102 So. 176 | Miss. | 1924
delivered the opinion of the court.
The appellees Charles T. Council and L. T. Wade, trustee, brought suit in'the chancery court of Washington county against O. F. Townsend, John TI. Boyden, trustee, J. W. Tates, and T. E. Tates.
The bill alleges a sale by Council to Townsend, with Boyden, trustee, of certain lands, for which, for the payment of a balance of the consideration, five notes and a deed of trust were executed on the land to secure the payment of the notes. The lands are described in the bill. These notes are held by the Commercial Bank of Greenville and the Citizens’ Bank of Greenville as collateral security to a principal note executed by Council. It is then alleged that Council assigned to L. T. Wade these notes subject to the collateral indebtedness against which the same are held by these banks, and that the assignment is for the use of the banks with equity over after the banks have been paid in favor of Council;
No testimony whatever was introduced to show that the two Tates were fraudulently attempting to mortgage or dispose of their other real property, or that they were shipping personal property out of the state for the purpose of defeating their creditors. The decree of the court finds the amount of the indebtedness owing each of the banks and Council, orders a sale of the land embraced in the deed of trust by a special commissioner appointed by it, and that he report his acts back to the court, and reserves for further hearing other questions concern the personal liability of the two Tates. We neglected to state that during* the progress of the trial a motion was made to dismiss and discharge the lis pendens notice relating to the other lands of the two Tates not included in the deed of trust. From this decree this appeal is here prosecuted.
We think the demurrer to the bill should have been sustained because the two Greenville banks, who were the legal holders of the notes of Townsend, were not made parties to • the suit. They held these notes as collateral security to an indebtedness of Council The legal title to the notes is in them. The record shows that the amount owing them is a large one. They were not parties to the assignment by Council to Wade, trustee. In its decree the court attempts to adjudicate the amounts owing these two banks, when the banks are not parties -to the suit. That they are necessary parties appears from the face of the bill, and for this reason the demurrer to the bill should have been sustained.
This court has held, in speaking of the statute relating to creditors’ bills, that it “was enacted to render ineffective and unavailing all fraudulent and collusive conveyances made prior to the institution of a suit, and to prevent divestiture of title subsequent to the filing of the bill by which it was sought to subject the property to the payment of an existing debt, whether the same had been reduced to judgment or not”; that this section (section 313, Hemingway’s Code; section 553, Code of 1906) “was designed for the protection of those creditors who have no lien upon, right to, or interest in land”; while chapter 46 of Hemingway’s Code (which is the Us pendens chapter), “was enacted for the.benefit of those entitled to such interest, lien, or right by virtue of some secret equity, some undisclosed claim, or founded upon or evidenced by some unrecorded instrument. A creditor’s bill ... is an effort to restore the title of the property involved to his debtor, who had fraudulently divested himself thereof, and which would, but for such fraud, have been subject to his debt. Successful in this, the law creates for him a lien upon the land in controversy, which relates back, as to other creditors and third persons in general, to the filing of the bill.” The lis pendens chapter “affords a simple plan whereby those persons who, at the date of the institution of the suit, are vested with, or legally entitled to, a lien upon, right to, or interest in real estate, may protect themselves from subsequent divestiture of title
Under this decision creditors, who file a creditors’ bill, by virtue of the service of process under this statute (section 313, Hemingway’s Code), are given a lien upon the lands of the debtor. This bill is not a creditors ’ bill under this statute. The allegatiofis of the bill affirmatively show that these complainants have no such interest in the lands as permits them to properly file a lis pendens notice in this cause.
The decree of the lower court is reversed, demurrer sustained, the lis pendens notice relating to the other lands of the two Yates not included in the deed of trust will be dismissed and discharged, and the cause remanded, with leave to complainants to amend their bill in accordance with this opinion.
Reversed, demurrer to bill sustained; cause remanded.