Yates v. Council

Sykes, P. J., 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; [390] that the deed of trust contains a stipulation that if Townsend shall fail to pay any of said notes when due, the holder or holders of said notes may declare all of the indebtedness immediately due, and that these notes have all been declared due and payable and are still unpaid; that O. F. Townsend conveyed these lands to J. W. and T. E. Yates by deed, in-which deed it is recited that the grantees assume and agree to pay the above notes executed by Townsend to Council; that the two Yates have failed and declined to pay these notes. It is then charged that, by virtue of this agreement, the Yates are primarily liable, or jointly and severally liable with Townsend. It is next charged that the lands are not worth more than one-half of this indebtedness; that the Yates own other lands, describing them, in-Washington county; that they are about to sell, convey, and dispose of these lands, or to mortgage them with the purpose and intent to place the same beyond the reach of their creditors, and for the purpose of defrauding their creditors. It is also charged that the two Yates have been shipping personal property out of the state for the purpose of defeating their creditors. The prayer of the bill is that the lands included in the deed of trust be foreclosed by the court, and that, if there be found a deficiency, then complainants recover of Townsend and the two Yates the'amount of this deficiency, and that this deficiency be decreed a lien on the other lands of the two Yates described in the bill, and in the lis pendens notice filed. A demurrer was filed to this bill, which among other things stated that the bill showed that the two banks were necessary parties to the suit and were not so made by the bill. This demurrer was overruled, answer filed, and the cause was heard on bill, answer and proof. The proof showed the various conveyances of the land set out in the bill; that the two banks held these notes as collateral security; that if the notes were collected in full there would be an equity payable over to Council or his trustee, Wade. The assignment by [391] Council to Wade was introduced. In it Council purports to assign to Wade, trustee, the notes and interest thereon owing* to him. In it, it is stipulated that the assignment is made to secure the payment of the notes to the two banks. The banks did not assign their interest in these notes to Wade. Testimony was then introduced showing the indebtedness owing by Council to each of these banks and the principal and interest due on all of these notes. 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. [392] All persons interested in the subject of litigation and whose interests will be affected by the decree must be made parties. A nonjoinder of necessary parties, if it appears upon the face of the bill, is demurrable. Rodd v. Durbridge, 53 Miss. 694; Chaplin v. McLeod, 53 Miss. 484; Whitney v. Cotten, 53 Miss. 689. There is nothing in the allegations of this bill to justify the tying up of the other lands of the two Yates by a Us pendens notice. This is not an attachment in chancery, neither is it properly speaking a creditor’s bill. 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 [393] to their detriment. The two statutes relate to entirely different and distinct classes of litigants.” Fernwood Lumber Co. v. Lumber Co., 85 Miss. 54, 37 So. 502. 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.