Wilkinson v. Love, Superintendent of Banks

• Decision Date: 27 February 1928
• Docket Number: 26171
• Citation: 149 Miss. 523,115 So. 707
• Court: Mississippi Supreme Court
• Parties: WILKINSON v. LOVE, SUPERINTENDENT OF BANKS. [*]

115 So. 707

149 Miss. 523

WILKINSON v. LOVE, SUPERINTENDENT OF BANKS. ^[*]

No. 26171

Supreme Court of Mississippi

February 27, 1928

Division A

APPEAL from chancery court of Bolivar county, Second district. HON HARVEY McGEHEE, Chancellor.

Suit by J. S. Love, Superintendent of Banks, and the liquidating agent of the Shelby-Citizens' Bank &amp Trust Company, against J. L. Wilkinson and others, and suit by Mrs. M. C Wilkinson against J. S. Love, liquidating agent of the Shelby-Citizens' Bank & Trust Company, which were consolidated. From the decree, J. L. Wilkinson appeals. Reversed and remanded.

This cause was reversed and remanded May 23, 1927, and suggestion of error was filed May 30, 1927. The cause was continued on suggestion of error to the September term, 1927, of this court. Pending suggestion of error there was an attempt to bring other appellants into the appeal by filing appeal bonds. Motions filed to dismiss these several appeals. Suggestion of error sustained, the attempted appeals dismissed, and cause reversed and remanded. The former opinion was withdrawn.

ON SUGGESTION OF ERROR.

Decree reversed and cause remanded.

Shands Elmore & Causey, for appellants.

A motion was made to exclude from the room M. L. Wilkinson and Mrs. M. C. Wilkinson, parties defendant. This was a violation of their constitutional rights, notwithstanding which protest, the learned chancellor ordered them out of the hearing of the witness, J. L. Wilkinson. Such action of the court was error. French v. Sale, 63 Miss. 386. This seems to be the first pronouncement in Mississippi on this question, the court holding that it is a deprivation of a constitutional right to exclude a party, though holding that the court in its discretion and in the interest of justice may reasonably require that such party shall testify as first witness on his side, or must remain out of the court room. In this case there were three parties, namely J. L. Wilkinson, M. L. Wilkinson and Mrs. M. C. Wilkinson, and it was urged to the court that they could not all three testify at the same time. This question was squarely presented to our court, and has been passed upon. See Bernheim v. Didrell, 66 Miss. 199; Dec. Dig., Trial, paragraph 41 et seq.

This two thousand two hundred fifty dollar-note was a negotiable instrument under the provisions of the Uniform Negotiable Instrument Law, being the law of Mississippi at the time of the execution of this note, and is good in the hands of a holder in due course. M. L. Wilkinson was in all particulars a holder in due course except that he took the note after maturity, and the law is that one who takes a negotiable instrument after maturity is charged with notice of any defenses that the maker or indorser thereof may have, but not with notice of latent or secret equities of third parties. Ethridge v. Campbell, 215 S.W. 441; Salt Lake Investment Company v. Stoutt, 180 P. 182; Gee v. Parks, 193 S.W. 767; Beneficial Loan Association v. Hillery, 113 A. 324; Hanssen v. Pusey & Jones Company, 279 F. 488; Reardon v. Cockrell, 103 P. 457. We wish to call the court's special attention here to the further fact that the bank acting through its proper officer, placed this note, bearing every evidence of being a valid instrument, in the hands of the payee thereof, so that he could negotiate it with every appearance of right. This officer of the bank says that this resulted from his negligence. In Reardon v. Cockrell, supra, we find the following announcement of the law: "The appellants themselves having placed the note and mortgage in possession of Sullivan and the co-operative company, for the purpose of permitting them to negotiate the same to third persons, if a loss ensues therefrom, it must be borne by the party who negligently made the loss possible." Burtt v. Schoening, 244 P. 381. This doctrine is expressly adopted in Mississippi in Hall v. Box, 131 Miss. 218.

Clark, Roberts & Hallam, for appellee.

Only J. L. Wilkinson and M. L. Wilkinson and Louise Neely, substituted trustee, were parties to this suit. Mrs. M. C. Wilkinson was not a party. There was another suit in which Mrs. M. C. Wilkinson was complainant, and that suit was tried at the same time that the present suit was tried, and by amendment J. L. Wilkinson and M. L. Wilkinson were made joint complainants with her in that suit. Therefore, the exclusion of Mrs. M. C. Wilkinson from the court room while J. L. Wilkinson was testifying can avail the appellant nothing. M. L. Wilkinson was the real party in interest, and not J. L. Wilkinson. M. L. Wilkinson it was who claimed to own the two thousand two hundred fifty-dollar note as a bona-fide purchaser for value. When the shadow vanishes and the substance is seen, J. L. Wilkinson was merely a witness for the defendant M. L. Wilkinson. It was, therefore, right and proper that M. L. Wilkinson should retire from the court room while his witness J. L. Wilkinson was testifying. French v. Sale, 63 Miss. 386, is relied on by appellant. The case is not parallel with the case at bar. In the present case there were two defendants, and both of them could not testify in their own behalf at the same time. It was therefore necessary that one should retire while the other one was testifying in his own behalf. This seems to be the effect of chancery rule number 11 (Griffith's Mississippi Chancery Practice, page 829). There is a distinction between Bernheim v. Dibrell, 66 Miss. 199, and the case at bar. There was no joint claim to the property as in the case cited. J. L. Wilkinson can have no just ground of complaint. He was not excluded from the court room, but was allowed to remain in the court room throughout the entire trial.

One who takes a negotiable instrument after maturity cannot be holder in due course. Section 2630, Hemingway's Code 1917. Further than this, J. L. Wilkinson negotiated this instrument to M. L. Wilkinson in breach of faith and under such circumstances as amounted to a fraud. The title of J. L. Wilkinson to this note therefore, when he negotiated it to M. L. Wilkinson was defective under section 2633 of Hemingway's Code 1917. And the fact that the instrument was overdue was notice to M. L. Wilkinson of this defect. At the time this note was negotiated to M. L. Wilkinson by J. L. Wilkinson, the bank claimed no latent or secret equities therein. It merely claimed that this note had been paid and satisfied and extinguished by the execution and delivery of the two thousand and fifty dollar-note by Mrs. M. C. Wilkinson. At that time the two thousand two hundred fifty dollar-note was dead. It had no legal existence. For these reasons, there is no question in this case as to latent or secret equities.

The question is: did the two thousand and fifty dollar deed of trust from M. C. Wilkinson to the bank constitute a first lien on lots 84 and 85 in block 9 of Williamson's Addition to the town of Shelby, and did M. L. Wilkinson have notice of that fact? If M. L. Wilkinson had gone to the chancery clerk's office and examined the land records he would have found that the Shelby Citizens' Bank & Trust Company held a deed of trust, which so far as the records showed, constituted the first and only lien on those lots. He would also have found that J. L. Wilkinson never had a deed of trust on these lots, but that the two thousand two hundred fifty dollar deed of trust which was given to him was not a lien on these lots at all, but purported to create a lien on entirely different property, to-wit: Two lots described as being in Williamson's Addition to the town of Shelby; that the deed of trust held by the bank was filed for record on April 2, 1924, and was actually recorded in the chancery clerk's office six months before the two thousand two hundred fifty dollar-note was transferred to him. The object of filing a deed of trust for record is to give notice to the world of its contents. Sections 2291 and 2292, of Hemingway's Code 1917; chapter 239, Laws of 1924; Stovall v. Judah, 74 Miss. 747.

OPINION

COOK, J.

The appellee, J. S. Love, superintendent of banks, and the liquidating agent of the Shelby-Citizens' Bank & Trust Company, instituted suit in the chancery court of Bolivar county against J. L. Wilkinson, M. L. Wilkinson, and Louise Neely, trustee, seeking to establish priority of the lien of a certain deed of trust executed by Mrs. M. C. Wilkinson in favor of the Shelby-Citizens' Bank & Trust Company, and also seeking an injunction to restrain the foreclosure of a deed of trust of prior date executed by the said Mrs. M. C. Wilkinson to J. L. Wilkinson, and by him assigned to M. L. Wilkinson. Thereafter Mrs. M. C. Wilkinson filed a bill against the said J. S. Love, liquidating agent, praying the issuance of a writ of injunction restraining the foreclosure of the deed of trust in favor of the bank until the priorities of the two deeds of trust could be determined and established.

Preliminary injunctions were issued in these causes, and upon motions being made to dissolve them, the causes were, by agreement of the parties, consolidated, and submitted as if on final hearing; and a decree was entered holding that the deed of trust given by Mrs. M. C. Wilkinson to the Shelby-Citizens' Bank & Trust Company was a lien on the property covered thereby superior to the deed of trust executed by her to J. L. Wilkinson, and making perpetual the injunction restraining J. L. Wilkinson, M. L. Wilkinson, and Louise Neely, trustee, from foreclosing the deed of trust held by M. L. Wilkinson; and from this decree J. L. Wilkinson prayed for and was granted an appeal, which he perfected by executing a proper bond. Mrs. M. C. Wilkinson, M. L. Wilkinson, and Louise Neely, trustee, executed no appeal or supersedeas bond, and did not otherwise...