Adkinson & Bacot Co. v. Varnado

• Decision Date: 29 June 1908
• Docket Number: 12,847
• Citation: 91 Miss. 825,47 So. 113
• Court: Mississippi Supreme Court
• Parties: ATKINSON BACOT ET AL. v. ELLIS M. VARNADO ET AL

47 So. 113

91 Miss. 825

ATKINSON BACOT ET AL. v. ELLIS M. VARNADO ET AL

No. 12,847

Supreme Court of Mississippi

June 29, 1908

FROM the chancery court of Pike county, HON. J. S. HICKS Chancellor.

Bacot and others, copartners doing business under the firm name of Atkinson Bacot Co., appellants, were complainants in the court below; Varnado and others, appellees, were defendants there. From a decree awarding complainants relief in part they appealed to the supreme court and the defendants prosecuted a cross-appeal.

On the 28th day of April, 1892, Ellis M. Varnado and Anna B Varnado, his wife, being indebted to complainants in the sum of $ 746.64, executed their promissory note for said sum, and to secure same executed a mortgage on certain lands situated in Louisiana and a certain other mortgage on property in Mississippi. The Mississippi and Louisiana mortgages were executed at the same time, the note secured by them being due and payable on January 1, 1893. The Mississippi deed of April 28, 1892, after describing specifically the property included within its provisions, also contained the following "and the grantors further convey any increase of property, real or personal, that may be by them or either of them hereafter acquired by purchase or otherwise, the title to which they warrant and agree forever to defend," etc. This deed was signed by the husband and wife, and in every respect duly executed. On the 6th of December, 1892, Anna B. Varnado, the wife, acquired by purchase a house and lot in the town of Osyka, the value of which is less than the value of a homestead as allowed by the exemption laws, upon which Charles Varnado held a purchase money lien for a balance of $ 150. The debt secured by the first deed on Mississippi property maturing and being unpaid, a second mortgage deed on Mississippi property was executed, in which Ellis M. Varnado and his wife, Anna B. Varnado, and Samuel R. Farrell all joined. This second deed was made for the purpose of securing certain indebtedness due by all the parties to Atkinson Bacot Co., equaling $ 2,250.81. It was executed on the 13th day of July, 1894, and the debt secured by it became due and payable on August 1, 1895. This second deed included the amount due under the first one, to-wit, $ 746.64, and stipulated that it was taken as additional security merely. This second mortgage deed contains the same provision as to after-acquired property found in the first one, and both husband and wife duly executed it.

The object of the suit was to foreclose the Mississippi mortgages not only by sale of the property specifically described in them, but as well on after-acquired property; the bill designating the house and lot in Osyka particularly as being liable under the mortgages as after-acquired property. The Louisiana mortgage was mentioned in the bill as a part of the transactions between the parties, and the prayer as to it was, not for a sale of the lands, but for a decree adjudging it valid.

The defendants answered the bill and admitted the acquisition of the house and lot, but claimed that it is not subject to the operation of the mortgage deed because it was purchased for and is used and occupied by them as a homestead.

The defendants alleged that the sum of $ 2,250.81 was made up of usurious interest, and make their answer a cross-bill praying that the account may be purged of usury and that they be required to pay only such sum as may be found justly due. The court below held that the contract was usurious eliminated from it the usurious charges, gave a decree for complainants in the sum of $ 1,340.71, and adjudged a lien on certain property owned by the defendants at the time of the execution of the mortgage, and other property which had subsequently been acquired by them, but declined to subject the Osyka lots to the payment of the mortgage, on the idea that defendants, Varnado and wife, were entitled to have the same exempt to them as a homestead. The final decree recognized the Louisiana mortgage as valid to secure the sum found to be due the complainants, but did not order a sale of the Louisiana land.

Decree affirmed.

McWillie & Thompson, for appellants and cross-appellees.

The facts of the case as shown by the bill are these: On April 28, 1902, Ellis M. Varnado and his wife, defendants, executed and delivered to a partnership then doing business at Osyka their joint and several promissory note for $ 746.64 with ten per centum interest from January 1, 1893, the date of its maturity. At said date Varnado and wife executed a mortgage on lands in Tangipahoa Parish, Louisiana, and a deed of trust on specific personal property then owned by them located in Mississippi to secure said note, and by the deed of trust they conveyed any increase of property, real or personal that they might thereafter acquire by purchase or otherwise, the title to which after-acquired property they agreed to warrant and forever defend. The note secured by the Louisiana mortgage and the Mississippi deed of trust was assigned to the complainant by the payee therein on January 20, 1893.

After the execution of the deed of trust the defendant, Anna B. Varnado, the wife of E. M. Varnado, acquired a piece of real estate situated in Osyka specifically described in the bill.

Afterwards on July 13, 1894, the transferred note being unpaid, the complainant and the defendants Varnado and wife and S. R. Farrell had an accounting when it was ascertained that the three defendants named were indebted to complainant, embracing the sum due on the first note, in the aggregate sum of $ 2,250.81, and they then executed and delivered to complainant a joint and several promissory note for that sum, payable to complainant, due August 1, 1895, and at the same time the said three defendants executed a deed of trust to secure the $ 2,250.81 note. This deed of trust by its recitals recognized the validity of the first note for $ 746.64, the Louisiana mortgage and the Mississippi deed of trust theretofore given to secure it and by said deed of trust said defendants conveyed other specific personal property as additional security for the debt evidenced by the first note and as security for that part of the second note which was not evidenced by the first one, and also conveyed a leasehold interest in a small piece of real estate and any increase of property real or personal that the grantors or either of them might thereafter acquire by purchase or otherwise, they agreeing to warrant and defend the title to such after-acquired property.

The prayer of the bill was for an adjudication of the sum due, a decree adjudging it a lien on all the property including the Louisiana lands, but seeking a sale only of the Mississippi property, real and personal, including the town lots acquired by Mrs. Varnado after the execution of the first deed of trust.

The answer of Varnado and wife, after some ineffectual efforts to deny the contents of the exhibits to the bill, raised. the question of the right of the complainant to have its mortgage adjudged to be a lien upon the Louisiana lands and pleads the statute of limitations thereto; it admits the acquisition of the Osyka lots by Mrs. Varnado after the execution of the first deed in trust, but claims that these lots are not subject thereto as after-acquired property because they constitute her homestead; denies the payment of the mortgage given on the lots by Mr. and Mrs. Varnado to their son Charles, and sets up usury in complainant's debt.

The complainant was entitled to a decree condemning the Osyka lots to be sold for the sum due on its debt. That the lots were acquired by Mrs. Varnado after the execution of the first deed of trust is admitted. After-acquired property can be conveyed or mortgaged to secure a debt and the conveyance or mortgage is perfectly valid as between the parties, although invalid as to third parties. White v. Thomas, 52 Miss. 49; Marx v. Davis, 55 Miss. 376; Williams v. Crook, 63 Miss. 9; Sillers v. Lester, 48 Miss. 513; Mississippi, etc., Co. v. Railroad, 58 Miss. 896; Fidelity, etc., Co. v. Sturtevant, 86 Miss. 509; s.c., 38 So. 783; Packwood v. Atkinson, etc., Co., 79 Miss. 646; s.c., 31 So. 337.

It is true that Charles Varnado, one of the defendants, had a mortgage on these lots given by his father and mother after they acquired them, but there was only $ 150 due him thereon according to his own testimony, and to put the case strongest against complainant, the lots should have been condemned for sale to satisfy its debts subject to Charles' mortgage.

The court below went off on the idea that the complainant's mortgage could not be enforced upon the after-acquired lots because Mrs. Varnado claims to have purchased them for a homestead and that she and her husband went upon the land and are now and have been since its purchase occupying it as their homestead. Homestead rights are purely statutory. Our statute applicable to the case is Code 1892, § 1971; Code 1906, § 2147, and it is as follows:

"2147. (1971) EXEMPTIONS IN CITIES, TOWNS AND VILLAGES. Every citizen of this state, male or female, being a householder, and having a family residing in any city, town or village, shall be entitled to hold, exempt from seizure or sale under execution or attachment, the land and buildings owned and occupied as a resident by such person, not to exceed in value, save as hereinafter provided, $ 3,000, and personal property, to be selected by him, not to exceed in value $ 250, or the articles specified as exempt to the head of a family."

There is nothing in this statute empowering a mortgagor to hold his homestead exempt from his mortgage. If he could hold it exempt from his mortgage he could hold it exempt from his deed of conveyance; in fact, a...