Opinion
October 25, 1948.
1. Equity pleading and practice — general demurrer.
A general demurrer admits all facts which as facts are well pleaded in the bill.
2. Equity — constructive trusts.
A bill which sufficiently alleges that the mortgagees had in their hands ample funds derived from agricultural products delivered to the mortgagees out of which to pay a current installment on a senior mortgage and out of said funds was obligated to pay the said current installment, and that instead of doing so persuaded the senior mortgagee to foreclose and to purchase at the foreclosure, makes out a case against the mortgagees as constructive trustees when they later purchased the property from the senior mortgagee.
3. Limitations of actions.
In a suit to establish a constructive trust in lands, the right of action accrues when the constructive trustee obtains his deed and the ten years statute of limitations applies, not the three or six years statute. Section 709, Code 1942.
Headnotes as approved by Roberds, J.
APPEAL from the chancery court of Hinds County, V.J. STRICKER, Chancellor.
L.F. Easterling and E.L. Shelton, for appellants.
We respectfully submit that the bill of complaint is full, complete, and states a cause of action. The bill was filed August 25, 1944. The attempted foreclosure by the Federal Land Bank was had on September 1, 1934, less than ten years from the time of the filing of the bill.
Complainants allege and aver that during the year 1929 complainants delivered and the said H.D. Gibbes and Sons received from the farming operations on said land 15 bales of cotton, and for the year 1930 they received 17 bales of cotton and for the year 1931, 15 bales of cotton, and for the year 1932, 15 bales of cotton, and for the year 1933, 15 bales of cotton, and for the year 1934, 15 bales of cotton, and continued to receive all the cotton raised on the said place from the crops raised thereon from the year 1935 to date; and complainants allege and aver on information and belief that the said H.D. Gibbes and Sons had and have sufficient money to pay the Federal Land Bank all said installments, and that it then and there became the duty of said H.D. Gibbes and Sons, who were then and had been for many years prior thereto, acting as the fiduciary and trustee of these complainants in the management and operation of said farm, to pay the Federal Land Bank the said installments as and when the same became due, but that the said H.D. Gibbes and Sons then and there contriving and intending to deprive complainants of their said property allowed the said installments due the Federal Land Bank for the year 1933 to become delinquent; and complainants contend that under some sort of prior agreement, unknown to complainants, between the said H.D. Gibbes and Sons and the said Federal Land Bank and the said C.C. Greer it was agreed that the said property would be foreclosed in order that the title could and would be vested in the said H.D. Gibbes and Sons, and that pursuant to said scheme, agreement and conspiracy, the Federal Land Bank on the 27th day of July, 1934, attempted to appoint W.S. Wells, Jr., in the place and stead of L. Barrett Jones, as shown by instrument recorded in Book 29 at page 161 thereof, and thereafter, on the 1st day of September, 1934, attempted to sell said land and convey the same to the Federal Land Bank for an alleged consideration of $1500.00, and then and there made a pretended trustee's deed to itself, the said Federal Land Bank, to the said land described in the said deed of trust, as shown by instrument of record in Book 96 at page 344 thereof, all of which are referred to herein for the purpose of identity and cancellation.
The whole bill must be taken by its four corners and every part thereof considered on a demurrer thereto. In the case of Morton v. Grenada Academies, 8 S. M., 16 Miss. 773, it was said: "A demurrer to a bill for want of equity on its face will not be sustained, unless the court be satisfied that no discovery or proof called for properly by the bill can make the subject matter of the suit a proper case for equity cognizance." See also Hill v. Ouzts, 190 Miss. 341, 200 So. 259; Goosby v. Byrd, 194 Miss. 568, 13 So.2d 33; Graves v. Hull, 27 Miss. 419; Anding v. Davis, 38 Miss. 574; Garner v. Lyles, 35 Miss. 176; Gibson v. James, 37 Miss. 164; Shearer v. Shearer, 50 Miss. 113; Gully v. Bridges, 170 Miss. 891, 156 So. 511; White v. Turner, 197 Miss. 265, 19 So.2d 825; Texas Co. v. Wheeless et al., 187 So. 880; Taylor v. Twiner, 193 Miss. 410, 9 So.2d 644.
It will be remembered that the bill charges that the pretended sale by the Federal Land Bank pursuant to the conspiracy, was made on September 1, 1934. The bill of complaint was filed August 25, 1944. In other words, it was six days before the ten years had expired. The bill was filed in time, even if we could indulge in the inference that the Federal Land Bank took possession. But the bill does not show that the Federal Land Bank ever took possession. The allegations of the bill are that the Federal Land Bank through its agent C.C. Greer, colluded and conspired with the Gibbes, the mortgagees under a second deed of trust, in order to vest title of the land in the Gibbes. Furthermore, the Federal Land Bank, which it is alleged was a mere conduit of the asserted title, did not convey the land to H.D. Gibbes. Jr., until January 17, 1935. It was averred further that Gibbes received all the crops raised on the land for the years 1934, 1935, and subsequent thereto, and that the appellees, Gibbes and Sons, were operating the place for and on behalf of the said Rachel Burton under the same arrangements they had and had operated under with Bill Burton, deceased, and that the said Gibbes and Sons were operating the said place in conjunction with and for Rachel Burton, who had the right to occupy the same as a homestead.
The case of Houston v. National Mutual Building Loan Association, 80 Miss. 31, 31 So. 540, is a well considered case which we consider directly in point.
There can be no presumption on the facts alleged in this bill, that the Federal Land Bank ever took any possession of the land involved at any time. If title passed by the attempted foreclosure sale to itself on September 1, 1934, under the allegations of the bill the said Land Bank was acting as a mere conduit, and attempted to pass the title to H.D. Gibbes, Jr., on January 17, 1935.
Under the allegations of the bill, prior to that time H.D. Gibbes and Sons were operating under a void deed of trust according to the averments of the bill and were occupying with regard to Rachel Burton and the other complainants a position of trust and confidence; and that they unlawfully used this position by attempting to acquire on January 17, 1935, the legal title to the said property, when in truth and in equity they were not entitled to do so.
Under the authorities cited they could not, occupying the position they did, acquire an adverse title to the said property. When they acquired title of the Federal Land Bank, it was as trustee for the use and benefit of the complainants. The bill shows that H.D. Gibbes, Jr., only paid the Federal Land Bank $2600.00, of which $520.00 was paid in cash and the balance of $2080.00 was to be paid in yearly installments over a period of 20 years. It is easily deducible that the $520.00 covered the 1933 installment due by the complainants to the Federal Land Bank under its deed of trust, and the costs and expenses of the foreclosure sale. In other words, the whole transaction was simply an advance made of $520.00 by H.D. Gibbes, Jr., one of the members of the partnership of H.D. Gibbes and Sons, for the benefit of the complainants, and in order to transfer the indebtedness of the Federal Land Bank from it to the said H.D. Gibbes and Sons, who were the holders, or claimed to be the holders, of a second deed of trust on the property. In other words, it was a mere change in the form of the transaction, that is a transferring of the debt of the Federal Land Bank to the appellees, Gibbes and Sons.
But under the averments of the bill it is charged, and the facts are given, that Gibbes and Sons collected 15 bales of cotton a year for all the years except 1930, when they collected 17 bales, and that the said Gibbes and Sons had in their possession sufficient money belonging to complainants from the proceeds of said crops, to pay the said installments to the Federal Land Bank, and that when they failed to carry out their obligation, but allowed the property to sell because of the default thereby occasioned, they became and were incapacitated under the facts to acquire and assert against complainants such title against said land. We, therefore, most respectfully submit that the demurrer of H.D. Gibbes and Sons should have been overruled, and they should have been required to answer the said bill of complainant; and the court below should have required the said Gibbes and Sons on appellants' motion therefor, to grant an inspection of its books, records and other documents pertaining to the transaction as prayed for in said motion.
As to the 3 year statute of limitations against open accounts, and the 6 year statute, the general statute of limitations, we say that these statutes are not applicable here. The bill charges that Gibbes and Sons had received all the crops from 1926 down to the present time; that the value of these crops delivered to and received by Gibbes and Sons were more than ample and sufficient to pay all installments to the Federal Land Bank and to pay any and all indebtedness that was due and owing either by Bill Burton or the complainants to the said Gibbes and Sons. The gravamen of the bill is to recover the land. The accounting asked for is ancillary to the main relief. If complainants had raised and delivered to the said mortgagees more than enough to pay the debt of the complainants, then upon an accounting, the decree of the court would be that the claim of the said Gibbes and Sons be cancelled. If upon an accounting any balance should be shown from rents and profits, or from the proceeds of crops raised by complainants, the same should be applied on the indebtedness first, and any balance over or any rents and profits collected and received could have been recoverable by the complainants affirmatively for six year period preceding the filing of the bill. The whole matter is so interwoven and correlated that an accounting was necessary and proper to show first, that all debts due and owing to the said Gibbes and Sons had been paid upon proper credits to be given, so that complainants could do equity by paying any amounts that might be due to Gibbes and Sons growing out of the relationship and the transactions involved as set forth in the bill.
The course of dealing between Bill Burton and the complainants on the one hand, and Gibbes and Sons on the other, was a continuous operation, constituting a running account between the parties. Gibbes and Sons, according to the allegations of the bill, during the lifetime of Bill Burton and since his death, continued to furnish the complainants each year, certainly prior to the year 1935, and to pay the taxes on said land and the installments due the Federal Land Bank, up to the installment in 1933, which they failed to pay, according to the bill, although they had the money in their hands with which to pay the same.
The legal principle involved as to the application of the 3 year and the 6 year statutes of limitations, was settled long ago by the decisions of this state, in the case of Hardin v. Grenada Bank, 182 Miss. 689, 180 So. 805, in which it was held: "Where from inception of loan in 1920 to foreclosure in 1934 there was a continuous transaction of renewals and payments between the parties and contract was tainted with usury, statute of limitiations was properly applied in permitting all payments made by debtor to be credited on principal debt."
In the case of Abbay v. Hill, 64 Miss. 340, 1 So. 484, it was held:
"If a merchant sell supplies to his customer, and receive from him cotton, which he sells for him and credits the net proceeds of the cotton to the account against the customer for supplies, the account thus kept will be a `mutual and open current account.'"
The above is found annotated under section 730, Code of 1942.
This is a suit bottomed on trust and confidence and upon fiduciary relationship existing between the parties.
As to the subject matter in question, the gravamen of the bill is to recover the land and to cancel clouds.
It is contended that Gibbes and Sons were trustees and that when they attempted to acquire under the circumstances stated in the bill the land in question, they secured and held the same as trustee and that equity will prevent them from asserting title thereto against complainants.
J.S. Rhodes, for appellees, Gibbes and Sons.
Appellants' bill, attempting to state a cause of action, on the ground that the said H.D. Gibbes, Jr., could not buy said land from said Federal Land Bank, since he occupied a fiduciary relationship to said appellants at the time of purchasing same, and that he bought said lands for the benefit of said appellants, does not set out facts sufficient to show that such a relationship existed. At the most all that H.D. Gibbes, Jr., and his partners, doing business as H.D. Gibbes Sons, ever did for said appellants was as supply merchants furnishing them as their customers wherein the relationship of creditor and debtor existed and they voluntarily as an accommodation to their customer, and without consideration, agreed to pay their taxes and the said Federal Land Bank installments out of any funds said complainants had and to render them an account at the end of each year. The Bill of Complaint states positively that said H.D. Gibbes and Sons did furnish appellants and their parents an account at the end of each year. This account, it is reasonable to presume, showed that the 1933 installment to the Federal Land Bank had not been paid and said appellants should have known that the said Federal Land Bank deed of trust would be foreclosed if same was not paid. H.D. Gibbes, Jr., did not purchase said land at the Federal Land Bank foreclosure sale. He did not buy it until over 4 and 1/2 months later. That certainly looks like a bona fide transaction not tainted with any fraud. Appellants had that much time in which to have bought said land back themselves had they so desired. The Bill of Complaint does not show that the Federal Land Bank refused to sell said land back to appellants. The Supreme Court of this State has held in the case of Weir v. Jones, 84 Miss., page 602, that: "A Bill in Equity to set aside a sale of lands is demurrable, if it admit that the lands were regularly sold, under a valid deed of trust, for the collection of a just and past due debt, and that complainants knew of the sale in ample time to have enjoined the same on any valid objection, although it charge that the sale was the result of a conspiracy between the trustee and the holder of a junior mortgage on the land, and that the beneficiary in the deed of trust did not desire to foreclose the deed of trust when the sale was made." I therefore contend that the said H.D. Gibbes, Jr., had a right to purchase said land in question from the said Federal Land Bank and that it was a valid sale and that he does not hold the title for the benefit of said appellants, but is the sole and exclusive owner of said lands and that he had a right to give an Oil Gas Lease on same to the Hunt Oil Company and that said Lease is valid and binding.
Appellants' Bill of Complaint shows that any cause of action, if any they may have, against said appellees, is barred by the Statutes of Limitations of this State and being sections 722 and 729 in regard to the Personal Property and an Accounting and Discovery, and sections 709 and 710, of the 1942 Mississippi Code, Volume 1, in regard to the Land and Real Estate.
If the 6 year Statute of Limitations does not bar a recovery for all Personal Property and any Accounting and Discovery, the said 3 year Statute of Limitations of this State certainly does, as the record in this case conclusively shows that any alleged cause of action, if any, which said appellants had against said appellees arose more than 3 years time prior to the filing of this suit. In the case of Blount v. Miller, 172 Miss. 492, this court held, "That advances of money and supplies made by Lessor to Lessee constitute an open account so as to require action thereon within 3 years after said cause of action accrued, notwithstanding the Deed of trust given by Lessee provided that advancements would be secured by Deed of Trust, since said writing was insufficient to make the debt one acknowledged in writing under 6 year Statute of Limitations."
This is chiefly a suit to recover land, and under the Statutes of Limitations of this State pertaining to land (and the sections of Law above cited) the said appellants were required to bring their suit in a court of Equity within 10 years time from the time their alleged cause of action arose, or same would be forever barred, and appellees' contention is that they failed to do this, and hence that appellants' claim is forever barred. When did appellants' cause of action arise with reference to their right to file a suit to recover said land? Appellees contend that when the 1933 installment of the Federal Land Bank Deed of Trust on said lands was due and when same was not paid at maturity, then said Deed of Trust was in default, and the legal title to said lands then passed to the said Trustee to foreclose same. The record shows that the Federal Land Bank appointed W.C. Wells, Jr., on July 27, 1934, as substituted Trustee to foreclose said lands and that said Deed of trust was foreclosed and said Trustee on September 1, 1934, executed a Trustee's Deed to said Lands to said Federal Land Bank. Since the said record does not disclose anything to show that any of the proceedings in connection with the foreclosure of this said deed of trust were unlawful and irregular, under the law we have a right to presume that the said Trustee in foreclosing this said Deed of Trust complied with all the requirements of Law in regard to Notice, of Time, Place of Sale, and Terms of Sale, etc. See case of Chandler v. Bank of Brooksville, 181 Miss. 529. Under the Law of this State, the said Trustee was due to advertise said land for sale by publication of Notice of Sale in a local newspaper where said land was situated once a week for 3 weeks time, and then he was required to sell said land within 7 days time from the last publication of the Notice of Sale. The record shows that the Trustees Deed to the said Federal Land Bank was dated September 1, 1934, and that would make his first Notice of Sale published in the newspaper early in August, 1934. Appellees therefore contend that appellants' cause of action, if any they had, arose early in August, 1934. Appellants filed their Bill on August 25, 1944, which was more than 10 years after their cause of action, if any they had, arose, so appellees contend that appellants' cause of action is barred by the 10 year Statute of Limitations. Beverly C. Adams, for appellee, Federal Land Bank.
In paragraph 13 of the bill of complaint, there is the following allegation: "Complainants charge on information and belief that the said H.D. Gibbes and sons, . . . then and there colluded and conspired with one C.C. Greer, of Utica, Mississippi, who was then and there the agent, officer and servant of the said Federal Bank, and it was then and there understood and agreed between the said parties, as complainants charge on information and belief, to let the said deed of trust default because of nonpayment thereof and have the Federal Land Bank to foreclose the same and thereafter to sell the property back to the said H.D. Gibbes and Sons, or one of them, and default was made for the year 1933 as aforesaid."
Also, in paragraph 14 of the bill is found the following: ". . . complainants aver that under some sort of prior agreement unknown to complainants between the said H.D. Gibbes and Sons and the said Federal Land Bank and the said C.C. Greer it was agreed that said property would be foreclosed in order that the title could and would be vested in the said H.D. Gibbes and Sons . . ." The last quoted allegation was not even given the dignity of being alleged on information and belief. Since the alleged agreement as set forth in paragraph 14 is "unknown to complainants," it contradicts and nullifies the quoted excerpt from paragraph 13 of the bill.
Assuming both of the allegations to be true, however, we point out that the appellants alleged that there was a deed of trust; there was a default; there was a foreclosure; the land described in the deed of trust was purchased at the foreclosure sale by the Bank. This brings the case at bar squarely in point with the case of Weir v. Jones (1904), 84 Miss. 602, 36 So. 533. In that case there was an alleged fraudulent conspiracy between the substituted trustee and a junior mortgagee to foreclose for the benefit of the junior mortgagee, who purchased at the foreclosure sale. As in the case at bar, the bill admitted that there was a valid deed of trust, a default and a regular foreclosure. The following is from the opinion of the court in the Weir case: "To disturb a sale made under such circumstances because of the fact that the substituted trustee and a junior mortgagee expected or intended to profit thereby would be an unwarranted extension of the legal principles applicable to such cases. From this view it is not material whether the junior mortgage was in fact for a just and legal indebtedness or not. Appellant purchased at a foreclosure of a senior mortgage at a sale regularly and legally held, and appellees cannot now set aside this sale for the purpose solely of having the property resold, with the bare hope that it might realize more than is justly owing thereon."
We also call the court's attention to the following quotation from the Weir case: "Nor would it avail the appellees aught, assuming it to be true that both the appellant and the substituted trustee intended, in making the sale, to thereby further the interest of the appellant. The law cannot concern itself with the motives of parties when their acts are legal and violate no principle of right." We submit that the foregoing quotations specifically cover the situation before us here. Although the appellants have not alleged fraud and have alleged no facts on which fraud could be inferred, they have hinted at a situation smacking of fraud. In this respect their bill of complaint is condemned by the following rule of law announced by the court in the first paragraph of the opinion in the Weir case as follows: "No principle of equity jurisprudence is more firmly established than that, where fraud is relied on as a basis of relief sought from a chancery court, the facts on which the charge of fraud is predicated must be specifically stated with full definiteness of detail. No general averment of a fraudulent course of business, and no bare statement of a corrupt design on the part of the defendant, is sufficient. The acts themselves which are claimed to be fraudulent must be clearly set out. It must further appear by definite averment in what manner the fraudulent acts wrought injury to the complainant. Fraud cannot be inferred, but must be distinctly charged, and with such fullness and precision that a court of chancery would be enabled to grant full and complete relief and redress should the bill of complaint be taken as confessed."
Ralph B. Shanks and W.E. Morse, for appellee, Hunt Oil Company.
The brief of appellant seems to concede the fact that Hunt Oil Company are innocent purchasers for value without notice of any infirmities of their title.
The record discloses, first, that Burton gave a deed of trust to the Federal Land Bank; second, that there was a foreclosure of the deed of trust by the Federal Land Bank, in which the Federal Land Bank bought in the property and sold it to Gibbes; third, that the appellants and their heirs moved out of possession and surrendered possession of said property to Gibbes, and that Gibbes was in possession of said property under record title when the Hunt Oil Company bought a lease from them.
There is no charge of notice of any record title being in the Burtons. There is no charge that the Hunt Oil Company, or any of its officials knew of any conspiracy, if there be any, between H.H. Gibbes and the Federal Land Bank. The Company examined the records, and was entitled to rely on them and the possession.
L.F. Easterling, for appellants, in reply.
Counsel say that on the face of the bill it appears that the foreclosure proceedings, that is the advertisement and sale by the Federal Land Bank, was valid on its face, and that even though there was collusion between the said appellees and the Federal Land Bank and a conspiracy to foreclose the deed of trust, that the allegations of fraud would be insufficient, and cited the case of Jones v. Weir, 84 Miss. 602. But we submit that that case is not in point, for the reason that here the whole gravamen of the bill was to have H.D. Gibbes and Sons treated in the said transaction as having secured the legal title, if the foreclosure was valid, contrary to its duty and obligation to the appellants. In this case we have, as we think, sufficiently alleged such facts as to show such relationship between the parties that under the law the said appellees were disqualified from asserting any title they obtained under the facts alleged, against these appellants. On appellants' theory no one would be hurt by requiring H.D. Gibbes and Sons to do what the law requires that they do in good feeling and in good conscience. The Federal Land Bank stands to lose nothing; it was a mere conduit whereby its claim was passed on to H.D. Gibbes and Sons. Appellants maintain that since it was the duty of H.D. Gibbes and Sons to pay the said installments out of the cotton which they had of the appellants and which position they had assumed for many years, that they could not turn about suddenly and secretly and use their position to acquire and assert a valid title to the land against the appellants; that the very reason why the foreclosure could be had at all was to pay the installment, which it was the duty of the said appellees to pay.
This court knows that, where a merchant retains the money with which to pay taxes on the lands held as security, he cannot fail to pay the taxes on the land sold and thereby acquire a title to the land and assert it against the mortgagor. This certainly cannot be questioned. This principle is peculiarly applicable here. This question was decided in Hatchett v. Thompson, 174 Miss. 502, 165 So. 110. In the case of Parker v. Jackson, 90 Miss. 641, 44 So. 34, it was held that a chancery clerk had certain duties to perform in connection with a tax sale, could not purchase land at a tax sale. We think the case of Risk v. Risher, 197 Miss. 155, 19 So.2d 484, is conclusive on this question.
The said Gibbes and Sons were acting with the acquiescence of the appellants and of the said Rachel Burton in the receiving and handling of the crops and in paying therefrom the taxes and Federal Land Bank installments. Under the allegation of the bill the said H.D. Gibbes and Sons for many years had assumed and performed the duty of advancing money to, first, Bill Burton and then to his widow with which to make crops; that they had received all the crops and had paid the taxes out of the proceeds of the crops, and also the Federal Land Bank installments. It, therefore, is plain that it became and was the duty of the said H.D. Gibbes and Sons to have paid the said installments, and that having failed to do so, they could not allow the property to sell and thereby acquire and assert against appellants such title to the said land.
Counsel picks out parts of the bill and attempts to draw inferences in favor of the running of the statute of limitations, but this court, in the case of White v. Turner, 197 Miss. 265, 19 So. 825, it seems to us, put this question at rest.
Counsel attempt to argue that as to certain parts of the relief prayed for, appellants are barred by the three year statute of limitations applicable to open accounts. In our original brief, we have set out authority to show that where relationship such as here, the accounts are running accounts.
Under the statute, the three year statute does not begin to run until the last item on the running account. We think this question is settled in the case of Beck v. Tucker, 147 Miss. 401, 113 So. 211, and cases therein cited.
In the case of Anding v. Davis, 38 Miss. 574, 77 Am. Dec. 658, it was held: "Where a mortgage provides that the mortgageee shall take and keep possession, and apply the rents and profits to the payment of his debts, the statute of limitations will not begin to run against the mortgagor until the debt is paid." See also Jones v. Brewer, 146 Miss. 142, 110 So. 115.
However, as we pointed out in our original brief, this is a suit predicated upon the fraud of the trustee or one occupying a fiduciary relationship. The purpose of this suit is to cancel the claim of the trustee maleficio and for an accounting. It is not a direct suit to recover specific items of rents for any specific year.
Appellants offer in their bill to pay any amount that may be found to be due after all credits under the authorities we cite in our original brief, the relationship constituting the account, nature and allegations of the bill, and mutual or running account. In order to determine what, if anything and how much, the appellants owed the said H.D. Gibbes and Sons, it was necessary to have an accounting of all the rents and profits, of the value of all cotton received, and how much had been paid out. All items received would of course be credited to the principal of the indebtedness, and until the indebtedness with interest had been satisfied in full, there could be no recovery by the appellants of the proceeds of cotton which had been credited, or should have been credited, on the account.
In the case of Burton v. Mutual Life Insurance Company, 157 So. 525, 171 Miss. 596, it was held: "The right of mortgagee, furnishing money to heirs, part of which was used to discharge ancestors' trust deed, to be subrogated to such prior incumbrances as to heirs not signing trust deed, accrued, as regards running of limitations, on payment of debt secured by such prior trust deeds." See also Harding v. Grenada Bank, 182 Miss. 689, 180 So. 805.
We submit that the bill sufficiently states a cause of action. It is sufficiently definite. It shows the relationship between the parties in great detail. It is sufficient to call for an answer. As stated in our original bill, before the suit was dismissed, counsel for appellants had endeavored to secure all the information they could by filing the proper motion to inspect and take copies of the books and records of the appellees, H.D. Gibbes Sons. They were entitled to that relief and it should have been granted.
The Federal Land Bank was a proper party in that appellants prayed in their bill that said mortgage be reinstated and that they be allowed to pay it out according to the terms and conditions of the original deed of trust. The bill also shows after the attempted foreclosure the Federal Land Bank in January, 1935, conveyed the said land to H.D. Gibbes, Jr. for a small cash payment and the balance in installments over a period of years. The result of what happened was that H.D. Gibbes and Sons became subrogated to the rights of the Federal Land Bank and entitled to receive from appellants the amount paid to the Federal Land Bank in said deed of trust; and if the court should find that Gibbes and Sons had no right to purchase the land and assert a hostile title to that of appellants and that H.D. Gibbes and Sons had caused the default by their own wrongful act and that they had colluded with the Federal Land Bank and agreed to purchase the land, evidently in advance, according to the bill, then the Federal Land Bank thereby violated its duty to the appellants and in order to obtain relief it was necessary to make it a party to the bill. But on the facts of the bill, no one would be hurt. The Federal Land Bank would get every dollar of its money, whether the original deed of trust stands or whether the deed of trust executed by H.D. Gibbes, Jr. to the said Federal Land Bank for the balance of the purchase money stands, there would still be the question of adjustment of the rights between all of the parties, so that the proper notice could be made on the records.
(Appellants did not raise the point that a demurrer relying on the statute of limitations, which is a special demurrer, is not, according to technical rules, to be pleaded in a general demurrer.)
Burton and others, appellants, filed the bill in this proceeding against H.D. Gibbes, Jr., W.H. Gibbes, J.L. Gibbes, a partnership, and against the Federal Land Bank of New Orleans and the Hunt Oil Company. General demurrers to the bill on behalf of the Land Bank and Hunt Oil Company were sustained in the lower court. The correctness of that ruling is presented on this appeal. Without going into detail, or elaboration, we find that the lower court was correct. In fact, appellants do not seriously take issue on that question on this appeal.
The Gibbes also filed a general demurrer, contending (1) the bill states no cause of action, (2) that no equity appears on the face thereof, but if a cause of action be stated, (3) it is barred by the three, six and ten year statutes of limitations.
This requires a summary of the allegations of fact in the bill in respect to the liability of the Gibbes.
It states that in the year 1922 the land in question, being approximately 118 acres located in Hinds County, Mississippi, was owned by Dock Burton and his wife Harriett; that Harriett died and her one-half interest was inherited by her husband Dock Burton, her son Bill and her daughter Estelle Burton Morgan; that on February 1, 1922, Dock Burton and the said two children executed a deed of trust to The Federal Land Bank of New Orleans to secure $2,000 payable in annual installments over a number of years. On October 8, 1924, Dock Burton conveyed his interest in the land to Bill Burton, and that on that date Bill and his wife went into possession of the land, and were in possession in 1926, when Bill executed to H.D. Gibbes and Sons a second deed of trust on the land to secure the sum of $750, Gibbes and Sons being a supply merchant; that Rachael Burton, wife of Bill Burton, did not sign that trust deed. Bill and wife remained in such possession until the death of Bill June 20, 1929; that Bill Burton became insane in the early part of 1929, but notwithstanding that fact the Gibbes on March 6, 1929, procured from him another trust deed on the land, which also included considerable personal property; that Bill left as his heirs at law his wife Rachael, his son Bill, Jr., and two daughters, Amelia Thomas and Susie Burton Grafton. These three heirs, together with Estelle Morgan and husband, are the complainants in the bill.
The bill further states that after the execution of the trust deed in 1929 ". . . the said Bill Burton made payments on said deed of trust and dealt with the said Gibbes and Sons as his merchant and adviser, the said H.D. Gibbes and Sons occupying towards him the position of a fiduciary"; Gibbes furnished to Bill Burton during his life, and after his death, furnished to Rachael money and supplies with which to make crops; that all of the cotton raised on the land was delivered each year to Gibbes, and that out of the proceeds of the sale of the cotton Gibbes paid all taxes on the land and the annual installments to the Land Bank. It then sets out the number of bales of cotton delivered to Gibbes each year for the foregoing purposes during 1930 to and including the year 1935, and that Gibbes "continued to receive all the cotton raised from the said place from the crops raised thereon from the year 1935 to date." It is alleged on information and belief, ". . . that the said H.D. Gibbes and Sons had and had collected from the said complainants sufficient money to pay the Federal Land Bank all of said installments and that it then and there became the duty of said H.D. Gibbes and Sons, who were then and had been for many years thereto acting as the fiduciary of these complainants in the management and operation of said farm, to pay the Federal Land Bank the said installment if and when the same became due, but that the said H.D. Gibbes and Sons then and there contriving and intending to deprive complainants of their said property allowed the said installment due the Federal Land Bank for the year 1933 to become delinquent . . ." The bill also alleges "Complainants would further show that after the death of the said Bill Burton, the said H.D. Gibbes and Sons took charge of the said plantation and continued to operate the same for and on behalf of the said Rachael Burton and received all the crops and in 1934 wrongfully took charge of all the personal property, consisting of horses, mules, plows, tools, implements, a wagon, etc., and that the said Gibbes and Sons have been in the possession of said personal property in the managing, handling and controlling of said business and they have never accounted to complainants for the same or its value". The bill says that Gibbes and Sons wrongfully contrived to and did procure the foreclosure of the Land Bank deed of trust, and that the land sold thereunder September 1, 1934, and was purchased by the Land Bank for the sum of $1,500.00, and that the Land Bank, on January 17, 1935, conveyed the land to H.D. Gibbes, Jr., for a consideration of $2,600.00. The prayer of the bill, as to Gibbes, is for an accounting, and that H.D. Gibbes, Jr., be held to be a trustee of the lands for benefit of the complainants. They offer to pay any amount found to be owing by them.
It is also stated that Rachael resided on the land as her homestead until during the year 1938, when she was forced to remove therefrom because of ill health.
(Hn 1) The demurrer, of course, admits the facts properly alleged in the bill. In our opinion it states a cause of action against Gibbes and Sons.
But it is contended that even so the right to recover is barred by the three, six and ten year statutes of limitations. The three and six year statutes have no application. Sections 729 and 722, Code 1942. (Hn 3) The principal object of the bill is to set aside the deed from the Land Bank to H.D. Gibbes, Jr., and hold Gibbes as trustee of the land for the benefit of complainants. The accounting feature is incident to that. Section 709, Code 1942, provides that "A person may not . . . commence an action to recover land but within ten years next after the time at which the right to . . . bring the action shall have first accrued to some person through whom he claims . . ." As against Gibbes the right of complainants to bring an action to recover the land accrued when he obtained a deed thereto. This suit was brought within ten years of that date.
This results in an affirmance and final judgment here as to The Federal Land Bank and The Hunt Oil Company and (Hn 2) a reversal and remand as to Gibbes.
Affirmed as to The Federal Land Bank and The Hunt Oil Company, and reversed and remanded as to Gibbes.