Mayes v. Thompson

• Decision Date: 03 April 1922
• Docket Number: 22057
• Citation: 128 Miss. 561,91 So. 275
• Court: Mississippi Supreme Court
• Parties: MAYES et al. v. THOMPSON

91 So. 275

128 Miss. 561

MAYES et al. v. THOMPSON

No. 22057

Supreme Court of Mississippi

April 3, 1922

1. CHATTEL MORTGAGES. Where induced by buyer's fraud, seller may recover from buyer, unless property has passed to bona-fide purchaser or mortgagee.

Where the owner of property is induced to sell it by a fraud perpetrated on him by the purchaser, he may rescind the sale and recover possesion of the property while it remains in the purchaser's possession, but cannot do so if the purchaser has resold or mortgaged it to a bona-fide purchaser or mortgagee for value without notice of the original owner's claim thereto.

2. SALES. In a replevin action for goods sold, the burden is on seller to prove draft given in payment is worthless.

Where the owner of property accepts from a purchaser thereof in payment therefor a draft drawn by one bank upon another, he can rescind the sale and recover the property, if the draft given him is worthless; but in an action of replevin involving his right so to do the burden of proving that the draft is worthless is on him.

3 SALES. Elements of "bona-fide purchase" stated.

The essential elements of a bona-fide purchase" within the bona-fide purchaser for value rule, are a valuable consideration, the absence of notice, and the presence of good faith.

4 SALES. Attorney's promise to render professional services is a valuable consideration within bona-fide purchaser rule.

A promise by an attorney at law to render professional services in exchange for property purchased is a valuable consideration therefor within the bona-fide purchaser for value rule.

5 SALES. Methods of protecting bona-fide purchaser, having paid part of price, and other claimants, stated.

A bona-fide purchaser for value, who has partially performed his contract for the payment for the property purchased before notice of a prior claim thereto, is within the protection of the bona-fide purchaser for value rule, but to what extent must be determined in each case by the relative equities of the adverse parties. This protection may be accorded, either by permitting the purchaser to retain a proportionate part of the property purchased, by giving him a lien on the property purchased to the extent of the consideration actually paid, or by permitting the purchaser to retain the property and giving to the prior owner or lienor a lien thereon to the extent of the unpaid purchase money.

HON. W H. POTTER, Judge.

APPEAL from circuit court of Hinds county, HON. W. H. POTTER, Judge.

Action by L. L. Mayes and another against W. E. Thompson. Judgment for defendant, and plaintiffs appeal. Reversed and remanded.

Reversed and remanded.

Mayes & Mayes, for appellant.

At the trial of this case in the lower court the appellants, Mayes and Crisler, made out a prima-facie case by providing that they acquired the automobile in controversy by bill of sale from J. C. McComber, who was then in possession of the automobile in Jackson, Mississippi, claiming to be the owner thereof and was driving and treating the automobile in every respect as though it was his own. Roach v. Anderson, 28 Miss. 234. "Possession of personal property, such as a negro slave, is prima-facie evidence of title in the possessor, and such title is presumed to be bona-fide in the absence of proof to the contrary.

The second instruction, also, is correct, as a general rule, and should have been granted. Taken in connection with the instruction above considered, it stated a proper rule to the jury, which appears to be justified by the state of facts appearing in evidence. Davis v. Loftin, 6 Texas, 489, and especially 497.

The appellee, Thompson, sought to meet and overcome the prima-facie case thus made out by Mayes and Crisler, by showing that McComber, alias Berger, obtained the automobile from him, Thompson, in exchange for a draft, and that Thompson has never collected any money on that draft.

Thompson contends and his attorney so argued at the trial, that the bare fact that they proved that Thompson has not realized any money on this draft, is they say, in itself, proof of fraud or swindle perpetrated by McComber on Thompson; and that, although they admit that when Thompson received the draft from McComber, he delivered actual possession of the automobile to McComber and that it was Thompson's intention and aim thereby, at the same time to give McComber title to the automobile and to allow him to drive it off and to treat it as his own and to hold it out to the world as being his, McComber's, property, and although it further appears, that McComber, clothed with this ostensible or real ownership, has disposed of the automobile to innocent third persons for value, still they say that this alleged fraud or swindle would defeat McComber's title and would defeat the title of the innocent third persons.

In response to that, we say that the position which our opponents have taken is untenable; that in the first place there is no proof in this record that McComber defrauded or swindled Thompson; and, in the second place even if the proof was sufficient to show that McComber defrauded or swindled Thompson and obtained this automobile from him by means of fraud or swindle, still under the law, the title of Mayes and Chisler, who are innocent third purchasers for value from McComber, would be paramount to that of Thompson. Henshaw v. Bryant, 5 Ill. 97.

We find that the law is well settled in Mississippi and in Texas, and in the vast majority of the states in the Union, that although as between the original parties, a sale may be avoided by the vendor and the vendor may retake the chattel where the vendee takes possession by fraud; but the courts are all uniform in their holding that in order to avail himself of the opportunity to rescind the contract and retake the chattel, the vendor must act before his vendee has disposed of the chattel to an innocent third purchaser. These decisions are all based on the idea that one of two innocent parties must suffer loss and that since it was the original vendor who made it possible for the vendee to perpetrate the fraud, the original vendor must be the one to bear the loss. Hall v. Hinks, 21 Md. 406; First Nat'l Bank v. Cook, 70 Miss. 587; Fraud: Davis v. Loftin, 6 Texas 489; Sadler v. Lewers, 42 Ark. 184; Brundage v. Cam, 21 Ill. 336; Depew v. Robards, 17 Mo. 580.

This principle is illustrated by the case of Mowrey v. Walsh, 8 Cow. 238, where it was held that, although one obtains goods by a fraudulent purchase, under a forged letter of credit and guaranty, yet, if he afterwards sells them to a bona-fide purchaser, without notice of the fraud, the property passes to the purchaser. To the same effect is the case of Parker v. Patrick, 5 T. R. 175, 8 Mo. 139. The law protects the honest purchaser, where the owner, although induced by fraud or mistake, has voluntarily given to another apparent right of property of sale. 35 Cyc, page 358, par. D; 35 Cyc, p. 359, par. F; Foster v. The State, 86 So. 513 (Miss.); The Railroad v. Phillips, 68 Ill. 553; Patterson v. Steiner, 17 So. 688; Chicago Dock Co. v. Foster, 48 Ill. 507; Perkins & Gray v. Anderson, 65 Iowa 398; Wilks v. Key, 23 So. 6; Spira v. Hornthall, 77 Ala. 137; Titcomb v. Wood, 28 Me. 561; Ditson v. Randall, 33 Me. 202; Rawley v. Bigeow, 23 Am. Dec. 607; Sinclair v. Healey, 80 Am. Dec. 589; Single Mfg. Co. v. Sammons, 49 Wis. 316; Arendale v. Morgan & Co., 5 Snead (Tenn.) 703; Tourtellott v. Pollard, 74 Me. 418; Ashland Block Ass'n v. Thompson & Co., 94 Ill.App. 501.

WHERE ONE OF TWO INNOCENT PARTIES MUST SUFFER. As is stated above there is a well-settled and thoroughly understood rule of law which is enforced in all of the states, to the effect that where one of two innocent parties must suffer loss by fraud of another, the person who enables the commission of the fraud must suffer the loss, Mich. Central R. R. Co. v. Phillips, 60 Ill. 190; Perkins & Gray v. Anderson, 65 Iowa 398; Spira v. Hornthall, 77 Ala. 137; Hall v. Hicks, 21 Md. 406; Dephew v. Robards, 17 Mo. 580; Ashland Block Co. v. Thompson, 94 Ill. Appeals, 501.

BONA-FIDE PURCHASERS FOR VALUE. Who are bona-fide purchasers for value? The notice and consideration are matters which are all clearly defined and discussed under 35 Cyc, page 345, et seq., and in the authorities cited thereunder. 35 Cyc, pages, 345, 346, 347, 348, 349, 350, 351, and 352.

CONSIDERATION. 1. IN GENERAL. To constitute one a bona-fide purchaser and entitle him to protection as such, he must have purchased not only without notice of defects in the title, but also for a valuable consideration, and he cannot be considered as a bona-fide purchaser until he has actually paid the purchase price, or become irrevocably bound for its payment.

2. PAYMENT OF VALUE. A. In General. To constitute a valuable consideration within the application of the above rule, it is necessary that the purchaser should part with something of value, incur some new obligation, relinquish some security or do some act on the faith of the purchase which cannot be retracted and which would leave the buyer in a worse position if his purchase should be set aside, a mere agreement by the buyer which he can avoid, in case his title proves defective, being insufficient. It is not, however, necessary that the consideration should be paid in money, or that it should be paid directly to the seller. The consideration paid should be fair and such as would not excite surprise or suspicion, and while it is not necessary that it should be for the full value of the property, yet where the consideration is inadequate and the transaction is not in the usual course of business, or there are other suspicious circumstances sufficient to put the buyer on notice, he cannot claim any...