H. & C. Newman, Inc. v. Delta Grocery & Cotton Co.

• Decision Date: 06 April 1925
• Docket Number: 24832
• Citation: 138 Miss. 683,103 So. 373
• Parties: H. & C. NEWMAN, INC., et al. v. DELTA GROCERY & COTTON CO. [*]
• Court: Mississippi Supreme Court

103 So. 373

138 Miss. 683

H. & C. NEWMAN, INC., et al. v. DELTA GROCERY & COTTON CO. ^[*]

No. 24832

Supreme Court of Mississippi

April 6, 1925

Division B

LANDLORD AND TENANT. Landlord waiving lien in favor of person supplying tenant, who took deed of trust on crops liable to extent of waiver on collecting note out of crops; before landlord can be held on waiver of lien on crops raised by tenant by person holding deed of trust from tenant, other securities embraced therein must be resorted to.

Where a landlord having a landlord's lien waives the lien in favor of the person who supplied the tenant to a given amount, and a person acting on such waiver supplies the amount and takes a deed of trust on the crops and other property of the tenant to secure his debt, and where a note by a subtenant is given to the chief tenant and transferred to the landlord and collected out of the crops grown on the leased premises, the landlord will be liable to the extent of the waiver, but before he can be resorted to by the person holding the deed of trust, the other securities embraced in the deed of trust must first be resorted to and exhausted.

HON. C L. LOMAX, Chancellor.

APPEAL from chancery court of Coahoma county, HON. C. L. LOMAX Chancellor.

Suit by the Delta Grocery & Cotton Company against H. & C. Newman and others. After a demurrer to bill was overruled, and a judgment for complainant, defendants appeal. Judgment reversed, demurrer sustained, and cause remanded.

Judgment reversed, and demurrer sustained, and cause remanded. Suggestion of error overruled.

Maynard, FitzGerald & Venable, for appellant.

ANALYSIS OF THE FACTS. As we analyze the facts, the possibly material ones are as follows: 1. The landlord waives his lien according to the usual language of waivers. 2. A merchant advances supplies to the tenant. 2. He undertakes to secure his advance by a deed of trust on the crop. 4. A tenant sub-leases part of the land. 5. The sub-tenant gives his note to the tenant for the rent he is to pay. 6. The tenant gives this note to the landlord, presumptively to be applied on his indebtedness for rent. 7. The note is paid from money derived from the sale by the sub-tenant of cotton raised by him on land which he has subleased, he paying the note in the hands of the landlord. 8. It does not appear that the subtenant owed the tenant anything on his rent. 9. It does not appear that the tenant, Collier, had any interest in the cotton sold by the sub-tenant, Mix. 10. It does not appear that the defendant had any knowledge that the sub-tenant was paying his note from cotton raised on the land.

The appellee claims in its bill that the five hundred dollars paid to appellants in discharge of the rent note which Mix, the sub-tenant, had given to the tenant belonged to it.

I.

DID A QUASI-CONTRACTUAL DUTY EXIST? As we understand it, a quasi-contractual obligation is one imposed by law irrespective of the consent of the parties to be bound, to pay a sum of money to others as belonging to them in justice and good conscience. This being true, the principles which control are equitable in their nature and the inquiry always is as to whether or not the defendant under the facts of the particular case "ought" in justice and right to pay a certain sum of money to another. It would appear that the obligation to restore benefits received from the plaintiff, which would be inequitable and unjust to retain, fall within four classes. According to Mr. Woodward in his work on "Quasi-Contracts," page 10, they may be classified: 1st, as "benefits conferred in mis-reliance on the existence of a right or duty;" 2d, as benefits conferred in dutiful intervention in another's affairs; 3d, benefits conferred under constraint; 4th, benefits sought to be recovered in an action for their restitution as an alternative remedy for repudiation or breach of contract or for tort.

It is apparent that the first three classes have nothing to do with the case at bar; that if the action as brought is to be here sustained, it must be by the principles of the fourth class. This proceeds on the ground that it is used as an alternative remedy for damages for the breach of a duty owed by contract; namely, that appellants promised in some way to pay this money to defendants or else on the theory that as an alternative remedy for some tort committed by defendants. The tenant, Collier, by giving a deed of trust, could not bind the crop of the sub-tenant, Mix. Gains v. Keeton, 68 Miss. 473.

Again, while it is admitted that one who has acquired converted goods either with notice of the conversion or without paying value or even although he be an innocent purchaser for value, if the converter has not been clothed with indicia of ownership, is himself guilty of conversion and to the extent of the benefit derived may be called upon for restitution. Bettis v. McNider, 137 Ala. 588, 34 So. 813, 97 A. S. R., 59; McArthur v. Murphy, 74 Minn. 53, 76 N.W. 955.

Yet in the case at bar, this principle does not apply for the reason that there was no conversion of cotton by Mix and hence the defendants did not receive the proceeds of converted goods. Again, as an exception to the above rule based upon policy, one who receives money innocently and for value, is always protected for as it has been stated: "It would be mischievous to require persons, who receive money in the way of business or in the payment of debts, to look into the authority of him from whom they receive it." And the bill nowhere charges that appellants had any knowledge that the five hundred dollars were the proceeds of cotton upon which appellees had any claims. Newhall v. Wyatt, 139 N.Y. 452, 36 Am. St. Rep. 712; State Bank v. U.S. 114 U.S. 401.

We think it is clear that there was no conversion on the part of Mix when he sold the cotton, no conversion on his part of the money when he paid the five hundred dollars to appellants, and no conversion on the part of appellants in receiving the money.

The cases on conversion by sale where the purchaser was held liable include: 115 Miss. 149, 172; 112 Miss. 77; 106 Miss. 489; 61 Miss. 150. These are readily distinguishable, from the case at bar. In all of these cases, the plaintiff had a lien on or some sort of interest in the property alleged to have been converted. And in each case the purchaser assisted in the conversion either with knowledge or if an innocent purchaser for value was such without the lienholder having done anything to clothe the tenant with sufficient indicia of ownership to work an estoppel. In the case at bar, the plaintiff had no interest in the Mix cotton, no property right therein, and the existence of some property right of some sort or character or the existence of some lien is essential to a conversion.

II.

It may be urged, however, that there is liability owing to some sort of agreements between the parties. Liability, if it exists at all, must exist either because the parties have agreed that such will be the case, which constitutes contract, or because the law imposes it irrespective of agreement, which would constitute a quasi-contractual liability.

The only contract entered into between appellee and appellants was the waiver agreement by the terms of which appellants agreed to waive the enforcement of their landlord's lien against the crop of Collier to the extent of twelve hundred dollars in favor of any one furnishing to Collier money and supplies in that amount.

It will be noted that they did not contract to guarantee the debt for the supplies, neither did they agree that they would see that the debt for the supplies would be paid, nor did they agree in any wise to guarantee or become surety or to do any other thing of an affirmative character. It is not charged that they have not kept this agreement. It is not charged that they have sought to enforce a landlord's lien on the crop of Collier.

Considering the language of the waiver, there is nothing therein, we submit, to impose any liability upon appellants other than to enforce a landlord's lien. This is all they contracted to do.

Brewer, Brewer & McGehee, for appellee.

The appellee predicates its cause of action on its right to have its claim for money advanced and supplies furnished the tenant first satisfied out of the proceeds of the crops grown on the leased premises, before the appellant was entitled to apply any of such proceeds to the payment of the rent due it as landlord, and contends that the appellant, as landlord, after having waived the rent in favor of the claim of the appellee of one thousand and two hundreds for money advanced and supplies furnished the tenant by the appellee, had no right to retain the five hundred dollars of proceeds of said crops to the detriment of the appellee. That the waiver was executed by the appellant "in order to enable the tenant to obtain such advances of money and supplies," and this is expressly stated therein as being the purpose of the giving of the said waiver.

The money was advanced and supplies were furnished by the appellee on the faith of the waiver by the landlord of its rent in favor of any person, firm or corporation advancing money and furnishing supplies to the tenant to said amount of one thousand two hundred dollars with which to make a crop on the leased premises.

The appellee does not contend that the sub-tenant was guilty of a conversion in selling the crop if when he sold the same he discharged the lien thereon for the rent, and this suit is not predicated on that theory. So far as the appellee is advised, the said sub-tenant may not have known that the appellant, as landlord, had waived all liens, for rent or otherwise, to which it may have been entitled against the crops in favor of the supply...