Pyle v. Gentry

• Decision Date: 06 February 1922
• Docket Number: 22236
• Citation: 90 So. 485,127 Miss. 784
• Court: Mississippi Supreme Court
• Parties: PYLE v. GENTRY et al

90 So. 485

127 Miss. 784

PYLE v. GENTRY et al

No. 22236

Supreme Court of Mississippi

February 6, 1922

1. DAMAGES. Only damages allowable for failure to pay when due is legal interest.

An agreement in a deed of trust on land to secure the payment of several promissory notes at maturity that, if the grantor fails to meet any of the notes when due, he will pay the holder thereof a fixed sum of money as rent with no provision for the credit thereof on the notes or on the interest to accrue thereon, is unenforceable, whether it is held to provide for liquidated damages or for a penalty for the only damages allowed by law for the failure to pay money when due is legal interest thereof.

2 DAMAGES. Conventional penalty is enforceable only to extent of actual damages for breach of contract.

A conventional penalty can be enforced only to the extent of the actual damages sustained because of a breach of the contract.

3 JUDGMENT. Maker not a party to action against indorsers not bound by judgment.

Although a holder of a promissory note has obtained judgment against the indorsers thereon, the maker of the note, if not a party to the judgment, will not be bound thereby in a suit against him by the indorsers thereon, but will be liable to them only for the amount that was actually due by him on the note.

HON. A J. McINTYRE, Chancellor.

APPEAL from chancery court of Pontotoc county, HON. A. J. MCINTYRE Chancellor.

Bill by J. T. Gentry and others against T. L. Pyle. Temporary injunction was issued, and the cause heard on demurrer and motion to dissolve, both of which were overruled, and defendant appeals. Reversed and remanded.

Reversed and remanded.

Fontaine & Fontaine and Mitchell & Mitchell, for appellants.

The court erred in overruling appellant's demurrer. It is settled law that a court of equity will not give relief against a judgment at law where the remedy at law was fully adequate and unembarrassed, unless for some reason which prevented a defense at law without negligence on defendant's part. Thomas v. Phillips, 4 S. & M. 358.

Complainant and appellee, Ann Leslie, was neither a necessary or proper party complainant. It affirmatively appears that she was not a party to the judgment, nor is it alleged that the other appellees were her agents, nor does it appear now that her rights could be affected or concluded by said judgment. Roberts v. Ross, 2 Miss. 274; Harper v. Hill, 35 Miss. 63.

She has all the rights she ever had, and can enforce them in another action. Harper v. Hill, 35 Miss. 63. It is argued that the makers of said notes, Eddie and Anna Leslie, should have been made parties defendant to the suit in which the judgment was rendered. The statute requiring suits to be brought against endorsers and makers jointly was for the benefit of endorsers. Code 1906, sec. 4013.

Appellees Gentry and McDivitt could have had them made parties defendant to the suit in which the judgment was rendered by demurring to the declaration or by plea in abatement. Lillard v. Planters Bank, 3 Howard 78; Stiles v. Inman, 55 Miss. 469.

The sale of the land by appellee Gentry to the Leslies, construing the deed, the notes and the deed of trust, all executed at the same time, together, clearly shows the contract for the sale of the land was an executory contract and that rent could be stipulated for in default of the payment of the purchase money. Sample-Carter Co. v. Cox, 22 So. 801. But in that case a re-conveyance of the land was made to Mrs. Cox.

Now the contract in this case certainly authorized the purchasers of the land to pay the rent instead of the notes for the purchase money as they became due, and compelled assignee of the notes for the purchase money to accept same. Justice WOOD in the case of Maynard v. Cox, 71 Miss. 495, propounds the question: "Can the dual relation of vendor and vendee and landlord and tenant subsist between the same parties when the vendee has received from the vendor an absolute conveyance to the land?" As to this we do not pretend to say; but we do say that the vendee in possession under his deed could compel the vendor to accept payment of the notes for the purchase money of said land. However, this may be, the claim of appellees Gentry and McDivitt that they should and ought to have been credited, as endorsers with the rent payments, on the purchase money notes for the land upon which they were sued by appellant Pyle, and which they allege in their bill of complaint were really payments on said land; we respectfully submit that this should have been in said suit in the circuit court upon these notes, and having failed so to do, they are now concluded by the judgment of the circuit court. The circuit court had full and unencumbered jurisdiction to entertain such plea, and their allegation in their bill of complaint that this defense was equitable and could not have been made at law is purely an erroneous conclusion of law.

George T. Mitchell and D. R. Bolton, for appellees.

Will a court of equity permit appellant to retain this four hundred fifty dollars additional sum and yet collect the full amount of the notes and interest? We frankly admit that if a court of equity will stand for such extortion, we have no lawsuit and might as well confess it in the beginning. Upon our confidence that it will not permit it, we are willing to rest our case.

What is this one hundred fifty dollars per annum which the deed of trust calls rent? It cannot be called rent, for appellant Pyle had no title to the land or even reversion therein. His only interest was a deed of trust securing his notes. He was an entire stranger to the title. The fee to the land was in the party who paid the rent. Under no construction of the law could this one hundred fifty dollars per annum payment be considered rent in the true sense of the word. It cannot be interest, for appellant claims his judgment for full interest, making no allowance therefor. In the case of Maynard v. Cox, 71 Miss. 495, there were interest notes which it was stipulated should be considered as rent notes and a landlord's lien retained for the collection of same. This the court held not to be rent, but a provision for an equitable lien on the agricultural products for the collection of the interest. There was no attempt in that case to collect both rent and interest.

What then is this thing called rent? We may conclude what it is not, but it is difficult to say what it is. Counsel for appellant do not undertake to classify it and we confess our inability to do so with entire accuracy. It is the creature of some justice of the peace which only the Sir William Blackstone of that system of jurisprudence adhered to by the ancient and Independent Order of J. P.'s could properly interpret.

If we may hazard our opinion as to what this rent really is, we would say that in the nature of a penalty or forfeiture, it seems to us very much like the "pound of flesh" exacted, by Shylock on Antonio's bond. It is an extra sum to which appellant became entitled under the contract upon default in payment of any note at maturity without in any way impairing or diminishing the rights of the creditor thereunder. Appellant's sole reliance is that he has gained an advantage at law and thereby he seeks to tie the hands of a court of equity and thus be enabled to hold that to which in equity and good conscience he is not entitled.

Answering appellant's contention that this matter is concluded by the judgment of the court of law, we say it was not a matter cognizable in a court of law. The law will enforce the contract as written, but equity will relieve against the inequities of it. The contract stipulated for the payment of the rent and in a court of law, appellant was entitled to insist on the principal and interest without credit for the rent, suit was brought in a court of law on the notes. There was no provision in them as to the rent. It was a separate instrument, the deed of trust, that provided for the rent. A court of law will enforce a contract according to its terms and will not relieve against it because it is unconscionable. The contract it enforced in rendering judgment on the notes had no reference to the rent. The rent was provided for in a separate instrument. It was not an executory, but an executed contract, for the rent had already been paid. It the aid of a court of equity is necessary in order to compel appellant to apply as an equitable set off that which in equity and good conscience he may not retain, although he obtained it...