Summary
In Love v. Miss. Cottonseed Products Co., 174 Miss. 697, 159 So. 96, this Court held that this section was intended to apply to persons representing governmental units under delegated authority.
Summary of this case from Watson, Coroner, v. HolifieldOpinion
No. 30991.
January 21, 1935. ON MOTION.
1. APPEAL AND ERROR. In suit by superintendent of banks, in charge of liquidation of bank, for collection of debt allegedly due the bank, superintendent held entitled to appeal from adverse decree without bond, under statute authorizing "officials representing state" and any "state officer" in suit in which state is "beneficially interested" to appeal without bond ( Code 1930, sections 13, 76, and section 3755 et seq.).
An "official" is not necessarily an officer in the technical sense, but may be one having subordinate administrative or executive powers in a governmental or public institution.
2. APPEAL AND ERROR.
Statute authorizing "officials representing state" and any "state officer" who is party to suit in which state is "beneficially interested" to appeal without bond was intended to apply to all persons representing state in judicial proceedings under delegated authority, and words "beneficially interested" are not limited to financial interest in particular suit, but include interest therein of state in governmental capacity (Code 1930, section 76).
ON MERITS. (Division A. Feb. 3, 1936.) [165 So. 446. No. 30991.]1. CHATTEL MORTGAGES.
Mortgagee as owner of debt and incidental security may maintain action for injuries to, or conversion of, mortgaged property and apply proceeds of any recovery therefor to discharge of mortgage debt (Code 1930, section 2128).
2. CHATTEL MORTGAGES.
Measure of mortgagee's rights in mortgaged property or for injuries thereto is the amount of debt owing to him.
3. CHATTEL MORTGAGES.
Mortgagee who assigned mortgage debt and security and did not transfer to assignee previously accrued cause of action for conversion of mortgaged property waived such cause of action, since mortgagee's interest in mortgaged property converted was based upon the mortgage and limited by debt secured and was lost by assignment (Code 1930, section 2128).
APPEAL from the chancery court of Sunflower county; HON. J.L. WILLIAMS, Chancellor.
Suit by J.S. Love, Superintendent of Banks, in charge of liquidation of the Sunflower Bank, against the Mississippi Cottonseed Products Company. From an adverse decree, the complainant appeals, and, upon abolition of office of superintendent of banks, Forrest G. Cooper was appointed receiver of the Sunflower Bank, and was authorized to revive and prosecute the appeal. Affirmed.
Moody Johnson, of Indianola, and Green, Green Jackson, of Jackson, for appellee, on motion.
No appeal bond was filed by the appellant pursuant to the provisions of sections 28 or 29 of the Code of 1930. The decree in this cause was rendered on the 19th day of May, 1933, and hence the right to file an appeal bond has expired pursuant to the provisions of section 2323 of the Code.
It is submitted that the appellant, even if a state officer, is not an official representing the state in the suit disclosed by the record in this case.
Section 76, Code of 1930.
Even if it be conceded, and this is a doubtful concession, that the appellant is a party to the suit, disclosed by the record in this case, in his official character, yet undoubtedly this is not a suit in which the state is beneficially interested.
Love is not a public officer and cannot so be.
Chapter 336, Laws of 1933; Love v. Sunflower County, 144 So. 856; Love v. State, 145 So. 619: Sections 102 and 250 of the Constitution; McCool v. State. 149 Miss. 82, 115 So. 121; State v. Henry, 87 Miss. 125, 40 So. 152, 5 L.R.A. (N.S.) 340; Wynn v. State, 67 Miss. 312, 7 So. 353.
To make the statute constitutional, it must be construed that Love is not in that hereunder done an officer.
State v. Gilmer Grocery Co., 125 So. 710; Smith v. Chickasaw County, 125 So. 96; Mai v. State, 152 Miss. 225, 119 So. 177; Money v. Wood, 152 Miss. 17, 118 So. 357; Thompson v. Box, 147 Miss. 1, 112 So. 597.
In order to render that done effective, Love must not be a public officer, and the Legislature so knew, and to that end he will have to be held to be a mere employee.
State v. Miller, 144 Miss. 614, 109 So. 900; Shilling v. State, 143 Miss. 709, 109 So. 737; Robinson v. State, 143 Miss. 247, 108 So. 903; Association v. Hemphill, 142 Miss. 298, 107 So. 24; Hinds County v. Johnson, 133 Miss. 591, 98 So. 95; Miller v. State, 130 Miss. 564, 94 So. 706; State v. Wheatley, 113 Miss. 555, 74 So. 427; Richards v. City Lbr. Co., 101 Miss. 678, 57 So. 977; Johnson v. Reeves, 112 Miss. 227, 72 So. 925; Sterrett v. Second National Bank 248 U.S. 135, 3 A.L.R. 256, 246 Fed. 753; Bullock v. Oliver, 155 Ga. 151, 29 A.L.R. 1486; Grant v. Leach, 280 U.S. 361; Moore v. Mitchell, 281 U.S. 23.
Cooper Thomas, of Indianola, for appellant, on motion.
It is conceded, as contended by the appellee, that the statutory authority, if any, giving the appellant the right to appeal without bond is contained in section 76 of the Code of 1930.
The superintendent of banks of this state in a suit to recover assets, as the present case, does so as a state officer.
Gift et al. v. Love, 144 So. 562; Section 2887, Code of 1930; Bank of Oxford v. Love, 111 Miss. 699, 72 So. 133.
In bringing the present actions, or similar or any actions at law or in equity to recover assets for a failed institution, Love is merely carrying out and discharging the duties enjoined upon him by the statutes.
Section 3817, Code of 1930.
To say that the state must be "beneficially interested" does not of necessity imply and mean that all, and all parts, of the state must be "beneficially interested." When it is said that the "public" must be "beneficially interested" in a project for legislative action, by such statement is not meant that "all" of the "public" must be interested.
State v. Whitesides, 30 S.C. 579, 9 S.E. 663, 3 L.R.A. 777; State v. Coahoma County, 64 Miss. 358.
Love, as a public or state officer, is interested in the performance of his duties as such officer because the imposition of such duties upon him causes him to be the state or public officer that he is.
46 C.J., sec. 308, page 1037, and page 922, sec. 2; Hudson v. Gray, 58 Miss. 589; Mercantile Trust Co. of San Francisco v. Miller et al., 166 Calif. 563, 137 P. 913; Miller v. Phipps, 119 So. 170.
Even though the appellant did not have the right to appeal without bond, his appeal cannot be dismissed because of the beneficent provisions of section 3375 of the Code of 1930.
State v. Coahoma County, 64 Miss. 358; Cleveland State Bank v. Cotton Exchange Bank, 118 Miss. 768; Hudson v. Gray, 58 Miss. 589; Wills v. Howie Brothers, 109 Miss. 568; Purity Ice Cream Co. v. Morton. 127 So. 276.
Flowers, Brown Hester, of Jackson, and Cooper Thomas, of Indianola, for appellant.
A valid lien on chattels, when the deed of trust or mortgage complies with chapter 243, Laws of 1920, is conveyed, regardless of whether the instrument is construed in a law court or when the "principles of equity apply."
Tabb v. Peoples Bank Trust Co., 133 So. 137.
The mortgage in question further provided that should the indebtedness be paid in full by December 15, 1929, then the instrument was void; otherwise, said mortgagee had the right to sell, which right, of necessity, included the right of possession. Then, from September 25, 1929, the date of mortgage, to December 15, 1929, or thereafter, if any injury or damage was done to the security, i.e., the cottonseed, then the Sunflower Bank had a right of action on case against the tort-feasors, whether mortgagor or purchaser or both.
11 C.J. 9, sec. 19.
On and after December 15, 1929, when Sunflower Bank had the right of possession to the security and had a lien thereon, a cause of action in trover and conversion lay.
26 R.C.L., page 1131, sec. 41, and page 1136, sec. 47.
In order to maintain trover and conversion, of course, the mortgagee must have the right of possession, or possession.
Buck v. Payne, 52 Miss. 271.
Concededly, the one thousand two hundred eighty-seven dollars and sixty-six cents owing was for seed purchased nearest and next to the end of the season on the principle of "first money in is the first money out."
Watkins v. Buchanan, 115 So. 773; Travis v. Mosley, 114 So. 628.
We need not go afield for precedents or cases to prove our contention that an action lay against the defendant company in the purchase of said seed, without there being an accounting to the mortgagee or lienholder.
Evans v. Carpenter, 115 Miss. 572, 76 So. 550; Pippin v. Farmers' Warehouse Co., 51 So. 882.
We think that we have satisfactorily and clearly shown that the sum of one thousand two hundred eighty-seven dollars and sixty-six cents with legal interest thereon could have been recovered by the Sunflower Bank, while a going institution and after the date of the conversions by defendant oil mill. But, by statutory corporate dissolution, said institution "went the way of all flesh," and Love, as superintendent of banks took charge thereof, including all assets. Did not the cause of action that the Sunflower Bank had against the defendant pass to said superintendent?
The right of action against the defendant company was not specifically conveyed or set out, and because of such fact, said cause of action was not thus conveyed, but remained in Love.
Gabbert v. Wallace, 66 Miss. 618; Love v. Miss. Cottonseed Products Co., 137 So. 739.
The present cause of action is certainly an asset dependent upon suit to recover, as it is now in process of suit. Inasmuch as such right of action passed to the superintendent of banks on his taking over the Sunflower Bank as shown by section 3817 of the Mississippi Code of 1930, and it has been judicially declared that said cause of action was never conveyed or transferred to the Merchants Bank Trust Company, then the right of action still exists on behalf of the superintendent of banks when this suit was instituted, and which Forrest G. Cooper, receiver, is now continuing to prosecute. It is such a right of action as will pass, because it is assignable and transferable.
38 Cyc., page 2051, sec. (v) and sec. (11); Coleson v. Blanton, 4 Tenn. 152; Thompson v. Ford, 29 N.C. 418; 22 Am. Dec. 582; 7 C.J. 131, sec. 220; Section 3817, Code of 1930; 23 R.C.L. 116, sec. 124.
The security which the Sunflower Bank held was diminished and impaired, at the least, in the sum of one thousand two hundred eighty-seven dollars and sixty-six cents, and said sum was converted by defendant oil mill, and appellant is entitled to a decree for said sum with legal interest from the date of conversion, January 31, 1930, as against appellee.
1 C.J. 1115, sec. 294. Moody Johnson, of Indianola, and Green, Green Jackson, of Jackson, for appellee.
The extent of the right of the mortgagee, after a sale by the mortgagor, was to take possession of the seed sold, and sell it according to the provisions of the mortgage, and to have an appropriation of the proceeds to the satisfaction of the debt owing by the mortgagor to the mortgagee secured by the mortgage; or, recover from the purchaser, the appellee, the market value of the seed purchased to the extent of the unpaid debt secured by the mortgagee. This, as we understand it, is settled law.
Black v. Robinson, 61 Miss. 64; 11 C.J. 623, sec. 338.
But where the mortgagee expressly or impliedly consents to a sale of the mortgaged property by the mortgagor, the mortgagee waives his lien, and the purchaser takes title free from the same, whether or not he knew of the existence of the mortgage, and notwithstanding his want of knowledge when he makes the purchase that such consent has been given.
11 C.J. 624, sec. 339.
The consent of the mortgagee to a sale by the mortgagor may be implied from the circumstances of the particular transaction or from the general course of dealing of the parties.
11 C.J., page 627.
The fact is, as disclosed by the record, that the Sunflower Bank, though a mortgagee, entrusted the sale of the cotton seed on which it held a mortgage, to the mortgagor, and, with knowledge of the sales made by the mortgagor, ratified the sale made by him by accepting the proceeds thereof. The question now presented, and which is the first question presented by the record for decision, is whether the Sunflower Bank, as mortgagee, waived the lien of its mortgage.
The appellant has and had no greater rights than the Sunflower Bank had and has.
Griffith's Chancery Practice, sec. 169; Section 2295, Code of 1871; Section 2779, Code of 1906; Burch v. Payne, 52 Miss. 271.
What possible interest in or claim to the property, sold by the mortgagor, has the mortgagee after he has assigned and transferred the mortgage, and indebtedness secured by it, to another person?
Elder v. Jones, 64 So. 212.
If, by virtue of the assignment, the mortgagee ceases to have any rights under the mortgage he has no rights in the property sold by the mortgagor and the necessary consequence is he has no right of action against the purchaser for the value of the property sold by the mortgagor. The conclusion is inevitable for the reason that it is solely by virtue of the mortgage that the mortgagee named therein has any right to the property therein conveyed, and if, by virtue of the assignment, the mortgage ceases to have any interest in, or claim to, the mortgage, it necessarily follows that he has no interest in or claim to the property therein conveyed.
Filing of former suit by appellant here on identical issue bars recovery in the instant suit.
Love v. Miss. Cottonseed Products Co., 137 So. 739, 161 Miss. 704; 2 Herman on Estoppel and Res Judicata, sec. 1282.
We say that the defense res judicata having been properly raised in the lower court, that J.S. Love, superintendent of banks, as liquidator of the Sunflower Bank, and his assigns or privies, including Forrest G. Cooper, present receiver of the Sunflower Bank, are absolutely bound by the former adjudication that there was no liability on the part of the Mississippi Cottonseed Products Company for the alleged conversion and are precluded from bringing and maintaining an identical cause of action.
34 C.J. 1005; 1 Herman on Estoppel and Res Judicata, secs. 115, 156, 157, 256 and 409; 34 C.J. 990, sec. 1409.
Clean hands doctrine invoked to prevent appellant from obtaining equitable relief under chattel mortgage fraudulent as to creditors.
Andrews v. Partee, 29 So. 788, 79 Miss. 80.
A mortgage on a stock of goods in trade, where it is either provided in the mortgage, or the agreement rests in parol, that the mortgagor is to retain possession, with the power to sell and add to his stock, in the usual way the particular character of business is carried on, is per se fraudulent and void as to the creditors of the mortgagor.
Britton v. Criswell, 63 Miss. 394; Andrews v. Partee, 79 Miss. 80, 29 So. 788; Coffeeville Bank v. Stone, 118 So. 413, 151 Miss. 482; Simmons v. State, 135 So. 196, 160 Miss. 582.
Appellant is in the position of seeking equitable relief against a creditor of his mortgagor when, by permitting the mortgagor to remain in possession, assume the credit of ownership, and sell the mortgaged goods over a period of months, he has perpetrated a fraud on the creditors of the mortgagor.
Griffith's Chancery Practice, sec. 42.
This is a motion to dismiss the appeal, the ground of which is that the appellant failed to execute and file an appeal bond.
The appellant, as superintendent of banks, in charge of the liquidation of the Sunflower Bank, filed an original bill of complaint against the appellee for the collection of a debt alleged to be due by the appellee to the bank, and the appeal is from a decree dismissing this bill of complaint. An appeal was granted without the necessity of an appeal bond.
The appellant had the right to an appeal under section 13, Code 1930, to which the order allowing him so to do added nothing. His claimed right to appeal without bond is governed by section 76, Code 1930, which provides that: "The state, and any county, city, town, or village thereof, and the officials representing the state, county, city, town, or village, in any suit or action, and any state, county, city, town, or village officer who is a party to any suit or action in his official character, in which suit or action the state, county, city, town, or village is beneficially interested and the several incorporated, charitable or educational institutions established and maintained by the state, shall be entitled to appeal from a judgment, decree, decision, or order of any court or judge, from which an appeal may be taken, without giving an appeal bond."
The ground of the motion to dismiss is that the appellant is not a state officer, and, if he is such, the state is not "beneficially interested" in the suit.
The appointment and duties of the state's superintendent of banks are governed by section 3755 et seq., Code 1930, and the appellee's contention is that to hold him to be a public officer thereunder would violate sections 102 and 250 of the Constitution of the state, because of the method of his appointment and the qualifications required of him therefor. It will not be necessary for us to decide this question, for, if we should hold that the appellant is not a public officer in the constitutional sense, as to which we express no opinion, nevertheless he is within the meaning and intent of section 76, Code 1930. That statute uses both the words "officials representing the state" and "any state . . . officer." An official is not necessarily an officer in the technical sense, but may be "one having subordinate administrative or executive powers in a governmental or public institution." Webster's New International Dictionary. Section 3755 et seq., Code 1930, charges the state's superintendent of banks with the performance of certain administrative duties, among which is the collection, by judicial process, of debts due banks being liquidated by the state banking department, and section 76, Code 1930, was clearly intended to apply to all persons representing the state in judicial proceedings under a delegated authority so to do. To hold otherwise would permit the letter of the statute to destroy its spirit and manifest purpose.
If it is necessary for the state to be beneficially interested in this suit, that fact appears. Sections 3755 et seq., Code 1930, which create the state banking department, were enacted under the state's police power for the supervision of the banking business, its theory being that the welfare of the state will be conserved by the protection of the welfare of each of its citizens in dealing with banks located in the state and operating under its laws. The words "beneficially interested" cannot be limited to a financial interest in the particular suit, but include interest therein of the state in its governmental capacity.
The motion will be overruled.
Appellee, Mississippi Cottonseed Products Company, owns and operates an oil mill under the trade-name of "Sunflower Cotton Oil Company," while during the ginning season of 1929-1930, W.R. Early, who was then president of the Sunflower Bank, owned and operated a cotton gin at or near Indianola, Mississippi, and was also engaged in the purchase and sale of cottonseed. Early in the 1929-1930 ginning season, the said W.R. Early was indebted to the Sunflower Bank in a considerable sum in the form of an overdraft, and he desired to procure additional money necessary to finance his operations during the remainder of the season. To secure his overdraft and further advances for the operation of his gin and the purchase of seed, the officials of the bank required Early to execute a chattel mortgage on all cottonseed then in the seedhouses of said gin, and on all seed to be acquired by him during the 1929-1930 ginning season; and on September 25, 1929, this mortgage was duly executed and recorded in the office of the chancery clerk of Sunflower county. It recited that it was to secure all overdrafts owing to said bank on the date of the execution thereof and any other overdraft or overdrafts that the said Early might owe the bank during the ginning season of 1929-1930; and further provided that, if all the indebtedness thereby secured was not paid by December 15, 1929, then the Sunflower Bank might sell the seed conveyed as aforesaid.
In accordance with this arrangement, by means of overdrafts, Early secured from the bank money to completely finance the ginning operations of the Early Ginning Company, including drayage and the purchase of seed at the gin; and Early sold all the seed thus acquired, and on which the bank held the chattel mortgage, to the appellee at the market price. After the recordation of the said chattel mortgage on September 25, 1929, until the close of the ginning season, in the latter part of January, 1930, the purchase price of seed sold to the appellee by Early amounted in the aggregate to thirty-three thousand seven hundred thirty-four dollars and sixty-six cents, and of this sum appellee paid to Early the sum of thirty-two thousand four hundred forty-seven dollars, leaving a balance of one thousand two hundred eighty-seven dollars and sixty-six cents due for seed purchased from him. The greater part, if not all, of the thirty-two thousand four hundred forty-seven dollars that was paid to Early was applied on his indebtedness to the Sunflower Bank, leaving a balance of more than five thousand dollars still due the bank. At the close of the ginning season in January, 1930, appellee delivered to Early a complete statement of his account with it, and issued a check payable to him and the Sunflower Bank for the balance due, which included the balance of one thousand two hundred eighty-seven dollars and sixty-six cents due for seed purchased, after the execution of the aforesaid mortgage, and also a further amount due Early for other seed and for drayage. This check was not accepted as a full settlement, and was revoked, and thereafter, Early having become further indebted to appellee, the balance of one thousand two hundred eighty-seven dollars and sixty-six cents owing for seed covered by the mortgage was applied on Early's indebtedness to appellee.
Shortly after the issuance of the aforesaid check to Early by the Sunflower Bank, the bank failed and was placed in liquidation, and J.S. Love, superintendent of banks, took charge of the defunct institution. Thereafter, in pursuance of an order of the chancery court, the Merchants Bank Trust Company, a newly organized banking institution of Indianola, Mississippi, purchased practically all of the assets of the defunct bank, including the indebtedness of the said Early to the bank; and this indebtedness and the mortgage securing the same were duly assigned to the purchaser.
Thereafter the superintendent of banks, in charge of the liquidation of the insolvent bank, instituted suit in his own name, seeking recovery of the balance alleged to be due for cottonseed converted as hereinbefore set out. During the progress of that suit, on its motion, the Merchants Bank Trust Company was substituted as party complainant instead of the superintendent of banks, and the bill of complaint was thereafter amended by making the said Early a party defendant, and praying for a personal decree against him for the balance then due on the indebtedness secured by the aforesaid mortgage. In the course of the trial of that cause, upon its being made to appear that the conversions complained of occurred before the date of the assignment to the substituted complainant, and that the right to recover for previous conversions of the mortgaged property was not assigned, the court entered a decree allowing the substituted complainant a recovery against W.R. Early for the balance due of five thousand eight hundred twenty-six dollars and twenty-five cents, with interest, and dismissing the bill as against the Mississippi Cottonseed Products Company.
On appeal from that decree, the only contention was that, when the facts were fully developed and it was made to appear that the right of action for conversion was not assigned by the superintendent of banks to the substituted complainant therein, the court, although not requested so to do, should have, of its own motion, ordered the original complainant to be brought back into the case as the actual complainant. The court held that, in the absence of a request to reinstate the original complainant, the court committed no error in failing to do so. That was the only question involved on that appeal, and the only point decided. Love et al. v. Mississippi Cotton Seed Products Co., 161 Miss. 704, 137 So. 739.
At the affirmance of the above-mentioned cause, the superintendent of banks, in charge of the liquidation of the Sunflower Bank, brought the present suit against the Mississippi Cottonseed Products Company for conversion of the cottonseed covered by the assigned mortgage, and prayed for a recovery of the balance due for the cottonseed alleged to have been converted by it; and, upon the trial of the cause, the court denied complainant any relief and dismissed the bill of complaint, and from that decree the present appeal was prosecuted. Afterwards, upon the abolition of the office of superintendent of banks, under the provisions of section 95, chapter 146, Laws 1934, Forrest G. Cooper was appointed receiver of the Sunflower Bank, and was authorized to revive and prosecute this appeal, and an order permitting him to do so was duly entered.
Conceding for the purpose of this decision that the record discloses an original right of action against the appellee, then, in our opinion, this cause may be finally disposed of by a consideration of the further question as to whether or not such cause of action was vested in and could be maintained by appellant, complainant below, when the bill of complaint was filed.
In the opinion in Love et al. v. Mississippi Cotton Seed Products Co., supra, it was said that, since the evidence showed that the conversions complained of occurred before the date of the assignment to the substituted complainant, and the right to recover for previous conversions of the mortgaged property was not contained in the terms of the said assignment, the court below dismissed the bill as to the appellee on the authority of Gabbert v. Wallace, 66 Miss. 618, 5 So. 394; and Gabbert v. Wallace was undoubted authority for the dismissal of the said bill. In that case it was expressly held that the right to sue for previous conversion of mortgaged property is not a part of the security which passes by an assignment of the debt, and that an assignment of a debt secured by a mortgage or deed of trust without an assignment of a right to sue for prior conversions of the mortgaged property confers no right upon the assignee to sue or recover for such conversions. That was all that was involved in Gabbert v. Wallace, and any language in the opinion therein, if there be any, from which the inference might be drawn that an original mortgagee who had assigned the debt and security could still maintain an action for conversions prior to such assignment, is not controlling upon that point.
By section 2128, Code 1930, it is provided that, "before a sale under a mortgage or deed of trust, the mortgagor or grantor shall be deemed the owner of the legal title of the property conveyed in such mortgage or deed of trust, except as against the mortgagee and his assigns, or the trustee after breach of the condition of such mortgage or deed of trust." And, so long as the mortgagee is the owner of the debt and incidental security, he may maintain an action for injuries to or conversions of the mortgaged property and apply the proceeds of any recovery therefor to the discharge of the mortgage debt. The mortgagee has the right to have the full, undiminished value of the mortgaged property applied to the discharge of the debt secured thereby; and the measure of his rights in the property or for injuries thereto is the amount of the debt owing to him. But the right to sue for conversions of the mortgaged property is one which the mortgagee may exercise or waive; and an assignment of the debt and security without a transfer to the assignee of any accrued right of action for conversion of the mortgaged property amounts to a waiver of such right of action. The interest of a mortgagee in the property conveyed, or the value thereof if disposed of by the mortgagor, is based solely on the mortgage, and is limited to the amount owing to him on the debt secured by the mortgage. In the case at bar, there is no debt due the appellant; consequently he has no action for injuries to or conversions of the mortgaged property.
The decree of the court below will therefore be affirmed.
Affirmed.