Merchants & Planters Bank v. Meyer

• Citation: 20 S.W. 406,56 Ark. 499
• Parties: MERCHANTS & PLANTERS BANK v. MEYER
• Decision Date: 22 October 1892
• Court: Supreme Court of Arkansas

20 S.W. 406

56 Ark. 499

MERCHANTS & PLANTERS BANK v. MEYER

Supreme Court of Arkansas

October 22, 1892

APPEAL from Jefferson Circuit Court in chancery, John M. ELLIOTT Judge.

Judgment reversed and affirmed.

M. A Austin for appellants.

1. There was no conversion by the Hammett Grocer Company. It is apparent that appellee knew, or could have known, that the Hammett Warehouse Company was selling the cotton and placing the proceeds in a solvent bank to the credit of Ritchie & Fitzhugh; he did not warn Howell or the company, or demand the proceeds, but stood by without objection, and hence is estopped. Bigelow on Estoppel (2 ed.) 452; 2 Johns. 573; 31 Ark. 131; Jones, Liens, sec. 583; 95 Ill. 346.

2. The Hammett Warehouse Company was sued, and without evidence the judgment was against the Hammett Grocer Company.

3. It was not the duty of the bank, after its debt was paid, to retain the surplus, and it is not liable for conversion in failing to do so. It had no right to transfer money from the account of Ritchie & Fitzhugh to the credit of Meyer without authority from the former. Not even t. a note left with it for collection. 12 La. An. 257; 7 Wall. 447; 31 Mich. 230; 1 Morse on Banks, (3 ed.) sec. 214, 317; ib. 324.

J. M. & J. G. Taylor for the Hammett Grocer: Company.

The company received the cotton as a cotton factor, sold same for a commission and did not convert the proceeds, but deposited same with the bank, to the credit of Ritchie & Fitzhugh, the bank having a prior mortgage.35 Ark. 539; 37 id. 115; Jones on Chat. Mortg. 490.

N. T White for appellee.

1. Both the Bank and the Grocer Company had notice. Hunn was the president of Hammett Company and cashier of the bank, and his knowledge was binding on both companies. 54 Ark. 54.

2. Appellee had a landlord's lien which was prior to all other claims or demands against his tenants, Ritchie & Fitzhugh. 25 Ark. 417; 25 id. 609; 31 id. 557; 33 id. 707; ib. 737; 36 id. 525; 45 id. 447. The waiver in favor of the bank did not displace the landlord's lien upon the balance of the crop. 33 Ark. 392-5. Nor was it displaced or affected by taking a mortgage. 36 Ark. 96. The remedies sought in this case are sanctioned in 33 Ark. 387; 35 id. 225; 52 id. 58.

3. As to the surplus in the bank's hands, after paying the debt due it, it was under obligation to see that the rest was paid. 35 Ark. 233; 33 id. 395.

4. The bank and the Hammett Company were joint tortfeasors, and both liable for appellee's entire debt. Bish. Non-Cont. Law. sec. 521; ib. secs. 519-20-22, 39; 15 Ark. 452; 23 id. 131; 39 id. 387.

5. It is too late here for the first time to object that the judgment was against the Grocer Company, when the Warehouse Company was sued. 6 Ark. 172; 7 id. 410.

OPINION

BATTLE, J.

Victor Meyer brought this action against Ritchie & Fitzhugh, the Merchants and Planters Bank, and the Hammett Warehouse Company, in the Jefferson circuit court, on the equity side thereof, to recover the amount due to him for the rent of a plantation for the year 1889.

The main facts in the case are as follows: Meyer, being the owner of the plantation in Jefferson county known as the "Corinne Place," leased the same for the year 1889 to Ritchie & Fitzhugh for $ 1,400, for which they executed their note to him and thereby promised to pay the same on the first day of November, 1889, at the Merchants and Planters Bank. In the month of March following, finding that they would need money to enable them to cultivate the place, they secured from the Merchants and Planters Bank a loan of $ 2,000 for that purpose. In order to aid them in procuring this loan Meyer agreed with the bank to postpone the collection of his note until the bank was paid. On the 4th day of March, 1889, they gave to the bank a mortgage on all the crops raised by them on the "Corinne Place" in the year 1889 and on a certain lot of mules and farming implements to secure it in the payment of the $ 2,000. The indebtedness for the loan was evidenced by four promissory notes mentioned in the mortgage, which provided that if they were not paid on or before the 15th day of October, 1889, it could be foreclosed by public sale. Further than this the dates of the maturity of the notes do not appear in the record here.

On the 5th of March, 1889, the day following the execution of the mortgage to the bank, Ritchie & Fitzhugh executed a mortgage on the same property to Meyer to secure him in the payment of the note executed to him by them for rent, and therein provided that it should be subject to the mortgage executed to the bank to secure the $ 2,000. This mortgage was duly acknowledged and filed for record on the day of its execution.

During the year 1889 Ritchie & Fitzhugh raised on the "Corinne Place" more than ninety-seven bales of cotton--how much more does not appear. They delivered ninety-seven bales of it, in many small lots, at divers times, to the Hammett Grocer Company, a corporation engaged in the business of a cotton factor, to be sold on commission, with instructions to deposit to their account in the bank so much of the proceeds of the sale thereof as was not delivered to them. It sold the cotton in more and smaller lots than it received it and at as many times, and, after deducting its commissions, deposited the residue of the proceeds of the sales, at different times, in various sums, amounting in the aggregate to $ 4,310.50, in the bank, to the credit of Ritchie & Fitzhugh. All of this money was appropriated by the bank to the payment of the notes, which were secured by the mortgage executed to it, and the checks which were drawn by Ritchie & Fitzhugh on the bank at divers times.

Meyer deposited the note, which was executed to him for rent, with the bank on the 31st of October, 1889; but, at the time it became due, there was nothing to the credit of Ritchie & Fitzhugh with the bank. After its maturity, two sums, $ 978.93 and $ 347.43, the proceeds of a portion of the 97 bales of cotton, were, respectively, deposited on the 16th of November and the 11th of December, 1889, with the bank. The larger portion of these two deposits were applied by the bank to the payment of the notes which Ritchie & Fitzhugh owed it, and the remainder was paid on the checks of the depositors.

The Hammett Grocer Company knew, through its officers, at the time it received the cotton, that Ritchie & Fitzhugh rented the "Corinne Place" of Meyer in 1889 and cultivated it in that year. It did not know that they cultivated any other place. It knew that they were not able to cultivate it without financial assistance, for they applied to it for such aid and it refused it. The bank had no actual notice or knowledge that Meyer had any lien on or interest in the deposits which were made with it by the Hammett Grocer Company, at the time it appropriated and paid them out.

Upon these facts Meyer sought to hold the bank and Hammett Grocer Company responsible, by this action, for the rent of the "Corinne Place" for 1889, complaining that there was nothing left to pay the note held by him, and that Ritchie & Fitzhugh were insolvent. The Hammett Grocer Company was designated in the complaint and sued as the Hammett Warehouse Company and at one time bore that name. The only defense pleaded by it was that, in receiving and selling the cotton and paying over the proceeds of the sale, it acted as a cotton factor, and had no notice of plaintiff's liens, and, therefore, was not guilty of conversion. Nothing was alleged or proved in mitigation of damages

The circuit court decreed that $ 260, which was in the hands of a receiver appointed in this action, be paid to plaintiff; and that plaintiff recover of the Hammett Grocer Company $ 1,064.03 and of the bank $ 169.61, the amounts so recovered being the sum due to Meyer for rent and the Hammett Grocer Company and the bank appealed.

The mortgage executed by Ritchie & Fitzhugh to Meyer did not displace the lien on the crops, which he would have been entitled to hold as landlord in the absence of other liens, The powers conferred and rights and interests acquired by the mortgage were cumulative. The landlord's and the mortgage liens could have been enforced at the same time during their existence. Franklin v. Meyer, 36 Ark. 96

Did the Hammett Grocer Company have notice of the fact that Meyer held a lien on the ninety seven bales of cotton delivered to it by Ritchie & Fitzhugh, at the time it received and sold them? It had notice of every fact necessary to show that he had such a lien, except, perhaps, actually knowing that the rent was unpaid; but it had knowledge of enough to put it on inquiry to ascertain the fact in that regard, and that was sufficient notice of whatever an inquiry would have revealed. It knew that Ritchie & Fitzhugh were tenants of Meyer, and that he had a lien on the crops grown by them, because the statute gave it to him and every one is presumed to know the law. It also hat reason to believe that they were unable to grow the crops without financial aid from others, because they applied to it for such assistance. The reasonable apprehension was that the rent was unpaid; and good faith and a proper regard for the rights of another demanded an inquiry as to the payment of the rent before making any sale or disposition of the cotton which would likely impair or destroy the landlord's lien. That inquiry properly made would have discovered the lien. It, therefore, had notice. Watt v Scofield, 76 Ill. 261; Dunn v. Kelly, 57 Miss. 825.

Having notice, it was liable to Meyer for the damages suffered by him on account of the violation or destruction by it of his landlord's lien. Hussey v. Peebles, 53 Ala. 432; Hudson v. Vaughan, 57 Ala. 609; Lavender v. Hall, 60 Ala. 214; Thompson v. Powell, ...