Newman v. Bank of Greenville

• Decision Date: 15 April 1889
• Parties: H. & C. NEWMAN v. BANK OF GREENVILLE ET AL
• Court: Mississippi Supreme Court

5 So. 753

66 Miss. 323

H. & C. NEWMAN v. BANK OF GREENVILLE ET AL

Supreme Court of Mississippi

April 15, 1889

APPEAL from the chancery court of Washington county, HON. W. R TRIGG, Chancellor.

The facts are stated in the opinion.

Decree reversed and cause remanded.

Phelps & Skinner, for appellants.

There is no evidence in support of the allegation in the answer of Moyses & Co. that appellants agreed to make the advances upon receipt of evidence of the extinguishment of one of the rent notes and lien attached to it. There is no pretense that Moyses proposed to extinguish the note for the purpose of giving appellanat a mortgage on the crop thus disincumbered but the pretense is that this was done to show appellants that Moyses & Co. could thereby ship them so much the more cotton, upon which appellants could reap commissions for selling. In other words, the purpose of the transaction was (as claimed) to enable appellants to earn commissions amounting to about fifty dollars, and for this they were to carry a large debt already due, advance three thousand dollars more, and all without any security, upon the crop released! the absurdity is self-apparent.

The plain import of the letter from Johnson to appellants accompanying the note indorsed in blank, constituted, in legal contemplation, a full and complete and unconditional assignment of Johnson's interest in the note as payee to appellants. The intention can only be gathered from the letter and the indorsement themselves. They cannot be contradicted by parol. Daniels on Neg. Instr., §§ 6, 717, 71. Even if the blank indorsement could be contradicted, the plain purport of the letter cannot be contradicted or varied.

From these the intention of Johnson was manifest. His writing that the crop was well advanced was to indicate to appellants that the lien thereon would be good security upon it for advances. He was also interested, as without the advances, the crop could not be made. The recital in the letter as to Moyses having extended favors to him, if it meant anything, meant not that they had paid the note--that would be no favor--but that they were extending him credit, or carrying him, and for that reason Johnson surrendered the note to be used as Moyses & Co. saw fit. The appellees play upon the word "surrendered"--surrendered for what purpose?--to be canceled? or to be used? To us this seems an idle quibble.

Appellants were not concerned with the consideration or inducement given by Moyses & Co. to Johnson to obtain the indorsement and surrender of the note, and its transfer to appellants. It was enough that Moyses & Co. had obtained it in such shape as would apparently transfer title to it, and lead appellants to make the promised advances on the faith of it.

The estoppel against Moyses & Co. would operate as a transfer of the title to the note, and consequently of the lien which secured it. 2 Pom. Eq. Jur., §§ 801, 804, and the estoppel would bind all privies by contract or estate. Ib § 813; and consequently the estoppel binds appellees.

The parties to the transaction themselves did not intend it as an extinguishment of the note. Their acts indicate this. An innocent intention is to be presumed instead of a fraudulent one. Moyses & Co., in fact, negotiated the note as a subsisting note and lien, and subsequently forwarding it to appellants, they refer to it as "placed" with them asking for a receipt for it, as well as the mortgages, and acknowledge the delivery of the rent note as security. The word "placed" is as well understood as the word "collateral."

It is true that ordinarily when a note gets back to the hands of the maker, its negotiability ceases, and he cannot, by putting it out again, bind the indorsers. Claiborne v. Planters' Bank, 2 How. 727. But says the court: "This transaction might have been susceptible of such an explanation as would probably have bound the indorsers." In other words, if the indorsers consent to its being kept alive in the hands of the maker for negotiation, it would bind them.

An acceptor holding his immature acceptance, can negotiate it before maturity so as to bind an indorser. 1 Daniels Neg. Instr., § 781 (b.), citing: Morley v. Culverwell, 7 M. & W. 174; Witte v. Williams, 8 Rich. (S. C.) 20.

Regarding the one bale of mortgaged cotton received by appellees, the assignment and delivery of the mortgage upon it made appellants secure as to this. Jones Chat. Mort. 518; Pom. Eq., § 734.

We deem it unnecessary to discuss the evidence pro and con, in reference to the fraud in the sale by Moyses & Co. to appellees, as the entire evidence appears in the record.

The appellants, by their written contract with Moyses & Co., had a legal right to the shipment of all the cotton that the latter controlled or owned or raised during the year, and any persons who knowingly assisted Moyses & Co. in the infringement of this legal right by diverting the property should be held responsible for the consequent injury. Bump. Fr. Con. 15 and 16. No lien on the cotton is claimed under the contract, but only a liability because a purposed fraud was committed.

In view of the numerous decisions of our supreme court on the point, it is needless to discuss the assignability of the landlord's lien.

Yerger & Percy, for the Bank of Greenville, and The Goldsmith Cotton and Provision Co., appellees.

It seems too clear to admit of argument that as to the excess over the rent note due to appellants by Moyses & Co., they cannot hold appellees. It is nowhere alleged in the bill, and there is no testimony adduced to show, that the sale made by Moyses & Co., to his co-defendants was not honest and bona fide. On the contrary, the answers and proof show that the debts due to appellees by Moyses & Co., and the sale to pay them, were honest and free from any suspicion, and that appellees are bona fide purchasers.

A pledge to ship cotton in consideration of advances made and to be made has never been held in this state to create a lien; the commission merchant is only a creditor at large, without any equity, lien, or charge. Allen v. Montgomery, 48 Miss. 101.

So, the only question in the case is whether appellants have a lien on the crops raised on the lands leased to Moyses & Co. by Johnson, by virtue of the rent note held by them. We say not.

1. The simple assignment of a rent note does not carry the landlord's lien to the assignee. The landlord's lien requires no writing or record; it exists by virtue of the relationship of landlord and tenant and is paramount and obtains equally against purchasers with and without notice. So our court has held, possibly against the weight of authority. Jones on Liens 577.

If "to hold the buyer of cotton liable to the landlord, when offered for sale in the large, active, open markets, without notice of a secret lien upon it, would so embarrass the marketing of almost the only salable product of our soil as to be exceedingly detrimental to both the agricultural and mercantile classes" (opinion of Simrall, J., in Wooton v. Gwin), it would be much more surely contrary to public policy to extend such a secret lien to every holder of a rent-claim.

A purchaser of cotton might by diligence ascertain from the landlord if his rent has been satisfied, but it would greatly hamper commerce if the buyer must, especially under our system of farming, ascertain who is the holder of a negotiated rent note, and whether it is paid. Often there are as many as a hundred notes given for rent of one plantation by tenants, and perhaps all of these have been nogotiated. If the buyers were assured by landlord and tenant that the note had been paid, this would not estop or affect an assignee, if it were not in fact paid but outstanding. Or if the tenant produced the note, duly satisfied, this would not be assurance that it was the only rent note he owed.

The assignability of a mechanic's lien is not a parallel case. Davis v. Bilsland, 18 Wall. 65.

There is no reason of public policy why a mechanic's lien should not be held assignable. To so hold opens no door for fraud, and the rights of innocent purchasers are protected, as the lien does not bind them unless of record.

We know of no lien so omnipotent, notice of which exists merely from the relation of the parties, that is held to be so assignable. In this case there was a written lease which was not assigned, and the relation of landlord and tenant has not changed. Even in Taylor v. Nelson, 54 Miss. 524 (which is not an authority under the present statute), there was an assignment of the rent and contract of the lessees. If "it is just to assume that the legislature in conferring a right and providing a remedy for its enforcement gave the only right or remedy intended to be enjoyed by the object of its solicitude" (Campbell, J., in Wooten v. Gwin), is it not fair to presume that the remedy was the measure of the right?

Appellants, at best, were only the indorsees of the note in the usual course of business. An equitable lien will not pass by the transfer of the note representing the llen debt. Jones on Liens 1. Is there better reason for holding that this secret lien so passes? We admit this position to be debatable, but upon our second position we rest confidently.

2. In fact, no assignment of the note and lien was made. There was no transfer of the note from Johnson to appellants; they did not purchase the note from him, nor did he deposit it with them, as a live thing, collateral to the debt of Moyses & Co. He simply gave up the note to the maker of it. He "surrendered" it. The use of this word is significant of Johnson's intention. In the first place it might be construed as limiting his liability as indorser, and then his letter to them apprised them, not that he...