Pennington v. People's Bank of Sumner

• Decision Date: 02 April 1923
• Docket Number: 22823
• Citation: 132 Miss. 23,95 So. 694
• Parties: PENNINGTON v. PEOPLE'S BANK OF SUMNER et al
• Court: Mississippi Supreme Court

95 So. 694

132 Miss. 23

PENNINGTON v. PEOPLE'S BANK OF SUMNER et al

No. 22823

Supreme Court of Mississippi

April 2, 1923

1 EVIDENCE. Letter of cashier of bank as to priority of lien held admissible as admission of bank against interest.

Where the cashier of a bank is in control of its affairs and is transacting its business in making a loan and preparing papers taking security for the loan, undertakes to draw the papers of the bank and also the papers of other parties taking a lien upon the same property, so draws them and causes them to be placed of record so as to show priority of loan in another lienholder, and writes such lienholder that he, such holder, has a prior lien, such letter is an admission of the bank against interest and is admissible in evidence as such.

2 MORTGAGES. Evidence held insufficient to sustain decree changing priority of deeds of trust.

Where in a suit between a bank and another in which the bank as complainant seeks to establish priority for its deed of trust over that of the defendant, which defendant had originally a vendor's lien upon the land, and in drawing the deeds of trust the cashier of the bank draws or causes to be drawn several deeds of trust upon the same property on the same day and causes the deeds to be so recorded as to give the defendant a prior deed of trust, and its cashier writes the defendant, "You now have a first mortgage," and where the mortgage of the defendant is left with such cashier, and such cashier has since died and such deed of trust or mortgage is found in the bank in a box or drawer for the use of its customers, of which the defendant is one, evidence on the part of the grantors that they understood that the bank's deed of trust was first in priority is insufficient to establish priority, where the defendant testified that he had no knowledge of the arrangement between the bank and the grantors in the deed of trust, and that he was to have a first deed of trust, and would not have taken a secondary lien to secure his rights and given up his first security.

SYKES, J., and SMITH, C. J., dissenting.

HON. G. E. WILLIAMS, Chancellor.

APPEAL from chancery court of Tallahatchie county, HON. G. E. WILLIAMS, Chancellor.

Suit by the People's Bank of Sumner and others against Ben T. Pennington. From a decree for plaintiffs, defendant appeals. Reversed and remanded.

Cause reversed and remanded.

Wells, Stevens & Jones, E. L. Mounger, Jno. H. Cook, and Vivian Cook, for appellant.

Hays, Stingily & Whitten and Cutrer & Smith, for appellee.

ETHRIDGE J. SYKES, J., SMITH, C. J., dissenting.

OPINION

ETHRIDGE, J.

On the 26th day of October, 1915, H. R. Jenkins and his wife, Elizabeth Jenkins, conveyed to the appellant, Ben T. Pennington, certain lands in Tallahatchie county involved in this litigation for the consideration of one thousand dollars cash in hand paid, receipt of which was acknowledged, and the further consideration of the assumption of all of the obligations and indebtedness of the said H. R. or Elizabeth Jenkins which is secured by a lien on the property therein conveyed, which indebtedness the appellant, Pennington, agreed and promised to pay as part of the consideration for said deed.

About the year 1918 H. R. and Elizabeth Jenkins filed their bill in the chancery court alleging that the said deed was in fact a mortgage and that they had remained in the possession of the property, and prayed for an accounting of the amount due Pennington and for a redemption of the mortgage. Jenkins and his wife, Elizabeth, employed attorneys to represent them in said suit, and the cause came to issue, and there was an agreement to settle the litigation by having the title confirmed to Pennington by decree of the said court, which decree was entered by consent and Pennington was to and did convey to J. W. Cutrer and A. H. Stephens, attorneys for H. R. and Elizabeth Jenkins, the property in question at and for the sum of forty-five thousand dollars; of which seventeen thousand five hundred dollars was paid by check of the said attorneys to Pennington and afterwards duly paid; and by the giving of their note to Pennington for twenty-seven thousand five hundred dollars, reserving a vendor's lien in the deed and note to secure the payment of said note. The consent decree and this note and deed were all signed and delivered on the 10th day of November, 1919. On or about the 15th day of November, 1919, a meeting was held and arrangements perfected by which the said attorneys for H. R. and Elizabeth Jenkins were repaid the check for seventeen thousand five hundred dollars, and their note for twenty-seven thousand five hundred dollars surrendered back to them and deed made by them to said H. R. Jenkins to the said property and deed of trust given to Pennington by H. R. and Elizabeth Jenkins on the said lands for the sum of forty-five thousand dollars. There was also an arrangement by which H. R. and Elizabeth Jenkins secured from the People's Bank of Sumner a loan of twenty thousand dollars evidenced by two promissory notes, one for ten thousand dollars due and payable to the People's Bank of Sumner one year after date, and one for ten thousand dollars due and payable to the People's Bank of Sumner two years after date; said notes to the said People's Bank were secured by deed of trust on the lands in controversy, and also by certain other lands belonging to J. W. Jenkins and G. C. Jenkins on their individual lands, said individual lands constituting two hundred fifty-five acres, and said notes to the bank were signed by H. R. Jenkins and his wife, Elizabeth Jenkins, and by J. W. Jenkins and G. C. Jenkins. These instruments were all dated on the 15th day of November, 1919, and the acknowledgments of H. R. Jenkins and his wife, Elizabeth Jenkins, were taken on the 18th day of November, 1919, and the acknowledgments of J. W. Jenkins and of G. C. Jenkins were taken on the 19th day of November, 1919; and the deeds of trust filed for record on the 20th day of November, 1919. There was also a deed of trust from H. R. Jenkins and Elizabeth Jenkins to J. W. Jenkins and G. C. Jenkins on the property in controversy to secure them from loss by their indorsements of the notes of H. R. Jenkins and Elizabeth Jenkins to the People's Bank of Sumner.

The meetings and negotiations as above stated were had on the night of the 15th of November, 1919, partly in the office of A. H. Stephens and partly in the People's Bank of Sumner. Mr. Ben T. Rowland, Jr., the cashier of the People's Bank, was present representing the bank, and agreed to have all the papers above mentioned drawn up without expense to the other parties, and all the parties left the papers to be prepared by Rowland; Pennington, the appellant, giving his check for the seventeen thousand five hundred dollars to be paid when the check of Cutrer was paid and when the papers were prepared in accordance with the agreement. The note of Cutrer and Stephens for twenty-seven thousand five hundred dollars was to be redelivered to them. The deeds of trust were filed for record in the following order: First, the deed of trust to Pennington at 10:30 a. m. on November 20, 1919; the deed of trust to the People's Bank at 11:30 a. m. on the same day; and the deed of trust to J. W. Jenkins and G. C. Jenkins at 12:30 p. m. on the same day.

About one year after these papers were taken and recorded, Ben T. Rowland, Jr., having then recently died, the president of the People's Bank of Sumner, Mr. T. C. Buford, in checking up the affairs of the bank and checking up the records, found that Pennington's deed of trust was recorded prior in time to that of the bank and that the records showed that it matured on January 1, 1921. He then went to the bank and went into the private papers of Mr. Pennington, which were in a box or drawer which the bank had for the use of its customers, and found the Pennington deed of trust and note, and on inspection it appeared on the original paper as originally written on the typewriter that the deed of trust was due on January 1, 1926, and that the "6" had been partially erased and the figure "1" written instead. He thereupon sent for Mr. Pennington and called his attention to this fact and asked him if he had an attorney. Mr. Pennington replied that Mr. Cook represented him, and Mr. Cook was sent for, and Mr. Buford turned over to Mr. Pennington the said papers. Mr. Buford testified that Mr. Pennington made no explanation of the matter, but said he would stand upon the papers. Mr. Buford consulted with the Jenkinses about the matter, and they represented that Mr. Pennington's note and deed of trust did not mature on January 1, 1921, and also that Mr. Pennington was to be second or subordinate to the deed of trust and notes of the bank and also to that of J. W. Jenkins and G. C. Jenkins. Mr. Pennington asked Mr. Buford about paying the interest on the H. R. Jenkins note to him, it being then due and unpaid. Mr. Buford refused for two reasons: First, he did not think Mr. Jenkins would be willing to pay the interest when the note and deed of trust showed maturity on January 1, 1921, when they would be subject to foreclosure of such deed of trust at any time; and, second, that he had no authority to pay such interest, but proposed to lend Mr. Pennington one thousand dollars on a demand note, which arrangement was carried out.

Whereupon the People's Bank of Sumner and J. W. Jenkins and G. C Jenkins filed a bill setting forth that the bank's deed of trust was a prior deed of trust to the other two deeds of trust, and that the deed of trust of J. W. Jenkins and G. C. Jenkins was a second deed of trust, and that Pennington's deed of trust was a third deed of trust; and also setting up that the date of the...