Liberty Mercantile Co. v. Allen

• Decision Date: 04 February 1924
• Docket Number: 23867
• Citation: Liberty Mercantile Co. v. Allen, 134 Miss. 354, 98 So. 774 (Miss. 1924)
• Court: Mississippi Supreme Court
• Parties: LIBERTY MERCANTILE CO. v. ALLEN et al

98 So. 774

134 Miss. 354

LIBERTY MERCANTILE CO. v. ALLEN et al

No. 23867

Supreme Court of Mississippi

February 4, 1924

Division A

APPEAL from chancery court of Amite county, HON. R. W. CUTRER Chancellor.

Suit by the Liberty Mercantile Company against Lee Allen and Jerome Ford. From the decree rendered, plaintiff appeals, and defendant Ford cross-appeals. Affirmed.

Affirmed on direct and cross appeals.

George Butler and C. T. Gordon, for appellant.

It clearly appears from the proof in this case that the appellant relied upon its 1918 mortgage to secure the indebtedness advanced during 1919, and that this arrangement was agreed to by the mortgagor, Lee Allen, and having so relied upon this deed of trust, and under its terms, they come clearly within the rule as laid down in Mechanics Bank v. First National Bank, 117 Miss. 437; Witczinski v. Everman et al., 51 Miss. 841.

It must be further noted that this deed of trust, as executed by Lee Allen to the appellant, was a matter of record on January 15 1920, when the appellee took its deed of trust, and was notice to appellee, and if the appellee had used any precaution and made inquiry it would have learned of the indebtedness then due the appellant under its 1918 deed.

From section 2307 and 2316 of Hemingway's Code it would appear that the appellant had done all that could be required of him that he might discover if there was any other outstanding mortgage on this land. It would further appear that the appellee's mortgage was never recorded, as directed by law. He will argue that this was no fault on his part, and that may be true, yet, nevertheless, under the statutes above referred to he is protected and the clerk must answer to him. The appellee is entitled to relief as against the clerk. He was and is the party injured by the failure of the clerk to record his deed of trust. Camp et al. v. Celtic Land &amp Improvement Company, 129 Miss. 417.

The record shows that the appellant did use the precaution to look up these records. The records further show that the appellee did not, and had he done so he would have been advised of the dealings between Lee Allen and the appellant, and of the deed of trust contract between them, and by the use of this precaution would have been protected, and surely he should be the one to pay for his failure to use precaution.

J. B. Sternberger, for appellees.

This case presents two legal questions for the Court's decision. 1. Did the lower court err in decreeing that the last clause in appellant's 1918 deed of trust limit the advancing clause in the first part of the deed to advances on account of the crop of 1918 in the last part? This last clause reads: "It is further distinctly understood and agreed between the parties aforesaid that this deed is made and intended to secure any advances on account of the crop of 1918 made after the maturity thereof, and not mentioned herein."

This clause was ample, therefore, to cover all future advances, but for the limiting later clause restricting same to advances made on account of the crop of 1918. Witczinski v. Everman, 51 Miss. 841, might then have been well invoked to sustain the post-maturity advances for which appellant contends. Courts do not make contracts for persons, and when they make them they must be subjected to well-settled rules of construction. Ignorance here does not excuse. This branch of the case is controlled, I submit, by Gray v. Helm, 60 Miss. 131. See, also, Mechanics' Bank v. First National Bank of McComb City, 117 Miss. 437.

2. To the contention of appellant mercantile company that it is not affected with constructive notice of Ford's 1920 deed of trust, because not properly indexed and recorded, it having been indexed and recorded in the chattel mortgage, instead of the land mortgage records, it is sufficient to say that the evidence is that Ford mailed his deed from Magnolia to the clerk at Liberty for recordation, and the clerk filed same, but by mistake indexed and recorded it in the chattel instead of the land mortgage records. To be sure this was in plain violation of section 2313, Hemingway's Code, which provides that: "An instrument embracing land shall not be recorded in the chattel record book." Now it is common for such deeds to embrace both lands and chattels, as is the case here. And it is just as common for them to be indexed and recorded in the "records of mortgages and deed of trust on land," as is provided in sections 2310, and 2311 of Hemingway's Code. Section 2292 provides that these instruments "shall take effect as to all subsequent purchasers for a valuable consideration without notice, and as to all creditors, only from the time when delivered to the clerk to be recorded." So when Ford delivered the deed to the clerk he had done all the law required of him, and any mistake in indexing and recording causing damage to another the clerk is liable for, and is plainly provided for in sections 2311 and 2316, Hemingway's Code. This question was before this court in Mangold v. Barlow, 61 Miss. 593, and the court there ranged itself with the current of authority, holding that: "The grantee not required to record the instrument, or to see that the officer does his duty. All that is imposed on the grantee is that the instrument shall be acknowledged or proved and lodged with the clerk of the chancery court of the proper county. There his duty ends. That done, his deed is not to be void as to subsequent purchasers or creditors."

3. The trustee's deed to Ford to the land in question is prima-facie evidence that the terms of the deed, and the law as to notice, were all complied with in making the sale. No evidence was offered to rebut this presumption. Enochs v. Miller, 60 Miss. 19, and McCaughn v. Young, 85 Miss. 277.

George Butler and C. T. Gordon, for appellant in reply.

It is our contention that the equities of the situation are with the Liberty Mercantile Company. The deed of trust in favor of the Liberty Mercantile Company, dated January 16, 1918, recites that the grantor expects the Liberty Mercantile Company "To advance him money and sell him supplies and merchandise during the year 1918, not to exceed four hundred dollars . . .; and whereas said party of the first part has agreed to secure the payment of said indebtedness, as also any of the amounts that may be advanced as aforesaid, and not mentioned herein, and any and all other indebtedness that is, or may become due during the life of this contract."

The life of this contract, in so far as it concerned the indebtedness evidenced by the promissory note, was six years from the maturity of the note, and was, so far as it concerned the indebtedness evidenced by open account, three years from the date the indebtedness became due. The Mercantile Company was guilty of no negligence, and was diligent in endeavors to ascertain and protect its rights. Before the renewal deed of trust of 1920 was given, that company investigated the records by looking at the proper index, and found no deed of trust in favor of appellee Ford.

On the other hand, appellee Ford, when he took his deed of trust on January 16, 1920, made absolutely no investigation of the record to determine whether there was a prior deed of trust against this land. The slightest investigation would have disclosed that there was an unsatisfied deed of trust against this land in favor of the Liberty Mercantile Company. Ford is conclusively presumed to have known of the existence of that deed of trust.

It is thoroughly well established that a vendee or mortgagee of lands claiming to be an innocent purchaser for value, without notice, is presumed to know the contents of a deed in his grantor's chain of title. Baldwyn v. Anderson, 103 Miss. 462; Parker v. Foy, 43 Miss. 260; Deeson v. Taylor, 53 Miss. 697.

It is also thoroughly settled...