Yates v. Council

• Decision Date: 22 December 1924
• Docket Number: 24221
• Court: Mississippi Supreme Court
• Parties: YATES et al v. COUNCIL et al. [*]

102 So. 176

137 Miss. 381

YATES et al v. COUNCIL et al. ^[*]

No. 24221

Supreme Court of Mississippi

December 22, 1924

Division B

1 MORTGAGES. Banks holding as collateral notes secured by mortgage necessary parties to foreclosure suit, and petition demurrable for nonjoinder.

In a suit to foreclose a mortgage in a chancery court, where the bill shows that the notes secured by the mortgage and deed of trust are held by banks as collateral security to an indebtedness, the banks are necessary parties to the suit.

2 PARTIES. Bill showing notes secured by mortgage held by banks not parties is demurrable.

When the bill shows this fact, it is subject to demurrer because of the failure to make the banks parties to the suit.

HON. E. N. THOMAS, Chancellor.

APPEAL from chancery court of Washington county, HON. E. N. THOMAS, Chancellor.

Suit by Chas. T. Council and another against J. W. Yates and others to foreclose deed of trust. From decree for plaintiffs defendants appeal. Reversed and remanded, and lis pendens notice discharged.

Decree reversed, demurrer to bill sustained; cause remanded.

Clark & Williams, for appellants.

1. There is no equity on the face of the bill. Council and Wade, his "trustee," are intermeddlers, and their bill fails to state any facts which would authorize them to file this suit. They did not hold the legal title to the notes sued on, they allege no demand upon the two banks, or either of them, to collect the notes, or to foreclose the deed of trust, and give no excuse for meddling with the securities of the banks in this fashion. Neither do they make the banks parties, nor show any reason for omitting to do so. Kitchens v. Harrall, 54 Miss. 474.

2. "It is a settled maxim in equity that all persons in interest in the subject to litigation whose interests will be affected by the decree, must be made parties to the bill." Foster v. Jones, 17 So. 893, 895; Story Equity Plead., sec. 201; Harding v. Cobb, 47 Miss. 599.

3. A misjoinder of complainants, if it appears on the face of the bill, is demurrable. Harding v. Cobb, supra; Harlow v. Mister, 64 Miss. 25.

4. A nonjoinder of necessary parties, if it appears upon the face of the bill, is demurrable. Rodd v. Durbridge, 53 Miss. 694; Champlin v. Cotton, 53 Miss. 689.

5. The bill itself nowhere alleges that Council had any substantial equity in the Townsend notes, which were collateral security to his loans at the banks. His bill states that L. T. Wade, his newly appointed trustee, was to liquidate the securities and pay over the remainder of the proceeds, "if any," to council. On the face of it, this bill is an attempt on the part of council to "raise the wind," by collecting his unascertained "equity" in securities which he had pledged to the banks. The gravamen of the bill is this: Council owes the banks, and has turned over to them the Townsend notes. If, after the banks are paid what Council owes them out of the securities, there is any balance remaining, he, Council, would like to get it. Accordingly, although he is not positive that anything will be left for him, he would greatly appreciate it if the court would order an accounting to ascertain what sum or sums "if any" are left for him. George v. Solomon, 71 Miss. 168. The bill in the instant case being a fishing bill, the demurrer to it should have been sustained. George v. Solomon, supra; Bank v. Phillips, 71 Miss. 51.

6. This is neither an attachment in chancery nor a creditor's bill. (a) Attachment in chancery. Townsend, the non-resident, who was summoned by publication, had no land in the state, and the notes were in the hands of the banks, and they are not made parties. Section 293, Hemingway's Code, does not cover the case. (b) Creditor's bill. The bill is not maintainable as a creditor's bill under section 313, Hemingway's Code, for want of interest, and for want of proper parties, both complainant and defendant.

7. The allegations of fraud, intent to hinder and delay, etc., are transparent subterfuges, put in to shut out a demurrer to the bill. Since Yates Brothers never had any dealing with Council, never came in contact with him, these allegations are far-fetched. There is no allegation that they had any fraudulent dealings in any property other than their own, and complainants set up on positive claim against them which would entitle them so come in on creditor's bill. When Council sold the land to Townsend, he took a deed of trust to secure the unpaid purchase money. On what theory can he allege that Yates Brothers are trying to defraud him by their dealings with their own property? It nowhere appears either in the bill or in the testimony that any demand was ever made, either by the banks or by Council, to pay these notes, and there is nothing in either the bill or the testimony to show that Yates Brothers even knew who held these notes, until this suit was filed. The allegations of fraud in the bill are mere conclusions of law from a vaguely stated act of facts which will not satisfy the court. Salter v. Aviation Salvage Co., 91 So. 340; Hamilton v. Lockhart, 41 Miss. 460; Fire Ins. Co. v. Standard Drug Co., 117 Miss. 435-36.

8. As to that part of the demurrer which challenges this bill for not making the assignment from Council to Wade, trustee, an exhibit to the bill, and also, the failure to show copies of the notes, we think that slack pleading and slack practice has become a great burden to all our courts, and that the time has come to call a halt on it. Had the assignment from Council to Wade, trustee, been set out in this bill, no court would have entertained such a bill. As it was, the allusions to this assignment contained in the bill, vague as they were, showed that the assignment was made after Council had pledged the Townsend notes to the banks, which was afterwards confirmed by the testimony. The rule is that vague pleadings must be taken more strongly against the pleader.

1. The testimony of the two cashiers knocks the bottom out of this case. Both plainly stated that this suit was brought by the two banks, who were not parties to it. This court has held, that a suit cannot be brought in equity "for the use" of a bank. The holders of both the legal and equitable interests must be before the court. Kitchens v. Harrall, supra. Had the bill been taken pro confesso, the right of both banks to bring an action on the Townsend notes would not have been affected by the decree in the chancery court. Patty v. Williams, 71 Miss. 837-41.

2. The testimony of the two cashiers plainly shows that this suit was authorized and directed by the banks, using Council and Wade as blinds.

3. There was no sound reason why the demurrer overruled, these appellants should be denied an appeal, and forced to answer instanter. They had a perfect right to assume that the bill of complaint could not stand up under a demurrer, to assume that the court below could ever be satisfied with any such bill, or should deny them the right to have the supreme court pass on the sufficiency of it.

4. The charges of fraud were dropped. Not one word of evidence was given to sustain them. This plainly shows that these allegations were inserted in the bill for the sole purpose of avoiding a demurrer. This suit, then, completely fails as an attachment in chancery, and as a creditor's bill for want of proof, as well as for lack of proper allegations.

5. There was no justification for tying up the plantation of Yates Brothers, not involved in this suit, by putting a lis pendens notice on the land records, and crippling them in this fashion. Section 2499, Hemingway's Code, does not authorize it in this case.

6. The objection by defendant at the hearing, to the introduction of the deed of trust, the notes, and the written assignment from Council to Wade, trustee, because they were not made exhibits to the bill, should have been sustained. We had, in our demurrer, called attention to the fact that the bill had no exhibits attached, and even though it be said that such omissions could not be made ground of demurrer, yet it was certainly proper practice to object to their introduction at the hearing, and the objection should have been sustained. Section 1634, Hemingway's Code; Wanita Woolen Mills v. Rollins, 75 Miss. 253.

Watson & Jayne, for appellees.

The assignment involved in this case operated to pass title to the notes and the mortgage into appellee Wade, as trustee. Nelson v. Yarbrough, 94 So. 887 (Miss.); 3 Pomeroy Eq. Jury. (4 Ed.), secs. 1209-10. The fact that there was more than one usee interested in the notes does not affect the liability of the maker of the mortgage paper; but could not relate to the right of the usees, as between themselves. 3 Pomeroy Eq. Jur. (4 Ed.), secs. 1201-2-3. Equity has power to decree a foreclosure of trust deed mortgages, independent of the powers conferred on the trustee therein named, by the contract. Smith et al. v. Cleveland Steam Ldy., 95 So. 433 (Miss.) The equity of redemption being in the appellants as owners of the land covered by the mortgage, they were necessary parties to the foreclosure proceedings. 2 Jones on Mortgages, (4 Ed.), sec. 1406.

The appellants as purchasers from the mortgagor had assumed the payment of the mortgage debt and thereby made themselves personally responsible to the holders of the mortgage paper also, were for that reason necessary parties, if personal judgment for a foreclosure deficiency was desired. 2 Jones on Mortgages (4 Ed.), 1407; Barries v. Jones, 71 So. 573 (Miss.); Keller v. Ashforth, 133 U.S. 610, 33 L.Ed. 667. The obligation of a purchaser of land who assumes a mortgage thereon as a part of the consideration for his purchase, enures in equity to the benefit of the mortgagee, who may enforce it against the...