North American Life Ins. Co. v. Smith
| Decision Date | 01 February 1937 |
| Docket Number | 32484 |
| Court | Mississippi Supreme Court |
| Parties | NORTH AMERICAN LIFE INS. Co. v. SMITH et al |
1 MORTGAGES.
Purchaser from mortgagor who assumes mortgage indebtedness becomes principal debtor to mortgagee and mortgagor becomes purchaser's surety.
2 EQUITY.
Bill for foreclosure of mortgage, which bill named "George M Forman" mortgagee and referred to and made an exhibit a deed by mortgagors showing that grantees assumed indebtedness to "George M. Forman & Company of Chicago Illinois," held demurrable as to grantees' personal liability for fatal variance, in absence of explanatory allegations, since terms of exhibit were controlling (Code 1930, secs. 374, 527).
3. EQUITY.
Where conflict between an exhibit and allegations of bill arises, the former controls (Code 1930, secs. 374, 527).
4. MORTGAGES.
Where mortgagee looked to others than mortgagors for payment of indebtedness for 10 years after conveyance by mortgagors to purchasers who assumed indebtedness, gave no notice to mortgagor of invalid foreclosure proceeding, and allowed principal and interest to remain in default for several years without suit, mortgagor held not discharged as surety for her grantees, because of mortgagee's want of diligence, especially where mortgagor made no attempt to put creditor in default under statute (Code 1930, sec. 2957).
5. PRINCIPAL AND SURETY.
Mere want of diligence, indulgence, delay not amounting to bar of statute of limitations, or passiveness of creditor towards principal debtor, does not discharge surety (Code 1930, sec. 2957).
6. PRINCIPAL AND SURETY.
Statute providing method by which surety may put creditor in default and thereby be discharged by demanding action against principal debtor by next term of court after 30 days from giving of notice held not repealed by Negotiable Instruments Act (Code 1930, sec. 2957).
HON. J. L. WILLIAMS, Chancellor.
APPEAL from chancery court of Washington county HON. J. L. WILLIAMS, Chancellor.
Foreclosure suit by the North American Life Insurance Company against Mamie W. Smith and others. From a decree allowing foreclosure but denying liability for any deficiency on the part of named defendant and defendants W. R. Moore and J. L. Nichols, plaintiff appeals. Affirmed as to defendants Moore and Nichols; reversed and remanded as to named defendant.
Affirmed in part; reversed and remanded in part.
Percy Bell, of Greenville, and J. C. Roberts, of Cleveland, for appellant.
A variance, to be material, must actually mislead the adverse party to his damage in maintaining his action or defense upon the merits.
Dudley v. Duval, 70 P. 68; Prestwood v. McGowin, 41 So. 779; Ostrom v. Woodbury, 122 P. 825; Southmayd v. Southmayd, 5 P. 318; Carter v. Baldwin, 30 P. 595.
The variance between the allegations of the bill and the exhibits was between the words "Geo. M. Forman" and "Geo. M. Forman & Company," which we contend was not material, but was the subject of proof; certainly, there was not such a variance as would mislead W. R. Moore and J. L. Nichols to their prejudice in maintaining their defense to the action and the proof was introduced that connected the exhibits and made the assumption valid liability of the said W. R. Moore and J. L. Nichols.
If we are correct in our view that there was no fatal variance between the allegations of the bill and the exhibits thereto, then the court was in error in sustaining the demurrer, and if in error in sustaining the demurrer, then the court erred in not fixing the order of liability of the various defendants in the court below.
Gilliam v. McLemore, 106 So. 99.
Waiver is a voluntary and intentional relinquishment or abandonment of a known existing legal right, advantage, benefit, claim or privilege, which except for such waiver the party would have enjoyed.
What facts and circumstances as set up by the defendant, Mamie W. Smith, in the court below in her answer, would constitute a waiver, we are unable to discover, unless forbearance and nonaction for a period of two years after a part of the debt became due constitutes such a waiver; but our contention is that the debt being legal with full consideration as shown by the evidence in the beginning, and the debt not having been paid, that only the statute of limitations would bar the collection of the debt, unless the facts and circumstances surrounding the attempted foreclosure of the property by the void substitution of trustee and the going into possession by the complainant of the property after the void sale, should constitute a waiver. However, our understanding of the law is that when the complainant went into possession of the property after the void sale, it thereby became, by operation of the law, a mortgagee in possession. We call the court's attention to the fact that in the face of the notes, personal demand for payment was waived by the makers thereof, and certainly Mamie W. Smith, one of the makers of these notes, cannot now be heard to complain because she did not receive personal notice that the notes were not paid.
Section 2167 of the Mississippi Code of 1930 governs that notice should be given at foreclosure, and when the requirements of this section are met, parties affected cannot complain.
In absence of the wilful wrong, neglect or fraud, a mortgagee who, following default on the part of the mortgagor, is in possession of the premises, need only account for the proceeds actually received.
Watson v. Perkins, 88 Miss. 64.
But since such power of appointment has been held to be purely personal and one that cannot be delegated, the attorney in fact of the holder of these notes had no right to make a substituted trustee, and, such appointment being void, the sale made by such trustee was void.
Allen v. Alliance Trust Co., 84 Miss. 319; Carey v. Fulmer, 74 Miss. 729; Hartly v. O'Brien, 70 Miss. 825; Watson v. Perkins, 88 Miss. 76.
The surety is in all respects equally bound with the principal for the payment of the debt, so far as the creditor is concerned, tie can, therefore, never claim to be released without showing that he has been in some manner damaged by the act of the latter.
Clopton v. Spratt, 52 Miss. 251.
The creditor, it is true, is his trustee of all securities placed in his hands for the protection of the debt, but surely he is no more bound to protect the surety than the latter, with the same facilities, is bound to protect himself. The creditor discharges his duty when he takes care that no affirmative act of his shall either diminish the value of the security, or tie up his own hands against the principal debtor, or release any claim he holds against the property of the latter.
Indulgence or nonaction, though in the meantime the principal should become insolvent, unaccompanied by any act of the creditor whereby the hazard is increased, will not discharge a surety. Nor will the failure of the creditor to present his claim to the administrator of the principal, whereby the debt against his estate was lost.
Wright v. Watt, 52 Miss. 634; 4 S. & M. 165; 7 S. & M. 437.
In the case at bar, there was only an indulgence on the part of the creditor, but no agreement and no valuable consideration. Then, too, there was no delinquency, in so far as appellant was concerned, until March 1, 1926.
The right to foreclose was the result of contract contained in the mortgage.
Thompson v. Hauze, 48 Miss. 444; Dibrell v. Carlisle, 48 Miss. 691; McDonald v. Vinson, 56 Miss. 497; Green v. Gaston, 56 Miss. 748; Leake v. Caffey, 19 So. 716.
We submit that no act of appellant can be taken to have the effect of penalizing it by a cancellation of the liability of the appellee for any deficiency that may or might exist after the sale made by the commissioner appointed by the court below.
We respectfully submit that this cause should be reversed and remanded for further proceedings.
Shands, Elmore, Hallam & Causey, of Cleveland, for appellee, Mamie W. Smith.
The appellee contends that if the appellant intended to hold her liable for the payment of these notes, appellant, or its agent, for the collection of the debt, ought to have given her, or her husband, C. R. Smith, notice of the nonpayment of the notes at maturity, so that they would have an opportunity to protect themselves by subrogation, or other legal process, and indemnify themselves against the principal obligators, the assumptors of the debt. That by reason of the long and persistent failure of the appellant to give the appellee and her husband, C. R. Smith, notice of the nonpayment of the notes, has discharged the appellee from any liability with respect to the notes; that the conduct of the appellant, and its agents, and the letters and other correspondence, led the appellee and her husband, C. R. Smith, to believe that appellant was not holding, and did not intend to hold, appellee or her husband for the payment of the indebtedness. That no notice whatever of the foreclosure proceedings was given to the appellee, or her husband, C. R. Smith, and they were entirely ignorant of the foreclosure, and ignorant that appellant would hold them liable for a deficiency, until after the foreclosure, and for that reason, appellee and her husband were not present at the sale to protect their rights; that after the foreclosure, appellant took possession of the property, and rented the property to tenants, who acted in good faith, in treating appellant as the owner of the property.
A complainant cannot obtain the aid of a court of equity if he comes before the court with unclean hands.
1 Pomeroy (4 Ed.), sec. 397; Griffith's Chancery Practice, 42; 21 C. J. 182, 183.
When C R. Smith conveyed the property to Moore...
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