Moreland v. People's Bank of Waynesboro

• Decision Date: 23 April 1917
• Docket Number: 18862
• Citation: 114 Miss. 203,74 So. 828
• Court: Mississippi Supreme Court
• Parties: MORELAND ET AL. v. PEOPLES BANK OF WAYNESBORO

74 So. 828

114 Miss. 203

MORELAND ET AL. v. PEOPLES BANK OF WAYNESBORO

No. 18862

Supreme Court of Mississippi

April 23, 1917

Suit by the Peoples Bank of Waynesboro against David Moreland and others. From a judgment for plaintiff, defendants appeal.

The facts are fully stated in the opinion of the court.

Judgment affirmed.

Luther K. Saul, for appellant.

The appellee's attorneys seem to be laboring under the impression that this case is being heard upon an issue of facts, when it is only upon the pleas to the declaration and the demurrers to the pleas. So the question of the appellant being a joint maker of the note cannot be considered, for he alleged "that he was only surety on the note and that the appellee had notice of this," and the appellee admits this by its demurrer to this plea. If appellee desired to show that the appellant was a joint-maker of the note, it should have taken issue to the plea by replication.

Now, I admit that it may have, or it may not have been the duty of the bank to offset any funds in its possession at the time of the maturity of the note, or subsequent thereto, belonging to R. P. Cook, if he was in a solvent condition. This has been so held by various courts. But the case at bar presents quite a different state of facts.

As to the sufficiency or insufficiency of the money on deposits at the bank to the credit of R. P. Cook, I think the learned judge is right in the case of H. S. Davenport v. State Banking Co., 8 L. R. A. (N. S.) page 955. Referring especially to this kind of question he said: "If this principle applies at all to deposits of money in a bank, it is difficult to see why it should be rigidly limited to deposits held by the bank at the time of the depositor's debt to the bank matures; for, if the means of satisfaction can be said to be within the control of the bank, then they would seem equally within its control when the deposits are made after the debt matures." But, however, this language was intended to reconcile the various decisions without regard to the solvency or insolvency of the principal obligor, and as said in my first brief, the final decision which will set at rest this seemingly unsettled point, must be had on the point "the solvency or insolvency of the principal obligor."

Counsel for appellee seems to ignore entirely the facts as to the allegation of the insolvency of the principal obligor and which is admitted by their demurrer to this plea, by citing and quoting decisions wherein this particular point was not under discussion at all. These decisions are evidently right under the facts that were being considered by the court, but in the cases holding that a surety is released, and cited by me in my first brief, I wish again to call the court's attention and to the fact that the insolvency of the principal obligor was plead and to hold that where a bank knows that the principal obligor is insolvent, or is likely to be so, and has the means of collecting what is due it within its possession and fails and refuses to do so and thus defeats a suit for contribution by the surety, does not relinquish the surety, would be a wrong that could not be easily righted, for as I understand the law and facts in this case, it should be reversed.

Heidelberg & Johnston, for appellant.

As the attorney for the appellant states in his brief that he relies on the matters contained in the special plea to secure a reversal of the case, we shall direct our attention to the allegations contained in this plea. It is too clear for argument that even if it be true, as stated in the second plea, that appellant was only surety on the note and that he received no part of the consideration and that J. A. Leggett the agent of plaintiff, after the maturity of the note and without any consideration, told the appellant that he was released from the note and that he would look alone to Cook that these facts will not have the effect of releasing appellant from the note. There must be a valuable consideration for a release. 34 Cyc., 1048.

The plea of the general issue filed to the declaration is not the proper plea to a declaration founded on a promissory note and is equivalent to a plea of non est factum, which must be sworn to. Sec. 1794, Code 1906; 12 Smedes and Marshall, 124.

The attorney for the appellant in drawing the special plea upon which he relies, appears for a reversal to be laboring under the misapprehension that it was the duty of the plaintiff to notify the appellant of the fact that his note had not been paid, it was the duty of the appellant to pay the note or see that it was paid at maturity and the appellee was under no legal obligation to notify him of his failure to do what he had promised to do.

In support of our contention that the bank was under no legal duty to apply the deposits of Cook to the payment of the joint note due by him and Moreland, we cite the court to the following authorities: First National Bank v. Peltz, 36 L. R. A. 832, also reported in 53 Am. State Reports 686; Peoples Bank of Wilkes-Barre v. Legrand, 49 Am. Reports (Pa.) 126, National Bank of Newburgh v Smith, 23 Am. Reports (N. Y.) 48 Voss v. German-American Bank of Chicago, 25 American Reports (Ill.) 415; also note on pages 98, 99 and 100 of 115 Am. State Reports.

The case of Pursefull v. Pineville Banking Co., Assignee, 30 S.W. 203, cited in the brief or appellant's attorney does not sustain his contention. It is only held in that case that if a bank owns and holds a note and at the maturity thereof holds a general deposit for the maker sufficient to pay the note, which it permits to be checked out and the maker afterwards becomes insolvent, the surety on the note is not liable. In the case before this court the bank did not have sufficient funds on deposit at the time of the maturity of the note to pay the amount due thereon. Nothing more is held in the case of German National Bank of Alleghany City v. Foreman, 21 A. 20, cited in the brief of appellant's attorney. In this case the deposit was sufficient at the time of the maturity of the note to liquidate it and the party suing was the indorser and not a joint maker of the note.

In the case of Bank of Taylorsville v. Hardesty, 91 S.W. 729, also cited in appellant's brief, the proof showed that the administrator of the interested surety went to the bank and inquired of its cashier whether the decedent's named appeared as surety upon any notes held by the bank; and he stated that it did not. It also appeared that the administrator was deceived by the cashier and that as a matter of fact his name did appear on a note and the administrator was prevented by such misrepresentation from taking steps to indemnify her against loss to the estate by reason of the suretyship; that at the time the representation was made by the cashier, the maker of the note was solvent and afterwards became insolvent, and that if the administrator had the note to pay, it would have been a clear loss to the estate caused by a misrepresentation of the cashier. Nothing of this kind appears in the present suit. It, therefore, furnishes no authority to secure a reversal of the judgment of the court below. For the foregoing reasons we submit that the court below did not err in sustaining a demurrer to the defendant's pleas and that the judgment of the lower court should be affirmed.

J. B. Saxon, for appellee.

Appellant admits and swears to it, that the bank had at several times after the note fell due enough money on deposit to the general credit of Cook to pay the note, and on top of page six he swears that he had in his own possession enough money belonging to Cook to cover the amount of the note, but claims as his excuse for not doing it, that he had no notice that the note was not paid at the bank; Appellant Moreland evidently knew that he himself had not paid the note, and there was nothing to hinder him from asking Cook about it, or calling up the bank and finding out whether or not the note had been paid, Moreland certainly knew that if he did not see that Cook paid the note, that he would have it to pay, and if Cook was insolvent, Moreland knew it, and yet he admits that he could have gotten his money out of Cook but rather than ask a few questions he goes ahead and pays Cook and gives the court as his paltry excuse, that he had no notice; and that the bank should have done a thing that appellant swears that he did not do himself; that the bank should have held on to the money when they had it in their hands, and swears that he had it. If Moreland would not protect himself, why call on the bank to do so? This is arguing the question from the words of appellant's own mouth.

We submit if the court please that this is but a mere subterfuge on the part of appellant Moreland to try to avoid the payment of an honest obligation. With all due respect to counsel for appellant, and his opinion as to the application of the law in this case I must confess that I can see no application of the authorities cited by appellant to this case. I can find no annallogy in the case cited by appellant's counsel and the case at bar. But take it for granted for sake of argument, you will find that Mr. Saul, appellant's counsel, admits that as he sees it, the question is a mooted one, and that the weight of authority is in favor of appellee bank; and ask the court to reverse the entire weight of authority together with the opinion of the lower court in favor of him and the majority opinion of the various opinions. The court will find that even the authority cited in support of appellant's contentions are minority reports or dissenting opinions of a few jurists in various states.

Without further argument on my part as my associates Messrs Heidelburg & Johnson have covered the...