Savings Bldg. & Loan Ass'n v. Tart

• Decision Date: 26 May 1902
• Court: Mississippi Supreme Court
• Parties: SAVINGS, BUILDING AND LOAN ASSOCIATION v. ELNATHAN TARTT

32 So. 115

81 Miss. 276

SAVINGS, BUILDING AND LOAN ASSOCIATION v. ELNATHAN TARTT

Supreme Court of Mississippi

May 26, 1902

FROM the chancery court of Lauderdale county. HON. STONE DEAVOURS Chancellor.

Tartt the appellee, was complainant in the court below; the building and loan association and others, appellants, were defendants there. The controversy arose from the following facts: In 1877 Joel P. Walker became the guardian of Sallie and Elnathan Tartt. He received $ 12,000 for them, and gave a bond, in the penalty of $ 18,000, as guardian. One of the sureties on this bond was Peter Higgins. Higgins died intestate in 1881. His estate was administered upon in the chancery court; notice to creditors given, debts probated and paid, and the administratrix made her final account, which was approved, and she discharged. The lands belonging to his estate were sold by his heirs to various parties. One of the wards [Sallie] became of age, and Walker settled with her. Walker died in 1899, without making any settlement of the guardianship of appellee, Elnathan Tartt. A few months after appellee became of age he filed the bill in this case against appellants, the heirs of Peter Higgins and their vendees. The purpose of the bill was to charge on the lands of which Higgins died seized and possessed the amount of the debt with statutory interest thereon, due by the guardian, Walker to appellee, Tartt. Section 2025 of the code of 1880 (code 1892, § 1881) provides that the lands of a decedent's estate should stand chargeable with his debts over and above what his personal estate might be sufficient to pay. The defendants, in their answers, do not deny that they purchased the lands involved from the heirs of Peter Higgins; nor do they deny that the guardian was in default to complainant, as guardian, to the amount claimed. They set up in defense the three, four, six and ten years' statute of limitations. To certain portions of the lands several defenses were interposed, to wit: It was contended that some of the lands are not liable because the defendants had acquired title to them through a tax sale; that another portion was not liable to the lien because it had passed into the hands of innocent purchasers for value, without notice. On these issues much testimony was taken, and the cause was heard on bill, answers and proof. There was a final decree rendered by the court below in favor of complainant, except as to the portion claimed under tax sale. From that decree defendants appealed, and complainant prosecuted a cross appeal to the supreme court.

For a previous report of this case, on appeal from a decree overruling a demurrer to the bill, see Horne v. Tartt, 76 Miss. 304. The cases are the same, though titles different.

Affirmed. Reversed and remanded.

Alexander & Alexander, Miller & Baskin, and T. G. Lewises, for appellants.

The question presented by this appeal is of the gravest importance. On its determination must depend the stability and security of perhaps a majority of the land titles in the state. The view taken by appellee, and adopted by the learned judge below, if correct, will cause alarm, and necessarily wither, unsettle or disturb the titles of a majority of our landowners, or at least, make it impossible for them or their attorneys to ever pronounce with certainty on the validity of their titles.

The lands in the hands of the purchasers from the heirs, was not liable at common law, even as against the specialty debts of the intestate, which bind the heir, personally, to the amount of the land received; purchasers from the heirs were protected. See Williams on Executors, 794; 11 Am. & Eng. Ency. Law, 1096. It is useless to multiply authorities to show that the bona fide purchaser from the heir was protected under the common law. This will not be denied.

If there be liability, it must be statutory. The statutes which changed the common law, and which were in force when Peter Higgins died, were §§ 2025 and 2028, code of 1880. The former provided that the lands of the estate should stand chargeable for the debts over and above what the personal estate might be sufficient to pay. The latter defined and limited the rights of creditors who failed to probate their claims. These statutes, being an innovation upon the common law, will be given a strict construction. Bearing in mind this rule of construction, let us examine as to the meaning of the word debt. The land is charged only with debts of the decedent. The word debt does not include purely contingent liabilities. A liability is a responsibility; debt and liability are not synonymous. See Am. & Eng. Ency. Law, 984.

The word debt within the meaning of our bankruptcy laws, has never been held to embrace a contingent liability, the obligation of which is dependent on a few contingencies which may never arise. See Sayre v. Glen, 87 Ala. 631; French v. Morse, 2 Gray (Ill.); Woodard v. Herbert, 22 Me. 358 (111 Mo. App., 530); Johnson v. Diamond, 11 Exch., 73.

The essential difference between a liability and a claim or debt has been clearly pointed out by our own court in Harris v. Hutchison, 65 Miss. 9. It holds that a contingent obligation, which may or may not become absolute, is not a claim within the meaning of §§ 2027, 2028, code of 1880, and, therefore, need not be probated. The obligation of probating was decided in Ales v. Plant, 61 Miss. 259, to be for the protection of the heirs of estates against the assertion of unregistered claims. The purpose of registering claims was held to be "The speedy settlement of estates and the early ascertaining of the respective rights of creditors, and heirs." The statute looks to the prompt distribution of both personalty and reality. If the contingent obligation is a mere liability and not a debt, in the sense that it is not to be probated, then it should not be a debt within the meaning of § 2025, which charges the lands in favor of the creditor. Both these sections look to the protection of the heir, as well as the creditor. Section 2023 protects the creditor by making the lands chargeable, but protects the heir by providing that the lands "may be subject in the manner hereinafter directed." When we come to see what is the manner directed, we find that "claims," whether due or not, must be registered, or they will be barred. Contingent obligations which may never become absolute, are expressly held not to be within the purview of these statutes. We ask, then, how can it be held that such an obligation is not a claim which can be probated, and at the same time that it is a debt which can be charged on the assets. We, therefore, invoke a strict construction of the statute on the meaning of the word debts. However, we do not invoke any stricter construction than our court has already given in the above decision. In the next place, since a bona fide purchaser from the heir was protected at common law, the statute will not be construed to deprive such purchaser of his protection. This would be to give it a broad and liberal construction instead of a strict one. The statute will be held to repeal the common law only so far as it plainly and expressly does so.

The bona fide purchaser is a favorite of the courts of equity. It is true there are eases which hold that express liens created by statute and growing out of contract, sometimes obtain even against bona fide purchasers. An instance of this sort is found in the reservation of titles by the seller of a chattel, but these cases depend upon the rule of caveat emptor. This rule is universally applicable in the sale of chattels, except where changed by statute or by registry laws. But we know of no cases, and can conceive of no instance where a secret lien or equity on land is held superior to the claim of one who purchased the legal title to the land, without either actual notice or constructive notice of the equity. It must be borne in mind that this is not a statutory proceeding. As was pointed out in Ales v. Plant, under the code of 1880, land could be subject only in two ways: First, by petition by the administrator, and second (the remedy for the first time incorporated in our statute) by creditors, "who have procured their claims against the estate to be registered." See § 2047, code of 1888; Ales v. Plant, 61 Miss. 255.

This not being a suit by the administrator nor by a creditor whose claim has been registered, must be viewed as an independent proceeding in equity. The creditor comes asserting his equity, and is met by a superior equity in the defendants. This equity is not only superior in itself, but is first in point of time, and is forfeited by possession. Let us waive these equities, although it is the essence of the defense of the bona fide purchaser that it deals not with comparative rights of equities, but is a defensive shield, which the courts throw around the innocent purchaser. The overwhelming force of the bona fide purchaser as against the creditor can hardly be illustrated more strongly than by the present case. The complainant comes asserting the technical statutory right an innovation upon the common law. He plants himself upon § 2023 of the code of 1880 which makes the lands chargeable for the debts of the decedent in a certain manner therein pointed out. When we turn to the manner presented, we find that the remedy fails. He cannot and does not avail of any statutory remedy, but falls back to the general equity jurisdiction, and when he does so he is met by the rule that equity will never enforce a recent lien on land against a bona fide purchaser of the legal title. This view brings us face to face with the alarming results which will follow an affirmance. Bear in mind that the appellee concedes everything except the legal proposition that nothing can...