Gidden Motor Co. v. Johnston

• Decision Date: 11 November 1929
• Docket Number: 28100
• Citation: 155 Miss. 328,124 So. 367
• Court: Mississippi Supreme Court
• Parties: GIDDEN MOTOR CO. et al. v. JOHNSTON

124 So. 367

155 Miss. 328

GIDDEN MOTOR CO. et al. v. JOHNSTON

No. 28100

Supreme Court of Mississippi

November 11, 1929

Division B

1. BILLS AND NOTES. Nonnegotiable instruments which partake of nature of commercial paper are assignable by indorsement and delivery.

Nonnegotiable instruments which partake of nature of commercial paper are assignable by indorsement and delivery.

2. BILLS AND NOTES. Indorsement on nonnegotiable instrument and its delivery has effect to transfer absolutely all right title, and interest of indorser therein.

Indorsement on nonnegotiable instrument and its delivery has legal effect to transfer absolutely all right, title, and interest of indorser therein, but it does not as to payer or maker of paper operate to convert it into negotiable instrument.

3. ESTOPPEL. Where plaintiff indorsed certificate of guaranteed claim against bank, and delivered it to another, assignment by latter vested in bona-fide assignee for valuable consideration title as against plaintiff.

Where plaintiff indorsed certificate of guaranteed claim against assets of bank without qualification or restriction, and delivered it to another, and thus gave him indicia of absolute ownership to enable him to use it as collateral for security of loan, assignment by him vested in bona-fide assignee for valuable consideration title thereto as against plaintiff.

HON HARVEY McGEHEE, Chancellor.

APPEAL from chancery court of Tunica county, HON. HARVEY MCGEHEE Chancellor.

Action by Mrs. E. B. Johnston against the Gidden Motor Company and others. From the decree, defendants appeal. Reversed and rendered.

Decree reversed.

Cutrer & Smith, of Clarksdale, and J. D. Magruder, of Tunica, for appellants.

Every promise in writing whereby any person, firm or body politic or corporate, promises or agrees to pay a certain sum of money or acknowledges the same to be due is a promissory note.

Section 1359, Hemingway's Code of 1917; Section 1424, Code of 1927; Hemingway's Code of 1917, section 2564, Hemingway's Code of 1927, section 2740.

An instrument issued under authority of chapter 124 of the Laws of 1914, and chapter 207 of the Laws of 1916, and chapter 165 of the Laws of 1918, volume 2 of Hemingway's Code of 1917, section 3594, is a promissory note.

The time of payment is not essential to the making of a paper a promissory note, nor that the paper shall be negotiable.

Bacon v. Cohea, 12 S. & M. 516; Shields v. Taylor, 25 Miss. 13; Ethridge v. Gallagher, 55 Miss. 458; Heckler v. Frankenbush, 76 Miss. 780.

The endorsement of a paper nonnegotiable as it may be considered to have been was sufficient to pass title and operate to effectuate a new undertaking on the part of the complainant to pay the obligation on the default of the maker.

Seymour v. Van Slyck, 8 Wend. (N.Y.) 403; 3 R. C. L., secs. 204 and 379; Hall v. Monohan, 71 A. D. 404; Cromwell v. Hewett, 100 A. D. 527-8; Nixon v. Carco, 28 Miss. 414; Thompson v. Strickland, 52 Miss. 574; Staton v. Bryant, 55 Miss. 261; Hart v. Foundry Co., 72 Miss. 809; McGee v. Carver, 106 So. 760; 1 Bobbs-Merrill Digest, secs. 1, 34, 35, 47, 120; 3 Bobbs-Merrill Digest, secs. 234, 235, 236, 240 and 241.

A person who is in possession of property although he may have procured possession thereof by fraudulent misrepresentations, can pass a good title to the paper.

Lee v. Portwood, 41 Miss. 109; Thomas v. Kinney, 8 Ga. 431.

Under the Mississippi Code, paper like that in question here, is personal property and is a chattel.

Hemingway's Code 1917, sec. 1358; Hemingway's Code 1927, section 1423; Ethridge v. Gallagher, 55 Miss. 458; 2 Pomeroy's Equity Jurisprudence (3 Ed.), page 1241, sec. 700; Caruth v. Thompson, 63 A. D. 550; Moore v. Moore, 2 A. S. R. 170; Scollans v. Rollins, 88 A. S. R. 386; McCarthy v. Crawford, 128 A. S. R. 95.

Where the true owner holds out another, or allows him to appear as the owner of or as having full power of disposition of the property, and innocent third parties are thus led into dealing with such apparent owner, they will be protected.

Otis v. Gardner, 105 Ills. S.Ct. 438; Hall v. Box, 131 Miss. 218; Wilkinson v. Love, 115 So, 707.

Maynard, Fitzgerald & Venable, of Clarksdale, for appellee.

A promissory note, according to the definition contained in section 1, Negotiable Instruments Law, must be payable on demand on a fixed or a determinable future time.

An inspection of the certificate will show that the State Banking Department does not promise to pay the money, nor does it acknowledge the same to be due by the State Banking Department. It is a mere statement that the owner is entitled to be paid out of the assets of the bank. The paper is neither a note, nor is it negotiable.

A purchaser of a thing in action not negotiable takes subject to all equities subsisting in favor of an original owner or assignor, and the immediate assignor can give no better title than he has himself.

Bush v. Lathrop, 22 N.Y. 535; Davis v. Bechstein, 69 N.Y. 440, 442, 25 A.L.R. 218; Cowdrey v. Vandenburgh, 101 U.S. 575, Combs v. Hodge, 62 U.S. (21 How.) 397; Peoples Trust Co. v. Smith, 215 N.Y. 488, L.R.A. 1916B, 840; Knox v. American Co., 148 N.Y. 441, 51 A. S. R. 700; East Birmingham Land Co. v. Denison, 85 Ala. 565, 7 A. S. R. 73; Reid v. Sprague, 72 N.Y. 457, 462; Sutherland v. Reeve, 151 Ill. 384, 38 N.E. 130; Peoples Trust Co. v. Smith, 215 N.Y. 488, Ann. Cas. 1917A, 560; L.R.A. 1916B, 840; Ballard v. Burgett, 40 N.Y. 314.

OPINION

Griffith, J.

The state banking department, as liquidator of the Delta Bank & Trust Company, issued, on March 15, 1921, to Mrs. E. B. Johnston, appellee here, a certificate of guaranteed claim against the assets of said bank in the sum of three thousand two hundred forty dollars and thirty-three cents. Sometime during the year 1923 Mrs. Johnston indorsed the said certificate, indorsing her name on the same in the manner in which indorsements are usually made on commercial paper, and without qualification or restriction, and delivered the same to one Smith. The actual purpose and understanding between appellee and said Smith in the said indorsement and delivery to Smith was to enable Smith to use said certificate as available collateral for the security of a loan from the Planters' Bank to Smith; but said Smith, instead of negotiating the loan with the bank, obtained the loan from the appellant, Mrs. E. D. Gidden.

When Smith deposited the said certificate with Mrs. Gidden as security for the said loan, he represented to her that he was the absolute owner of said certificate. During the years 1924 and 1925 certain dividends were paid on said certificate by the banking department, which payments were received by Mrs. Gidden and credited on the note evidencing the loan. The first note made by Smith to Mrs. Gidden was not fully paid, and a renewal note for the balance was given and secured likewise by the said certificate. In May, 1925, said Smith proposed to sell the said certificate to Mrs. Gidden outright, so that thereby the balance due on the note would be paid and the said Smith would receive the overplus in cash. Nothing having happened during all this time of some two years that this certificate had remained as collateral with Mrs. Gidden to indicate that the title and interest of said Smith was anything other than he had represented it to be, that is, that of absolute ownership, and, on the contrary, everything that had happened appearing to confirm that claim, Mrs. Gidden purchased the said certificate from Smith and paid him therefor the then full market value, without discount, and in cash.

Some time after the final transaction last mentioned, but just when is not clear from the record, Mrs. Johnston, appellee began--and apparently for the first time--to inquire what had been done with, or what had become of, said certificate, and, learning about the year 1926 that it was in the possession of appellant, this suit was instituted to recover the certificate and for other relief. The chancellor sustained the bill, and by his decree ordered the certificate delivered up, and, in addition, gave a money judgment...