Summary
In Butler Mercantile Co. v. Cruise, 175 Miss. 200, 166 So. 325, a crop mortgage to secure advances purported to cover also the crop of the following year. It was held to be only an equitable mortgage as respects the future year, and that when during that year the tenant was refused advances by the mortgagee, and mortgaged the crop to another for supplies to make a crop which otherwise would not have been made, the latter mortgage had the superior equity.
Summary of this case from Myers v. HobbsOpinion
No. 32099.
February 24, 1936. Suggestion of Error Overruled, April 6, 1936.
1. CHATTEL MORTGAGES.
Mortgage on a thing that has neither actual nor potential existence is void.
2. CHATTEL MORTGAGES.
Where mortgage on 1930 and 1931 crops to secure advances to enable production of 1930 crop antedated the planting of the 1930 crop, the mortgage was valid as regards crops produced during 1930, but constituted an equitable mortgage enforceable only between the parties thereto as regards the 1931 crop.
3. CHATTEL MORTGAGES.
Where 1931 crop could not have been produced in absence of advances, crop mortgage to secure such advances held superior, as to such crop, to prior mortgage on 1930 and 1931 crops to secure advances to enable production of 1930 crop, where such prior mortgage antedated the planting of the 1930 crop.
4. APPEAL AND ERROR.
Contention not within the pleadings will not be considered on appeal.
5. APPEAL AND ERROR.
Apportionment of costs by chancery court will not be disturbed on appeal unless manifestly unjust and unfair.
APPEAL from chancery court of Pike county. HON. R.W. CUTRER, Chancellor.
Butler Snow, of Jackson, and C.T. Gordon, of Liberty, for appellant.
The deed of trust in favor of the Butler Mercantile Company constituted a valid first lien on the crop grown in 1931.
There was no evidence showing that Cruise owed the Hyman Mercantile Company, or its assignee, anything under the deed of trust to the Hyman Mercantile Company.
Everman v. Robb, 52 Miss. 653; McCown v. Mayer, 65 Miss. 537; Stadecker Son v. Loeb, 67 Miss. 200; Maynard v. Cock, 71 Miss. 493; Butt v. Ellett, 19 Wall. (U.S.) 544, 22 L.Ed. 183.
It is a matter of common knowledge that this form of deed of trust is in general use throughout the southern cotton-producing section of Mississippi, at least, and has been for a great many years.
If such a deed of trust is not good as to subsequent purchasers, or encumbrances, for value, it is certainly good between the parties.
Everman v. Robb, 52 Miss. 653; Bascot v. Varnado, 91 Miss. 825; Holroyd v. Marshall, 10 House of Lords, 191.
In the absence of some evidence showing or tending to show an indebtedness to Hyman Mercantile Company secured by a deed of trust on the crop in question or evidence showing that the First National Bank had bought the cotton, it is perfectly clear that the Butler Mercantile Company is entitled to enforce its lien.
When the chancellor dismissed the bill, he rendered a decree for the costs against appellants. This was manifest error. Even if the bill should have been dismissed, the cost only incident to the trial in the chancery court should have been assessed against appellant, and the judgment for costs theretofore entered by the circuit court should have been in no way affected or limited.
J. Gordon Roach, Junior O'Mara and Williams Hunt, all of McComb, for appellees.
The chancery court shall have power to decree that either party shall pay the costs of any suit in equity, or that the same may be divided as may appear equitable.
The chancellor was correct in taxing the appellants with all costs in this cause.
Section 672, Code of 1930; Liberty Mercantile Co. v. Allen, 134 Miss. 35, 98 So. 774.
It is universally known and this court will take judicial knowledge of the fact that the southern farmer must have capital each and every year consisting of farm implements, commercial fertilizer, groceries, feed and other supplies in order that they might produce agricultural products, particularly cotton. This fact was known by the Butler Mercantile Company at the time the Butler Mercantile Company at the time the Butler Mercantile Company refused to furnish Cruise supplies in the year of 1931, and at the time the deed of trust was taken by the Butler Mercantile Company.
A majority of appellants' authorities deal with the question of the "potential existence" of the property mortgaged. This question is not now before the court for the reason that the circuit court of Pike county, Mississippi, held favorable toward appellants in passing upon this question of law when the circuit court reversed the judgment of the county court of Pike county, Mississippi, and ordered a de novo trial. The chancery court, the court from which this case is appealed, did not decide this cause upon a question of a "potential existence" of the property mortgaged but upon other grounds as are set out in the decree of the chancery court.
The other authorities relied upon by appellants deal with cases in which the mortgagor was actually furnished with supplies and necessities at all times by the mortgagee. These are not the facts in the case at bar and as stated, appellants refused and failed to furnish Cruise with supplies or necessities from which he could produce the property involved in this controversy. If it had not been for the furnishing of the supplies by the Hyman Mercantile Company to Cruise in the year of 1931, the property involved herein would not have been produced and would not be in existence. The whole of this situation was brought about by the action of the Butler Mercantile Company, one of the appellants in this cause, by refusing to furnish supplies to Cruise in the year of 1931.
Argued orally by George Butler, for appellant.
This is an appeal from a decree of the chancery court of Pike county adjudging that the mortgage given by appellee, C.L. Cruise, to the Hyman Mercantile Company, on crops produced by him and his tenants during the year 1931, for advances made to him by the mercantile company during that year, was superior to a mortgage executed by him in the early part of 1930 in favor of appellant on the same crops but for advances made to produce the crops of the previous year.
The cause originated in a replevin suit in a justice of the peace court. Six bales of lint cotton were involved. Its course from there to the chancery court is very unusual. It was transferred by the justice of the peace to the county court and tried, and appealed to the circuit court where a new trial was ordered and by agreement of the parties the cause was transferred to the chancery court. There it was proceeded with, of course, as a cause in equity. There is no controversy about the facts; therefore, only questions of law are involved.
Cruise was unable to make a crop on his lands for the year 1930 without financial help, for which he applied to appellant. Appellant agreed to help him, and on the fifteenth of February of that year Cruise executed a mortgage on all crops to be grown by himself and his tenants on his lands, and any other that he might control during the years 1930 and 1931, to secure advances by appellant as needed in 1930, including an indebtedness of $54.50 then already incurred. The indebtedness was due August 1, 1930. Appellant accordingly made advances. Out of the crops Cruise lacked about $200 of paying appellant all he was due him.
On or about the beginning of the year 1931, Cruise found as he had the year before, that he could not make a crop for that year without help. He applied again to appellant for advances to enable him to make a crop; appellant denied his request on the ground that it was going out of business. Thereupon Cruise made application for the necessary advances to the Hyman Mercantile Company, which company agreed to grant his request. He executed a mortgage on April 18, 1931, in favor of that company to secure all the advances made and to be made to him by the company during the years 1931 to 1934, inclusive, and the mortgage covered all crops produced by him and his tenants, or crops owned or controlled by him during those years. The mortgage recited that the advances for each year were to be due on October 1st of that year. Of his 1931 crop, six bales of cotton were stored with the Champion Compress Company, for which Cruise received negotiable warehouse receipts.
The Hyman Mercantile Company had assigned to the First National Bank of McComb the indebtedness due it by Cruise for that year, and the latter had turned over to the bank the negotiable warehouse receipts for the six bales of cotton. The First National Bank, the trustee in the Hyman Mercantile Company's deed of trust, and the Champion Compress Company were all made defendants to the bill, but the interested parties are appellant and the bank. The six bales of cotton so delivered to the bank discharged Cruise's indebtedness to the Hyman Mercantile Company for the year 1931, and the deed of trust securing the same was duly canceled.
Under the facts, therefore, appellant is claiming a lien under its mortgage on the crops of 1931 for advances to make the crop of 1930, which advances were due on the first of August, 1930, while the bank is claiming a lien under the Hyman Mercantile Company's mortgage for advances made during the year 1931 on crops produced during that year. An important fact to be borne in mind in considering the question involved is that Cruise, in order to produce the crop of 1931, was forced to mortgage it to the Hyman Mercantile Company because appellant refused to make the necessary advances to him for that purpose. And an important principle of law to be kept in mind is that a mortgage on a thing that has neither actual nor potential existence is void; it is nothing. In Russell v. Stevens, 70 Miss. 685, 12 So. 830, 831, the court held that "possession of land, and preparation for making a crop on it, make the crop to be grown as much a subject for sale or mortgage as the next cast of a fisherman's net, or the wool to be grown on the sheep of the party." The mortgage under consideration in that case, however, was on the crops to be grown for a certain year on lands controlled by the mortgagor to secure advances for that year. In Liberty Mercantile Company v. Allen, 134 Miss. 354, 98 So. 774, the court held that a mortgage to secure advances to make the crop of 1918 made after the maturity thereof and not mentioned in the mortgage, or any indebtedness assumed or paid by the mortgagee, only secured the indebtedness of the mortgagor incurred during the year of the execution of the mortgage. In Shaw v. Kinney, 227 Ala. 170, 149 So. 227, the Supreme Court of Alabama held that a mortgagor is without power to mortgage crops except crops grown on land owned or in which the mortgagor has a present interest during the year or years in which the mortgage debt matures. In that case the court stated the well-established principle, and cited authorities to support it, that at common law a mortgage executed on an unplanted crop to be grown on land in which the mortgagor had a present interest at the time it was executed vested in the mortgagee only an equitable title to the crops subsequently planted and matured by the mortgagor.
In the early part of 1930, when appellant took its mortgage on the crops of both the years 1930 and 1931 to secure advances made in 1930 and maturing in that year, the mortgagor had the land on which the crops were to be produced, but that is all; he had planted no crops, nor done the necessary things in order to plant. Under Russell v. Stevens, supra, and other decisions of this court, the mortgage was valid on the crops of that year for the advances with which to make the same but so far as the crops of 1931 are concerned, at most appellant had only an equitable mortgage enforceable as between it and the mortgagor. On the other hand, Hyman Mercantile Company had a valid mortgage on the crops produced in 1931 for advances made by it during that year, and in addition it occupied a highly equitable position, because the evidence shows without dispute that Cruise could not have produced the crop of 1931 without the help of Hyman Mercantile Company. Which must prevail, that equity in connection with the mortgage of the Hyman Mercantile Company or the mortgage in favor of appellant? We hold that a valid mortgage can be given only on the crops of one year to secure advances made that year to produce such crops; that if it covers the crops of a future year or years for an indebtedness created in the year the mortgage was given, at most it is only an equitable mortgage good between the parties and must stand aside as against a mortgage given under the facts and circumstances of the Hyman Mercantile Company's mortgage. We are therefore of the opinion that the chancellor committed no error in rendering the decree for the bank.
Appellant contends that the evidence failed to show any indebtedness of Cruise to the Hyman Mercantile Company incurred to make the crop of 1931. There was no such issue made by the pleadings. The Hyman Mercantile Company's deed of trust was introduced in evidence, and it was shown that it took the entire six bales of cotton to pay the indebtedness incurred under it. Appellant's contention is without merit.
There is a question of costs in the case. We leave that like we found it. The chancery court has such large powers under the statute for apportioning costs that we decline to disturb its action, unless it is manifestly unjust and unfair. We cannot say that with reference to the costs here involved.
Affirmed.