Exchange Bank v. E. B. Williams & Co.

On Rehearing.

MONROE, J.

The facts material to the decision of the case here presented may be restated as follows, to wit:

H. C. Buck, Jr., doing business in the name of H. C. Buck, Jr., & Co., operated a sawmill at Boyle, Miss., and was in debt to the Exchange Bank of Friar’s Point, Miss., and others. On September 28, 1901, he and B. B. Williams & Co. negotiated a contract (all the conditions of which were not finally agreed on until some time later) to the following effect, viz., that he should deliver to Williams & Co.' 500,000 feet of ■ cypress lumber at Boyle; that, in order to supply him with the money needed for the purchase of certain standing timber, constituting what is called the “Faison” (or “Shaw”) brake, Williams & Co. should furnish their note for $2,000, payable in four months, and, to secure them against loss with respect thereto, that Buck should transfer to them the bill of sale of the brake in question; that, from the payments to be made for the lumber, there should be deducted $4 per 1,000 feet, which should be credited on the note; that Williams & Co. should estimate the lumber as manufactured and piled every two weeks, and should give their 90-day notes in payment therefor, to the extent of 80 per cent, of the price, after the deduction of the $4 per 1,000 feet heretofore mentioned, and that, upon the shipment of the lumber, they should pay the price, in full, in cash, such payments to be applied in reduction of any outstanding notes given by them, due or not due; and there was a further agreement whereby Buck & Co. leased to Williams & Co. the land upon which the lumber contracted for was to be piled. In accordance with the contract so made, Williams & Co., in November, 1901, furnished their note for $2,000, which was discounted by the plaintiff bank for account of Buck & Co., and the proceeds of which were used by that firm; and Buck & Co., who held a bill of sale, from one Faison, of the timber standing in the Faison brake, delivered the same to Williams & Co., together with, an instrument, executed upon a separate piece of paper, and reading (so far as it need be here quoted) as follows:

“We hereby transfer to E. B. Williams & Co. all our right and title in timber specified in bill of sale attached. This transfer is- made to secure them in the issuance of their four months’ promissory note for $2,000, and, if the same is taken care of, as per contract now in force, then this instrument to be null and void. [Signed] H. C. Buck, Jr., & Co.”

This instrument was not recorded until January 17, 1902, and the clerk of the court, being examined as a witness, says:

“Said instrument is acknowledged by the subscribing witness, and was filed for record January 17, 1902. No land is described in the record of this instrument, and no record of the bill of sale attached, as referred to in said instrument.”

As a matter of fact, the bill of sale (from Faison to Buck) was recorded on the same day as the transfer, but, as the clerk says, there is nothing to show that the two are identified with each other, and there is nothing in the instrument of transfer which identifies any property whatever. In the meanwhile — that is to say, on December 31, 1901 (prior to the recording of either of the documents mentioned) — the timber in question was seized under a writ of attachment issued from the circuit court of Sunflower county, on a claim of A. S. Caldwell against *917H. C. Buck for $577.50 and costs, upon which plaintiff obtained judgment in April, 1902, in satisfaction of which the timber was sold in August, 1902, for the sum of $385. In the meanwhile, also — that is to say, on January 18, 1902 — the cashier of the plaintiff bank wrote to Williams & Co. as follows:

“I have been at Boyle for several days at mill of H. C. Buck, Jr., & Co., and find matters in very bad shape. We are interested to considerable extent there, and Mr. Buck is heavily involved with local parties. I have been endeavoring to hold matters in check, and have tried to adjust his affairs without resort to litigation. We wish to get everything there under conti'ol and save what we can. I wish to make you this proposition: We will refund you the amount advanced to Mr. Buck on cypress and amount you have paid on the $2,000 note, and let you out without loss. You to assign us bill of sale on Shaw brake, and make bill of sale to us for cypress lumber you have advanced on at Boyle, and assign lease of ground on which it is placed, if you have lease.”

The cashier’s representations as to Buck’s condition were fully authorized by the facts, as defendant’s agent, who was on the spot, testifies that he owed money in every direction, and it is shown that among others he owed a debt of some $800 to one party from whom he had bought the cypress timber out of which he had manufactured at least part of his lumber; that .the vendor was threatening to seize the lumber; and that others were threatening personal violence.

Of the cypress lumber (for which defendant held bills of sale) there appears to have been on hand about 140,000 feet, and there was about 110,000 feet of oak lumber, for which the bank held bills of sale. On the other hand, defendants had made a contract with Crandall & Richardson of Chicago, whereby they had agreed to deliver to that firm 250,000 feet of cypress lumber, which they were relying on Buck & Co. to supply, and which, it is quite evident, he would not have been able to supply. Before .the proposition made by the bank could be accepted, therefore, or, rather, before it could be placed on a basis that would let defendant out without loss, it became necessary to dispose of the Crandall & Richardson contract, and in order to arrange that Buck went to Chicago, and, after some negotiations (participated in by Crandall & Richardson, the bank, and himself), it was agreed that the contract should be executed by the bank’s furnishing its oak lumber to supply the shortage in cypress; and thereupon defendants accepted the bank’s offer to them, the understanding being that they were to be paid $2,500 in reimbursement of moneys expended in connection with their contract with Buck & Co., which amount, reduced by certain adjustments to $2,249.35, was duly paid. — part of the payment consisting of the surrender by the bank of defendant’s note for $2,000, upon which there was due a balance of $1,436.95 ($563.05 having been paid, on account, in the manner provided for by the contract with Buck & Co.). Defendants, on their part, gave up the 140,000 feet of cypress lumber, and transferred to the bank the lease of the land upon which it was piled. They also (on February 13, 1902) executed a written instrument reading, in part, as follows, to wit:

“For value received, we * * * do hereby assign, transfer, and make over unto the Exchange Bank, of Friar’s Point, Miss., all our right, title, and interest in and to all the cypress timber bn a certain tract of land, * * * being the same purchased by H. C. Buck, Jr., & Co. of G. W. Faison, * * * and by H. C. Buck, Jr., & Co., transferred to us by deed dated November 1, 1901. Said several deeds being recorded in the office of the clerk of the chancery court of said Sunflower county in Book J 2, p. 149,” etc.

The evidence shows beyond question that Buck interposed in the matter, and that whilst defendants acquired the bill of sale merely to secure them against eventual liability for the amount represented by their note, and hence were originally authorized to use it only for that purpose, they were not *919only authorized under the arrangement as thus made to transfer it to the bank, but were authorized to vest in the bank such title as Buck & Co., or they, or both, had in the timber. The bank, in executing the contract with Crandall & Richardson, obtained (net) $2,684.59 for the lumber turned over to it by defendant, so that, leaving the timber brake out of the calculation, it makes a profit, on its contract with defendants of, say, $184.59. The bill of sale from Faison to Buck & Co., and the transfer from Buck & Co. to defendants, .passed through the hands of the bank whilst they were in process of execution, and the bank had as fair an opportunity as did the defendants of becoming informed of the fact that the transfer did not identify the bill of sale or the property to which the bill refers, and that neither the bill nor the transfer had been recorded until the day preceding that on which the offer to defendants was made. Moreover, it will be remembered that, in making his offer in behalf of the bank, the cashier wrote: “I have been at Boyle for several days, at mill of H. C. Buck, Jr., & Co.” — from which it appears that he was on the spot, in intimate association with Buck, between whom and himself, as it happens, there is a family connection, within a few weeks after Caldwell’s attachment had been levied, and was in a better position to become informed of that fact than were the defendants, who were in New Orleans. Considering the case as thus presented, and though we are still satisfied that both litigants acted in good faith, we are now of opinion that the law does not require it, and that it would be inequitable to impose a loss upon the defendants in order that the plaintiff should make an additional profit. The proposition that the bank made, and defendants accepted, must be taken as a whole. The bank offered, say, $2,500 for the cypress lumber held by defendants, the transfer of the lease, and the bill of sale of the timber. The lumber and the leased premises were delivered to it, and it sold the former for $2,684.59. Defendants also conveyed to the bank all their right, title, and interest in and to the timber, and, if it was believed that their interest was greater than it really was, the error was one in which they shared; was partly' of law and partly of fact; and was no more of their making than of the bank’s. As it appears to us from examination of the originals in the record, and from the testimony of the clerk of the chancery court of Sunflower county, the bill of sale from IPai-son to Buck & Co., and the instrument by which Buck & Co. undertook to transfer the timber therein conveyed to defendants, have no physical connection, and are not otherwise identified with each other, so that if the instrument had been recorded before the-attachment it would have accomplished nothing in the way of protecting the timber from seizure at the suit of Buck’s creditors. The bank does not therefore appear to have been injured by the nonregistry complained of.

It is a fact that the conveyance executed by defendants contains the recital that the deeds from Faison to Buck & Co. and Buck & Co. to them had been recorded. But the recital was true, and even if such recording could have protected the timber, if the bank was unaware that it had not been done until January 17, 1902, its ignorance was inexcusable, since, as we understand it, the documents were delivered to it, and they have the date upon which they were recorded conspicuously inscribed upon their backs, together with the volume and folios in and upon which the record is made. It is said that the bank did not know that there had been an attachment levied, but it is not pretended that defendants had any such knowledge; and. as they undertook in good faith to convey to the bank only such interest in the *921property as they possessed, if that interest proved to be less valuable than the bank expected, it was not their fault, but the fault of the bank, which, as we have said, was quite as well informed upon the subject as were the defendants, and, having its domicile in Mississippi, being presumably more familiar with the laws of that state than defendants, and having immediately before submitting its proposition, through its cashier, made an investigation on the spot, was in a position to be better informed. If, knowing, or being in a position to know, that the interest of the defendants might have been partially or wholly devested by an attachment or an execution against Buck, the bank chose to act with its eyes closed, it was at liberty to do so, but there is no reason why it should now complain of a lack of information which it might readily have obtained if it had kept its eyes open. If it be true (and the cashier so testifies, and we do not doubt it) that the cypress brake was worth $1,500, then, as the lumber which was turned over to it was actually sold for $2,684.59, the bank expected to get $4,184.59 worth of property for $2,500. Even as the matter stood, the interest in the brake, which the defendants conveyed, represented the whole value of the brake, less the incumbrance resulting from the attachment (for, say, $577), or something over $900, and it was open to the bank to have realized that amount by making a temporary advance for the payment of the claim of the attaching creditor. But that it did not choose to do, and we do not think that the obligation to take such action vested in the defendants, who had conveyed their interest, and were called on to do no more.

It is therefore ordered, adjudged, and decreed that the prayer of the applicant herein be denied, that the judgment of the Court of Appeal remain undisturbed, and that this proceeding be dismissed, the applicant to pay the costs.