85 U.S.

471
21 L.Ed. 810
18 Wall. 471

RAILROAD COMPANY
v.
ORR.
October Term, 1873

APPEAL from the District Court for the Middle District of Alabama.
Orr, a citizen of Mississippi, suing for himself and in behalf of all others,
holders of bonds of the county of Limestone, in the State of Alabama
(secured by a certain mortgage hereinafter specifically described and
which the bill set forth), who might come in and contribute to the
expenses of the suit, filed a bill in the court below against the said county
and 'The Nashville and Decatur Railroad Company,' both corporations of
Alabama.
The bill set forth that in the year 1853 a railroad company, under the name
of 'The Tennessee and Alabama Central Railroad Company,' was
incorporated by the legislature of Alabama for the purpose of making and
working a railroad within the limits of Limestone County; a further
purpose of the incorporation being, however, that the railroad thus
incorporated might be connected and ultimately consolidated with
railroads in Tennessee; that in 1855 the legislature of Alabama authorized
the county of Limestone to subscribe $200,000 to the stock of the said
company, and in payment thereof to issue and deliver to the company the
bonds of the county to that amount; that the county did issue and deliver
such bonds; that in 1858 the company was authorized by the legislature to
sell the said bonds, and for the purpose of securing their redemption, to
mortgage all its property and franchises; that on the 29th of July, 1858, the
company did execute such mortgage, and sold and assigned the said bonds
to various persons, and among others to the complainant to the amount of
$10,000; that the mortgage, dated as just said, was made between the
railroad company on the one part and James McDonald, James Sloss,
Booth Jones, and twelve other persons, including the complainant, all
named specifically in the mortgage (and in the recital of it given in the
bill) and holders, all of them, of the bonds intended to be secured by the

mortgage; that the mortgage, after reciting the debts due to each of the
said persons, the amounts, manner in which the debt accrued, granted,
bargained, and sold all the land which made the bed of the road and its
appurtenances to the said James McDonald, James Sloss, Booth Jones,
and the twelve others, including the complainant, as security to each
person for the payment to each of the bonds held by him; that the
complainant, now, at the time of filing his bill, remained the owner of
about $6500 of them, of which both the interest and principal remained
unpaid; that in 1866 and 1867 'The Tennessee and Alabama Central
Railroad Company' was consolidated with order railroad companies, and
that the consolidation became known as 'The Nashville and Decatur
Railroad Company,' and that the property and assets of the former
company passed into the hands of the latter; that the complainant
presented his bonds for payment to the proper authorities of Limestone
County, in 1866, and that payment was refused; and that 'The Nashville
and Decatur Railroad Company,' though fully aware of the default of the
county, neglected and refused to provide for the payment of the bonds,
and that the rights and interests of the bondholders were greatly
endangered. The prayer of the bill was for an account, for a decree
requiring the company to pay the amount that should be found to be due to
the complainant, for the foreclosure of the mortgage, and the sale of the
mortgaged property.
The county of Limestone failed to appear, and a decree pro confesso was
taken against it. 'The Nashville and Decatur Railroad Company' appeared,
and demurred for want of proper parties and other causes. The court
below overruled the demurrer, and considering, on certain pleas put in,
that the case was with the complainant, decreed a sale of the road, &c.,
unless, within a time named, the company paid the amount due on the
complainant's bonds.
On appeal here the question was whether the demurrer was rightfully
overruled for want of proper parties.
Mr. R. T. Merrick, for the appellant; no opposing counsel .
Mr. Justice HUNT delivered the opinion of the court.

The principal question in the case, and the one upon which the decision is now
placed, is whether there are the proper parties present in the suit?

It is a general rule in equity that all parties entitled to litigate the same questions

are necessary parties. All persons having an interest, although remote, in the
subject-matter of the bill must be made parties, or the bill must be so framed as
to give them an opportunity to come in and be made parties.1 The principle that
all must be made parties whose interests may be affected by the decree is only
departed from where it becomes extremely difficult or inconvenient to enforce
the rule.2
3

The principle is also well settled that when it appears on the face of the bill that
there will be a deficiency in the fund, and that there are other creditors or
legatees who are entitled to a ratable distribution with the complainants, and
who have a common interest with them, such creditors or legatees should be
made parties to the bill, or the suit should be brought by the complainants in
behalf of themselves and all others standing in a similar situation, and it should
be so stated in the bill.3 The rule in the United States courts is thus expressed:
'That all persons who have any material interest in the subject of the litigation
should be joined as parties, either as complainants or defendants.'4

The frame of the mortgage now sought to be enforced differs from the ordinary
trust-deed or mortgage by which the payment of railroad bonds is secured. A
trustee is ordinarily named, to whom the security runs as mortgagee, and the
instrument recites that the mortgage is made to him in trust to secure the bonds
described to the holders thereof. Here the mortgage is made directly to the
persons holding the bonds, who are named, and their several interests
described.

The bill does not distinctly allege the insufficiency of the fund to pay all the
debts secured by it. It does, however, allege that the county of Limestone, the
maker of the bonds, has refused to pay them, that the railroad company neglects
to make payment, and that the rights and interests of the bondholders are
greatly endangered.

Upon two grounds, therefore, it would seem to be necessary that the other
bondholders should be parties to this suit: 1st. The adequacy of the security of
the mortgage for the payment of all the bonds purporting to be secured by it is
quite doubtful. The fund is, to some extent, 'tabula in naufragio.' It is the
interest of every bondholder to diminish the debt of every other bondholder. In
so far as he succeeds in doing that, he adds to his own security. Each holder,
therefore, should be present, both that he may defend his own claims and that
he may attack the other claims should there be just occasion for it. If upon a
fair adjustment of the amount of the debts there should be a deficiency in the
security, real or apprehended, every one interested should have notice in
advance of the time, place, and mode of sale, that he may make timely

arrangements to secure a sale of the property at its full value.

2d. It is a rule of general application, both at law and in equity, that a suit upon
a written instrument must be brought in the name of all who are formal parties
to it, and who retain an interest in it. No reason is shown in this bill to take the
case out of the rule. No reason is assigned why the fifteen persons named do
not unite in the action. No allegation is made that they have been requested so
to unite, and have refused. The general rule is applicable to this action.5

For the cause set forth in the demurrer, to wit, a want of proper parties, the
decree must be REVERSED, AND THE CAUSE REMANDED with directions
to

DISMISS THE BILL WITHOUT PREJUDICE.

Bailey v. Inglee, 2 Paige, 278; La Grange v. Merrill, 3 Barbour's Chancery, 625.

Wendell v. Van Rensselaer, 1 Johnson's Chancery, 344.

Egberts v. Wood, 3 Paige, 517; Mitchell v. Lenox, 2 Id. 280; Baldwin v.

Mechanics' Bank of Alexandria v. Seton, 1 Peters, 299; Story v. Livingston, 13

See Ribon v. Railroad Companies, 16 Wallace, 450; Shields v. Barrow, 17