Boswell v. Thigpen

• Decision Date: 20 December 1897
• Citation: 75 Miss. 308,22 So. 823
• Court: Mississippi Supreme Court
• Parties: M. T. BOSWELL v. R. T. THIGPEN, ADMR

22 So. 823

75 Miss. 308

M. T. BOSWELL v. R. T. THIGPEN, ADMR

Supreme Court of Mississippi

December 20, 1897

December 1897

FROM the chancery court of Attala county HON. A. M. BYRD Chancellor.

The appellee, administrator of Mrs. S. J. Roby, filed his bill in equity against the appellant, Boswell, and therein averred that in 1888 his intestate executed a deed of trust on a certain tract of land in favor of Boswell; that in 1891 she sold and conveyed this land to Mrs. S. A. Jenkins for $ 1 000, evidenced by two promissory notes, maturing respectively in 1892 and 1893; that at the same time one W. J. Roby sold and conveyed to Mrs. Jenkins a small tract of land for $ 200 and took her promissory note therefor, which he indorsed and delivered to Mrs. S. J. Roby; that in 1891 Mrs. S. J. Roby deposited all three of these notes, aggregating $ 1, 200 with Kelly & Mills, of Kosciusko, as collateral security for a debt she owed them of $ 178.50; that on November 20, 1893 Kelly & Mills, against the wishes and over the protest of Mrs. Roby, sold the pledged notes, at a large discount, to Boswell, who received payment of the same from Mrs Jenkins; that Boswell knew at the time he bought them that the notes were merely deposited with Kelly & Mills as collateral security for said indebtedness of Mrs. Roby to them; that on Mrs. Roby's indebtedness of $ 516 to Boswell, secured by her deed of trust on the land subsequently conveyed to Mrs. Jenkins, sundry payments had been made, and that after crediting Boswell with the aggregate amount of the balance of this debt, and the debt due to Kelly & Mills, there remained due, of principal and interest on the pledged notes, the sum of $ 530, for which he refused to account, and for which complainant prayed a decree. The bill shows that appellee was appointed administrator of Mrs. Roby's estate, at the November term, 1896, of the chancery court of Leake county, which, by law, began on the second Monday of that month and continued six days. Laws 1896, pp. 87, 88.

The defendant demurred to the bill of complaint, assigning as grounds for demurrer, the following: [1] That the bill did not state when Mrs. Roby died, nor whether testate or intestate; [2] that the bill showed that Mrs. Roby, in 1891, delivered the notes she held against Mrs. Jenkins, to Kelly & Mills, as security for her indebtedness to them, and failed to show that the sale of the same to defendant was unlawful or fraudulent, or for any other purpose than that intended by the parties when the same were left as security with Kelly & Mills, as alleged in the bill; [3] that the bill failed to charge that Kelly & Mills did anything more than they had a legal right to do--that is, to sell the security for the payment of the debt; [4] that no right of action arose on the facts charged in the bill; [5] that the bill shows that defendant had the first lien or deed of trust on the lands sold by Mrs. Roby to Mrs. Jenkins, and could sell the same for his money, and had the first right in a court of equity for his money, either out of the lands or the proceeds of the sale made; [6] that the bill shows that the defendant received payment of the three notes named in the bill, on the twentieth of November, 1893, and that more than three years had elapsed since the right of action accrued, and that the claim in suit was therefore barred by limitation; [7] that the bill had no equity on its face; [8] that, admitting all that the bill charges as true, and that the defendant did collect all the money due on the Jenkins notes, in November, 1893, the defendant's remedy was full, adequate and complete at law; [9] that the court was without jurisdiction to collect the debt against defendant, when the same was due by simple contract, if at all, and while no liens are sought to be enforced, nor any facts shown calling for the aid of a court of equity, and no inquiry into mutual questions involved; [10] that the bill was otherwise vague and uncertain, and, on the facts, should be dismissed; [11] that the bill does not show that the debt due Kelly & Mills had ever been paid by complainants, so as to entitle them to the proceeds of the collaterals deposited to pay said debt. The demurrer was overruled by the court below, and the defendant prosecuted this appeal.

Affirmed.

Dodd & Armistead, for appellant.

The second ground laid in the demurrer is as follows: "Because the bill shows that Mrs. S. J. Roby, in 1891, delivered the notes she held against Mrs. S. A. Jenkins to Kelly & Mills, as security for her debt due them, and fails to show or allege the sale of the same to M. T. Boswell was unlawful or fraudulent; or for any other purpose than that intended by the parties when the same was left as a security with Kelly & Mills, as alleged in the bill." We think just here the bill is fatally defective in not stating that there was no power of sale conferred by the assignor in depositing the collateral notes with Kelly & Mills as security; and that the sale of said notes by them to Boswell was unlawful, and not within any agreement or consent of assignor, at the time they were so deposited as security. We insist that the primary purpose of the collateral security was, if Roby did not pay Kelly & Mills, the notes should be sold or otherwise collected to pay off the debt; the bill should negative the idea of a power of sale in Kelly & Mills when the collaterals were deposited with them, for otherwise the sale to Boswell would be valid, and if valid, the bill states no cause of action against defendant.

The third and fourth grounds are, in the main, and in substance and effect, contained in the second, above commented upon, while the fifth ground brings out the equity of the defendant in the funds sought to be reached by the bill.

We now invite the court's attention to the sixth ground of demurrer, to wit: "Because the bill, on its face, shows that the defendant, Boswell, received payment of the three notes named in the bill on the twentieth day of November, 1893, and that more than three years have elapsed since the right of action accrued, and that the claim in suit is barred by the statute of limitations and is now no valid claim against this defendant." The bill says: "Complainant further shows that on November 20, 1893, the date on which defendant received payment of the three notes given by Mrs. S. J. Roby, was then justly due the defendant $ 178.50, for which the said notes were placed with Kelly & Mills, " etc. Now, the bill was not filed until January 21, 1897. So more than three years elapsed before bringing this suit against this defendant, and it is therefore barred. We think it clearly barred from inspection of the bill, nor can we see an answer to this proposition, which we earnestly insist upon. We press upon the court that this is not an action of tort as against Boswell. If any wrong was committed, it was done by Kelly & Mills, who sold the collaterals, and not by the party who collected them. If the money collected from the collaterals, in the hands of the purchaser of them, overpaid his account, then an implied contract arose between the parties by operation of law, and the demand, in such case, would be barred in three years. Section 2739, code 1892.

As before stated, there are many cases in which the sale of collateral security can be made so as to pass the legal title to the paper, and, as the bill does not negative this idea, the purchaser of such paper is entitled to protection as owner of same, and, if protected, and he made profits by reason of his purchase, that would not avail complainant.

Again, we submit by bringing this suit against Boswell, the complainant expressly affirmed the sale to Boswell, and waived the tort against Kelly & Mills, and must stand or fall on the limitations governing implied contracts. Isaacs v. Herman, 49 Miss. 449. And if this authority cited is the law, the same is conclusive of this case, and the claim is barred. But there are other equally decisive reasons why the demurrer should have been sustained. The seventh ground laid, is "because the bill has no equity on its face." There is no equity jurisdiction on the facts stated in the bill, because no "mutual accounts" between the parties, which must exist to give the chancery court jurisdiction in a case like the one at bar. See constitution of this state, sections 160, 161. Sykes v. Barnard, 72 Miss. 297.

Luckett & Sullivan, for appellee.

There is no merit in any of the causes of the demurrer.

Second cause: That the bill fails to allege that sale of the notes was unlawful, etc., for any other purpose than that intended by the parties. When the doing of a thing is unlawful, you show that it was unlawfully done when you show it was done at all. The sale of this pledged property was, of itself, unlawful. The assumption in this cause of demurrer is, that a pledgee can sell the thing pledged whenever, however, to whomever, and for whatever he pleases, leaving the pledgor without any rights, either in law or equity. The pledgor is outlawed. Why? Because he was honest and reckless enough to secure the debt he owed. Under this rule, A, who holds B's note for $ 1, 000, secured by collaterals worth ten times as much, could sell these collaterals for enough to pay the $ 1, 000, and B would be the loser thereby. The law does not put one man at another's mercy, but protects both.

Third ground: "Because the bill fails to charge that Kelly & Mills did anything more than they had a legal right to do; that is, to sell the security for the payment of the debt."

"The general rule of law is that without an express agreement to the contrary, negotiable collaterals, as they have no market...