Bank of Tupelo v. Motley

Ethridge, J., delivered the opinion of the court. The appellant filed a bill in the chancery court against the defendants Motley, Buff, Harkey, Livingston, Clark, Hambrick, and Gregory, and also against Anderson & Long as trustees, setting forth that Harkey borrowed from the appellant ten thousand dollars for the payment of which he executed his promissory not bearing eight per cent, interest from October 6, 1919, which was secured by collateral notes aggregating fifteen thousand and three dollars; that Harkey failed and refused to pay said note for ten thousand dollars, whereby the right accrued- to the complainant to recover from Harkey the said ten thousand dollars with interest and also attorneys’ fees; that the collateral placed by Harkey with complainant as security for the said ten thousand dollars was five promissory notes of the same date executed by Motley to Harkey, one for [680] one thousand and five hundred dollars and two for two thousand dollars each, all of said notes bearing' 6 per cent, interest; that said notes represented the balance due by Motley to Harkey as the purchase money of certain land described in the bill; said land was bought by the defendant Motley from Harkey and a deed with vendor’s lien reserved for the purchase money of said land; that Harkey also put up notes executed by Buff to the amount of four thousand dollars, said notes representing a balance due on certain lands described in the bill; that when said notes were placed with the complainant they were indorsed in blank by Harkey; that the defendant Hambrick by a duly 1‘ecorded deed conveyed to Harkey the interest of Hambrick in the said lands; that the defendants Livingston and Gregory prior to December, 1917, had all of the said lands, and on the 12th day of December, 1917, they sold and conveyed to Hambrick and Harkey in consideration of a cash payment and the balance of the purchase money represented by the notes for nine thousand dollars to said Livingston and Gregory; that Livingston and Gregory made the usual warranty deed and took from Hambrick and Harkey a deed of trust on said land for the balance of the purchase money, nine thousand dollars; that the defendant Clark had acquired certain of these notes to Livingston and Gregory; that, the defendants Hambrick and Harkey being in default, the right accrued to the defendants Gregory and Clark and to the complainant to have the foreclosure of the deed of trust executed to Livingston and Gregory for the payment of said notes. It is further alleged that when the defendant Motley bought, said lands from the defendant Harkey, he conveyed to Harkey a certain house and lot in the city of Tupelo described in the bill which was taken at a value of two thousand dollars and treated as a cash payment. It is further alleged that for the purpose of further securing the said note for ten thousand dollars executed by Har-key to the complainant, after the original transaction, Harkey executed a deed of trust on said house and lot in [681] Tupelo; that Harkey wholly failed to pay the said ten thousand dollars, and the trustee Anderson foreclosed the deed of trust on said house and lot, at which sale it was bought in by the complainant bank; that the defendant Motley had been in the possession all the time of the house and lot conveyed by him to Harkey and upon which Hark-ey gave complainant a deed of trust which was foreclosed as stated, and Motley is claiming that the complainant bank got no title to said property; that both Motley and the complainant bank claim title to said house through the defendant Harkey and it is not necessary to deraign title thereto; that Motley has no right, title, or interest in the said house and lot and that his claim thereto is a cloud on complainant’s title which it has a right to have set aside by this court; that Motley is insolvent and cannot be made to respond to a personal judgment, and that the other securities held by the complainant bank than said house and lok are insufficient to pay complainant’s debt; and prayed the court to settle the title between Motley and complainant to said house and lot; that the amount of the indebtedness due complainant bank by Harkey be ascertained and fixed and a personal decree rendered against Harkey, and that there be a foreclosure of said collateral secured, by vendor’s lien, and a decree be made for the sale of the land above described except the house and lot in Tupelo, and out of said proceeds the purchase-money notes due the defendants Clark and Gregory be first paid and the balance applied to the payment of the debt due complainant bank by Harkey, including interest, costs, and attorneys’ fees, and for a personal decree against the defendants Buff and Motley for any balance due and unpaid on their notes above described. The defendant Motley filed an answer and cross-bill in which he set forth that the conveyance of said house and lot to Harkey was procured by fraud and that prior to the complainant bank’s acquiring the deed of trust a bill had been filed in the chancery court to have said deed canceled and said transaction set aside for fráud, and that [682] a decree bad been rendered in said suit against said Har-key canceling said deed for fraud, and that a Us pendens notice was filed with the bill, and that the complainant bank being a purchaser pendente lite was bound by said judgment. The complainant bank answered the cross-bill and alleged that the allegations in the suit by Motley against Harkey were untrue in fact, and that as the complainant bank was not a defendant in said suit it was not bound thereby. On the hearing there was a conflict in the proof offered by the complainant bank and by the defendant Motley as to the facts c'oncerning the trade between Harkey and Motley in which Motley conveyed to Harkey the house and lot in the city of Tupelo; the proof for the complainant bank tended to show that Motley knew of the prior incumbrance to Oregory and Livingston at and before the execution .of the deeds in that transaction, while the proof for Motley tended to show that he did not know at said time of said facts, but only learned of them several days thereafter, and that when he learned of them that Harkey promised to take up said notes with the notes that Motley executed to Harkey on the same lands. The chancellor held that it was not necessary for him to decide this conflict of evidence; that, inasmuch as the bank acquired its deed of trust subsequent to the filing of the suit by Motley against Harkey to cancel his deed to Harkey to said house and lot, the complainant bank was bound by said decree, although not a party to said suit, and that the decree of cancellation related back to the filing of the bill and lis pendens notice, and that it was immaterial whether the allegations of that bill were true or untrue; that if the complainant desired to contest the truth of the allegations of that bill, it should have intervened in that suit, and that if it did not do so it was concluded by the decree in that suit. The position of the chancellor as to this contention seems to be the law of this state. Shotwell v. Lawson, 30 Miss. 27, 64 Am. Dec. 145; Osborne v. Crump, 57 Miss. 622. The [683] chancellor decreed for the complainant bant as to the other features of the bill and there is no cross-appeal, so the only contention before ns is as to the correctness of the decree canceling the trustee’s deed to the house and lot in Tupelo made to the bank under the deed of trust secured by the bank subsequent to the filing of the suit. If the decree relates back to the date of the filing of the bill as it clearly does under the above authorities, then at the time of the giving of said deed of trust on said house and lot by Harkey to the bank Harkey had no title thereto. There is a further contention by the appellee that the bank was not a bona-fide purchaser for value without notice and that the deed of trust was given to secure a preexisting debt, but we deem it unnecessary to discuss this feature of the cause because the other feature disposes of the appeal. The decree of the lower court will therefore be affirmed. Affirmed.