Scott v. Green River Lumber Co.

• Decision Date: 21 January 1918
• Docket Number: 19834
• Parties: SCOTT & GARRETT v. GREEN RIVER LUMBER CO
• Court: Mississippi Supreme Court

77 So. 309

116 Miss. 524

SCOTT & GARRETT v. GREEN RIVER LUMBER CO

No. 19834

Supreme Court of Mississippi

January 21, 1918

Division B

APPEAL from the circuit court of Quitman county, HON.W. A. ALCORN JR., Judge.

Suit by the Green River Lumber Company against Scott & Garrett. From a judgment for plaintiff, defendants appeal.

The facts are fully stated in the opinion of the court.

Judgment reversed, and cause remanded.

P. H Lowry, for appellant.

Under the evidence in this case, the defendants were at most, only sureties for the payment of this rent, Norris being the principal debtor. Norris owed them an indebtedness secured on his crop, more than the crop paid, and was still largely indebted to them, and there is no pretense of proof that they ever agreed with Norris to pay this indebtedness, in consideration of the receipt of the crop. They were only secondarily liable, or in other words they were sureties.

Mr Black in his Law Dictionary, says: "A surety is defined as a person who, being liable to pay a debt or perform an obligation, is entitled, if it is enforced against him, to be indemnified by some other person, who ought himself to have made payment or performed before the surety was compelled to do so."

To the same effect: 27 Am. & Eng. Ency. Law, page 431; Smith v. Shelden, 24 Am. Rep. 333. While there is some conflict of authority, the reasonable, just and general accepted rule is that where a principal creditor has the means of satisfaction actually within his grasp, he must retain it for the benefit of the surety, Lichtenhalters v. Thompson (Penn.), 15 Am. Dec. 583; Baker v. Briggs, 19 Am. Dec. (Mass.) 316; White v. Life, etc., (Ala.), 35 Am. Rep. 45; 27 Am. Eng. Ency. Law (2 Ed.), 516 and 520. In the case of Moreland v. Peoples' Bank, 74 So. 828, this court recently held that the rule above stated will not be applied in this state if a bank is dealing with the funds of its depositors. I do not understand that the court means to repudiate this general doctrine, which is correct and wholesome; but this court as I gather only declined to apply it to banks, for the reason stated in the Wilkes-Barre v. Legrande, 103 Pa. 309, quoted, as I take it, approvingly by this court. It is not necessary, however, to apply this rule in its strictness in this case. Here the plaintiff was actually indebted to Norris, at the very time the suit was brought, in a sum much larger than the debt for which the defendants were surety and had notice that Norris was a non-resident and was insolvent, and that the defendants were delaying a settlement for the very purpose of getting the money out of Norris. Further than that, they knew of the plea and notice of the defendants in this case, and by the interrogatories filed for them to answer, that the defendants were defending this suit on that very ground. Under these circumstances, the appellee deliberately, and as we think the evidence shows, fraudulently handed this cash over to the principal debtor, ordinarily releasing the surety, it seems to me that there can be no question about the payment, under the circumstances in this case releasing the surety.

It may be true also, that ordinarily the payment of a salary or wages to an employee would not come within the rule. In the present case, while the amount was paid for services, it is not within the reason of the exception. Here it was not a payment of a running salary, but a payment of quite a sum of money that had accumulated from a salary much more than sufficient for ordinary living expenses.

Independent of the notice under the general issue in this case, the defense that the plaintiff at the time the suit was brought had sufficient funds of the principal in its hands to pay the debt, might have been made under the general issue. 32 Cyc., 130.

The defense by a surety of release by the dealings of the creditor with the principal, is a legal defense, while it may arise out of the equitable doctrine of marshalling securities and at least a kindred doctrine, it may nevertheless be made in a suit at law. Besides, where the surety is sued alone, he may set up any defense, legal or equitable. 32 Cyc., 149; 27 Am. & Eng. Ency. Law (2 Ed.), 489; Smith v. Clopton, 48 Miss. 66. To sum up my position in this case, it is as follows: First, the appellants (defendants) are surety for a debt of Norris, the tenant; second, the appellee (plaintiff) after the debt of Norris, the principal, became due, and before this suit was brought, and at the time this suit was brought was indebted to Norris and had funds of Norris; in its hands, much in excess of the debt for which appellants are surety; third, the appellee knew that the crop of Norris had been applied on the indebtedness of Norris to the appellants, incurred in the making of this crop, and that it was not sufficient to pay the indebtness; fourth, the appellee knew further that the appellants were delaying the payment of Norris' debt, in order that Norris might pay it himself; fifth, this notice had been brought to appellee, not only by the defense set up in this case, but by searching interrogatories, propounded to the appellee by the appellants in the course of the litigation; sixth, the appellee with this knowledge, and with no excuse except the purpose to make the surety pay the principal's debt, paid to the principal, a much larger amount than the indebtedness for which the appellants were surety; seventh, by this course, of dealing and these transactions between the creditor and the principal debtor the surety is released. So far as the surety is concerned, the debt is paid and the creditor cannot demand of them the payment of it or the indebtedness for the payment of which it had in its actual possession much more than enough of the principal debtor's money to satisfy and which it deliberately and purposely paid over to him. This is a gross fraud and an injustice to the surety, which the courts of justice will not permit. I therefore must respectfully submit that this case should have been submitted to a jury and that it was error for a court to give a peremptory instruction of the plaintiff and it should be reversed and remanded for a trial by a jury under proper instructions.

J. E. Holmes, for appellee.

We respectfully submit that a clearer case cannot be stated for the application of the lien of the landlord for his rent. The statute is not open to construction.

"Every lessor of land shall have a lien on the agricultural products of the leased premises, however and by whomsoever produced, to secure the payment of the rent and this lien shall be paramount to all other liens, claims or demands upon such products." (Sec. 2832, Code 1906.)

It is equally clear that the lien will prevail against even a bona-fide purchaser for value, and that the landlord is not confined to the statutory remedy the lien is broader. Newman v. Bank, 66 Miss. 323-337; Henry v. Davis, 60 Miss. 212; Fitzgerald v. Fowlkes, 60 Miss. 270; Cohn v. Smith, 64 Miss. 816.

But learned counsel for appellants seems to take the position that as between landlord and tenant there exists the relation of creditor and debtor and that the defendant merely became sureties for Norris the debtor of the plaintiffs, and upon this theory learned counsel builds the foundation for his assignment of error. It is true that the subtenant stands in the relation of surety for the tenant, but I do not find any case holding that a creditor of the tenant or a creditor of a subtenant is surety for the tenant.

In this case the defendants, Scott & Garrett, purchased the cotton and applied the proceeds, knowing that the landlord's lien existed against the cotton. In other words the cotton was converted by the defendants with the knowledge that there existed a lien against the cotton for the payment of the rent. In fact, there was an implied understanding that the proceeds of the cotton should pay the rent, and it is impossible for the defendants to escape the effect of their letter shown on page 107 of the transcript in which said letter the defendants admit the claim of the plaintiffs. The defendants say in said letter: "Mr. Norris told us the only claim there is or will be on his crop will be your claim for land rent only. Will you please verify his statement to us?" The plaintiff verified this statement and the defendants took over the cotton upon that understanding. Not only so, but learned counsel's position is not tenable either on the law, nor upon the particular facts in this case.

In the second place, if the defendants were surety for the payment of the rent, and nothing more, then they (plaintiffs) could not be compelled to apply money which came into their hands to the rent account, but would have...