Bass v. Estill

Simrall, J.,

delivered the opinion of the court.

This is a controversy between W. H. & R T. Bass, judgment creditors of John H. Estill and Toof, Phillips & Co., now represented by their assignee in bankruptcy, under a deed of cestui que trust, executed by Estill for their benefit. The property to which the respective creditors asserted a lien, has by consent been sold, and their respective claims are made to the fund realized.

W. H. & R. T. Bass assert that their j udgment is older than the trust deed, and therefore they have the superior right. -On the contrary, Toof, Phillips & Co. contend that their deed in.trust was elder. But whether that pretension be sustained or not, they insist that the forty mules, the chief element in the contest, were one-half of them, the joint or partnerhip property of Estill and Ferris, who were planting partners in 1870. And the other half were the partnership property of Estill & Son, who were planting together also in the same year; and that the members of these respective firms united in the deed of trust to secure advances to be made for the production of the crops. These advances are *305recited in the deed to be made “ to J. EL Estill, J. C. Eerris and E. EL Estill, composing the firms of Estill & Eerris, and Es-till & Son.” John EL Estill, with Eerris, composed one firm? and he and his son the other. Each firm cultivated separate plantations, kept independent accounts, and had separate transactions with these merchants.

The mules, plantation implements, and crops oí cotton and corn to be grown in 1870, were the property included in the deed in trust.

John EL Estill made an office confession of judgment in favor of the Messrs. Bass, on the — day of April, 1870. That judgment was approved and confirmed by the circuit court on the — day of August (the previous April term had failed).

The counsel for the appellants is in mistake in supposing that W. EL & J. T. Bass acquired the benefits and liens of a judgment before its confirmation by the circuit court. The act done by the debtor before the clerk in vacation, is an acknowledgment of indebtedness” (to his creditors), and “ consent given for judgment to be rendered against him, at the next term of said circuit court (in favor of the creditor) for the amount and costs accruing thereon.” When the plaintiffs’ “ statement,” and the debtors’ “ acknowledgement ” of the above purport are filed, the “ clerk shall docket the cause on the appearance docket“ and at the next term, on motion of the plaintiff, the court shall render judgment and such judgments shall be binding unless set aside during the term,” etc. Code 1857, pp. 523-4, arts. 257, 258. The statute seems to be specific and plain, that the plaintiff does not acquire a judgment, until the court pronounces it. W. EE. & B. T. Bass obtained a judgment at the August term of the circuit court, and not in the previous April by reason of anything that occurred before the clerk in vacation. Nor does the statute give countenance to the idea that for any purpose, of lien, or any other advantage, the judgment relates back to, and takes effect from the office confession.

*306The deed in trust purports to have been executed the 4th of April, 1870. It was filed for record the 12th of that month,, and was recorded by the clerk. But the deed was not acknowledged by the grantor, nor was it proved by a subscribing witness. There was no authority of law to admit this deed to record, and its registration did not have the effect of notice to subsequent purchasers and creditors. In fact it ,was a nullity as to all the benefits conferred by statute upon a properly registered instrument. Work v. Harper, 24 Miss. Rep., 517; Tillman v. Cowand, 12 S. & M., 262.

If the rights of Toof, Phillips & Co. stood alone upon notice imparted by the record, it would no more avail them, than if the instrument had never been filed in the office and recorded.

But the appellants, the Messrs. Bass, had notice of the deed the same day that the office confession was taken.

The attorney for the-appellants testifies that the deed was presented at the office, just after the papers for the office confession had been prepared, and requested notice to be taken that that proceeding had been first instituted. One of the appellants was present at the time. It appears that these parties were aware of the nature and purposes of the deed. See Wailes v. Cooper et al., 24 Miss., 228.

Assuming it as proved that the appellants had notice of the deed in trust, any lien acquired by their judgment on the property embraced in it was subordinate to that security.

It has been argued for the appellants, that the sale and purchase of the mules had not been consummated until the office confession of judgment by Estill. Sometime prior to that, how long does not appear, the appellants sold and delivered the mules-to Estill for a draft on his brother who resided in Richmond, Kentucky, on the assurance that it would be accepted. The draft-was sent from Bolivar county, Mississippi, to Richmond for acceptance.

When it returned dishonored, John H. Estill sent the appel*307lants a draft on E. Estill his son, and J, O. Eerris, which was declined and returned, and, thereupon, the matter was settled by the office confession of jndgmént. But the mules had already been delivered to John H. Estill. Eerris states in his deposition that he bought an undivided half interest in twenty of the mules before the deed in trust was executed. W. N. Hood was present when the sale was made. The mules were delivered when the draft was drawn. It may be true as claimed by the counsel for appellants, that John H. Estill practiced a fraud upon the appellants by giving the draft on his brother, and they might have annulled the sale and reclaimed the mules upon the dishonor of the draft. But they did not pursue that course, but adopted means satisfactory to themselves to secure the debt.

It becomes important to analyze the several interests of the grantees in the deed in trust to the mules, so as to settle the conflicting equities of the parties claiming them or the money arising from their sale. An undivided half interest in twenty of the mules had been sold by John H. Estill to Eerris, and were held by them jointly as partnership stock before the execution of the deed in trust. These mules, on the plantation jointly cultivated by John H. Estill and Eerris, passed by the conveyance as joint or partnership effects.

E. Estill, in his answer, specifically states the terms of the partnership with his father, viz.: That he was to reside upon, take charge of and manage the two plantations, Lenoir and Lake. His father to furnish the necessary team and the land,” and the net proceeds to be equally divided after the expenses were paid.

The mules put by John H. Estill on these plantations were his individal property; his son had no ownership in them; his interest was limited to a use of the animals for the year in the production of the erops.

These twenty mules were not partnership property, and there was, therefore, no right in Toof, Phillips & Co., to assert a superior claim to them on the ground merely, that they constitute joint *308assets, and should be first applied to .the partnership debts. But it was competent for John H. Estill to pledge them as a security to these merchants for the supplies and advances made to the two partnerships. So far as the deed in trust created a security, and no farther, haveToof, Phillips & Co., by reason of it the advantage over the appellants. The trust deed is only a security to the extent of $5,000. To whatever extent these merchants may have advanced beyond that sum, the security can only stand as against the judgment creditors as protecting the sum named in it.

The parties to that conveyance plainly intended the trust debt should be primarly liquidated by the cotton. As fast as prepared for market, the grantors engaged that it should be shipped to the trust creditors at Memphis for sale- The security embraces both partnership property and the individual property of John H. Estill. In marshalling the assets, as between Toof, Phillips & Co., and the judgment creditors of John H." Estill, it should be done upon the rule, of first applying the joint fund, upon which they have the lien, to pay their debt, and resorting to the individual property to supply a deficit. Irby v. Graham, 46 Miss. Rep., 430.

If the crops of cotton and corn, produced by the partnership of Estill & Son, will liquidate their debt, they ought to be confined to it, so that the individual property of Jno. H. Estill may be appropriated to the judgment creditors. It does not appear that John H. Estill had separate effects upon the plantation, cultivated on account of himself and Eerris. The effects of that partnership, including the crops of cotton and corn, ought to pay the account of that parthership. But the deed has this further benefit for the cestui que trust, namely: that all the property named in it, whether owned jointly or individually, stands as a security for the indebtedness of both the partnerships, to the extent of $5,000. The equities of the parties stand in this category :

The trust creditors have a preference over the judgment credit*309ors, to all the partnership effects of both the partnerships, whether plantation implements, mules, cotton or corn, and that for the whole amount of their advances, although in excess of the $5,000 named in the deed of trust. That right rests upon the principle stated and illustrated in Irby v. Graham, 46 Miss., 425, and subsequent cases, to wit: That the creditors of a partnership have a preference to the joint funds and assets, to the exclusion of the creditors of an individual member of the partnership. The rights of the latter extending no farther than to the surplus interest of the individual member after the joint liabilities have been satisfied. See Williams v. Gayle, MSS. opinions.

2d. The trust creditors have a preference to the entire fund in litigation, joint and individual, over the judgment creditors, to the extent of five thousand, the sum named in the deed.

3d. In applying the trust fund to the payment of the debts to Toof, Phillips & Co., the contract intends that the .crops of cotton should be first applied; next in order and in aid of the crops, the plantation implements, mules or other effects jointly bound, and lastly the individual property of John H. Estill.

But if the crops and other partnership effects have actually realized and paid to the trust creditors the $5,000 and interest limited in the deed, then that security has been satisfied, as to any individual property embraced in it, and the judgment creditors, by reason of their lien, have a preference over the trust creditors to the extent of the value of such separate property. See Haynes et al. v. Hough, MSS. opinion.

Recurring to the report of the master, it is shown that Toof, Phillips & Co. advanced to Estill and Ferris, $6,705, and to Estill & Son, $7,961.32. The total of advances being $14,666 32. Deducting the credits from cotton and cash, and there is still due $5,274; of this balance, $2,055 from Estill & Ferris, and $3,219 from Estill & Son. To make good these sums, Toof, Phillips & Co. had a preference to the whole amount received from the cotton and other joint property. The amount thus realized was a *310little over $9,000, nearly four thousand dollars in excess of the sum agreed to be conveyed. But the deed of trust became thereby satisfied, so as to turn loose the 20 mules owned by John H. Estill, and upon them or their money value, the judgment creditors had a preference.

So much of the decree of the chancery court is erroneous, as allows to Toof, Phillips & Co., ■ $3,500, the amount produced by the sale of the. 40 mules, or so many of them as survived. One-half of that sum ought to have been appropriated to the judgment of the appellants.

That portion of the decree is reversed, and decree here in accordance with this opinion.