Lundy v. Greenville Bank & Trust Co.

• Decision Date: 31 May 1937
• Docket Number: 32504
• Citation: 174 So. 802,179 Miss. 282
• Parties: LUNDY et al. v. GREENVILLE BANK & TRUST Co. et al
• Court: Mississippi Supreme Court

174 So. 802

179 Miss. 282

LUNDY et al. v. GREENVILLE BANK & TRUST Co. et al

No. 32504

Supreme Court of Mississippi

May 31, 1937

Division A

1 WAREHOUSEMEN.

Negotiable warehouse receipts payable to bearer may be negotiated by mere delivery, by any person to whom custody of receipt has been intrusted by owner, if at time of such intrusting receipt may be negotiated by delivery, and person to whom receipt is negotiated acquires such title to goods as person negotiating receipt and depositor of goods or person to whose order they were to be delivered by terms of receipt had or had ability to convey to purchaser in good faith for value (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

2. WAREHOUSEMEN. The evidence showed that cotton grower intrusted to cotton factors possession and custody of negotiable warehouse receipts payable to bearer within statute providing that negotiable receipt may be negotiated by owner or by any person to whom possession or custody of receipt has been intrusted by owner, and that receipts were in such form that they could be negotiated by cotton factors by delivery (Code 1930, section 3520).

The evidence disclosed that for many years the cotton factors had acted as factors for the cotton grower in sale of at least part of his cotton, that buyers in the market had been accustomed to buy the cotton grower's cotton from such factors and paid them therefor, that the grower had perfect confidence in the honesty and integrity of the members of the cotton factors firm, that the cotton grower left the receipts with the factors because he wanted a convenient place for the receipts in case of sale by the factors, that shortly after he left the receipts, the grower had notice of the fact that the factors were exercising control over the receipts, and that the cotton grower had requested a buyer to examine his samples on the cotton factors' tables with the view of purchasing the cotton.

3 WAREHOUSEMEN.

The pledgee of negotiable warehouse receipts payable to bearer acquired a lien superior to any rights of cotton grower who had surrendered possession and custody of receipts to pledgors under such circumstances as to clothe pledgors with indicia of ownership and enable them to negotiate receipts to a bona fide purchaser for value, notwithstanding negotiation of receipts by pledgors was fraudulent or a breach of duty (Code 1930, sections 3527, 3538).

4 WAREHOUSEMEN.

By permitting pledgors to withdraw negotiable warehouse receipts payable to bearer under agreement to sell receipts for pledgee's account, pledgee did not lose superiority of its lien over rights of owner who had originally intrusted possession of receipts to pledgors, unless surrender of receipts by pledgee resulted in subsequent negotiation to a purchaser in good faith for value (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

5. WAREHOUSEMEN.

Where pledgors regained possession and control of negotiable warehouse receipts payable to bearer under agreement to sell them for pledgee's account, purchaser of receipts from pledgors acquired absolute title thereto as against both owner who did not authorize pledge, and pledgee (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

6. WAREHOUSEMEN.

Where pledgee surrendered to pledgors possession of negotiable warehouse receipts payable to bearer under agreement to sell them for pledgee's account, rights of owner who had not authorized pledge were not restored because pledgors sold receipts to innocent purchaser and proceeds of sale were delivered to owner in form of a cashier's check, where at time of sale by pledgors, owner's rights had been lost or were subordinate to rights of pledgee (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

7. WAREHOUSEMEN.

A cotton owner's release of cotton at time when he had no notice of rights of pledgee of negotiable warehouse receipts payable to bearer did not constitute such consideration or value as would make owner a purchaser for value, where after loss of his rights in cotton to pledgee, owner's release was ineffective as against pledgee, and warehouse company could have been required to surrender cotton to pledgee or other purchaser in good faith for value (Code 1930, section 3521).

8. BANKS AND BANKING.

A "cashier's check" is merely a bill of exchange drawn by a bank on itself, and accepted by act of issuance, and such check is not subject to countermand by issuing bank.

9. INJUNCTION.

That as against payee of cashier's check, issuing bank may have no right to refuse payment, does not prohibit third party, who is interested in proceeds of check, from intercepting payment thereof by injunctive process.

10. WAREHOUSEMEN.

When pledgee of negotiable warehouse receipts payable to bearer surrendered possession thereof to pledgor for sole purpose of selling them for benefit of pledgee, pledgor became trustee for pledgee and in disposing of receipts was acting as trustee.

11. WAREHOUSEMEN.

The rule that when trustee has invested trust property or its proceeds in any other property into which it can be distinctly traced, cestui que trust may follow it into new investment, unless interest of bona fide purchaser for value has intervened, authorizes pledgee of negotiable warehouse receipts payable to bearer to follow proceeds of receipts which were surrendered to pledgors for benefit of pledgee, into cashier's check, payment of which was intercepted by injunctive process based on asserted rights to proceeds (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

12. WAREHOUSEMEN.

An alleged lien by virtue of cotton owner's promise to deliver negotiable warehouse receipts could not prevail against a prior pledgee or purchaser of receipts for value without notice, where at time of promise owner's rights to negotiate receipts had been lost, by valid negotiation thereof by one to whom possession of receipts had been intrusted (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

13. ACTION.

The consolidation of two suits was not an abuse of trial court's discretion, where consolidation would save labor and costs, prevent delay, would not prejudice rights of parties, the two suits were between substantially same parties, and respective rights of parties, and facts on which they were based were closely interwoven.

14. EQUITY.

The allowance of amendment of bill of complaint was not error, where rights of defendant were not affected.

15. INJUNCTION.

Where suit was not only for injunction to restrain sale of warehouse receipts, but to establish title to and recover receipts, mere fact that there was a separate hearing on motion to dissolve ancillary injunction when it was necessary that cause proceed to final hearing on merits, did not of itself authorize allowance of attorneys' fees as damages on dissolution of injunction.

Suggestion Of Error Overruled July 19, 1937.

APPEAL from the chancery court of Leflore county HON. R. E. JACKSON, Chancellor.

Consolidated suits by the Greenville Bank & Trust Company against J. I. Lundy and others, and by J. I. Lundy against J. T. McCain and another, doing business as J. T. McCain & Son, and others, wherein the Bank of Commerce filed a bill of interpleader, and wherein the Bank of Greenwood and others filed cross-bills. From a decree, J. I. Lundy and another appeal. Modified and as modified affirmed.

Affirmed as modified.

A. M. Pepper, of Lexington, Arthur Bruce and H. C. Mounger, both of Greenwood, for appellant, J. I. Lundy.

The court erred in allowing the Greenville Bank & Trust Company to file the amendment to its original bill, denying ownership of thirteen warehouse receipts and the cotton represented thereby, after first having obtained an injunction involving said receipts and said cotton.

The court erred in granting the decree dissolving the injunction against the defendant, The Bank of Greenwood.

Alcorn v. Sadler, 66 Miss. 221, 5 So. 694; Citizens Bank & Trust Co. v. Harpeth Nat. Bank, 120 Miss. 505, 82 So. 329; Jennings v. Shapira, 131 Miss. 596, 95 So. 305; McKinzie v. McCrory, 86 Miss. 86, 40 So. 483; Stewart v. Belt, 19 So. 957; Bowen v. Hoskins, 45 Miss. 189, 7 Am. Rep. 728; Hill on Injunction 108; Hoagland v. Titus, 1 McCart. (N. J.) 83; Board of Supervisors v. Paxton, 56 Miss. 679; Jones v. Brandon, 60 Miss. 556; Griffith's Chancery Practice, page 482; Rickets v. Rickets, 152 Miss. 792, 119 So. 195; Alcorn v. Alcorn, 76 Miss. 907, 25 So. 877; Hentz v. Delta Bank, 76 Miss. 429, 24 So. 902; Bynum v. Meyer, 48 So. 289.

The court erred in allowing the defendant The Bank of Greenwood to amend its answer and cross-bill.

The court erred in allowing the defendant Greenville Bank & Trust Company to amend its answer and crossbill so as to dismiss as to defendant The Bank of Greenwood.

The court erred in consolidating Causes Nos. 6566 and 6568. The lower court was clearly in error in consolidating these causes, since there were different parties complainant and different parties defendant, different subject-matter in the two causes, different transactions out of which the causes arose, one being as to a certain eighty-two bale lot of cotton, and the other being principally as to a cashier's check, the Bank of Commerce and certain other defendants being interested in the outcome of the cause as to the cashier's check and having nothing to do with and knowing nothing whatever about the other suit as to the eighty-two bale lot of cotton. All of this merely tended to confuse and cloud the issues and complicate matters in the mind of the court.

The lower court seemed to be of the opinion that a compress receipt is just like a ten dollar bill, and that anyone coming into possession of it, no matter under what circumstances, has...