State v. Hemingway

• Decision Date: 30 November 1891
• Citation: 10 So. 575,69 Miss. 491
• Court: Mississippi Supreme Court
• Parties: STATE v. W. L. HEMINGWAY ET AL

10 So. 575

69 Miss. 491

STATE v. W. L. HEMINGWAY ET AL

Supreme Court of Mississippi

November 30, 1891

FROM the chancery court of the first district of Hinds county HON. H. C. CONN, Chancellor.

W. L Hemingway was treasurer of the state of Mississippi from January, 1878, until January, 1890. The bill in this case in behalf of the state was filed against him and the sureties on his last two official bonds, one of which was given in January, 1882, covering the term of four years following, the other given in January, 1886, for the succeeding term of four years, each bond being in the penalty of $ 80,000. About the time of the expiration of the last term, in January, 1890, it was claimed that the said Hemingway, as treasurer, was largely indebted to the state. This bill was filed October 15, 1890, charging, in substance, that Hemingway, on going out of office, in January, 1890, was indebted to the state in the sum of $ 315,000 and upwards, and that it was uncertain which bond was liable therefor. It was therefore sought to have the different sets of sureties interplead, in order that the liability, as between them, might be determined. It is shown that, on February 20, 1890, shortly after the announcement of the alleged shortage on the part of the said W. L. Hemingway, he executed a mortgage or deed of trust to one O. J. Waite, as trustee, by which he conveyed to him in trust, all his property, real and personal, in this state and elsewhere, to be sold to indemnify and save harmless all of the sureties on his official bonds, including the two above mentioned. The bill charges that this deed was fraudulent and, if not, that it operated primarily as a security for the indebtedness due the state by Hemingway, and not as indemnity to the sureties, and that it should be enforced for the payment, as far as may be, of the whole indebtedness due leaving the state to proceed against the sureties individually for the balance due after appropriating all the property conveyed.

In the trust-deed, which is made an exhibit to the bill, the grantor recited that it was claimed that, on a final adjustment of his accounts as treasurer, there would be a shortage; that he had given divers bonds, and that he was desirous of indemnifying, as against loss, any and all the sureties on his bonds. Therefore, in consideration of $ 10, he conveyed to the trustee all of his property, real, personal and mixed. The property was referred to as being situated in several states, and a general description was given Without specific designation. After the granting clause, the deed contains the following:

"But upon the following express trust and conditions, that is to say: if it shall be found, on such final adjustment of my aforesaid accounts, that I shall not be found indebted, then this conveyance to be void, otherwise said trustee, or any one else in writing appointed by my sureties on such bonds or their legal representatives, shall sell all my property hereinbefore described, or so much thereof as may be necessary, to the highest and best bidder for cash; . . . and out of the proceeds of such sale the trustee so selling shall pay, first, his own expenses and reasonable commissions in executing this trust, and then he shall pay in full, if he can, what I may be found indebted to the legal payee or payees thereof, and if any surety or sureties on any of the bonds hereinbefore referred to have made any lawful and proper payment on any such indebtedness of mine, such trustee shall prorate to such surety or sureties, according to the relation of such outlay to the demand of such payee, the object being to pay any liability of mine, and to save harmless any and all my sureties on any and all of said bonds, it being the true intent and meaning of this instrument to marshal the proceeds of the sales hereinbefore authorized for the adjustment pro rata, according to the amount which it may be found that I owe on the several funds intrusted to me as aforesaid, and for the like indemnity of any sureties of mine on any of my bonds."

In the bill it was claimed that this deed was void on its face. It was shown that part of the property conveyed consisted of cotton, corn, oats, etc., and the products of a dairyfarm embraced in the conveyance; that a large part of this property was perishable and consumable in the use, and yet the same was not delivered to the trustee at the time of the conveyance; that Hemingway was permitted to continue in possession and to use and enjoy the property and the income thereof for a number of months after the deed was executed; that he was permitted to dispose of part of the mortgaged property by conveyances to Nugent & McWillie and Calhoon & Green, attorneys, for his own purposes, but the trustee joined in the conveyances to these parties. The bill prayed for a personal decree against Hemingway for the entire amount of his indebtedness to the state, and that the property embraced in said conveyance should be subjected to the satisfaction of this indebtedness. But, if the court should be of opinion that the conveyance was valid, then, and in that event, it was asked that it should be treated as a mortgage in favor of the state, and enforced accordingly

Both sets of sureties, those on the bond given in 1882 and those on the bond of 1886, answered the bill, virtually admitting the default, but averring that it occurred entirely during the last term, and therefore that only the last bond was liable, wherefore the defendants denied the necessity for interpleader. They also denied the invalidity of the trust-deed, and all allegations of fraud were denied.

It was averred by the defendants that the conveyance of a part of the mortgaged property to Nugent & McWillie and Calhoon & Green was in consideration for their services as attorneys in protecting the interests of the sureties, who were the usees in the trust-deed; that these services were necessary for the protection of the trust-estate, and that the conveyances, which were made by Hemingway and joined in by Waite, the trustee, were by consent of the sureties. These conveyances were Omitted from the agreed record, and all the facts as to this do not seem to be before the court on this. appeal. As a part of the proof in the case, an agreement, signed by the respective solicitors, was filed, reciting as follows:

"It is admitted that all the property conveyed by William L. Hemingway in the assignment to O. J. Waite, trustee, exhibited in the papers in said cause, is not of value sufficient to satisfy the $ 80,000 bond last given as treasurer by said Hemingway to said state; and no proof need be made of this, nor of the consent of the sureties to the conveyance of land by O. J. Waite and W. L. Hemingway to Nugent & McWillie and Calhoon & Green; nor that the said Nugent & McWillie and Calhoon & Green rendered the services set up in their answers--all of which matters are admitted as if duly proved.

"It is further admitted as a fact that, at the close of his last term, January, 1890, W. L. Hemingway, state treasurer, according to his books and accounts, upon settlement with the state, owed, and still owes, the sum of $ 315,619.20, according to his said books and accounts."

The proof tended to show that the defalcation occurred entirely during the last term, and it was proved that, in March, 1886, the treasurer's office was investigated by a legislative committee, and that all the money due was counted, and found to be on hand.

A part of the property embraced in the trust-deed consisted of a dairy-farm and the stock thereon. The trustee, Waite, lived about half a mile from the farm, and there was some testimony, tending to show that, after the execution of the trust-deed, he exercised a general or partial supervision over the property, and that Hemingway, who was in actual control, acted as his representative; that for several months, pending inquiry as to the alleged deficit in the accounts of the treasurer, Hemingway had possession of all the property, and that he received and appropriated the income of the dairy-farm, and that he sold some articles of personal property, and received the proceeds. But there was testimony which tended to show that this was done in the preservation of the property; and, further, that, as it was not developed positively that there was a deficit, it was not believed that there was any occasion for the trustee to take immediate possession of the property, and sell the same under the provisions of the trust-deed.

Besides this dealing with the property during the delay of several months, pending investigation as to the treasurer's defalcation, there was no attempt to show fraud in fact as connected with the trust-deed. There was no evidence of any understanding or agreement, before or at the time of executing the deed, that the grantor was to reserve any benefit or interest in the property conveyed.

After this bill was filed, on the 6th day of January, 1891, the state recovered a judgment against the defendant, Hemingway, and the sureties on his last bond, for $ 82,600, this being the amount of the penalty of the bond with interest. The record of the suit at law culminating in this judgment was introduced in evidence.

On March 14, 1891, the case having been set down for hearing on the pleadings and proofs, and having been fully heard, the court made a decree, holding that the trust-deed executed by Hemingway was not fraudulent in law or fact, and that it should be enforced by a sale of the mortgaged property, the proceeds to he applied in exoneration of the sureties. The property was ordered to be sold by Waite, as receiver, and the cause was continued, no express adjudication being made as to whether there was any liability on the bond executed in 1882.

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