131 S.E. 432 | S.C. | 1926
Lead Opinion
The opinion of the Court was delivered by
This is an appeal from a decree of Judge Featherstone. His decree will be reported for a proper understanding of the case. The- exceptions, seven in number, challenge the correctness of his Honor’s rulings.
The appellant’s counsel at the hearing conceded that, if the note and mortgage involved in the suit were not indivisible, the position of the appellant was untenable.
The note and mortgage are divisible and not indivisible. The evidence satisfies us that the note came into possession of the respondent before maturity for value and without notice. The purchase of the note carried with it the mortgage.
The testimony of the bank officers is unco'ntradicted. They were not cross-examined. Their evidence shows that the note was purchased before maturity for value and without notice, and that the bank innocently holds the same.
All exceptions are overruled, and judgment affirmed.
Concurrence Opinion
:I concur in the result of Mr. Justice Watts’ opinion in this case, but for the reason that the case involves some interesting questions of commercial law, not discussed in the leading opinion, I shall express my views upon them.
The action is to foreclose a mortgage of real estate executed by the defendant on April 15, 1922, securing a note dated on that day, payable to the order of Eastern Hide & By-Products Company, on November 15, 1922, for $2,-792.14, with interest from date at 6 per cent., with 10 per cent, attorneys’ fees.
The plaintiff bank claims to be a holder in due course of the note and mortgage by indorsement from the payee on September 15, 1922, before the maturity of the note on November 15, 1922.
The defendant admits the execution and delivery of the note and mortgage, but sets up the defense that they were executed and delivered “upon condition that said Eastern Hide & By-Products Company should release certain cotton and allow certain credits, which the company then and there promised to do”; that without such agreement they would not have been executed and delivered; “that, after securing the execution and delivery of the papers aforesaid, the said Eastern Plide & By-Products Company falsely and fraudulently repudiated its said obligation and covenant, and entirely failed and refused to procure the release of said cotton or to allow any credits whatsoever”; that as a consequence, neither the company nor its assignee has the right to assert any right or interest by virtue of said note and mortgage.
It appears that, prior to the execution of the note and mortgage, the defendant had given to the Eastern Company a bill of sale of certain cotton (the number of bales does not appear in the record for appeal) ; that this cotton had been shipped by the defendant to Barrett & Co., of Augusta, Ga. ; that the bill of sale was being held by the Eastern Company
“In order to save Mr. and Mrs. Munn from criminal prosecution by the Eastern Company, we agreed to waive criminal rights by their giving in substitution for the bill of sale on this cotton a mortgage on the property and Mr. E. C. Dennis drew the deed of trust and the note, and delivered it to us in settlement of all rights that we might have by reason of our bill of sale covering the cotton, and we then executed a release deed and notified Barrett & Company to release the cotton.”
It appears that, although the note and mortgage were executed on April 15, 1922, this notification to Barrett & Co. was not transmitted until September 25, 1922.
Judge Dennis in his testimony, says:
“I got up that note and mortgage and sent it in to them and they were to accept that note and mortgage in lieu of all other securities of whatever kind they had.”
In the letter of the Eastern Company of March 27, 1922, proposing to accept note and mortgage, they say:
“We agree that as soon as this bond and mortgage goes to record to release the cotton in order that he can get what fertilizer he needs without cash.”
Judge Dennis further says.: “Representing the Munns and at the request of the By-Products Company, I got up that note and mortgage,” which obviously was in consequence of and in line with the letter of the By-Products Company dated March 27th.
It seems to me, therefore, that there was an utter failure to establish the contention of the defendant that the note and mortgage were executed and delivered upon condition that the cotton was to be first released. The agreement to release the cotton was collateral to the execution of the note and
In this view of the case, in the absence of a plea of set-off or of a counterclaim for damages on account of the breach of the condition or collateral agreement, and in the absence of any evidence tending to show any damages sustained by the defendant on that account, I do not consider it material to determine whether or not the note and mortgage, or the note with the mortgage as an accessory to it, were or was to be considered as possessing the attribute of commercial negotiability.
I must, however, record my dissent to the statement that under the circumstances of this case the note and mortgage were divisible; by which statement I understand it to be declared that, regardless of any provision in the mortgage, the negotiability of the note is to be determined solely by its terms.
My understanding of the law is that, where a note and mortgage are simultaneously (practically) executed as parts of a single transaction, they are to be read and construed together, and every part of each is to be given effect if possibly reconcilable (8 C. J., 199. Bewley-Darst Co. v. Gin Co., 126 S. C., 225; 119 S. E., 589), and that the question whether a provision in a mortgage which is not contained in the note shall be deemed to have affected the negotiability of the note, otherwise negotiable, depends upon whether that provision simply relates to the security rather than to the indebtedness; that, if the terms of that provision in the mortgage are such as to make the note uncertain or conditional as to amount, time of payment, or the like, they render the note nonnegotiable. 8 C. J., 201. Whether there are any provisions in the mortgage' which render the note nonnegotiable, I do not deem it necessary to consider.
It is the settled law of this State that the holder,in due course of a negotiable note, secured by a mortgage, is entitled to foreclose the mortgage, and is protected in doing so by the commercial and not the equity rule, as is explained in Dearman v. Trimmier, 26 S. C., 506; 2 S. E., 501. 19 R. C. L., 356.
Besides this, the Circuit Judge has found as a fact that the collateral agreement to release the cotton has been performed by the mortgagee. There is abundant evidence to sustain this conclusion.
I think, therefore, for the reasons stated above, the judgment of the Circuit Court should be affirmed.
Lead Opinion
January 28, 1926. The opinion of the Court was delivered by This is an appeal from a decree of Judge Featherstone. His decree will be reported for a proper understanding of the case. The exceptions, seven in number, challenge the correctness of his Honor's rulings.
The appellant's counsel at the hearing conceded that, if the note and mortgage involved in the suit were not indivisible, the position of the appellant was untenable.
The note and mortgage are divisible and not indivisible. The evidence satisfies us that the note came into possession of the respondent before maturity for value and without notice. The purchase of the note carried with it the mortgage.
The testimony of the bank officers is uncontradicted. They were not cross-examined. Their evidence shows that the note was purchased before maturity for value and without notice, and that the bank innocently holds the same.
All exceptions are overruled, and judgment affirmed.
MR. JUSTICE COTHRAN and MESSRS. ACTING ASSOCIATE JUSTICES J.H. MARION and R.O. PURDY concur in result. *302
MR. CHIEF JUSTICE GARY did not participate.
MR. JUSTICE COTHRAN: I concur in the result of Mr. Justice Watts' opinion in this case, but for the reason that the case involves some interesting questions of commercial law, not discussed in the leading opinion, I shall express my views upon them.
The action is to foreclose a mortgage of real estate executed by the defendant on April 15, 1922, securing a note dated on that day, payable to the order of Eastern Hide By-Products Company, on November 15, 1922, for $2,792.14, with interest from date at 6 per cent., with 10 per cent. attorney's fees.
The plaintiff bank claims to be a holder in due course of the note and mortgage by indorsement from the payee on September 15, 1922, before the maturity of the note on November 15, 1922.
The defendant admits the execution and delivery of the note and mortgage, but sets up the defense that they were executed and delivered "upon condition that said Eastern Hide By-Products Company should release certain cotton and allow certain credits, which the company then and there promised to do"; that without such agreement they would not have been executed and delivered; "that, after securing the execution and delivery of the papers aforesaid, the said Eastern Hide By-Products Company falsely and fraudulently repudiated its said obligation and covenant, and entirely failed and refused to procure the release of said cotton or to allow any credits whatsoever"; that as a consequence, neither the company nor its assignee has the right to assert any right or interest by virtue of said note and mortgage.
It appears that, prior to the execution of the note and mortgage, the defendant had given to the Eastern Company a bill of sale of certain cotton (the number of bales does not appear in the record for appeal); that this cotton had been shipped by the defendant to Barrett Co., of Augusta, Ga.; that the bill of sale was being held by the Eastern Company *303 as security for the debt then due by the defendant to it, amounting to $2,545.06. There is a very indefinite reference in the evidence to an attachment by the Eastern Company of this cotton. The vice president of the Eastern Company testified:
"In order to save Mr. and Mrs. Munn from criminal prosecution by the Eastern Company, we agreed to waive criminal rights by their giving in substitution for the bill of sale on this cotton a mortgage on the property and Mr. E. C. Dennis drew the deed of trust and the note, and delivered it to us in settlement of all rights that we might have by reason of our bill of sale covering the cotton, and we then executed a release deed and notified Barrett Company to release the cotton."
It appears that, although the note and mortgage were executed on April 15, 1922, this notification to Barrett Co. was not transmitted until September 25, 1922.
Judge Dennis in his testimony, says:
"I got up that note and mortgage and sent it in to them and they were to accept that note and mortgage in lieu of all other securities of whatever kind they had."
In the letter of the Eastern Company of March 27, 1922, proposing to accept note and mortgage, they say:
"We agree that as soon as this bond and mortgage goes to record to release the cotton in order that he can get what fertilizer he needs without cash."
Judge Dennis further says: "Representing the Munns and at the request of the By-Products Company, I got up that note and mortgage," which obviously was in consequence of and in line with the letter of the By-Products Company dated March 27th.
It seems to me, therefore, that there was an utter failure to establish the contention of the defendant that the note and mortgage were executed and delivered upon condition that the cotton was to be first released. The agreement to release the cotton was collateral to the execution of the note and *304 mortgage, the validity of which was not affected by the breach, if there was a breach, of the collateral agreement; and, if the defendant had any remedy at all on account of said breach, it could only have been resorted to in this action by a set-off or counterclaim to the action upon the note and mortgage.
In this view of the case, in the absence of a plea of set-off or of a counterclaim for damages on account of the breach of the condition or collateral agreement, and in the absence of any evidence tending to show any damages sustained by the defendant on that account, I do not consider it material to determine whether or not the note and mortgage, or the note with the mortgage as an accessory to it, were or was to be considered as possessing the attribute of commercial negotiability.
I must, however, record my dissent to the statement that under the circumstances of this case the note and mortgage were divisible; by which statement I understand it to be declared that, regardless of any provision in the mortgage, the negotiability of the note is to be determined solely by its terms.
My understanding of the law is that, where a note and mortgage are simultaneously (practically) executed as parts of a single transaction, they are to be read and construed together, and every part of each is to be given effect if possibly reconcilable (8 C.J., 199. Bewley-Darst Co. v. GinCo.,
I do not think that the position of the appellant can be sustained that the burden of proof was upon the bank to show that it had paid out the proceeds of the discount of the note to the Eastern Company. The law places the burden upon the other party upon its appearing that the indorsee is in possession of the note; the presumption being that he is a holder in due course. 8 C.J., 981. Bank v. Stackhouse,
It is the settled law of this State that the holder in due course of a negotiable note, secured by a mortgage, is entitled to foreclose the mortgage, and is protected in doing so by the commercial and not the equity rule, as is explained in Dearman v. Trimmier,
Besides this, the Circuit Judge has found as a fact that the collateral agreement to release the cotton has been performed by the mortgagee. There is abundant evidence to sustain this conclusion.
I think, therefore, for the reasons stated above, the judgment of the Circuit Court should be affirmed.
MR. ACTING ASSOCIATE JUSTICE J.H. MARION concurs.