Williams v. Butts

Citation124 Miss. 661,87 So. 145
Decision Date28 February 1921
Docket Number21557
CourtUnited States State Supreme Court of Mississippi
PartiesWILLIAMS v. BUTTS

1. MORTGAGES. When a deed absolute on its face may be shown to be a mortgage stated.

A deed from A. to B., accompanied by a written agreement on the part of B. to convey to C. on the payment to him by C. of the money paid by B. to A. for the land conveyed, C. being then and thereafter remaining in possession of the land, may be shown to be a mortgage to secure the payment to B. of money advanced by him to C. with which to purchase the land from A.

2. APPEAL AND ERROR. Questions not presented below will not be considered.

A question not within the case made by the pleadings in the court below will not be considered by the supreme court on appeal.

3. PAYMENT. When court may apply payment stated.

If neither the debtor nor the creditor applies a payment to a particular one of several debts due the creditor by the debtor, the court will do so, but if the intention of the parties in making and receiving the payment can be ascertained with reasonable certainty from all the facts and circumstances of the case, the payment will be applied by the court accordingly.

4 MORTGAGES. Mortgagee entitled to cancellation on payment of mortgage debt, though owing mortgagee other debts.

Where a mortgage secures payment of a specific debt, the debtor is entitled to the cancellation thereof on the payment by him of the debt secured, although he may owe the mortgagee other unsecured debts contracted since the execution of the mortgage.

HON. L F. EASTERLING, Chancellor.

APPEAL from chancery court of Yazoo county, HON. L. F. EASTERLING Chancellor.

Suit by Anna Williams against Emily Butts. Decree for defendant, and both parties appeal. Reversed and remanded.

Decree reversed, and cause remanded.

E. L Brown, for appellant.

The contention of opposing counsel was that the instruments drawn were to be considered separately, the one as a deed disconnected with the other, and the other to be considered as an obligation on the part of Mr. Scarbrough to sell to Anna, and no obligation on her part to buy of him, this contention excluding from consideration all of the evidence, and in fact, denying the well-established proposition that a deed, absolute on its fact may, if the grantor retain possession, be shown to be a mortgage. Brooks v. Kelly, 63 Miss. .

This case disposes of the point to be based upon any consideration of whether or not Anna was the owner of the lands when Mr. Campbell deeded the same to Mr. Scarbrough, and this is independent of the consideration which we submitted at the argument, that Mr. Campbell held the lands in trust for Anna. Thomas v. Holmes County, 67 Miss. 754. If there could be any doubt as to whether this instrument was a mortgage, in the case of Klein v. McNamar, 54 Miss. 102, it is said: "The books abound in cases where the absolute conveyance has been shown by extrinsic evidence to be but a security for a debt. The question raised has only here and there been mooted in no instance that we have seen with success." Washington v. Soria, 73 Miss. 665.

Application of Payments. In this case, there was no application of the payments made by Scarbrough himself, that is to say, by the creditor. In Poindexter v. LaRoche, 7 S. & M. 699, the supreme court held: "If a party be indebted by mortgage, and also by simple contract debts, to the same creditor, and make a payment, and omit to apply it specifically to one of the debts, the law will make the application in the way most beneficial to the debtor, namely first to the mortgage."

So, the record being otherwise silent as to how Mr. Scarbrought appropriated these payments, and absolutely silent as to how Mr. Anna (?) directed that they be applied, the law applied them to the secured debt.

Contrary to what was asserted by opposing counsel at the argument, the civil law rule does not prevail in this state, as held in McLaughin v. Green, 48 Miss. 175, which rule is that the payments are to be appropriated most beneficially to the debtor.

In Mortimer v. McCabe, an unreported case, but reported in 1 Miss. Dec. 595, it is held: "Where a credit upon an open account is not applied by either party, the law appropriates it to the oldest items."

In the case of Fletcher v. Gillman, 62 Miss. 8, some of the items of the open account were barred, and some were not, and there were credits on the account, the statute of limitations being pleaded on the balance due. The chancellor applied the credits to the latest items of the account, and thus extinguished the whole of it. Of this action of the chancellor the court said: "This was erroneous. The credit was not dated, and there was no parol proof in the case, nor is there anything to denote any appropriation of the credit by either party. Where a payment is made upon an account without any application of it, the law applies it to the first items in the account." This case, involving one exactly like it, is cited with approval in Duffey v. Kilroe, 116 Miss. 11.

On the point that when credits are made generally on an account and neither the debtor nor creditors applies them to any specific items of the account, the law will apply them to the first items of the account. See Fletcher v. Gillum, 62 Miss. 8; Mortimer v. Kay, Miss. Decision, page 587; Duffey v. Kilroe, 116 Miss. 7. These authorities settle without a doubt that when payments are made and credited on account generally, no specific application being made by either party, that the law will apply the credit to the first items of the account in their order.

Under the law and undisputed facts, as shown by the book of C. C. Scarbrough, the complainant is entitled to the remedy prayed for, to-wit: To have a commissioner appointed to convey to her the lands mentioned in complainant's bill.

The decree of the chancellor, making Anna Williams, appellant, pay the unsecured account of C. C. Scarbrough, as a condition precedent to the satisfaction of the equitable mortgage, is not only contrary to the law and evidence, but is totally outside of the pleadings, and not authorized by the pleadings. So much of the decree of the chancellor that finds that appellant owed anything under the equitable mortgage must be reversed, and a decree entered by this court that appellant is the owner of the land in controversy, and direct that a deed be made to appellant of the same.

Campbell & Campbell and Mayes & Potter, for appellants.

The court correctly determined the deed from Mr. Campbell to Mr. Scarbrough, while absolute on its face; was in fact a mortgage. Before the matter was affected by legislation the unrestricted doctrine prevailed in this state that a deed absolute on its face could be shown to be only a mortgage. This rule was modified by paragraph 1299, Code of 1880, paragraph 4233, Code of 1892, section 4783, Code of 1906, which is as follows: "A conveyance or other writing absolute on its face where the maker parts with the possession of the property conveyed by it, shall not be proved, at the instance of any of the parties, by parol evidence, to be a mortgage only useless fraud in its procurement be the issue to be tried."

In this case the uncontradicted evidence shows that the appellant did not part with the possession of the property; that she was in possession at the time of the execution of the deed; that she is still in possession.

We, therefore, submit that it was competent to show by parol evidence that a mortgage was in fact given and that the deed executed by Mr. Campbell to Mr. Scarbrough, while in form absolute, was in fact a mortgage to secure the debt owed by the appellant to the appellee.

We still refer the court to Annotations in the case of Johnson v. First National Bank of Commerce, L. R. A. 1916B, page 136. We refer the court to the following cases from other states: Carr v. Carr (1873), 52 N.Y. 251; Stinchfoeld v. Millikin (1880), 71 Me. 567; Phelan v. FitzPatrick (1893), 84 Wis. 240, 54 N.W. 614 (1886); 66 Wis. 579; citing Scribner v. Le Clair; Fisk v. Stewart (1877), 24 Minn. 97 (Syl. of court); Beebe v. Wisconsin Mortg. Loan Co. (1903), 117 Wis. 328, 92 N.W. 1103; Hall v. O'Connell (1908), 52 Or. 164, 95 P. 717, 96 P. 1070; Sweet v. Mitchell (1862), 15 Wis. 642; Brooks v. Kelly, 63 Miss. 616.

It will not be necessary to multiply authority showing that parol evidence is admissible to prove that a deed absolute on its face can be shown to be a mortgage. In this case the uncontradicted proof shows that the instrument in question, while on its face an absolute deed in form, was by the verbal agreement of the parties a mortgage.

It is the established rule that as in this case where neither party has applied the credits, that they will be applied to the oldest debt. This rule is not only universal, but it is the law in our own state. "Where a payment is made upon an account without any application of it, the law applies it to the first items in the account. Here, therefore, in the absence of any proof the credit should have been applied to the first item of the account and this would have left the last item unbarred and unpaid." Fletcher v. Gillan, 62 Miss. 8, citing under sub-sec. 4, 30 Cyc., page 1243.

To the same effect is the case of Mortimer v. Kay, 1 Miss. Decision, page 587, and Duffery v. Kilroe, 116 Miss. 7. This rule is so well established by elementary law that we feel that it was hardly necessary to cite authority in support thereof. There is another rule on the application of payments as well settled as the rule that creditors are to be applied to the oldest items first, and that is that where there is no application of payments that the payments will be applied most beneficially to the debtor, and therefore, to the unsecured...

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