Opinion
No. 36096.
September 23, 1946.
1. INTOXICATING LIQUORS.
The sale of standard negotiable warehouse receipts covering whiskey is a "sale of whiskey" within statute providing that any person trusting or giving credit to another for intoxicating liquors shall lose the debt and be forever disabled from recovering any part thereof (Code 1942, sec. 2612).
2. INTOXICATING LIQUORS.
A mortgage on Mississippi realty securing note given by corporation to satisfy obligation of buyer of warehouse receipts for whiskey in storage in Kentucky, where sale of liquor is permitted to transfer to seller of receipts, cafeteria stock which was the consideration for the sale of the receipts, could not be foreclosed in Mississippi, in view of Mississippi statute providing that any person trusting or giving credit to another for intoxicating liquor shall lose the debt and be disabled from recovering thereon but court would leave the parties where it found them (Code 1942, sec. 2612).
McGEHEE, J., dissenting.
APPEAL from the chancery court of Harrison county, HON. D.M. RUSSELL, Chancellor.
H.H. Parker, of Poplarville, and White Morse, of Gulfport, for appellant.
The prime purpose of uniform warehouse receipts act is to make standard receipts issued by warehousemen for chattels, documents of title, so that honest purchasers will be protected as purchasers in good faith.
Weil Brothers v. Keenan, 180 Miss. 697, 178 So. 90.
A warehouse receipt is a written acknowledgment by a warehouseman that he holds certain goods in store for the person to whom the writing is issued.
67 C.J. 463, warehouse receipt.
A warehouse receipt for intoxicating liquor does not come within the prohibition of our statute.
Code of 1942, Sec. 2612.
The phrase "intoxicating liquors" when not otherwise defined by statute, generally includes and means any liquors intended for use as a beverage or capable of being so used, which contain alcohol, no matter how obtained, in such percent that they will produce intoxication when imbibed in quantities that may practically be drunk.
38 Am. Jur. 255, Sec. 6.
If our Legislature had intended to outlaw the sale of negotiable warehouse receipts on certain commodities, it would have said so in plain and unmistakable language. It did not legislate on this subject, but on the contrary it did provide in the "uniform warehouse acts" for the negotiability of warehouse receipts.
A warehouse receipt is only symbolic of the property. It is a contract. It is not intoxicating liquors, and it does not come within the prohibition of Section 2612, Code of 1942.
From an examination of the cases of Mississippi arising under the statute, we find in each case that the debt was contracted for the sale of "intoxicating liquors" intended for consumption in the State of Mississippi.
McConnon Co. v. Meadows, 138 Miss. 342, 103 So. 7.
The maxim "He who comes into equity must come with clean hands," has no such application as appellant seems to give it in this case, under the facts set out in the record. It has reference solely to wilful misconduct in regard to the matter in litigation "though an obligation be indirectly connected with an illegal transaction it will not thereby be barred from enforcement if the plaintiff does not require the aid of the illegal transaction to make out his case.
McClellan v. McCauley, 158 Miss. 456, 130 So. 145.
The ordinary rule is that it is only with regard to the plaintiff's rights against the defendant that the plaintiff must come into court with clean hands.
Beekman v. Marsters, 195 Mass. 205, 80 N.E. 817, 820, 11 L.R.A. (N.S.) 201, 122 Am. St. Rep. 232, 11 Ann. Cas. 332.
One suing a stranger to a contract to prevent his acts done in violation of complainant's rights thereunder is not to be denied relief on the ground of his fraud or misrepresentations in procuring the contract, when the other party thereto never complained of such fraud or misrepresentations nor cancelled nor sought to cancel the contract.
Beekman v. Marsters, supra.
Frank and Rosa Blevins are strangers to the transaction and they cannot complain. The same applies to Farose Trading Corporation. J.E. Blevins made the contract with Dr. Martin, he is not a party to this suit, and insofar as this record shows has made no complaint.
When the note and mortgage were offered in evidence they established a prima facie case for appellant. Appellant did not require the aid of an illegal transaction to make out his case.
Gardner Gardner and Oscar Backstrom, all of Gulfport, for appellees, Frank A. Blevins and Rosa E. Blevins.
The sale of whiskey is illegal and against the established and declared public policy of the State of Mississippi.
Goodman v. Swett, 108 Miss. 224, 66 So. 535; Lemonius v. Mayer, 71 Miss. 514, 14 So. 33; Elkin Henson Grain Co. v. White, 134 Miss. 203, 98 So. 531; Skinner Mfg. Co. v. Deposit Guaranty Bank, 160 Miss. 815, 133 So. 660; Virden v. Murphey, 78 Miss. 515, 28 So. 851; Lucas v. Waul, 12 Smedes M. (20 Miss.) 157; Martin v. Terrell, 12 Smedes M. (20 Miss.) 571; Smither v. Keys, 30 Miss. 179; Campbell v. New Orleans Nat. Bank, 74 Miss. 526, 21 So. 400, 23 So. 25; Code of 1942, Sec. 2612.
The sale or negotiation of negotiable warehouse receipts is a sale of the goods covered thereby.
Lundy v. Greenville Bank Trust Co., 179 Miss. 282, 174 So. 802; Love v. People's Compress Co., 137 Miss. 622, 102 So. 275; Weil Brothers v. Keenan, 180 Miss. 697, 178 So. 90; Code of 1942, Sec. 5052.
The courts of Mississippi will not aid in the collection of a debt founded on the sale of whiskey even though the sale be made outside of the State.
Lemonius v. Mayer, supra; Elkin Henson Grain Co. v. White, supra; Skinner v. Bank, supra; Virden v. Murphy, supra; Capps v. Postal Telegraph-Cable Co., 197 Miss. 118, 19 So.2d 491; Code of 1942, Sec. 2612.
A corporation cannot give away its assets nor bind itself to pay the debt of another without a sufficient consideration.
Armstrong v. Shell, 200 Miss. 7, 26 So.2d 344; 14A C.J.S. 363, 528, 529; 19 C.J.S. 429, 537.
Bidwell Adam, of Gulfport, for appellee, Farose Trading Corporation.
In addition to adopting the brief of appellees, Frank A. Blevins and Rose E. Blevins, the appellee, Farose Trading Corporation, would respectfully call the Court's attention to this additional fact which stands out very clearly in this entire proceeding, and that is this: this is an unholy and unlawful and illegal transaction in its entirety because it had to deal with and did deal with whiskey warehouse receipts, and it would be impossible to say that this transaction was based on a whiskey deal and could be so separated that any degree of respectbility or decency could be attached to one part, and then to say that the remaining part was not respectable. In other words, it is an illegal, unlawful and unholy transaction from the very beginning to the end. It was to do a thing that is condemned by the laws of this State and that is to engage in the sale and trading and transaction of whiskey warehouse receipts. The law of this State is too well settled that in matters of this kind the parties are in pari delicto, and the law leaves them where it finds them, as has been repeatedly said by this Court in decisions in cases it is not necessary to cite, and many of which have already been cited above.
Appellant is executor of the estate of V.B. Martin, deceased. Dr. Martin entered into an agreement with J.E. Blevins for the sale of warehouse receipts covering one hundred barrels of whiskey in storage in the State of Kentucky. The consideration for such sale was 75 shares of stock of Morrison Cafeteria. The stock was never delivered, and the pleadings, interpreted by the briefs filed by appellant, sustain the conclusion that, in lieu of delivery of the cafeteria stock, Dr. Martin was later delivered the note of Farose Trading Corporation in the sum of $4,363.94, secured by its mortgage upon certain real and personal property in the City of Biloxi.
Subsequent to execution of the mortgage, Farose Trading Corporation sold this property to one Frank Blevins and wife. This action was brought by Dr. Martin's executor to foreclose the mortgage as security for the note and decree for any deficiency. Frank Blevins and wife were made parties defendant, unquestionably because of their purchase of the mortgaged property. J.E. Blevins is not a party to this suit.
Complainant, to sustain his case, introduced the mortgage and note and the minutes of the corporation authorizing their execution. Thereupon defendants moved for decree and same was awarded dismissing the bill.
We do not adjudge the sufficiency of the mortgage as recordable, nor whether Frank Blevins and wife had actual notice of its execution. Nor do we examine the authority of the corporation to execute the note and mortgage in lieu of the obligation of J.E. Blevins to deliver the cafeteria stock.
We are of the opinion that Section 2612, Code 1942, precludes maintenance of the action in this State. This section is as follows: "If any person shall trust or give credit to another for intoxicating liquors, he shall lose the debt, and be forever disabled from recovering the same or any part thereof; and all notes or securities given therefor, under whatever pretense, shall be void." (Italics supplied.)
There is no allowable debate of the proposition that the sale of standard negotiable warehouse receipts covering whiskey is a sale of the whiskey. J.E. Blevins, for reasons best known to him, did not pay for same and converted the receipts into cash without carrying out his agreement or offering so to do.
We are not concerned with the validity vel non of the agreement to buy the whiskey, or the extent of the legal obligation to pay therefor. Our decision is not intended to affect the legal status of this obligation if pursued in courts other than our own. We are dealing solely with a procedural matter affecting the remedy. Therefore, whether the sale or contract with Dr. Martin was effected in this State or elsewhere is not now relevant.
Had the contract in question been for a money consideration, or evidenced by a note or other evidence of debt, few would question the application of Section 2612. Certainly, Dr. Martin falls in the category of those who `shall trust or give credit to another for intoxicating liquors.' It is only by tracing the assumed obligation of the corporation only so far as the failure of J.E. Blevins to deliver the cafeteria stock, that the identity of the original obligation can be obscured.
To acknowledge that the corporation executed its note and mortgage in lieu of J.E. Blevins obligation, is to haul into plain view the nature of the latter. Running through all the subsequent manipulations is the persisting and persistent debt owing to Dr. Martin for his whiskey. It would not be self-serving for the appellant to insist that this obligation did not persist lest he undermine his case by revealing a total absence of considertion moving to the corporation. There is no showing of any obligation resting upon the corporation to make good the promise to deliver the cafeteria stock. The relationship, personal and commercial, between the Frank Blevins, managing head of the corporation, and J.E. Blevins, is not made certain by testimony, but an assumption that they are personal and business strangers would invoke a coincidence defiant of reasonable and obvious deduction.
To sustain any obligation on the part of the corporation, we must follow it down to its foundation, the cornerstone of which is the sale of whiskey. We are minded to reassert the possibility of a continuing legal obligation upon the part of J.E. Blevins, whose relationship to the grantee of the mortgaged property has been made the subject of interesting but legally irrelevant comment by appellant.
Appellant yields to a normal impulse in inveighing against the deliberate defiance of an obligation to pay the estate of Dr. Martin the not inconsiderable sum of $4,363.94. We can follow only as far as the statute his contentions, made with a vehemence and logic which are seldom inspired by any but a just cause. Purely ethical considerations we are not competent to discuss nor decide.
The obligation of the corporation cannot be seen in its full stature without revealing and invoking a credit extended for a debt whose enforcement in this State the statute forbids. The learned chancellor was compelled to leave the parties where he found them. We are equally bound. Goodman v. Swett, 108 Miss. 224, 66 So. 535; Elkin Henson Grain Company v. White, 134 Miss. 203, 98 So. 531. See also Lemonius v. Mayer, 71 Miss. 514, 14 So. 33; Virden v. Murphy, 78 Miss. 515, 28 So. 851; Skinner Mfg. Co. v. Deposit Guaranty Bank, 160 Miss. 815, 133 So. 660; and Capps v. Postal Telegraph, etc., Company, 197 Miss. 118, 19 So.2d 491.
Affirmed.
Sydney Smith, C.J., did not participate in this decision.
DISSENTING OPINION.
Section 2612, Code 1942, under which the appellant was denied relief in the trial court, is highly penal, and it is well settled by the uniform decisions of this Court, and those in other jurisdictions, that such a statute is to be strictly construed against a litigant invoking its protection. It provides, in effect, that a creditor shall lose the debt, and that a note, and any security taken therefor, shall be void only where the credit is extended for the purchase price of intoxicating liquors. The intent and purpose of our prohibition laws is to prevent the transportation into, and the possession and sale of, intoxicating liquors in this State.
In my opinion it can be said with better reason that the note and mortgage, which are sought to be foreclosed on property in this State, were given by the Farose Trading Corporation of New Orleans, Louisiana, to satisfy the written obligation undertaken by J.E. Blevins Company, of New Orleans, Louisiana, to transfer and deliver to Dr. V.B. Martin, of Picayune, Mississippi, the 75 shares of Morrison Cafeteria preferred stock, than that the said note and mortgage were given to represent the purchase price of the intoxicating liquors called for by the warehouse receipts which Dr. Martin negotiated and delivered in New Orleans, Louisiana, unto the said J.E. Blevins Company in exchange for the Morrison Cafeteria stock.
If this is the correct theory as to what consideration induced the execution of the note and mortgage, or if the same is supported by as good reason as the one to the effect that they were executed to represent the purchase price of intoxicating liquors, then the statute should not be applied. I think that the cases cited in the majority opinion can be distinguished from the instant case on the facts involved.
The pleadings disclose that Dr. Martin, as the owner of certain warehouse receipts issued under the Uniform Negotiable Warehouse Act of the United States calling for the 100 barrels of Kentucky Bourbon whiskey, the location of which is not shown, but assumed to have been in Kentucky, entered into a written "trade agreement" on May 20, 1937, with the J.E. Blevins Company, 307 Carondelet Building, New Orleans, for the exchange of the said warehouse receipts for the 75 shares of Morrison Cafeteria preferred stock. That in signing this agreement Dr. Martin gave his telephone number and his post office address at Picayune, Mississippi. But the agreement does not show on its face the place of its execution and delivery, or the place where the warehouse receipts were to be negotiated and delivered, or where the Cafeteria stock was to be received in exchange therefor. If, therefore, it is a violation of the law, or of any public policy of this State, to contract in Mississippi for the transfer of warehouse receipts for intoxicating liquors located in another state, it will be presumed, in the absence of any proof to the contrary, that the entire transaction occurred where the same is lawful. And no proof was offered by the defendants in support of this affirmative defense, so as to show that the transaction occurred in this State. The complainant alleged that the entire transaction took place in New Orleans, Louisiana, including the execution of the note and mortgage several months later by the appellee, Farose Trading Corporation, to make good the default of the J.E. Blevins Company in carrying out its written obligation to transfer and deliver to Dr. Martin the Cafeteria stock. So far as the note and deed of trust are concerned, they show on their face that they were executed in New Orleans, Louisiana.
It further appears from the pleadings that Dr. Martin had promptly negotiated and delivered the warehouse receipts to the J.E. Blevins Company, pursuant to the trade agreement of May 20, 1937; and that the latter failed and refused to transfer and deliver to him the Morrison Cafeteria stock contracted for. Whether or not the J.E. Blevins Company owned any such Cafeteria stock at the time of the execution of the trade agreement, or had any intention of procuring the same for delivery to Dr. Martin as a consideration for the transfer of the warehouse receipts by him, does not appear. However, he had a right to assume that the said company was ready and able to transfer to him the said Cafeteria stock, and he was entitled to enforce specific performance of the said obligation in the courts of Louisiana, if such stock was available for that purpose; or, in the alternative, he was entitled to recover the value thereof.
After repeated demands by Dr. Martin for delivery of the Cafeteria stock to him by the said J.E. Blevins Company (as affirmatively alleged in the pleadings of the appellee defendants), or, on the other hand, that the said company should give back to him the said warehouse receipts calling for the 100 barrels of whiskey, it appears that the appellee, Farose Trading Corporation, in which the said J.E. Blevins was likewise largely interested, executed and delivered to Dr. Martin, at New Orleans, Louisiana, on November 15, 1937, the note and mortgage herein sued on; and as a consideration therefor the said appellee Trading Corporation thereupon obtained the release and cancellation of the obligation of the J.E. Blevins Company to transfer and deliver the said Cafeteria stock. Such release and cancellation in that behalf is expressly noted on the face of the said trade agreement, the notation bearing date of December 8, 1937. Therefore, Dr. Martin relinquished an obligation in his favor which was legally enforcible in the courts of Louisiana as a consideration for the note and mortgage here involved, and it was a sufficient consideration therefor. In other words, Dr. Martin elected, as he had a right to do, to accept the note and mortgage in lieu of the Cafeteria stock or its value, instead of suing the J.E. Blevins Company for the proceeds of its sale of the warehouse receipts which it had converted to its own use.
Some time after the execution of the note and mortgage by the appellee Farose Trading Corporation pursuant to a resolution by its board of directors, authorizing the execution thereof, and a copy of which resolution the said Corporation caused to be furnished to Dr. Martin along with the said note and mortgage, the said appellee Trading Corporation sold and conveyed to Frank A. Belvins and wife the property covered by the mortgage, located in Biloxi, Mississippi, and in this deed of conveyance the appellees Frank E. Blevins and wife assumed, as a part of the consideration in the deed, the payment of any valid indebtedness against the property; and it is charged by the complainant that they were not only stockholders in the said Trading Corporation, but that they had actual notice of the existence of the note and mortgage on the property, and that the same was duly recorded in Harrison County, where the property is situated.
Neither the J.E. Blevins Company nor J.E. Blevins is a party to this suit. Frank A. Blevins and wife are not sued to enforce the collection of any credit extended to them for the purchase price of whiskey delivered to them in this state or elsewhere, but on their contractual obligation to pay the note and mortgage as part of the consideration in the deed to them, and which note and mortgage were executed, as aforesaid, to make good the default of the J.E. Blevins Company in transferring and delivering to Dr. Martin the Cafeteria stock.
Moreover, no purchase price for the whiskey represented by the warehouse receipts was ever fixed, and the record fails to show that any sum was ever discussed as representing the value of such warehouse receipts. Dr. Martin may have considered the Cafeteria stock worth more than the value of the warehouse receipts, else he would not have offered to make the exchange. In order to avoid the application of this highly penal statute, I am of the opinion that we should assume that the note and mortgage which were executed several months after the transfer and delivery of the warehouse receipts, were executed as representing the value of the Cafeteria stock, which Dr. Martin had, in the meantime, been trying to get transferred and delivered to him. It was never contemplated by him that he was to get either money or a note and mortgage for the purchase price of the warehouse receipts, and he only accepted the note and mortgage in satisfaction of the obligation of the J.E. Blevins Company to transfer and deliver to him the Cafeteria stock, as is shown by the notation of the release of such obligation on the face of the trade agreement itself.
On June 8, 1945, when the final decree was rendered in the trial court, denying the aid of the courts of this State to the executor of Dr. Martin's estate, who was suing on behalf of his widow and children, to collect this indebtedness of approximately $4,000, growing out of a transaction which occurred in another state, the State had recognized for more than a year, and had expressly declared by Chap. 139, Laws 1944, the right of the State Tax Collector to invoke the aid of our courts to collect 10% of the proceeds of all sales made of intoxicating liquors in this State. Therefore, I am unable to say that to allow this executor to collect the debt here sued on would contravene any law or public policy now in force in Mississippi. And if the State can invoke the aid of the courts to collect for itself a part of the proceeds of the whiskey sold in this State, then one of its citizens should not be denied the aid of its courts to enforce an obligation which indirectly grew out of a mere exchange of whiskey warehouse receipts in return for Cafeteria stock in another state, where the sale of such liquors is lawful. And if this is to be the State's public policy, I would scruple to assert that our public policy should be revised, modernized and improved. It occurs to me that it would be better that the very odd and confused public policy of our State which is to be gleaned from the statute prohibiting the sale of intoxicating liquors in this State, and that allowing the aid of the courts to collect for the State 10% of the proceeds of such sales should be contravened than that we should permit one of our citizens to be cheated and defrauded of $4,000 on a transaction had in another state, where the sale of such liquors is legalized, and where such transaction did not contemplate the bringing of any liquors within our borders.