Consumers Credit Corp. of Miss. v. Swilley
| Decision Date | 19 March 1962 |
| Docket Number | No. 42225,42225 |
| Citation | 138 So.2d 885,243 Miss. 838 |
| Parties | CONSUMERS CREDIT CORPORATION OF MISSISSIPPI v. Mrs. Fern F. SWILLEY. |
| Court | Mississippi Supreme Court |
Satterfield, Shell, Williams & Buford, Patrick H. Scanlon, Jackson, for appellant.
Cox, Dunn & Clark, Jackson, for appellee.
This case originated in the Circuit Court of the First Judicial District of Hinds County, Mississippi, and from a judgment in favor of the defendant the plaintiff appealed to this Court.
The suit is brought for a balance of $4,366.79 alleged to be due to Consumers Credit Corporation of Mississippi by J. J. Jones and his wife, Mrs. Alyce Rea Jones, and against Mrs. Fern F. Swilley on her letter of guaranty to the appellant Consumers Credit Corporation. The alleged indebtedness came about under the following facts and circumstances:
Mr. J. J. Jones and his wife Alyce Rea Jones organized a corporation known as the Jones Finance Corporation and entered into the small loan brokerage business for several months. They obtained credit from Consumers Credit Corporation of Louisiana. After a few months, it was discovered that Mr. Jones' account was in arrears.
It appears from the testimony in this case that at the time that the Jones Finance Corporation ceased its operation it was indebted to the Consumers Credit Corporation of Louisiana for unpaid notes due by Jones Finance Corporation in the sum of $6,098.40.
A new corporation was organized on July 17, 1958, by Mrs. Fern F. Swilley, known as the Central Finance Company for the purpose of engaging in a small loan brokerage in the city of Jackson, Mississippi, and Mr. J. J. Jones became the president of this corporation. However, Mrs. Swilley owned all of the 750 shares, except 10.
The Consumers Credit Corporation of Louisiana organized a Mississippi corporation under the new Mississippi Small Loan Law and transferred to the Mississippi corporation the business of the Jones Finance Corporation. The Central Finance Corporation entered into a contract with the Consumers Credit Corporation of Mississippi and gave to the Consumers Credit Corporation of Mississippi a letter of guaranty signed by Mr. J. J. Jones and Mrs. Fern F. Swilley. This letter of guaranty is in the following words:
'July 29, 1958.
'Consumers Credit Corporation of Mississippi, R. F. D.,
Poplarville, Mississippi.
Gentlemen:
'In as much as you are handling notes and accounts of Central Finance Company, Inc., of 343 North Farish Street, Jackson, Mississippi:
'Please be advised that we, the undersigned, do hereby fully, completely and entirely warrant and guarantee, without reservation, any and all notes or other similar evidences of indebtedness which may be discounted to you, sold to you, or which otherwise may come into your possession from Central Finance Company.
'This warranty is to be construed as fully and completely as though we had, each of us and both of us, personally endorsed each and every instrument.
Very Cordially,
/s/ J. J. Jones
/s/ Fern F. Swilley'.
The Central Finance Company was organized under date of July 17, 1958, and thereafter on July 29, the Central Finance Company and Consumers Credit Corporation of Mississippi entered into a finance contract, and on November 11, 1958, the note here sued on was signed by Mr. J. J. Jones and his wife. On the back of this note is stamped , and was signed by J. J. Jones.
It appears from the testimony that the note given by J. J. Jones and wife to Consumers Credit Corporation of Mississippi, was accompanied by a trust deed dated November 11, 1958, also signed by J. J. Jones and Mrs. Alyce Rea Jones but made payable to the Central Finance Company, Inc., rather than to the Consumers Credit Corporation of Mississippi. The testimony shows that Mr. Raymond Morris, who is the auditor of the Southern Life Insurance Company, came to Mr. Jones and got him to give him the note, and that Mr. Jones took the trust deed to him the next day, after obtaining his wife's signature on the trust deed. There was no consideration paid to Mr. Jones, nor to Central Finance Company, Inc., for the execution of the note and trust deed, in fact, Mr. Hal J. Hendrick, the president of Consumers Credit Corporation of Mississippi, testified: 'In order to clear up the old Jones sore, it was agreed that they would have this note made, backed up with all the security and the guarantee of Central Finance Company, in order to get that headache out of the way and let us get on with the new business at hand'. The witness did not indicate that Mrs. Swilley was included in the phrase 'they would have this note made'. There was a three way contract between the Consumers Credit Corporation of Louisiana, The Southern Life and Surety Insurance Company and Jones Finance Corporation, in which the Southern Life and Surety Company had guaranteed the Consumers Credit Corporation of Louisiana against default arising out of its contract with Jones Finance Corporation. During the time the Jones Finance Corporation was in operation it had a large number of notes in the hands of the Consumers Credit Corporation. These notes had been retained by the corporation as extra collateral, and were not returned to Mr. Jones at the time he signed the note here sued upon.
The record further shows that no collection was made on the insurance policy because of the alleged default of J. J. Jones, although there was a reserve held by the insurance company on the notes of Jones Finance Corporation.
The defendant Mrs. Swilley propounded interrogatories to the plaintiff Consumers Credit Corporation of Mississippi, in which she asked: The plaintiff filed the following answer to the interrogatory:
Defendant then amended her answer to ask that she be given credit on the note in the alternative for the sum charged to be due to Consumers Credit Corporation of Louisiana from the Southern Life and Surety Insurance Company and readily available to it on demand, in the sum of $2,111.38.
The circuit judge heard the testimony in this case and decided that the note here sued on was not such a note as was contemplated by the written guaranty signed by Mrs. Fern F. Swilley.
The testimony in this case shows that when the audit of the Central Finance Company was made in 1958 the independent auditor asked Consumers for a verification of the outstanding balance on November 28, 1958, which was just 17 days after the date of the note. The third secretary and treasurer wrote that 'the outstanding balance for Central Finance Company of Jackson, Mississippi, as of November 28, 1958, is $17,861.63.' This balance did not include any part of the amount of the note in the suit.
The questions to be determined here are: (1) Did the agent Jones have authority to bind Mrs. Fern F. Swilley on his personal note; (2) did the letter of guaranty and the Broker's Contract extend to the personal note of Jones, and beyond the obligation to guarantee loans in the normal course of business; (3) was there any consideration for the note sued on so as to bind Mrs. Swilley; and (4) is defendant entitled to credit for the money said to be due plaintiff by the Southern Life and Surety Company?
The contract of guaranty in this case is based upon the letter dated July 29, 1958, above set out, which predicates its action upon the phrase 'in as much as you are handling notes and accounts of Central Finance Company, Inc.' The appellant knew that the note taken from J. J. Jones was not a note of Central Finance Company, nor was the note on their 'account', but rather it was an effort on the part of the appellant to get a new note, as shown by the following testimony: 'In order to clean up the old Jones sore, it was agreed that they would have this note made'. The letter of guaranty stated that Mrs. Swilley would warrant 'all notes or other similar evidences of indebtedness which may be discounted to you, sold to you, or which otherwise may come into your possession from Central Finance Company.' This note was not discounted to Consumers Credit Corporation, nor was it sold to them, but does the expression 'or which otherwise may come into your possession from Central Finance Company' bind Mrs. Swilley on the note of her agent for his personal debt?
We have reached the conclusion that Mrs. Swilley is not liable on her letter of guaranty to Consumers Credit Corporation of Mississippi for the following reasons:
As a general rule an agent can not act adversely to the interest of his principal. The text writer in 2 Am.Jur., Agency, Sec. 98...
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