Hughes v. Kaw Inv. Co

• Decision Date: 02 July 1923
• Docket Number: 22821
• Citation: 133 Miss. 48,97 So. 465
• Court: Mississippi Supreme Court
• Parties: HUGHES et al. v. KAW INV. CO

97 So. 465

133 Miss. 48

HUGHES et al. v. KAW INV. CO

No. 22821

Supreme Court of Mississippi

July 2, 1923

Suggestion of Error Overruled Sept. 24, 1923.

(In Banc) January 1, 1920

1 MORTGAGES. Landowner paying taxes due before sale of nonpayment held not in default under provision in deed of trust accelerating due day for default in payment of taxes.

Where lands are advertised for sale by the sheriff because of nonpayment of taxes, and the taxes are duly paid before the day of sale by the landowner, he is not in default as mortgagor, and his lands may not be sold under the following provision of the deed of trust: "Or should default be made in the payment of the taxes legally assessed against any of the hereinafter described property as due, then in any of said events the entire sum hereby secured with accrued interest then remaining unpaid shall immediately become due and payable at the option and election of the mortgagee herein, his heirs or assigns."

2. BILLS AND NOTES. Note secured by deed of trust payable to order indorsed by payee with recourse held negotiable.

Where a note secured by deed of trust on lands is payable to order and indorsed by the payee as follows: "Pay to the order of John Smith without recourse"---this note is a negotiable instrument.

3 ASSIGNMENTS. Law providing for notation on records of assignments of indebtedness held not to apply to negotiable instruments.

Section 2296, Hemingway's Code (section 2795, Code of 1905) which provides for the notation on the records of assignments of any indebtedness, does not apply to a negotiable instrument.

HON. V. J. STRICKLER, Chancellor.

APPEAL from chancery court of Hinds county, HON. V. J. STRICKLER, Chancellor.

Suit by E. J. Hughes and others against the Kaw Investment Company. From a decree for defendant, plaintiffs appeal. Affirmed.

See, also, 129 Miss. 434, 91 So. 702.

Decree affirmed.

W. E. Morse, for appellant.

This appeal is prosecuted on direct appeal and cross appeal from a decision of the chancery court of the first district of Hinds county in which the appellants were denied a ten per cent penalty imposed by statute and in which the appellee and cross-appellants were restrained and enjoined from selling Elton Plantation, a farm of five thousand acres in Hinds county, for nonpayment of the taxes for the year 1920, before the entire indebtedness under a conveyance was due. There was no interest or principal payment due at the time this foreclosure proceeding was instituted. The only clause of the deed of trust that they attempted to proceed upon, was that the taxes had not been paid by December 15, 1920. The chancellor held that the company could not foreclose on account of taxes not being paid on or before December 15th that "as due" did not mean "when due" or "as due and payable." The court held that the undisputed evidence offered did not constitute a fraud; that we were not entitled to the ten per cent penalty of the principal and interest; that we were liable for the payment of interest due May 20, 1921, which fell due two months after the foreclosure proceedings had been instituted. If we had been allowed to collect the ten per cent. then there would have been no interest due.

The court will bear in mind first that the deed of trust makes a difference in the accelerating clause between the principal and interest on the one hand and the taxes on the other. With reference to the principal and interest it provides that should default be made in the payment of the principal and interest as due and payable, with the taxes, it provides that should default be made in the payment of taxes lawfully assessed against the hereinafter-described property "as due." In the first place as due means "as owing" "as unpaid" etc., the taxes are due up until the time they are paid or satisfied or up until the first Monday of April when they are satisfied by a sale of the land, to the state, or to an individual so that the taxes are no longer due but have been fully paid and satisfied. In other words, taxes paid before the property was actually sold inures to the benefit of the property owner, showing that this time is given to the property owner within which to pay his taxes.

No one could claim their property and no right by reason of the taxes not having been paid could intervene between the complainants herein until the property was actually sold which would have been on the first Monday in April, 1921. Even then these people would have two additional years within which to protect their interest. It is true that section 2197, Code of 1906, imposes a ten per cent. penalty, but that is payable by the delinquent taxpayer alone and the ten per cent. is not put on as a penalty upon the property owner but as additional compensation to the sheriff and tax collector. See Anderson v. Hawkes, 70 Miss. 639, 12 So. 968. For cases construing "as" to mean "when" see: Finance Company v. Anderson & Co., 106 Iowa 429; Schroder v. St. Louis Transit Company, 111 Mo. 67, 85 S.W. 968; Colt v. Hubbard, 33 Conn. 281; Fester v. Johnson, 38 N. J. 46.

Our construction is that "as due" means "as owing." It certainly was meant to apply taxes that were to accrue in the future, and the very terms of the deed of trust itself shows that they made different arrangements with reference to the principal and interest on the one hand--as due and payable--and the taxes on the other--as due--. We think that our interpretation of the word "due" is the proper one in this case. See "due," 19 C. J. 818. See also: Swanson v. Spencer, 164 S.W. 285.

Here was a mortgage running over a period of years with interest payable annually and the taxes to be paid on the property during the ensuing years. The parties knew that the taxes would have to be paid and they provided for their mutual protection. The interest must be paid as due and payable that is May 20th of each and every year; the taxes must be paid as due, that is sometimes before the taxes were paid or satisfied--by some one paying them or by a sale of the property for the satisfaction of the debt. You can search the authorities and you will not find a single case to immediately mature the indebtedness except where the parties fix it so that is the interpretation to be drawn from the instrument. The leading case on this question is United States v. Bank, 9 Peter (U.S.) 298 L ed. 308. See also Hiller v. Neeves, 83 Wisc. 637.

But the cross-appellants claimed that we defaulted in the payment of taxes and that this is the real reason that they have a right to foreclose this property. But see Osborn v. Rogers, 1 N.Y.S. 623, 49 Hem. 245; Union Trust Company v. Grant, 111 N.W. 1039; Germainia Life Insurance Company v. Potter, 124 A.D. 814, 109 N.Y. 435; Fleming v. Franing, 22 L. R. A. (N. S.) 560.

We have the Kaw Company attempting to make an illegal sale of Elton Plantation, for the non-payment of taxes as due, which the court construed to be unlawful, but aside from these facts it would be inequitable and unjust to allow these people to foreclose for nonpayment of taxes, especially where the complainants paid the taxes and offered to pay the cost of publication which was the only rightful cost that had accrued at that time. The Kaw Investment Company fraudulently attempted to get possession of Elton Plantation; it attempted to prevent the legitimate powers of the deed of trust to its selfish and unholy aims. The law on this sort of proceeding is stated in Securiy Loan Company v. Lake, 69 Ala. 465.

We next come to the proposition that the Kaw Investment Company is indebted to the complainants in a sum of ten per cent. of the record assignment made to it by S. E. Cobb. See section 2296 of Hemingway's Code. See also LaFayette County v. Hall, 70 Miss. 678; State v. Marshall, 100 Miss. 26, 56 So. 793. See Farmer v. Hicks, 45 Miss. 294; Holmes v. McGuty, 44 Miss. 94; Robinson v. Moors, 76 Miss. 89, 23 So. 631; Powell v. McKee, 81 Miss. 229.

Our court has enjoined deeds of trusts from sales where it was absolutely void notably in the case of McWilliams v. Philips, 51 Miss. 196. The Kaw Company was without authority to declare the deed of trust to be due and payable because there had been no breach of the conditions. They have no authority save that given to them in the deed of trust. There was not one cent of principal or interest due, the company was not apprehensive of their loan as they had just been notified that this loan was good for all time to come. They were told by their agent that Dr. Gay, a former owner of the land had stated that Harberts and Hughes would pay the taxes.

Teat & Potter, for appellees.

Under the terms of the deed of trust cross-appellees were in default and the cross-appellants were entitled to declare the entire debt due. Section 4313, Code 1906, section 6948, Hemingway's Code. Section 2197, Code 1906, section 1882, Hemingway's Code, as amended by chapter 293, Laws 1920, provides, that the sheriff shall collect ten per cent as damages on all taxes collected after the 2nd day of February. It is admitted by the bill that taxes were legally assessed against this property and that the same had not been paid on the day defendant, Kaw Investment Company, the legal holder of the notes, exercised its option and declared the entire indebtedness due because of a default in the payment of the taxes as due. On this question the case of Parker v. Oliver from the supreme court of Alabama, 18 So. 40, is directly in point. See also Stevens v. Cohen (Mass.), 49 N.E. 926. Webster defines default to mean, "a failure, an omission of that which ought to be done neglect to do what duty or law requires."

In the case at bar the law required that the taxes be paid on or before the 15th day of December, the statute readi...