Burnet v. Boyd

| Miss. | Oct 15, 1882

Cooper, J.,

delivered the opinion of the court.

The averments of the bill are sufficiently definite to advise the defendants of the nature, character and amounts of the advances of money made bj'- complainants on behalf of the firm of Burnet & Co. It is not necessary to set forth the antecedent transactions conducted by Frankenbusb, one of the members of defendants’ firm, and from which arose the liability of the firm to third persons, which was discharged by the complainants.

The letters of attorney, though not under seal, authorized Frankenbush to make a contract, good in equity as a mortgage, on the lands therein described, and the mortgage, though not valid as a legal mortgage, because not under seal, is good in equity, and will be enforced according to the intention of the parties.

It is said by the defendants that while by the unsealed power Frankenbush was authorized to borrow money for the firm of Burnet & Co., and to secure its repayment by the execution of a mortgage upon its real estate, yet no authority was given to him to mortgage the lands to pay debts already contracted, and that by their bill the complainants show the fact to be that the debt or liability which Frankenbush attempted to secure by mortgage was in existence at the time the mortgage was made.

We are not called upon now to determine whether a power of attorney by which authority is conferred upon one partner to convey the real estate of the firm is to be construed and measured by the same rigid rules as those which apply in cases where a power- conferred is to be exercised over property owned by the grantor, nor the extent to which a more liberal construction would be indulged. It is sufficient to say in this case that, under the facts disclosed in the bill, Frankenbush might, within the terms of the power, have executed a mortgage to secure the complainants against loss by reason of their liability as accommodation makers of paper upon which Bur-net & Co. procured money after the execution of the letters of attorney.

By the terms of the letters, Frankenbush was authorized to borrow money for his firm (a power which he had without regard to the letters), “ and to sign and indorse all note or notes representing the sum or sums thus borrowed, or to be borrowed, and to secure the payment and reimbursement thereof by granting a special mortgage on the whole or a part of the real estate, lands and tenements belonging to our said firm, or standing in its name.”

After the execution of these letters of attorney, Franken-bush, in order to obtain money to be used by his firm — some of it, probably, in discharge of debts due by it for which complainants were then bound — procured complainants to sign, as accommodation makers, a number of promissory notes, which were discounted and their proceeds applied to the use of his firm ; to secure them against loss by reason of their aid thus given to his firm, the mortgage was given.

Complainants have been forced to repay to the holders of the paper the sums advanced by them to Burnet & Co., and in the eye of a court of equity, occupy the same position as if they had originally advanced the money, and are entitled to the protection of the security on the faith of which they assumed the liability incurred by them. The form of the notes executed by Frankenbush to Boyd & Co. (Exhibits B, C, D, and E), and of the notes executed by Boyd & Co., as accommodation makers, in favor of Burnet & Co., in liquidation (Exhibits F, Gf, and H) is not material. The notes (Exhibits B, C, D, and E) need not have been executed at all; it is not pretended that they are due from the makers according to their tenor. Their existence may complicate the transactions, since they are not the evidence of any debt, nor were they intended so to be. It would have been simpler and better if the mortgage had been made directly for the purpose of securing to Boyd & Co. the repayment of any sums which they should be compelled to expend in discharging the debts for.which they were bound as accommodators for Burnet & Co., for at last it comes to that, and the notes executed by Frankenbush add nothing to the strength of their claim — they does not, on the other hand, detract at all from it — utile, per inutile non vitiatur. The notes (Exhibits F, G, and H) were given to Boyd &Co., presumably, after the dissolution of the firm of Burnet & Co. If they were the cause of action, the position of counsel for appellants, that Frankenbush could not bind the fft-m by his indorsement after its dissolution, might be sustained. But the bill distinctly avers that the amounts which Boyd & Co. paid were on account of debts due by Burnet & Co. on the 6th day of June, 1878, and they are evidenced by notes of which Boyd & Co. were the accommodation makers. It is this allegation of the bill which gives validity to complainaut’s demand. If such payments were in fact made by them— no matter Avhen, or where, or how — whether by check, on their bank, or in cash,- or by the execution of other notes as renewals of the first, the original obligation of Burnet & Co. remains unchanged and enforceable. It is the substance, not the form, that is to be regarded.

In response to the argument that the court cannot treat the mortgage as good in equity, because the complainant had treated it as a legal one, it is sufficient to say that all the facts are stated, and from them the mortgage is good in equity though not at law; and to the objection that no other relief can be granted than that specifically prayed, or of the same character, because the prayer for general relief ■ is in the conjunctive, instead of the disjunctive, we have only to reply that the day has long passed in which such objections can be regarded in courts administering justice.

The decree is affirmed, and sixty days given to answer.