Guthrie v. Merchants Nat. Bank of Mobile

• Decision Date: 22 November 1965
• Docket Number: No. 43675,43675
• Citation: 254 Miss. 532,180 So.2d 309
• Parties: Raiph K. GUTHRIE and Mrs. Ralph K. Guthrie v. The MERCHANTS NATIONAL BANK OF MOBILE.
• Court: Mississippi Supreme Court

Page 309

180 So.2d 309

254 Miss. 532

Raiph K. GUTHRIE and Mrs. Ralph K. Guthrie v. The MERCHANTS NATIONAL BANK OF MOBILE.

No. 43675.

Supreme Court of Mississippi.

Nov. 22, 1965.

Lee B. Agnew, Jackson, for appellants.

Young & Young, Pat H. Scanlon, Jackson, for appellee.

BRADY, Justice:

Two causes of action, Cause No. 39,328 against appellants, Ralph K. Guthrie and wife, Mrs. Ralph K. Guthrie, and Cause No. 39,322 against appellant Ralph K. Guthrie, were instituted by The Merchants National Bank of Mobile, appellee, for deficiencies on promissory notes executed by appellants. The two cases were consolidated for trial purpose and the jury rendered a verdict in the County Court of the First Judicial District of Hinds County, Mississippi, for appellee. The First Circuit Court District of Hinds County affirmed the judgments of the county court, from which appellants prosecute this appeal.

Stated tersely, the basic facts are as follows:

During the month of July 1958, appellants, Mr. and Mrs. Ralph Guthrie, moved to Mobile, Alabama. They proceeded to borrow from The Merchants National Bank of Mobile, for brevity hereinafter designated as MNB, the sum of $400 to help defray their moving expenses. Several payments were made on this note.

On December 22, 1958, the appellants negotiated another loan from MNB in the sum of $468, executing therefor their promissory note payable in twelve monthly installments of $39 each, said payments beginning on January 16, 1959. From this December 1958 loan, $299 was used to pay the balance of the July 1958 note, $147.12 went to the appellants, and the bank received $24.88 for interest.

Mr. and Mrs. Guthrie made payments on the $468 note of December 22, 1958 until August 7, 1959, at which time they defaulted in the payments, leaving a delinquent balance of $273 due and owing. Cause No. 39,328 was instituted in the County Court of the First Judicial District of Hinds County on May 21, 1964.

The record discloses that on May 15, 1959, Ralph K. Guthrie, in order to purchase certain photographic equipment from Calagaz Photo Supply, Ins., borrowed $864 from MNB, executing therefor a promissory note payable in twelve monthly installments of $72 each, beginning June 10, 1959. The appellant, Ralph K. Guthrie, secured his note by executing a chattel mortgage to appellee on the same date covering the photographic equipment purchased by Mr. Guthrie with the money borrowed. The bank, at the time, deducted its interest and recording fees from the loan and, after doing so, issued a check to Mr. Guthrie and Calagaz Photo Supply, Inc., for $800.50. No part of the May 15, 1959 loan was applied in payment of the December 22, 1958 note executed by Mr. and Mrs. Ralph Guthrie. Since the December 22, 1958 note had not been paid, the appellee bank retained possession of the note and did not return it to the appellants.

The record discloses that appellant Ralph K. Guthrie made one payment only on the May 15, 1959 note. This was a payment in the sum of $72, which was made on August 11, 1959, leaving a balance on the note of $792.

The record discloses that appellant Ralph K. Guthrie took a large part of the equipment covered by the chattel mortgage and pawned it with three pawn shops in Mobile, receiving therefore only $285.50. Some of the equipment was pawned on August 7, 1959, for which appellant Guthrie received $187.50. Being contacted repeatedly by the bank, Mr. Guthrie delivered voluntarily to the bank the four pawn tickets totaling $285.50 which he had received from pawning the mortgaged property.

On March 7, 1960, not having recorded the chattel mortgage, MNB issued its checks to the three pawn shops, totaling the sum of $285.50, and received the property which appellant Guthrie had pawned. Appellant Guthrie voluntarily released the remainder of the property which was covered by the chattel mortgage he had executed.

Appellant Guthrie contended that the bank released him from all remaining indebtedness when he voluntarily relinquished to appellee the balance of the property which he had in his possession. He admitted on cross-examination that he was unable to fully pay the notes; that he made only one payment on the May 15, 1959 note.

In December 1959 appellant Guthrie filed a Wage Earner Plan under Chapter 13 of the Bankruptcy Act, 11 United States Code sections 1001-1086 (1938), as amended, and MNB perforce postponed at that time any legal action under its chattel mortgage pending the bankruptcy proceeding. When appellant failed to comply with the requirements under the Wage Earner Plan and his petition was dismissed in September 1960 for noncompliance therewith, appellee was unable to located either of the appellants, as they had moved from Mobile to some unknown destination.

Ultimately in the spring of 1964, appellee received information which disclosed that appellants were residing in Jackson, Mississippi, and immediately employed counsel to institute suit.

On May 21, 1964, Cause No. 39,328 was filed against appellant for the sum of $273 on the December 22, 1958 note, plus interest and reasonable attorneys' fees. At the trial appellee proved that interest from the maturity date of the note, January 1960, until August 16, 1964, the date of trial, amounted to $100, and that reasonable attorneys' fees for collection of the promissory note amounted to $99,25. Appellee sought recovery in the amount of $466.35, for which sum the jury returned its verdict.

On May 20, 1964, appellee instituted Cause No. 39,322 against appellant Ralph K. Guthrie in the County Court of the First Judicial District of Hinds County for $369.06, representing the balance due on the promissory note, plus interest from its maturity date, May 10, 1960, to August 10, 1964, in the amount of $125.48, and reasonable attorneys' fees in the sum of $117.24. Appellee demanded judgment in the sum of $612.78, and the jury returned a verdict for exactly this amount.

The appellants appealed both judgments to the Circuit Court of Hinds County, where they were affirmed, and from these judgments appellants prosecute this appeal.

The dominant issues in the trials below and in the record here are questions of fact, and these issues will be dealt with in this opinion as they appear in the assignment of errors urged by appellants. The major error urged by appellants is that the trial court erred in overruling appellants' motion to disallow any testimony by appellee in denial or avoidance of the special matter set forth in the answer of appellee, for the reason that appellee did not file a written replication to appellants' answer which set up affirmative defenses, which replication the appellee was required by law to file.

This error is based upon Mississippi Code Annotated section 1475.5(4) (1956) which, in substance, provides that when affirmative matters have been set up in the answer of the defendant, the plaintiff shall 'file a written statement of any special matter which he intends to give in evidence in denial or avoidance of such special matters so given in the answer by the defendant, and to which it would have been necessary heretofore to reply specially had the defendant's defense been specially pleaded * * *.'

This statute has been considered by this Court and has been reported in the case of Burns v. Clarksdale Production Credit Ass'n, 189 Miss. 34, 195 So. 588 (1940). In that case Burns brought a suit to recover a sum of money allegedly due him as a farmer under the cotton price adjustment plan. Burns' subsidy check from the United States Government had been sent to the appellee credit association to apply on loans made by it to Burns. In its answer the credit association alleged two affirmative defenses: (1) Burns had violated the terms of the deed of trust with the credit association; (2) Burns had abandoned the crop, and the credit union, as a successor in interest, became entitled to the subsidy check. Plaintiff Burns filed no written answer to these affirmative defenses. In deciding that a replication was unnecessary, we stated:

Appellant, as plaintiff in the court below, filed no replication to these notices, nor was he required to do so under section 536 of the Code of 1930, insofar as his answer thereto may have consisted of a mere denial of the facts alleged therein. (189 Miss. at 41, 195 So. at 590.)

The language of Mississippi Code Annotated section 1475.5(4) (1956) concerning replications is substantially the same as that contained in Mississippi Code section 536 (1930).

We again construed the statutes in Motors Ins. Corp. v. Lenoir, 218 Miss. 348, 67 So.2d 381 (1953). In that case the insurance company issued a policy of insurance to Lenoir to protect him against loss of a certain truck by fire. Later the truck burned, and Lenoir brought a suit against the insurance company to collect on the policy of insurance. In its answer the insurance company set up, by way of defense and as affirmative matter and avoidance, that Lenoir had procured the blasting with dynamite and burning of the truck for the fraudulent purpose of collecting the insurance proceeds. The plaintiff filed no written statement of any special matter which he intended to give in evidence in denial or avoidance of the affirmative matter set forth in the defendant's answer. In considering whether or not a written replication should have been filed, this Court stated:

The appellant's contention that the court erred in refusing to grant its request for a peremptory instruction is based principally upon the failure of the appellee to file any written replication to the amended answer of appellant which set up by way of defense and as affirmative matter in avoidance that the appellee procured the burning and destruction of the truck for the fraudulent purpose of collecting the insurance thereon. It is the contention of appellant that since no written replication was filed, no proof by the appellee in denial and avoidance of the...