Crosby v. Peoples Bank of Indianola

• Decision Date: 17 April 1985
• Docket Number: No. 54673,54673
• Citation: 472 So.2d 951
• Parties: 41 UCC Rep.Serv. 1052 Betty S. CROSBY v. PEOPLES BANK OF INDIANOLA.
• Court: Mississippi Supreme Court

Page 951

472 So.2d 951

41 UCC Rep.Serv. 1052

Betty S. CROSBY v. PEOPLES BANK OF INDIANOLA.

No. 54673.

Supreme Court of Mississippi.

April 17, 1985.

Rehearing Denied July 24, 1985.

W. Dean Belk, Clark, Davis & Belk, Indianola, for Betty S. Crosby.

Harlan H. Varnado, for Ira T. Crosby.

Richard G. Noble, Crosthwait, Terney, Noble & Eastland, Indianola, for appellee.

Before ROY NOBLE LEE, SULLIVAN and ANDERSON, JJ.

ROY NOBLE LEE, Presiding Justice, for the Court:

Peoples Bank of Indianola filed suit against Betty June Crosby and Ira Talmadge Crosby, Jr. claiming the balance due on a certain promissory note from Century Mississippi Corporation, which balance was approximately one hundred eighty thousand dollars ($180,000). The Circuit Court of Sunflower County, Mississippi, sitting without a jury, found in favor of Peoples Bank and ordered that the note be surrendered to the Peoples Bank after satisfaction of Mrs. Crosby's prior one hundred thousand dollar ($100,000) claim in it. The Crosbys have appealed to this Court.

The overriding question in this case is who had the superior interest in the balance of the note, viz, Betty Crosby or Peoples Bank?

Betty Crosby and Ira Talmadge Crosby, Jr., wife and husband, each owned an interest in a cable television corporation, i.e., Crosby Cable, Inc., which sold its assets to Century Mississippi Corporation in November, 1980, for the sum of two hundred eighty thousand dollars ($280,000), evidenced by a promissory note. Mrs. Crosby's interest in Crosby Cable, Inc. was calculated to be one hundred thousand dollars ($100,000) from the sale, and Crosby Cable, Inc. executed and delivered to Mrs. Crosby its note for that amount on October 31, 1980. The $280,000 Century note, payable to Crosby Cable, Inc., was assigned to Mrs. Crosby as security November 15, 1980. Possession of the Century note and a security agreement were delivered to W. Dean Belk, attorney and agent for Mrs. Crosby, and has been retained by him since that time.

After selling the Crosby Cable, Inc. property, Crosby formed a new corporation, Mississippi Woodworks, Inc. That business was designed to manufacture raw lumber into pallets and Crosby obtained financing from the Peoples Bank for the purchase of machinery and for operating the business. Notes were executed in the name of Mississippi Woodworks, Inc., in the joint names of Mississippi Woodworks, Inc. and Crosby, and some individually in Crosby's name. The business did not do well and Crosby had to obtain a renewal of the notes. The bank required additional collateral and prepared documents for Crosby to sign, including an assignment of the balance of the Century note (after payment of the $100,000 to Mrs. Crosby). On May 17, 1982, when the renewal transaction occurred, Crosby signed some of the notes, together with an assignment of the Century note, but refused to sign several renewal notes in his individual capacity.

Peoples Bank bases its suit upon the renewal transaction and the assignment to it of the Century note by Crosby. The assignment authorized the Peoples Bank to deliver a copy of the assignment to Mrs. Crosby's attorney, W. Dean Belk, and directed Belk to deliver the note to the Peoples Bank when Mrs. Crosby's $100,000 interest was satisfied.

On June 9, 1982, Betty Crosby and Ira Talmadge Crosby, Jr. executed an instrument entitled "Child Custody and Support and Property Settlement Agreement." On the same date, they filed a joint complaint for divorce in the Chancery Court of Sunflower County, Mississippi, on the ground of irreconcilable differences, pursuant to Mississippi Code Annotated § 93-5-2 (1972). Final decree divorcing the parties and approving the separate agreement was entered by the court September 10, 1982.

The separation agreement provided that, as lump sum alimony and in lieu of child support, Crosby would convey, set over and assign unto Mrs. Crosby any and all of his interest in the balance due on the Century note, dated November 6, 1980, in the original principal sum of $280,000. Crosby actually assigned that note to Mrs. Crosby on June 28, 1982. Crosby Cable, Inc., by Ira T. Crosby, Jr., President, assigned Betty Crosby all of its interest in the Century note, dated November 6, 1980, on the ninth day of June, 1982, although it had previously On June 15, 1982, Peoples Bank filed notice of its interest under the Crosby assignment, although it did not file with the Secretary of State's Office until August 17, 1982. Notice of the Crosby assignment to Peoples Bank was forwarded to Mrs. Crosby's attorney, W. Dean Belk, and received by him on June 17, 1982. Peoples Bank acknowledged that it had actual notice of the separation agreement and divorce action between Betty Crosby and Ira T. Crosby, when they were filed on June 9, 1982.

assigned the note to Ira T. Crosby, Jr. on October 15, 1981. ¹

The lower court, in arriving at its decision, answered three questions: (1) that there was a valid delivery of the assignment of the Century note from Ira T. Crosby, Jr. to Peoples Bank; (2) that the signing and filing of the property settlement agreement did not constitute a valid security interest and that Mrs. Crosby's interest was not perfected until September 19, 1982, when the divorce was granted to the parties, and, therefore, was inferior to Peoples Bank; and (3) that Peoples Bank perfected its interest on June 17, 1982, when a notice of the assignment of Crosby to Peoples Bank was received by attorney W. Dean Belk on June 17, 1982, and that Peoples Bank's interest was superior to that of Mrs. Crosby.

Crucial to the decision in this case is the effect of the continued possession of the Century note by Mrs. Crosby and whether or not the property agreement executed by the Crosbys on June 9, 1982, perfected a valid interest in the balance of the Century note to Mrs. Crosby.

The lower court held that the property settlement agreement was not an assignment; that any filing in the chancery clerk's office of the property settlement agreement did not constitute proper notice; that Mrs. Crosby had to rely on her assignment dated June 28 and its perfection on July 12, 1982, in order to establish her interest; and that her interest was not valid until September 19, 1982, when the divorce between the Crosbys became final.

The lower court relied for its decision on Johnson v. Collins, 419 So.2d 1029 (Miss.1982), noting that delivery of certain certificates of deposits to the wife in accordance with the terms of a property settlement agreement in a divorce action was conditional. However, we distinguish Collins from the case sub judice. In Collins, a separation agreement executed by the husband and wife provided the following:

This Agreement entered into this day by and between ALLEN E. COLLINS, hereinafter called "Husband" and SYVILLA J. REEVES COLLINS, hereinaftered called "Wife";

Witnesseth:

Whereas, the parties are now separated and do not believe that a reconciliation of their differences is possible at this time; and

Whereas, said parties desire to resolve all questions of property rights in order that a Joint Bill of Complaint for Divorce may be later filed;

NOW THEREFORE, for an [sic] in consideration of the premises, and in consideration of the mutual promises of the parties, Husband and Wife do hereby enter into the following separation agreement: ...

419 So.2d at 1031.

After delivery of the certificates of deposit to his wife, Mr. Collins died before the divorce was granted. The co-executors of the deceased husband's estate brought suit to recover the certificates and the widow claimed that they constituted an inter vivos gift. This Court held that transfer of the certificates of deposit was not a free and voluntary act with the intention to make a gift, but, rather, a transfer of property executed pursuant to a separation agreement prepared in contemplation of obtaining a divorce due to irreconcilable differences, and did not constitute a valid gift inter vivos. The facts and agreement in WHEREAS, the parties hereto were married on the 24th day of December, 1950 in Indianola, Sunflower County, Mississippi, and separated on or about the 1st day of June, 1982 in Indianola, Sunflower County, Mississippi, and since that date have been living separate and apart; and,

the case sub judice differ from Collins. The instrument here is entitled "Child Custody and Support and Property Settlement Agreement" and pertinent parts of the agreement follow:

* * *

* * *

WHEREAS, the parties desire to confirm their separation and make arrangements in connection therewith, including arrangements for the custody and maintenance of the minor child and settlement of the property rights of the parties and other rights and obligations growing out of the marriage relation.

IT IS, THEREFORE, AGREED:

I. SEPARATION

The parties may and shall at all times hereafter live and continue to live separate and apart. Each shall be free from interference, authority and control, direct or indirect, by the other as fully as if he or she were single and unmarried. The parties shall not molest each other or compel or endeavor to compel the other to cohabit or dwell with him or her by any legal or other proceedings for restitution of conjugal rights or otherwise.

* * *

* * *

III. CHILD SUPPORT AND ALIMONY

As lump sum alimony and in lieu of child support for the minor child of the parties, namely: David Greg Crosby, the HUSBAND shall convey, set over and assign unto the WIFE any and all of his interest in the balance due on that certain Promissory Note dated November 6, 1980, in the original principal sum of $280,000.00, a copy of same being attached hereto and marked as Exhibit "A".

* * *

* * *

VIII. MUTUAL RELEASES

Except as otherwise provided in this Agreement, each party shall be fully released by the other from any obligation for alimony, support and maintenance, and each accepts the provisions hereof in full satisfaction of all...