Central Optical Merchandising Co. v. Lowe's Estate, 42877

• Decision Date: 17 February 1964
• Docket Number: No. 42877,42877
• Citation: 249 Miss. 61,160 So.2d 673
• Parties: CENTRAL OPTICAL MERCHANDISING COMPANY, Inc. v. ESTATE of Morris B. LOWE, Deceased, Barbara Dale McHan, Administratrix.
• Court: Mississippi Supreme Court

Page 673

160 So.2d 673

249 Miss. 61

CENTRAL OPTICAL MERCHANDISING COMPANY, Inc. v. ESTATE of Morris B. LOWE, Deceased, Barbara Dale McHan,

Administratrix.

No. 42877.

Supreme Court of Mississippi.

Feb. 17, 1964.

Wynn, Hafter, Lake & Tindall, Greenville, for appellant.

Philip Mansour, Greenville, for appellee.

ETHRIDGE, Justice:

This case involves contests of probated claims against the estate of a deceased. The Chancery Court of Washington County disallowed them, and from the two consolidated decrees the claimant (Central Optical Merchandising Company, Inc., called Central Optical) appealed.

The issues are (1) whether claimant had a prima facie right as the holder to four promissory notes, which it as payee had endorsed in blank and upon which there were subsequent restrictive endorsements by others; and (2) whether the claim on open account was a sufficient 'itemized account' under the statute to be amended (after the six month period for creditors to file), and to be amplified and further described by evidence on contest by the administratrix. These questions we answer in the affirmative.

For many years Morris B. Lowe was the owner and operator of Greenville Optical Company, an unincorporated business in Greenville, Mississippi. He died on July 16, 1962, and letters of administration were granted to appellee, Barbara Dale McHan. Notice to creditors was published, and on December 22, 1962 Central Optical filed its claims against the estate. Mississippi Code 1942, Rec., section 568 requires that any person desiring to probate his claim against an estate, where there is no written evidence of it, shall present 'an itemized account, or a statement of the claim in writing, signed by the creditor.' There were two types of asserted debts, four promissory notes, and an open account.

First. Four promissory notes were executed by Lowe on July 8, 1961, each being in the principal amount of $750, and payable to the order of Central Optical. At the time claimant probated this claim, the maturity dates of all of the notes had occurred. They were endorsed in blank by Central Optical. Subsequently they were endorsed to the order of Lincoln Rochester Trust Company by Shuron Optical Company, Inc. Claimant had possession of the notes, and the probated claim averred that it had reacquired them. On the face of three is stamped a notation that they were 'charged back' to the account of Central Optical. The administratrix argues that the notes show on their face that Central Optical has no right, title or interest in them. The trial court sustained this position, and disallowed this claim. We hold this was error.

Mississippi Code 1942, Rec., section 89 (NIL Sec. 48) states:

'The holder may at any time strike our any indorsement which is not necessary to his title. The indorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.'

The applicable rule is described in 11 Am.Jur.2d, Bills and Notes, section 393:

'The holder of an instrument may at any time strike out any indorsement which is not necessary to his title, thereby, however, releasing the indorser whose indorsement is stricken and all subsequent indorsers. Accordingly, if an instrument contains indorsements subsequent to an indorsement in blank the holder may strike those out, although the intervening indorsements are in full. An indorsement upon a negotiable instrument may be stricken out by the original payee upon his regaining possession in a bona fide manner, and he may recover upon such instrument as if it had never been indorsed.'

To the same effect are 10 C.J.S. Bills and Notes Sec. 215; Beutel's Brannan, Negotiable Instruments Law (7th ed. 1948) 642; McLemore v. Hawkins, 46 Miss. 715 (1872); Taylor v. Julienne, 180 Miss. 320, 177 So. 19 (1937); Kendrick v. Kyle, 78 Miss. 278, 28 So. 951 (1900). As was stated in McLemore, the 'possession of a note by the payee or a subsequent endorser is prima facie evidence, notwithstanding subsequent endorsers thereon, that he is the lawful owner and has reacquired the legal title.' Here Central Optical had a prima facie right in these four notes, having reacquired them. So that claim should have been allowed, in the principal amount of $3,000 plus accrued interest. The decree disallowing the probated claim on the four promissory notes is reversed, and judgment is rendered here allowing it.

Second. The claim filed by Central Optical on Lowe's open account consisted of five pages, with the statutory affidavit. It stated that Lowe's estate was indebted to claimant as of November 30, 1962 in the sum of $5,006.47, 'for the unpaid balance on the account of the said M. B. Lowe and his estate, * * * for lenses, frames and other optical merchandise sold and delivered, after allowing all proper credits.' It was then stated that the unpaid balance of the account on June 25, 1961 was $8,410.85. This beginning figure was assumed by claimant to be correct. It contained no verifying data to support it. The claim, after allowing certain credits and debits, stated that the balance due on November 30, 1962 was $5,006.47. Attached to it was a certified copy of the accounts receivable records of claimant for the account from June 25, 1961 to November 30, 1962. This attached exhibit began with a 'proof total' of $8,690.62, and contained 37 pages of photocopies of the accounts receivable records of Central Optical. Each page identified the purchaser, and contained ten vertical columns, with appropriate figures under the various parts, identified as date, description, prescription, stock, net item, credit, balance due, sales balances for prescription and stock, and proof total.

The first publication for creditors was made on July 26, 1962. Several weeks after the six months period for probating claims expired, the administratrix filed a contest, asserting the claim was not an itemized account, was fatally defective, and should be disallowed.

At the hearing Cecil R. Shaffer, president of Central Optical, testified about the notes, and, with reference to the open account, he said the exhibit to the claim consisted of the company's work sheets from which the statement was made up. Claimant's counsel then handed the witness eighteen manila envelopes, which he identified as containing copies of the numerous original bills or invoices for supplies sent to Lowe from July 25, 1960 to November 30, 1962. He then offered in evidence these invoices, stating they were not offered to amend the claim, but to support and substantiate the entries in the attached ledger sheet. Counsel for appellee objected, on the ground they were an amendment to the claim. The court reserved its ruling. The final decree disallowed the claim on open account.

Subsequently claimant moved for consolidation of the cases on the notes and open account, and for an order directing the original invoices be sent to this Court. Such an order was entered, stating 'the invoices introduced as exhibit 2 to the direct examination of Mr. Cecil Shaffer be and they are hereby attached to and considered as a part of said record without the necessity of each separate invoice being copied verbatim into said record.' Apparently the trial court considered that the invoices were admitted in evidence. If they were not, they should have been. They described in detail each of the sales by Central Optical of Lowe, giving the date, description, and other details of the particular lenses, frames and other optical merchandise.

Under all of the foregoing circumstances, we conclude that appellant had the right to amend its claim (with limitations), and to offer evidence to explain and clarify it; and that expiration of the period for filing claims did not bar these procedures.

Mississippi Code 1942, Rec., section 568 provides that any person desiring to probate his claim against an estate shall present to the clerk, 'if there be no written evidence thereof, an itemized account, or a statement of the claim in writing, signed by the creditor, and make affidavit, to be attached thereto, to the following effect,' setting forth the form of affidavit.

All claims against the estates of deceased persons shall be registered, probated and allowed within six months after first publication of notice to creditors, otherwise they will be barred. Code Secs. 569, 566. In 1926 what is now section 569 was amended (Miss.Laws 1926, ch. 157) by adding a statement 'that where the affidavit is made in good faith and the claim is registered, probated and allowed by the clerk, but the affidavit is defective or insufficient, the court may allow the affidavit to be amended so as to conform to the requirements of the statute, at any time before the estate is finally settled, whereupon the probate shall be as effective and the claim as valid against the estate as if the affidavit had been correct and sufficient, in the first instance.'

Nevertheless, Rice Stix Dry Goods Co. v. Monsour, 178 Miss. 621, 174 So. 63 (1937), held that this amendment to section 569 'limits amendments to the affidavit, and does not apply to the account, * * *.' See Bell v. Union & Planters Bank & Trust Co., 158 Miss. 486, 130 So. 486 (1930); United States Fidelity & Guaranty Co. v. Blanchard, 182 Miss. 179, 181 So. 134 (1938) (can not amend to increase amount of claim). Rice Stix also disallowed a claim on itemized account because insufficiently itemized, but it does not appear that evidence was offered to explain it. Amendment was denied.

Legislative intent must be considered in the light of the realities of probate practice. Although claims must be registered within six months after the first publication of notice to creditors, no fixed form of claim is ordinarily required, nor is the technical accuracy and certainty of description which is essential in pleading necessary. In general, 'the statement shall give notice that a claim exists against the estate, for...