| Miss. | Oct 15, 1914
Lead Opinion
delivered the opinion of the court.
ON PLEA IN BAR.
A plea in bar as to appellant S. A. Jones was filed in this case. It is as follows:
“Now comes the appellee, H. A. Barnes, by his attorneys, and shows to the court that after the trial of this cause in the lower court, to wit, on February 29, 1912, the appellant S. A. Jones filed a petition in bankruptcy, whereby he voluntarily, in accordance with the acts of Congress in that behalf made and provided, assigned to a trustee in bankruptcy all his property other than that exempt from execution at law, and there was included in said assignment, by operation of law, all the interest of said bankrupt in each and every of the several notes sued on in this cause, and on which the appellant, S. A. Jones, is seeking a judgment against this appellee, and the said S. A. Jones now has no interest in said notes, and has not had any interest therein since the filing of said petition in bankruptcy, and the said S. A. Jones now has no interest in this cause which will entitle him to prosecute this appeal; and this the appellee is ready to verify. Wherefore the appellee prays that this cause, as against the said S. A. Jones, may be dismissed.”
Appellant S. A. Jones filed a replication to the plea in bar, in which he says that “all and singular the aver-ments of said plea are untrue.”
An agreed statement of facts is on file, and for our consideration upon the hearing of the plea. It reads:
“ (1) After the rendition of the final decree appealed from in this case, enjoining the appellants from institut*806 ing or prosecuting suits on the promissory notes mentioned in the pleadings, the said S. A. Jones was adjudged a bankrupt by the United States District Court, Southern District of Mississippi, Southern Division, at Biloxi.
“(2) That the said S. A. Jones did not schedule the notes above mentioned, or either of them, as constituting a part of his assets, and in fact his schedule showed no assets above those which were exempt. At the same time the schedule of his debts showed that he owed two thous- and, six hundred, twenty-six dollars and twenty-nino cents.
“(3) It appearing at the first meeting of the creditors that there were no assets, the estate was ordered closed. No trustee was appointed under the circumstances, as none appeared to be needed.
“(4) Afterwards, and before the prosecution of the appeal in this case, the said S. A. Jones was discharged as a bankrupt, and after receiving his discharge it was that he, together with his coappellant, prosecuted the appeal in this case. ’ ’
As to the present hearing on the plea in bar, this case is controlled by the decision in the case of Juden v. Nebham, 103 Miss. 84, 60 So. 45. Therein it was decided that property belonging to the estate of a bankrupt, though' not scheduled, will pass to the trustee upon adjudication of bankruptcy, and does not revest in the bankrupt by his discharge. The bankrupt in that case had not scheduled the note sued upon among his assets, and no trustee was appointed, because no assets were shown. He was finally discharged, and we held that he was divested of his ownership of the note, and consequently deprived of his right to recover. When appellant S. A. Jones was adjudged a bankrupt, all of his title and ownership in the notes involved in this action passed out of him, and was not revested in him upon his discharge. When his
The plea m bar is sustaimed.
Opinion on the Merits
ON THE MERITS.
We find in the record an agreement by counsel for the appellants and for the appellee that this case be submitted for hearing on two issues: (1) On the plea in bar to the appeal of S. A. Jones, one of the appellants; and (2) on the merits of the case. We have decided the first issue by sustaining the plea in bar.
Appellee filed his bill in chancery against appellants to restrain them from prosecuting two suits then pending in the circuit court, and from filing other suits on certain notes given them by appellee in payment for a part of the capital stock in a sawmill company, also for the purpose of rescinding the contract of sale of the stock, and for the purpose of having the notes declared void for the want of consideration and because their execution was induced by fraudulent representation. The bill, which contains, at length, averments showing the false and fraudulent representations which it is alleged were made by appellants in connection with the contract of sale, was fully denied by appellants in the answer which they filed, and which answer they made a cross-bill, praying judgment against the appellee for the entire sum of the notes given by him for the purchase price of the stock.
The case was tried by the chancellor, and submitted for his decision, upon issues of fact. The finding shown in the final decree is that the giving of the notes “was induced by misrepresentation, and that the property sold to the complainant was worthless.” He denied the prayer of the cross-bill, and granted that the bill of complaint, perpetually enjoining appellants from prosecuting any further suits on the notes, directing the delivery of the notes by appellant for cancellation and return to ap-pellee, and declaring the notes to be void. The decision
Appellants contend that there was an affirmance of the contract of sale by appellee, because after purchasing the stock from appellants he operated the business for one month, when he sold his interest to K-. C. Oliver, who was one of the organizers, with appellants, of the sawmill company, and held one-half of the capital stock therein. But there is ample evidence to show that appellee did not know, when he was operating the business, that the statement made to him of the financial condition of the company at the time of the sale of the interest in the capital stock was false, and that the representations then made by appellants were not true. The statement referred to was in writing, and is an exhibit in the record. This statement showed that the company had a clear capital stock of ten thousand dollars, which was not true. The company was then practically in failing condition. The statement did not show the correct financial situation of the company. For instance, there was no mention in the statement of a liability consisting of an indebtedness to Gr. L. Hawkins secured by a collateral pledge of the capital stock of the company amounting to seven thousand dollars. There were other representations made to ap-pellee at the time, which were shown by the testimony to be false, and which he had no knowledge- of until after his connection with the business had ended. Under the facts in this case, and in the absence of the knowledge of the false and fraudulent representations, it cannot be said that his connection with the mill for the short period of one month could be a ratification of the contract which would amount to an affirmance thereof by him.
We do not see that there was any unreasonable delay on the part of appellee in rescinding the contract of sale. It is shown in the record that he did not know of the real financial condition of the company until some time after
Nor can it be said that there was a consideration in this case which should be returned by appellee as a condition precedent to the right to rescind. The evidence shows that, while he made a trade for his interest in the company with Oliver and received notes to evidence the amount due therefor, he did not collect anything thereon and that the notes were worthless; Oliver having failed and gone through bankruptcy. In truth, it is shown that the sawmill company and S. A. Jones, as well as Oliver, failed and were adjudged bankrupts. Ap-pellee received nothing whatever of any value from his purchase of the stock at all. He did not receive the stock at all. There was nothing to be returned.
When we sustained the plea in bar as to appellant S. A. Jones, the appeal was thereby dismissed as to him. The case then remained on the docket for hearing as to the other appellant, B. 0. Jones. The dismissal of the appeal of S. A. Jones did not carry with it the dismissal of the appeal of his coappellant, B. C. Jones.
We find no error in the trial of this case, and it is affirmed.
Affirmed.