, therefore, the said James W. Elwell, trustee, as in said trust deed provided, representing the bondholders in said deed mentioned, for himself as such trustee, releases all errors whatsoever had or committed in or concerning the decree entered in the aforesaid cause and cross-cause by said court on the thirtieth (30th) day of June, A.D. 1884, and in and about the proceedings in said cause leading to said decree, and especially releases all his right, as such trustee, of appeal from said decree and proceedings, without intending, however, to prejudice the right of the holders of any of said convertible mortgage bonds to enforce the payment of their said bonds, or any part thereof."
Mr. W. H. Lyford for the Chicago and Eastern Illinois Railroad Company, one of the appellees, in support of the motion to dismiss.
Mr. Charles M. Osborn and Mr. Samuel A. Lynde, for the appellant, opposing.
The decree from which this appeal is prosecuted was not a joint decree within the meaning of the rule requiring all of the parties against whom a joint decree shall be rendered to join in the appeal.
The general rule, that all of the parties against whom a joint decree or judgment is rendered must join in the appeal or writ of error, is clearly stated in the decisions of this court, which are cited by counsel in the argument upon this point. The reasons upon which this rule is founded are first fully stated in Owings v. Kincannon, 7 Pet. 399, 402. The court there says: “Upon principle, it would seem reasonable that
Argument against the Motion,
the whole cause ought to be brought before the court, and that all the parties who are united in interest ought to unite in the appeal.” Since that decision, it is said in Simpson v. Greeley, 20 Wall. 152, 157: “The question has frequently been presented to this court, and has uniformly been deter mined in the same way, where it appeared that the interest was joint.
Where the interest is joint and the interest of all is affected by the judgment, the rule is universal that all must join in the writ of error.
In all of the cases where this rule is stated and applied, it is clearly announced that the rule exists only where the decree or judgment is joint, and the rule is held to have no application when the interest of the parties is not joint, and they are not jointly affected by the decree. Simpson v. Greeley, 20 Wall. ubi supra; Germain v. Mason, 12 Wall. 259; Forgay v. Conrad, 6 How. 201; Brewster v. Wakefield, 22 How. 118, 128; Milner v. Meek, 95 U. S. 252; Railroad v. Johnson, 15 Wall. 8.
If the trustees under the first mortgage and the Danville company should have joined in the appeal from this decree, the order of the Circuit Court allowing this appeal amounts to a sufficient severance of the parties to authorize the prosecution of this appeal in the name of Elwell alone.
There is no strict technical proceeding, that must be followed to work a severance of parties against whom a joint decree is rendered, so as to authorize an appeal by one of the parties.
In Masterson v. Herndon, 10 Wall. 416, 418, the court says: “We do not attach importance to the technical mode of proceeding called summons and severance. We should have held this appeal good if it had appeared in any way by the record that Maverick had been notified in writing to appear, and that he had failed to appear, or, if appearing, had refused to join.” The court further says that there should be a written notice and due service, or the record should show the appearance and refusal, and that the court on that ground granted an appeal to the party praying for it as to his own interest. See also O'Dowd v. Russell, 14 Wall. 402; Sage v. Central Railroad Co., 93 U. S. 412.
Argument against the Motion.
By the execution of releases of error, waiving all right to appeal, the trustees in the first mortgage, the trustee in the chattel mortgage and the Danville company, had, at the time when the National City Bank was granted leave to prosecute this appeal in the name of its trustee, Elwell, estopped themselves from prosecuting an appeal or joining with the appellant in this appeal. These releases of error worked a severance of any joint interest or right to appeal, and the appeal was properly allowed in the name of Elwell alone.
We contend that the decree is not joint, and that Elwell had separate and distinct interests in the controversy, which were affected by the decree, and that he not only could appeal separately from the decree, but in order to have that portion of the decree reviewed which finds in favor of the trustees under the first mortgage, he had to, appeal separately; that the order granting this appeal was made on notice to all parties, and with all parties present in court, so that a severance was effected, if that was necessary; and that the other parties have, by their releases of error and waiver of right to appeal, voluntarily made a severance.
Elwell had no power or authority as trustee in the second mortgage to release errors in the foreclosure proceedings and decree, and to waive the right to appeal from the decree. His attempt to release errors, and waive the right to appeal, was a gross breach of trust and clearly outside of the power and duties conferred upon him by the trust deed; and it cannot bar the right of the National City Bank as holder of bonds secured by the trust deed to him, to prosecute by leave of court this appeal in his name, or furnish good reason for dismissing this appeal.
The second ground, urged in support of this motion, that Elwell's release of errors and waiver of right to appeal bars the prosecution of this appeal, seems to us so utterly unreasonable and inequitable as to require but little argument.
We cannot denounce Elwell's conduct in this matter in strong enough terms, so gross was the breach of trust which he attempted to perpetrate.
It appeared as a matter of record in this cause at the time
Argament against the Motion.
when this alleged release of errors was filed and put on record, that this bond holder, now prosecuting this appeal, had sought to become a party to the cause before the decree because of its belief and fears of Elwell's bad faith; that it had served notice and request on Elwell to take an appeal, and had offered him all protection and indemnity against costs, expenses or damages; and had afterwards petitioned the court to be allowed to appeal on its own behalf because of Elwell's collusion and breach of trust. The proposition that Elwell could come into court and by releasing errors and making a formal waiver of the right to appeal, cut off the rights and equities of any of his cestuis que trust, who did not give their express consent to this action, is monstrous, and all the more so when the record shows that the bondholder, to defeat whose rights this attempted release is used, expressly charged the trustee with bad faith and breach of trust, and sought the privilege of becoming a party to the cause in order to protect itself against him and to assert its rights in its own narne.
A trustee can neither waive the lien given him by the trust deed, nor the right to enforce that lien, and thereby deprive the cestui que trust of the benefit of the security and lien or estop and bar him from enforcing it. Nor can be by his assent, release or waiver estop his cestui que trust from prosecuting an appeal under the authority of the court in his name, any more than he can assent for his cestui que trust to a diversion of the trust estate or a waiver of the lien. He has no personal right or title, but acts purely in a representative capacity. If he acts in good faith and within the powers vested in him, whatever binds him in any legal proceedings which he may begin and carry on to enforce the trust, binds his cestui que trust, and whatever forecloses the trustee, in the absence of fraud, forecloses the bondholders. Richter v. Jerome, 123 U. S. 233, 246. But he cannot foreclose the bondholders by refusing to enforce the trust, or by waiving the right to appeal from the decree that may be rendered adverse to their interests. Nothing short of the express consent of all of the holders of bonds secured by his trust deed could warrant the trustee to attempt to release errors or waive the right to