Hughes v. Kaw Inv. Co.

97 So. 465 | Miss. | 1923

Lead Opinion

Sykes, P. J.,

delivered the opinion of the court.

The appellants by their bill seek to enjoin the sale of certain lands under a deed of trust. The default declared in the advertisement of sale was that default had been made in the payment of taxes. The clause relating thereto in the deed of trust is as follows:

“Or should default be made in the payment of the taxes legally assessed against any of the hereinafter described property as dne, then in any of said events the entire sum hereby secured with accrued interest then remaining unpaid shall immediately become due and payable at the option and election of the mortgagee herein, his heirs or assigns.”

The taxes had not been paid by the appellants before the time came and the lands were advertised for sale by the sheriff for nonpayment thereof. The sale was to be made April 1st. When this fact was ascertained by the owners of the notes, some time in March, they advertised this land for sale under the deed of trust. Shortly thereafter, and before the day of sale, the appellants paid the taxes.

The question here presented is whether or not under the clause of the deed of trust above quoted the appellees had a right to dclare a forfeiture and sell the lands. Technically speaking, taxes are due December 15th. If not paid by February 1st, a penalty accrues. The taxpayer, however, has the right to pay the taxes at any time before the land is sold. This clause is a penal one, and must be strictly construed against the creditor, and liberally construed in favor of the debtor. Since the debtor has the right to pay these taxes at any time before the lands are sold, a forfeiture under this clause of the deed of trust cannot be declared at least until the day of the sale of the land. The chancellor so held upon this question.

The note in this case was payable to the order of S. E. Cobb, and was indorsed as follows:

“Pay to the Kaw Investment Company without recourse.

[Signed] S. E. Cobb.”

This indorsement was not noted on the record of Hinds county within thirty days from its execution. It is contended by the appellants that, under section 2296 of Hemingway’s Code (section 2795, Code of 1906), because of this failure the owners of the notes forfeited to the mortgagors ten per cent, of this indebtedness. This section reads as follows:

“All assignments in whole or in part of any indebtedness secured by mortgage, deed of trust, or other lien of record, shall be entered on the margin of the record of the lien within thirty days from the day of said assignment, or said assignment shall be acknowledged and filed for record within said time, and if the assignee of said indebtedness fail to comply with the provisions of this section he shall forfeit to the debtor ten per cent, of the' amount of said indebtedness.”

The question here presented is whether or not this statute applies to the indorsement of a negotiable instrument. It was passed when our anti-commercial statute was in full flower. Under that statute all notes were nonnegotiable, except those payable to bearer; consequently a negotiable instrument was not within the terms of the statute. There is a difference between “assignment” and “indorsement.” Indorsements of negotiable instruments are of various kinds, as especially pointed out in our Negotiable Instrument Acts. A note made payable to order and indorsed in blank thereafter passes by delivery. If this statute were applicable to negotiable instruments, it would depend upon the nature of the indorsement as to whether the penalty applied. If the note were indorsed in blank, neither the taker from the indorser nor any other taker could be liable under the statute, for the reason that it was not specifically eo nomine made payable to him. On the other hand, if it were made payable to one by name as in this case, the statute would apply. In other words, the nature of the indorsement, under that theory, would determine the liability of the indorsee to the penalty. This is not the law. While the word “assignment” is a broader term than the word “indorsement,” and sometimes includes it, this section was dealing solely with nonnegotiable instruments, and the assignment therein referred to- was the assignment necessary to nonnegotiable instruments, and not the indorsement of a negotiable instrument.

“ ‘Assignment’ is a broader term than ‘indorsement,’ and is more comprehensive than the terms ‘indorse/ ‘negotiate/ or other likewords, as applied to commercial paper. Assignment is generally used to signify the transfer, of nonnegotiable instruments, while indorsement is used to signify a transfer of negotiable instruments.” 5 Corpus Juris, p. 841.

The use of the word “assignment” in this statute referred only to nonnegotiable instruments, and was not meant to, and does not, include the various indorsements of negotiable instruments. The chancellor held that the indorsees of the note were not liable to this penalty. This is also a penal'statute, and must be strictly construed.

The decree of the lower court is affirmed.

Affirmed.

Cook and Ethridge, JJ., dissenting in part.

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Dissenting Opinion

Ethridge, J.

I dissent from that part of the opinion which holds that section 2296, Hemingway’s Code (section 2795, Code_ of 1906), is not applicable to deeds of trust securing negotiable instruments. Section 2296, Heming-ways Code (section 2795, Code of 1906), is set out in the majority opinion, hut it ought to be construed in connection with section 2295, Hemingway’s Code .(section 2794, Code of 1906), and with section 2806, Hemingway’s Code (section 2805, Code of 1906), and chapter 196, Laws of 1910, amending section 2805, Code of 1906, and the meaning and purpose of the legislative scheme determined from a reading of all these sections together. In other words section 2296, Hemingway’s Code (section 2795, Code of 1906), does not stand alone, and a construction which might be reasonable if it stood alone may not be reasonable Avhen considered with other sections in pari materia.

Section 2295, Hemingway’s Code (section 2794, Code of 1906), reads as follows:

“When the indebtedness, or any part thereof, secured by a mortgage, deed of trust, or other lien of record shall be assigned by the person appearing by the record to be the creditor, he shall be required by the assignee to enter the fact of the assignment on the margin of the record of the lien; and in default of making such entry, any satisfaction or cancellation of the lien or instrument evidencing it entered by the original creditor shall release the same as to subsequent creditors and purchasers for value without notice, unless the assignment be by writing duly acknowledged and filed for record; and every assignment by an assignee of any such lien shall be entered in like manner and with like effect in case of failure.”

Section 2306, Hemingway’s Code (chapter 196, Laws of 1910), amofig other things provides :

“But the clerk shall not record any mortgage or deed of trust in which the name of the beneficiary is not disclosed therein; and if such instrument is recorded, it shall not impart notice to any one; provided, the failure to disclose the name of the beneficiary shall not apply to mortgages and deeds of trust given by corporations either foreign or domestic, to secure the payment of serial bonds payable- to bearer; and the assignment or transfer of such mortgages or deeds of trust or bonds secured by the same need not be entered on the margin of the record. But it shall be the duty of the holder of such securities covered by this proviso to list and assess the same for taxation, if liable for taxation, in the hands of the holder, such list or assessment; to show the amount, date, due and value of such securities of such corporation so made payable to bearer, and on failure of the holder to so assess the same, all interests thereon, shall be forfeited in his hands and as against him, and he shall lie denied the right to recover such interest in the courts of the state.”

The original section of the Code of 1906 (2805) ended as follows:

“But said clerk shall not record any mortgage or deed of trust in which the name of the beneficiary is not disclosed therein, and if such instrument is recorded it shall not impart notice to any one.”

The legislative policy is clearly indicated in the last sections, and especially by chapter 196, Laws of 1910 (section 2306, Hemingway’s Code), which makes its own exceptions by providing that the failure to disclose the name of the beneficiary shall not apply to mortgages and deeds of trust given by corporations, either foreign or domestic, to secure the payment of serial bonds payable to bearer. This is plainly a legislative declaration that the section shall apply to all deeds of trust and mortgages not excepted from the operation of the section under the rule that, where the legislature enumerated the things to be excepted, the enumeration embraces all that is intended to be excepted, and all other classes are included. These sections deal with the record of instruments, and have no bearing on the negotiability or nonnegotiability of instruments. The statutes probably intend to serve several purposes, one of which was to enable the debtor to know who his creditor was so that he might deal with his obligation in the light of such information, and the suit before us demonstrates the benefit of having such knowledge because the maturity of all the debt is attempted to be accelerated in the" case before us without any notice to the debtor in advance of the acceleration. The sections also intend to give information to the taxing authorities as to who is the owner of the recorded debt so that the state, counties, and municipalities may have such debt listed for taxation. It may be that the instrument which is secured by the mortgage is a negotiable instrument, and under our law the security passes with the transfer of the debt; but people are supposed to malte their contracts in view of the laAV, and, if it is desired that a note should be negotiable and pass from hand to hand by delivery, that purpose could be 'carried out by either not taking the security or not placing it of record, taking the consequences in either case that would follow such action. The state has full power to deal with the record of instruments, and to provide such conditions as it may deem best for the public interest. In my humble opinion the decision in the present case emasculates the statute, and defeats the purpose indicated by the Legislature. The statute may not be a wise one, and may be in fact subversive of the public ivelfare, but that is a question with which the court has no kind of concern, because the shaping of public policy and the making of laws is for the legislative department.