Opinion
No. 33278.
June 13, 1938.
1. FRAUDS, STATUTE OF.
An oral agreement of second mortgagee that if mortgagor would pay part of indebtedness secured by first trust deed, and if third party would advance remainder of indebtedness to prevent foreclosure of first trust deed, third party should have first lien on land covered by first and second trust deeds, was valid and binding on second mortgagee, notwithstanding statute of frauds (Code 1930, section 3343 et seq.).
2. VENDOR AND PURCHASER.
The purpose of recordation is to give notice by constructive process to purchasers without notice before maturity for value.
3. MORTGAGES.
Where second mortgagee agreed that lender of money used to pay off first trust deed should have first lien on land covered by first and second trust deeds, and sold note secured by second trust deed after maturity, lender had priority as against second mortgagee and its purchaser, notwithstanding that lender's priority was not shown by record.
APPEAL from chancery court of Alcorn county; HON. JAS. A. FINLEY, Chancellor.
Chester L. Summers, of Corinth, for appellant.
Parol evidence is inadmissible to change the terms of a written contract.
10 R.C.L. page 1021, sec. 214, and page 1023; Edrington v. Stephens, 148 Miss. 583, 114 So. 387.
Gray is asking the court to reform and add to the mortgage from Phillips to the First National Bank, "This mortgage is second to a mortgage from grantors, J.N. Phillips, et ux, to Lee Gray." And he is asking the court to write in the face of the recorded instrument, and the record, "The First National Bank waives its priority of time and of record in favor of Lee Gray and the mortgage to him." Equity aids the vigilant, and we do not think a court of equity will write in oral agreements, change the terms of written contracts and the statute of priority to aid one whose situation is brought about by his own negligence.
Were the oral promises of the president of the First National Bank such as to estop the bank from claiming its priority of time and record? In the answer and intervention filed, Gray set up his contention as to the facts under which he claimed priority. Although he did not claim subrogation, ask for reformation or specifically allege waiver, it is apparent his claim was founded on all the principles. In his testimony he at times intimates that he was to be subrogated to the rights of the Corinth Bank and Trust Company. The effect of his whole plea and testimony is that the mortgage from Phillips to the First National Bank be reformed to include the alleged oral agreements as to priority. But according to his testimony Hazard agreed to waive the mortgage of the First National and in favor of Gray's mortgage, and he undertakes to show the consideration for the waiver. On the hearing of the cause, Gray amended to specifically plead estoppel. Admitting the facts alleged to be true, we submit that it does not constitute equitable estoppel.
Hart v. Foundry Machine Co., 72 Miss. 809, 17 So. 769; Bridge Creek Dr. Dist. v. Webster, 168 Miss. 115, 150 So. 915; Day v. McCandless, 167 Miss. 832, 142 So. 487.
Can Gray say that he was relying on any statement or promise of Hazard's when he could have examined the record and found the truth for himself before he paid over the money. Bearing in mind that he was a volunteer and making a new loan, this court has expressly held that the duty was on him to look at the records for himself and not rely on the statements of the clerk or any other party.
Eagle Lbr. Co. v. DeWeese, 163 Miss. 602, 135 So. 490.
When Gray raises the question of estoppel he raises the defense to his own claim. A party proposing the terms of a contract cannot be heard to object to them, and when a party has executed a written contract he is estopped to deny its terms.
10 R.C.L., page 799, sec. 111, page 757, sec. 76.
The doctrine known as estoppel against estoppel is that two estoppels may destroy each other, or, as otherwise expressed, one estoppel may set another at large.
10 R.C.L., page 841, sec. 146.
If Gray has any claim against any one it is against the clerk.
Mangold v. Barlow, 61 Miss. 593.
Gray is not subrogated to the rights of the Corinth Bank Trust Company.
Howell v. Bush, 54 Miss. 437.
Gray was a volunteer in this matter. He was a stranger to the original transactions. Therefore he cannot claim equitable or conventional subrogation. All decisions on the question agree on the principle that volunteers or strangers cannot claim subrogation.
Berry v. Bullock, 61 Miss. 463, 33 So. 410.
There is not clear proof of a waiver, and no proof whatever that the First National Bank waived or relinquished its rights. The only proof of waiver is that Hazard agreed to take a second mortgage, and that Hazard was president of the bank. There was no proof offered that Hazard was in charge of the bank, or had authority to make the waiver.
12 U.S.C.A., sec. 5145, sec. 71.
The burden of proof being on appellees to prove the waiver, there is no presumption as to any part of the waiver, and they must prove that the waiver was made by those in authority, or that the same was ratified. There was no consideration for the waiver.
The testimony of all the parties and evidence offered by Gray himself shows that his situation is the result of his ignorance of the law, believing that his mortgage being prior to the renewal mortgage would protect him, and a result of his dependence upon the chancery clerk's office to prepare his papers and look after his title. When he closed the deal he was not relying on statements of Hazard. He went to the clerk's office after the bank had acted. Regardless of what Hazard may have agreed to, the bank had acted and shown what it intended to do, that it intended and did take a mortgage first on its face, and subject only to such as might be prior in law to the original trust deed. The original mortgage to the First National was not cancelled, but was renewed on record for Gray to see.
W.C. Sweat and N.S. Sweat, both of Corinth, for appellees.
The First National Bank was estopped to claim that its trust deed was prior to that of Lee Gray's.
It is not a question of varying the terms of a written instrument by parol; it is not a question of a reformation of an instrument; it presents a plain and simple question of estoppel, as follows: A asserts that if B will do a certain thing that he will likewise carry out and perform certain other things, and then when B, relying on A's assertion, has performed his part of the agreement and A has accepted the benefits thereof, A will not be later allowed to repudiate the agreement.
21 C.J., page 1204, sec. 205, page 1210, sec. 212; Smith v. Walsh, 63 Miss. 584; Shivers v. Simmons, 54 Miss. 520; 10 R.C.L. 694, sec. 22.
The principle on which the doctrine of estoppel rests is that it would be fraud for one to assert what his previous conduct has denied, when on the faith of that denial others have acted.
Staten v. Bryant, 55 Miss. 61; Higgins v. Habberstraw, 76 Miss. 627, 25 So. 168; Kelso v. Robinson, 161 So. 135; Izard v. Mikell, 163 So. 498.
We therefore insist that the First National Bank having made this agreement with Gray and having induced Gray to act upon it, and having received the benefits therefrom, afterwards having recognized his trust deed as being first, that it was estopped to deny that Lee Gray's trust deed was actually a first and prior trust deed.
The appellant being in privity with the First National Bank is also estopped.
Gaines v. Kennedy, 53 Miss. 103; Georgia Pacific R.R. Co. v. Brooks, 66 Miss. 583, 6 So. 467; Martin v. Tillman, 70 Miss. 614, 13 So. 251; First National Bank v. Bennett, 111 Miss. 26, 71 So. 169.
The First National Bank should have canceled its old trust deed and equity regards that as done which ought to have been done.
Hardee v. Cheatham, 52 Miss. 41; U.S.F. G. Co. v. Marathon Lbr. Co., 119 Miss. 802, 81 So. 492.
The old trust deed of the First National Bank was not actually renewed and is now out of date, and the new trust deed is second to Lee Gray's.
Appellant is claiming the benefit of what he says is a renewal of the old trust deed, yet he intimates that Hazard was without authority to act. But for the attempted renewal the old trust deed is long since out of date. If Hazard was without authority to act all of his actions were void including the taking of the new note and trust deed. Appellant cannot in one breath state that Hazard was without authority to act and in the next breath claim the benefit of the things which Hazard did. If Hazard had authority to act, appellant, as successor to the bank, is estopped to claim that his trust deed is first. If Hazard was without authority to act appellant has nothing at all because his trust deed was absolutely barred by the statute of limitations.
Case v. Hawkins, 53 Miss. 702; Boyd's Ex'r. v. First National Bank of Williamsburg, 108 S.W. 360.
G.C. Taylor, the assignee of a certain deed of trust and note executed by J.N. Phillips and Ethel Phillips, husband and wife, to the First National Bank of Corinth, brought suit to foreclose same, and Lee Gray and W.C. Sweat intervened, each asserting a deed of trust having priority over the indebtedness claimed by G.C. Taylor. There was a decree giving them this priority, and as no appeal was taken in favor of W.C. Sweat by any party to the suit, no further reference to that claim will be made.
It appears that prior to 1930, J.N. Phillips and wife had given a deed of trust upon the property involved to the Corinth Bank Trust Co., securing a debt for $850. The First National Bank also had a trust deed on the same property to secure an indebtedness of $325 which was second to that held by the Corinth Bank and Trust Company.
The Corinth Bank Trust Company was proceeding to foreclose its deed of trust when T.H. Phillips and his son, Bob Phillips, father and brother of J.N. Phillips, went to see Lee Gray for the purpose of borrowing money from him to pay off and discharge the Corinth Bank Trust Company's deed of trust. Gray was willing to advance $500 provided he was given a first lien on the property. T.H. Phillips and his son arranged to pay $350 so as to reduce the debt of the Corinth Bank Trust Company, and the President of the First National Bank agreed that if Gray would advance $500 he should have a first lien. Accordingly, J.N. Phillips and wife executed a deed of trust to Lee Gray, but Gray did not take an assignment from the Corinth Bank Trust Company. At the same time, the deed of trust given by J.N. Phillips and wife to the First National Bank was renewed, but it was then understood and agreed that Lee Gray's deed of trust would be placed first of record and have priority, but, in fact, the First National Bank's deed of trust was placed first on the record. There was no stipulation in either of the deeds of trust that the deed of trust in favor of Lee Gray would have priority over that of the First National Bank, but the agreement was made as above stated. The First National Bank was placed in the hands of a Receiver subsequent to the above transaction and after the note of J.N. Phillips and wife was due; an assignment was made by the Receiver to G.C. Taylor without recourse, and Taylor asserts priority on the theory that the agreement between the First National Bank and Lee Gray with reference to priority was not valid as against him (Taylor), because there was nothing of record showing such priority, and that the verbal agreement made by the President of the First National Bank was not valid further because it violated the Statute of Frauds, Code 1930, secs. 3343 et seq.
There are no recitals in either deed of trust as to the agreement between J.N. Phillips and the President of the First National Bank. It is contended that giving priority to the Gray deed of trust would vary the terms of a written contract which is contrary to law.
The Chancellor, in the court below, held that the Gray deed of trust had priority over the Taylor deed of trust; but rendered a personal decree against J.N. Phillips and his wife in favor of Taylor, and subordinated his lien to that of Sweat and Gray, and the appeal is taken from the decree giving Gray priority.
Inasmuch as the deed of trust of the First National Bank was second to that of the Corinth Bank Trust Company, and the President of the First National Bank agreed that Gray's deed of trust would have priority if $350 was paid on the debt to the Corinth Bank Trust Company, and Gray would advance the $500 and take a deed or deed of trust on the land, his deed of trust should be a first lien thereon, we think this agreement was valid, and that it bound the First National Bank, because there was no requirement that the priority should be in writing, and there was a valuable consideration to the First National Bank, as its equity in the land was increased.
The purpose of recordation is to give notice by constructive process to purchasers, without notice before maturity, for value. The First National Bank having such notice of the equity of Lee Gray, and having made an agreement to take a deed of trust subject to such equity, is bound thereby. G.C. Taylor, being a purchaser after maturity of paper taken subject to the rights existing against it, is not a bona fide purchaser, for value, before maturity, without notice. The Chancellor was correct in his decree giving Gray priority, and, accordingly, his decree will be affirmed.
Affirmed.