Hawkins v. Shields

• Decision Date: 15 January 1912
• Docket Number: 15,224
• Citation: 100 Miss. 739,57 So. 4
• Court: Mississippi Supreme Court
• Parties: E. B. HAWKINS v. J. T. SHIELDS

57 So. 4

100 Miss. 739

E. B. HAWKINS v. J. T. SHIELDS

No. 15,224

Supreme Court of Mississippi

January 15, 1912

APPEAL from the circuit court of Lauderdale county, Hon. J. L BUCKLEY, Judge.

Suit by E. B. Hawkins against J. T. Shields. From a judgment for defendant, plaintiff appeals.

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

Cause reversed.

Wyatt &amp Easterling, for appellant.

Under section 4001, Code of 1906 of Mississippi, the first defense--negligence or default of appellant, under proper conditions--would have been a good defense, but in case at bar, as appears from testimony of appellee himself, the notes which form the basis of this suit had been past due for more than two and one-half years before he endorsed or transferred them to appellant, and had never made an active effort to materialize on them, and appellant had them only a short time prior to the purchase of the first deed of trust testified about. Our court, when speaking on the liability of a surety very forcibly said: "We have examined with care every case cited by appellant's counsel in support of the principle contended for, and we presume that his research has collected all the cases upon it deemed favorable by him. There is not one of them, strictly in point; that is to say there is not one of them where, in a contest between the creditor and the surety, it was held, in the absence of some special stipulation or circumstance requiring the creditor to proceed promptly on the collateral, that mere inaction as to the collateral would release the surety. Most of them were cases between the creditor and principal debtor, and in nearly all of them there had been some positive act of commission by the person whereby the value of the collateral had been impaired, or by his acts he had made it his own property. Where these features do not distinguish the cases, they are in states which do not adhere to the inflexible rules maintaining the liability of the surety and are to be found in our own and other states. The principles which pervade our decisions and which we think are certainly the soundest in view of our statutes, authorizing the surety, by notice, to compel the bringing of suit and by affidavit after judgment, to require the exhaustion of the principal debtor, may thus be stated:

The surety is in all respects equally bound with the principal for the payment of the debt, so far as the debtor is concerned. He can, therefore, never claim to be released without showing that he has been in some manner damaged by the act of the other; no mere laches on the part of the creditors short of a bar of the statutes of limitations.

The next defense undertaken by appellee is that the indorsement appearing thereon were not placed there at the time of their delivery to appellant and that appellant took them without recourse.

Section 4001, Code of 1906, under heading, "Promissory notes, other writings and the vendor's lien assignable; defenses," provides: "All promissory notes and other writings for the payment of money or other thing may be assigned by indorsement, whether the same be payable to order or assigns or not, and the assignee or indorsee may maintain such action thereon, in his own name as the assignor or indorsee could have maintained; and in all actions on such assigned promissory notes, bill of exchange, or other writing for the payment of money or other thing, the defendant shall be allowed the benefit of all want of lawful consideration, failure of consideration, payments, discounts, and set-off made, had or possessed against the same, previous to notice of assignment, in the same manner as though the suit had been brought by the payee; and the assignee or indorsee of any such instrument may maintain an action against the person who may have indorsed the same as in case of inland bills of exchange; but where any debt shall be lost by the negligence or default of an assignee, or indorsee, the assignor shall not be liable on the assignment or indorsement. The assignee of a claim for the purchase money of land may enforce the vendor's lien as the vendor could."

Appellee, however contends that he did not indorse the notes to appellant, but he admits that the signatures appearing thereon are his and that appellant did not know that they had been previously put on there at a prior time for a different purpose, but admits, further, that he did transfer or record these very notes and deed of trust as is borne out by the following testimony of appellee. If that indorsement was placed on them prior to transaction with appellant and left on there and appellee did not advise appellant of that fact, even then appellee is liable unless fraud is pleaded. "In the case of the blank indorsement, for the purpose of deposit of a check which is subsequently repudiated and returned, if the blank indorsement is negligently left upon the check and it is transferred to a bona fide holder, the latter may recover from the indorser who under such circumstances is estopped to set up fraud. Turnbull v. Bowyer, 40 N.Y. 456, affirming 2 Rob. (N. Y.) 411; Alleman v. Wheeler, 101 Ind. 141; Burgess v. Northern Bank, 4 Bush (Ky.) 600; Cabot Bank v. Norton (Mass.), 4 Gray 156; Mosher v. Carpenter (N. Y.), 13 Hun 603; Turnbull v. Bowyer, 2 Rob. 406, affirmed in 40 N.Y. 456, 100 Am. Dec. 523; Herrick v. Whitney, 15 Johns. Eng. 240; Gurney v. Wornest, 4 El. & Bl. 133; Jones v. Ryder, 5 Taunt. 488, and numerous other and different states.

McBeath & Miller, for appellee.

The sole question involved is whether or not appellant has a right to recover against appellee as an indorser under the facts of this case.

The undisputed testimony is, that some two years before the transaction between appellant and appellee, the appellee endorsed the Johnson notes in blank for the purpose of using them as collateral security for a loan obtained from the Peoples Savings Bank. When the loan was paid the endorsed notes were returned to appellee, who failed to erase said endorsement.

Appellee testified that he never endorsed the notes for the purpose of transferring them to appellant, and the only requirement made by Hawkins was that he (Shields), was to make the transfer at the chancery clerks office on the deed of trust. On this the appellee rested his case and contented himself by submitting the cause to the jury on this one instruction.

"The court instructs the jury for the defendant Shields that, if they believe from the evidence that Shields did not endorse said notes for the purpose of transferring same to E. B. Hawkins, and that the only requirement of Hawkins from Shields was, that Shields was to make the transfer on the record of the deed of trust, then plaintiff cannot hold Shields on said endorsement, and the jury will find for the defendant Shields."

On this instruction the jury found for the defendant. We submit that there was no error in granting this instruction. If Mr. Hawkins who held a third deed of trust, purchased these notes which were secured by a second deed of trust for the reason as is stated by appellee in his cross-examination, page twenty, that is, "For the purpose of getting nearer to the first mortgage," then there was no intention on the part of either party to this transaction, to make appellee liable for any default of Johnson and his wife.

The truth of the matter is that the suing of appellee by appellant is simply an afterthought of appellant.

Appellant had a third deed of trust on the property and wanted to get the second out of his way as a matter of protection. Shields never endorsed these notes to Hawkins and we submit that the instruction of the trial judge given appellee, was not error and that this case should be affirmed.

OPINION

MCLEAN, J.

W. B Johnson and wife were indebted to one Bluett Lee, and in order to secure payment of this indebtedness, on December 24, 1904, executed a certain deed in trust upon certain real estate. Subsequently to this Johnson and wife become indebted to J. T. Shields, and in order to secure the payment of this indebtedness also executed a certain deed in trust upon the same property, and at a still later date, being indebted to E. B. Hawkins, executed a third deed in trust conveying the same property. The indebtedness to Shields was evidenced by eight promissory notes, all of which were dated January 3, 1906. These notes were made payable to the order of J. T. Shields and were due at different dates; the first one being due on April 15, 1906, and the last one on December 15th of the same year. In January, 1907, Shields borrowed some money from the Citizens' Bank, and in order to secure the payment of this loan he indorsed,...