Hanson v. Davis

Ethridge, J., delivered the opinion of the court. The appellee, James C. Davis, Director General, operating the Mobile & Ohio Railroad, filed an attachment in chancery, in the chancery court of Lauderdale county, Miss., against the appellant C. 0. Hanson, trading as the Churchill Compresses, and Mrs. Lois Churchill, and the Fidelity & Deposit Company, and J. D. Morton, Jr:, alleging that the defendant Hanson was trading as Churchill Compresses and was operating thereunder certain compresses at Meridian, Miss., Tupelo, Miss., and Corinth, Miss., and is a nonresident of the state of Mississippi, residing in the state of Tennessee, that the defendant Mrs. Lois Churchill is a nonresident of the state of Mississippi, — 87 — and lives in the state of Georgia, and that J. D. Morton is a resident of Lauderdale county, Miss., in charge of the compress operated by Hanson at Meridian, Miss., and had in his custody and under his control property belonging to the defendants Hanson and Mrs. Lois Churchill, or in which they have some interest. It is further alleged that A. F. Churchill, now deceased, was the former owner of the compress properties and of various compresses in the states of Alabama, Arkansas, Mississippi, Missouri and Tennessee, and that he was compressing cotton for hire, and storing cotton for hire in the state of Mississippi, and owned and operated cotton compresses in the said state; that, beginning in September, 1917, said A. F. Churchill entered into a contract with the Mobile & Ohio Railroad Company, which contract was later renewed and extended between said Churchill and the director general of railroads on the 23d day of September, 1918, and again on the 1st day of September, 1919, copies of which contracts are made exhibits to the bill; that the performance of said contracts by the said Churchill was secured by bond executed by the appellant Fidelity & Deposit Company of Maryland, as surety, a copy of which is made an exhibit to the bill. Under the contract between said Churchill and the director general, the performance of which was secured by the Fidelity & Deposit-Company of Maryland, it was provided, with reference to demurrage charges that should accrue in favor of the railroad company, or the director general operating the railroads, that certain sums should be paid by the compress for each day or fractional part of a day that cars were delayed or held after the first forty-eight hours, and for certain credits with reference to such contracts not necessary specifically to be set forth in this opinion. The contracts also provided for unloading cotton in transit and compressing it and reloading for shipment, and for receiving and compressing cotton which would be consigned over the Mobile & Ohio Railroad for shipment, and for insurance of said cotton, etc. These settlements were to — 88 — be made from weekly or monthly bills, and all sums disbursed by the railroad company for premiums for insurance, provided that the average rate of premium for the year or for the season, paid by the railroad at the said compress, shall not exceed the average rate obtainable by the compress at that point, and shall be based on monthly averages, detention time. The bill set forth various extensions of said contract and an indebtedness for the insurance premiums and for the items of demurrage. It is alleged that Churchill conducted the business in the name of the Churchill Compress originally, and that on the 20th day of August, 1917, he gave to Hanson a power of attorney, which is set forth as an exhibit to the bill, under the terms of which Hanson was authorized to manage, operate, and control the' compresses in the states of Alabama, Arkansas, Mississippi, and Tennessee. The-authority given in the contract between Hanson and Churchill was full and explicit, and authorized Hanson to carry on the business, pay the debts and expenses, sell the property, etc.There was an extended additional power of attorney given on the 19th day of June, 1919, and a contract had been made between Hanson and Churchill, whereby Churchill agreed to sell and did sell to said Hanson all his compresses and ginning property, etc., and also all bills receivable, choses in action, and all other assets of every kind and character belonging to the said Churchill, growing out of or accruing from the purchase and operation of the Churchill Compresses and gins in the states of Alabama, Arkansas, and Mississippi, for a consideration of five hundred and fifty thousand dollars, plus certain items in the nature of advances aggregating twenty-four thousand eight hundred sixty-two dollars and eighty-seven cents, making a total consideration of five hundred seventy-four thousand eight hundred sixty-two dollars and eighty-seven cents net to the said A. F: Churchill, and the assumption by the said Hanson of all debts and liabilities accrued or to accrue, absolute and contingent, growing — 89 — out of the purchase and‘operation of the said compresses and ginning plants. This money 'was to be paid by Hanson out of the proceeds of sale of said properties or otherwise, the business to be conducted in the name of the Churchill Compresses until the said considerations should be fully paid. That Hanson was to proceed with reasonable dispatch to dispose of said properties or a sufficient amount thereof to pay said indebtedness. On the 11th day of June, 1920, said A. F. Churchill died testate. A copy of his will is made an exhibit to the bill, and said will devised to his wife all his property of every kind, and directed her to pay his debts, and relieved her from giving bond, filing reports or inventories, or getting permission of any court to sell any of his property or effects. This will was recorded in Lauderdale county, Miss., but no notice to creditors or any other proceeding taken, either in this state or in the state of Georgia, where the testator died, to present any claims for payment. After the death of said A. F. Churchill, Mrs. Lois Churchill, both individually and as executrix of the estate of said A. F. Churchill, executed and delivered an additional power of attorney to Hanson, which power was filed for record in Lauderdale county, Miss., November 12, 1920. In this instrument it was recited that there was a. contract between A. F. Churchill and C. C. Hanson with reference to the sale of the property on the 2d day of June, 1919, by Churchill to Hanson. This instrument also recites that A. F. Churchill, after making said agreement, had given additional power of attorney dated June 19, 1919, for the purpose of enabling the same to be carried out according to its purpose. The instrument signed by Mrs. Lois Charchill recited that Hanson had paid approximately three hundred thousand dollars on the purchase of the property, mid also that A. F. Churchill had left his property to said Mrs. Lois Churchill “absolutely, with full power to dispose of the same in any manner in which she might desire, etc., without obtaining any order of court whatsoever, and making any report to any court whatsoever.” This con — 90 — tract further recites that Mrs. LoiS Churchill was desirous of carrying out the agreement between her husband and Hanson relative to the sale and disposition of all of the said compresses and ginning properties, and that it was deemed necessary, in view of the death of A. F. Churchill, for her to execute a power of attorney to the said Hanson to enable him to carry on the compressing and ginning business and to make sale and disposition of any of the property formerly owned by the said A. F. Churchill, in order to complete the execution of said contract between said A. F. Churchill and said C. C. Hanson, and to carry out the same in good faith. The various contracts between the railroad company and the Churchill Compresses, made exhibits to the bill, are signed “A. F. Churchill, by C. C. Hanson,” on the part of the compresses, and the contracts so signed were secured by the bond of the Fidelity & Deposit Company of Maryland, and the items sued for in the bill of complaint accrued while Hanson was conducting the business of the Church-hill Compresses either for Churchill or in his own right, under the contract between Churchill and himself. There was never any administration under the will of A. F. Churchill nor any notice published to creditors in any court in any state. The bill was demurred to by Hanson, Morton, and the Fidelity & Deposit Company of Maryland, separately, but each filed the same grounds of demurrer and each was represented by the same counsel. The first ground of demurrer is that there is no equity on the face of the bill; the second that the original cafise of action, if any, is against A. F. Churchill, deceased, and that the only way an indebtedness of this character ' can be collected is through an administrator or executor, and, third, that the executrix of said A. F. Churchill is an essential party to the suit. The bill made Mrs. Churchill a party as a nonresident defendant, but she was not made .a party as the executrix of the last will of said A. F. Churchill. — 91 — The bill was filed upon the theory that C. C. Hanson was charged, under the contracts between him and A. F. Churchill, with the duty of paying the debts accrued and to accrue in the compress business, and that the creditor had a right to resort directly to a suit against Hanson. It was also filed on the theory that Mrs. Lois Churchill, being the sole devisee in the will and the executrix of the will, without bond, became a trustee for the payment of debts, and that the will constituted a trust to pay debts, and that she was responsible at least to' the extent of the property devised to her for the payment of the debts, and that a creditor could resort to an action against her without probating any claim or taking any steps to have the estate administered. The will provides in the first item that all of the just debts shall be paid by the executrix. The second item gives to Mrs. Lois Churchill all of the estate and property of every character and description owned by the testator at his death to be her- own property absolutely. The third item makes Mrs. Lois Churchill executrix of the will. The fourth item provides: “I hereby give full authority to my executrix, Lois Churchill, full possession of all the estate of every character which I have or to which I may be entitled at the time c" my death, and after taking out letters testamentary upon my estate, she shall thereafter be relieved from making any inventory, any appraisement, giving bond, making-annual reports or conforming to any other legal provisions with reference to the administration of the estate of deceased persons, and the executrix under this will shall have absolute right to dispose of any property which may come into her possession, without obtaining any order from any court whatsoever. The intent hereof being to vest in the devisee taking under this will, the possession and enjoyment of my property after my death as quickly and as fully as possible, subject to the payment of indebtedness and without subsequent direction by any court.” Mrs. Lois Churchill made no appearance in the court below’, and a decree pro confesso was taken against her, — 92 — and she is not a party to this appeal. The demurrer was overruled by ■ the chancellor, and an appeal granted to settle the principles of the case. -We think that, under the contract between C. C. Hanson and A. F. Churchill, in his lifetime, and under the contract with Mrs. Lois Churchill individually and as executrix after his death, that Hanson is personally liable to the complainant, appellee, because he agreed in his contract to pay all the debts of the compress accrued and to accrue and was in charge of the compress properties, operating them, and that this right accrued to pay the debts as they became due, and were not deferred until after he-had paid Churchill for the property in full. This court held in Barnes v. Jones,,,, 111 Miss. 337, 71 So. 573, that where the grantee, as a part of the consideration for a deed to him assumes the payment of the grantor’s debt to his vendor, the grantee becomes personally liable to the creditor of his grantor who may recover the amount of the debt. In other words, in that case it was held that, when a contract is made by which the buyer of property agrees as a part of the purchase money therefor to pay the debt of the seller, that such a contract becomes an original contract between the buyer and the creditor of the grantor, and that such creditor may sue the grantee directly under the terms of the contract, though he is not a party to the contract. To the same effect is the casé of Dodge v. Cutrer, 100 Miss. 647, 56 So. 455. Under these authorities we think the bill was maintainable against Hanson and that Hanson could not raise the question as to the propriety or legality of the proceeding against Mrs. Lois Churchill. Inasmuch, however, as the chancellor has sent the case here to settle the principles applicable, we think that the will above referred to creates a trust for the payment of debts, and Mrs. Churchill, having, under the allegations of the bill, come into the possession of the property under the terms of the will, without publishing notice to creditors or taking any other steps to administer the estate, — 93 — would become personally liable to the creditors of A. F.' Churchill at the time of his death, Gordon v. McDougall, 84 Miss. 715, 37 So. 298, 5 L. R. A. (N. S.) 355, and if she has, after the death of A. F. Churchill, had any connection with the operation of the compress business, or, if she owned it while it was being operated by Hanson for her benefit, if he was so operating it, that she would become liable for the charges and expenses of such operation.' In our opinion the bill states a cause of action, and the chancellor was correct in overruling the demurrer. Of course, when the answers are filed, any proper defenses, if any, to the bill may be raised, and cross-bills and answers between the defendants may be presented so as to raise all the questions affecting the rights of the parties. Affirmed and remanded.