Lienkauf Banking Co. v. Haney

Mayes, J., delivered the opinion of the court. On the 6th of October, 1902, J. J. Haney executed the following note: “Hattiesburg, Miss., Oct. 6th, 1902. $1,025.48. Three months after date I promise to pay to tire order of Metzger Bros., of Mobile, Alabama, the sum of one thousand and twenty-five and forty-eight one-hundredths dollars. Interest from date at the rate of eight per cent, per annum. Value received. Negotiable and payable at the Lienkauf Banking Company, of Mo [619] bile, Alabama. In case this note is not paid at maturity and the same is collected by an attorney, I agree to pay all costs of collection and including ten per cent, attorney’s fees. This note is given as part payment of the purchase price of one hundred and seventy tons T rails and connections and is one of a series of two notes. It is agreed and understood that the title to all of said rails and fastenings is not to vest in us, but to remain in said Metzger Bros., or their assigns, until all the purchase money notes which we have agreed to pay therefor are fully paid. Metzger Bros., or their assigns, distinctly reserve and retain the title to said rails and fastenings; and the said Metzger Bros., or their assigns, shall have the privilege of taking-up and removing all said rails and fastenings at their option, without notice to purchaser should any part of said purchase money be not paid when due. It is also understood that said material shall be regarded as personalty until the purchase price therefor shall be paid. J. I. Haney.” The above is one of two notes; both being for the same amount, one payable three months after date, and the other six months after date. On the face of these notes they are negotiable and payable at the Lienkauf Banking Company, of Mobile, Ala. Before the maturity of these notes and for a valuable consideration, without notice, the Lienkauf Banking Company became the holder of the notes by indorsement from Metzger Bros. These notes were not paid at maturity, and suit was instituted by the Lienkauf Banking Company against Jay J. Haney and others for the amount thereof. The defense sought to be made is a failure of consideration. The question in the case is whether or not these notes are to be controlled by the law of Alabama or the law of Mississippi. If controlled by the law of Alabama, the defenses offered cannot be made under the law merchant of that state. If controlled by the law of Mississippi, the defense is a valid defense. In view of the fact that these notes provide on their face that [620] they shall be negotiable and payable at the Lienkauf Banking Company, of Mobile, Ala., we hardly think an argument as to the place where these contracts are to be performed- and by what law they should therefore be controlled is necessary. Under the repeated decisions of our state, beginning with the case of Fellows v. Harris, 12 Smed. & M. 462, and ending with the ease of Hart v. Foundry Co., 72 Miss. 809, 17 South. 769, it has been held that, where a note is made negotiable and payable in another state, it must be governed by the law of that state. This has been the unbroken authority of our state on this subject. Harrison v. Pike, 48 Miss. 46; Fellows v. Harris, 12 Smed. & M. 462; Miller v. Mayfield, 37 Miss. 688; Emanuel v. White, 34 Miss. 56, 69 Am. Dec. 385; Coffman v. Bank, 41 Miss. 212, 90 Am. Dec. 371; Bank of La. v. Williams, 46 Miss. 625, 12 Am. Rep. 319; Dalton v. Murphy, 30 Miss. 59; Hart v. Foundry Co., 72 Miss. 809, 17 South. 769. This rule of the law as to the negotiability of the notes is not to be changed because of the incident that the notes reserve title to the properly which forms the predicate of the debt. The notes are for a sum certain, negotiable and payable in Alabama, and are controlled by the law of that state. Ensley Lumber Co. v. Lewis, 121 Ala. 94, 25 South. 729. While the case must be reversed, it is manifest that the appellant is not entitled to all the relief sought by the bill. It can establish no lien or claim on any rails, except such as were sold. The decree of the court below should be against the makers of the notes for the amount of -same, with interest, and the amount of the notes should be made out of them if they are not solvent. If, however, they are insolvent, then the complainant or appellant is entitled to a decree against the other defendants only for such quantity of iron bought by Jay J. Haney from Metzger Bros, as may be shown that each converted to his use after the purchase from Jay J. Haney and the J. J, Haney Company. If the testimony fails to show that the subsequent owners of the road converted any of the rails sold by Metzger [621] Bros, to the use of the makers of the notes, then the complainant is not entitled in any view of the case to a judgment against the subsequent owner. Reversed and remanded.