Green v. Morris

• Decision Date: 06 May 1918
• Docket Number: 20073
• Citation: 78 So. 550,117 Miss. 635
• Court: Mississippi Supreme Court
• Parties: GREEN ET AL v. MORRIS ET AL

78 So. 550

117 Miss. 635

GREEN ET AL v. MORRIS ET AL

No. 20073

Supreme Court of Mississippi

May 6, 1918

Division B

APPEAL from the chancery court of Union county, HON. A. J. MCINTYRE Chancellor.

Suit by E. E. Green and others against J. R. Morris and others. From the judgment rendered, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Order reversed, and cause remanded.

Jones &amp Knox, for appellant.

The court erred in holding that the notes owned by the appellee Morris, had priority. There is nothing in the face of the notes, or in the deed of trust securing the notes showing there was any priority given one note mentioned in the deed of trust over that of another; the notes sued on by appellant were all secured by the same deed of trust and all matured at the time of the trial of said cause. And all of Said notes should have shared pro rata in the proceeds of the sale of the land and the property described in the deed of trust securing said notes. It appears to be the settled law in this state that all debts protected by the same security are entitled to share pro rata in its proceeds. Henderson v Herrod, 10 S. & M. 631; Bank of England v. Tarleton, 23 Miss. 173; Pugh v. Holt, 27 Miss. 461; Goax et al. v. McCanless, 60 Miss. 248.

The undisputed proof shows that the appellants were bona-fide purchasers for value, before maturity, in due course of trade of the notes sued on in their bill in the court below and said deed of trust securing said notes and the notes mentioned therein fail to recite or give any notice whatever of any priority or preference in the payment of said notes. But said deed of trust specifically provides that out of the proceeds of the sale of the property, the full amount of the debt mentioned therein shall be paid by the trustee.

The appellee aided and assisted in putting these notes notes held by them, and they are not to be prejudiced by any secret equity of priority that the appellee may claim to have reserved.

The appellee aided and assisted in putting these notes on the market in the manner and form they are now in. He certainly has no priority over an innocent purchaser of notes that appellee himself helped to put upon the market. Jefferson College v. Prentiss, 39 Miss. 46.

There is nothing to show there is sufficient property to pay all the debt secured, in fact there is not. The appellee has already disposed of much of the property covered by the deed of trust for a small amount, and the record indicates there is not now enough property left to pay the debt secured by the trust deed. If there was even a probability of any balance after paying the debt against the land, that balance under the pleading and facts, should be paid J. L. Sanders the last purchaser, but he is not here complaining.

Second, the court erred in holding that the indorsement of the notes held and owned by E. E. Green and the Merchants and Mechanics Bank was without consideration and not binding. If J. R. Morris had not indorsed the notes, the stock of goods received by J. R. Morris and referred to in the signed agreement was consideration for the notes, but when J. R. Morris, appellee, indorsed the notes, he then warranted the validity of the notes, and also that there was no legal defense growing out of his own connection with the notes. Also, in said agreement said Morris agrees to convey all three of said notes held by appellant to T. J. Morris. 7 Cyc., page 831 and 832; Hawkins v. Shields, 57 So. 4.

Third, there was error by the court in not deciding the issue as to appellee indorsing the notes held and owned by appellants Green and the Merchants and Mechanics Bank. This issue was squarely before the court; was a most material issue to appellant's rights and about the only issue hotly contested before the court. If the appellee, Morris, indorsed the notes, these two appellants not only had the right to a pro rata share of the proceeds of the sale of the property covered by the deed of trust, but were entitled to a personal decree against the appellee, Morris. We think the evidence both oral and by depositions and that shown by comparison of the handwriting of the appellee, Morris, clearly show that the appellee indorsed the notes sued on. An effort will be made to show this court part of the handwriting of the appellee used as comparative evidence in the court below. As many of the comparisons were made from the public records, that part of the evidence cannot be conveniently produced in this court on appeal. If appellee indorsed the notes sued on, then the principles governing the rights of the appellants holding said notes are elementary, and authorities need not be cited. Surely, the appellee must have indorsed the notes sued on. The signature is too much like other signatures he made not to be his. But little weight can be given appellees denial of his signature on the notes, when he could not even be certain about his signature of his sworn answer in this case, and would not be until he was certain it was his answer. He agreed in writing to convey said notes and did so.

Fourth, it was error on the part of the court not to find and decree the amounts due the appellants as well as that of the appellee. It is true the clerk and commissioner might find the correct amount due appellants and might properly pro rate the balance if any; but, this is not a judicial finding of the amounts due under the mortgage. On judgment or decrees foreclosing mortgages, see 27 Cyc., pages 1641 and 1642.

We respectfully submit that the decree of the court below should be reversed and proper decree entered here fixing the rights of the appellants.

L. R. Kenneday, for appellee.

The indorsement of the notes sued on was wholly without consideration. Appellee did not get one cent benefit from the transfer; in fact if the scheme disclosed by appellants bill is carried out, it means that appellee not only gets nothing out of the sale of his place, but must actually pay his brother, forty per cent. of the entire face value of the notes, amounting to a virtual loss of the place to him and this is but a fair sample of the equity of appellant's bill. The consideration failed absolutely. See 7 Cyc., pp 690 to 700, inclusive, and the notes, etc. The learned chancellor, heard the evidence, passed on it, and this court will not disturb his finding. By failing to include appellant T. J. Morris, as a party defendant who is also an indorser of the notes, and who is (according to the original bill) perfectly solvent, appellants are in no position to complain of the decree in this case, the lower court simply meant to refer appellants to their co-complainant, T. J. Morris, on his indorsement of these notes, he being perfectly solvent according to the allegations of their own answer to cross-bill, which the answer does not deny. No one can deny under the proof in this case the fraud of appellant, T. J. Morris, against appellee J. R. Morris. This fraud had the effect to destroy any right which T. J. Morris may have had against his brother, J. R. Morris, and if T. J. Morris could not recover on his brother's indorsement, certainly no subsequent holder could, for they have no more title, or greater rights than he had and are limited to his rights in this proceeding against appellee, J. R. Morris. No sane man would think of giving a commission of forty per cent. to get his land sold on a credit, with no security whatever, and indorse the commission notes. No honest man would take a forty per cent. commission from his brother (as in this case) and require him to indorse the commission notes and thus bind himself for the absolute payment of the commission regardless of whether the sale was carried out or not, etc. Even if old man J. R. Morris did make such a contract, a court of equity would not allow it to stand, under the proof in this case, for appellee says that he left it wholly and entirely with his brother, T. J. Morris; never saw the commission notes until they were sent to New Albany for collection; was not present when papers were executed; knew nothing whatever, except what his brother told him. Learned counsel in their brief fail to note the difference between indorsements made in due course of trade and indorsements fraudulently obtained. Hence the citation of 7 Cyc., pp. 831-2 what the learned writer has to say there, is with reference to defenses, other than fraud. This authority says: "The transferer of commercial paper, even where indorsed, "without recourse" warrants the validity of the instrument. Thus he (T. J. Morris) is held impliedly to warrant that the paper is supported by a valid consideration; that it was properly stamped that prior parties had capacity to contract; that the instrument is still subsisting as a valid obligation; and in general, that there is no legal defense...