Opinion
14038
April 9, 1935.
Before SHIPP, J., Florence. September, 1934. Affirmed.
Action by Mary S. Parrish against the W.R. Barringer Company, Inc., and others in which Mrs. Louise D. Barringer intervened. From the judgment rendered intervener appeals.
The Master's report and order of the Circuit Judge directed to be reported are as follows:
MASTER'S REPORTThis cause was referred to me by the Court of Common Pleas of Florence County, S.C. to take the testimony and report the same to the Court, together with my conclusions and recommendations on both the law and facts, with leave to report on any special matter. In accordance therewith, I have taken the testimony and report the same herewith, and herein report my conclusions and recommendations.
The plaintiff in this case sues for judgment on note of B. G. Gregg for $5,000.00 and interest, and sets up two additional notes for $3,000.00 each, given by the W.R. Barringer Company, Inc., to B.G. Gregg, and pledged by Gregg to plaintiff as collateral security for his direct obligation to her for $5,000.00. Plaintiff further alleges that the Barringer notes assigned by Gregg to her as collateral security are tow of series of nine notes, all originally secured by a mortgage of certain real estate, given by the Barringer Company to Gregg. In addition to asking for a money judgment, plaintiff also seeks a foreclosure and sale of the mortgaged premises. The defendant Elizabeth B. Douglas has admitted all the allegations of the complaint, and has joined in the prayer for relief, after first setting up in her answer one of the series of said nine notes, in the sum of $3,000.00, pledged by Gregg to her as collateral security for a loan of like amount. The defendant Charles N. Griffin has answered, likewise joining in plaintiff's prayer for relief, alleging that he is the owner and holder of note No. 6 of said series, for $3,000.00, upon which there is a certain balance remaining unpaid. The interests of the plaintiff and of the two defendants above named are therefore identical. None of the facts above recited are in dispute.
In addition to the allegations above referred to, plaintiff alleges in her complaint that of said series of nine notes, Nos. 1 to 5, inclusive, aggregating $12,000.00, were paid in full by the Barringer Company. The defendant, Mrs. L. S. Barringer, who later intervened, contends that said notes 1 to 5, inclusive, were assigned to her for value, and that she is the owner and holder thereof. The position taken by the defendant last named has created the controversy in this action. There is, as stated, no dispute concerning the respective amounts due plaintiff and the defendants Elizabeth B. Douglas and Griffin, as receiver. They are admittedly the owners and holders of four of the series of said nine notes (Nos. 6 to 9, inclusive). If the remaining five notes have been paid, as alleged by plaintiff, then the entire proceeds of the sale of the mortgaged premises will be applied to the satisfaction of their respective debts. If, on the other hand, Mrs. L.S. Barringer should prevail in her contention, then the proceeds of sale of the mortgaged property must be apportioned among all the parties, including Mrs. Barringer, and none of them, admittedly, will be paid in full. It should be borne in mind at this point, that Dr. B.G. Gregg, the original owner and holder of all the series of nine notes, admitted in his answer in this cause plaintiff's allegation to the effect that all of notes 1 to 5, inclusive, were paid in full.
The main question for determination is whether or not the defendant Mrs. L.S. Barringer is the owner and holder of notes Nos. 1 to 5, inclusive, and whether, as such owner, she is entitled to share in the distribution of the proceeds of the sale of the mortgaged premises.
In connection with the claim of Mrs. L.S. Barringer as the alleged owner and holder of notes Nos. 1 to 5, inclusive, the burden of proof rests upon her to substantiate her claim of ownership of the notes.
I have carefully considered the entire record including the testimony of the several witnesses and the documentary evidence introduced before me, and have reached the conclusion that Mrs. Barringer has not only failed to prove her contention by any preponderance of the evidence in her favor, but that the overwhelming weight of the evidence is contrary to the contention which she seeks to maintain in this action.
Granting, however, that Mrs. Barringer's contention is true, and that the notes which it is now contended are in the possession of Mrs. Barringer are really owned by her, the burden is upon her to show that there was a purchase rather than a payment thereof, when they were surrendered by the First National Bank. She must show by some competent evidence that there was a contract of purchase and sale entered into between her and the bank, and that Dr. Gregg, the payee, consented thereto. In considering this aspect of the case there is no evidence whatsoever of any agreement between the parties for the sale of the notes. The testimony of Mr. Husbands, the then cashier of the bank, is to the effect that no such agreement existed. He states that he never heard of Mrs. Barringer in this transaction.
"Where the maker of a note receives money from another with which to purchase it, but does not tell the holder, who has no intention of selling the note, that this is his object when he pays him the money, the note is extinguished by payment." Cason v. Heath, 86 Ga. 438, 12 S.E., 678.
"Where the maker of a note borrows money from a third person, with which he pays the note, it will operate as a payment, unless there is a clear intent that it will operate as a purchase and not a payment." 8 C.J., 590.
The minds of the parties must have met; there must have been a contract or agreement, either express or implied, before the alleged sale of these notes to Mrs. Barringer can be upheld. There is no evidence in the record in this cause which could possibly sustain her contention.
The defendant Mrs. L.S. Barringer was not originally a party to this action, but upon petition she was granted the right to intervene and be made a party defendant and given the privilege to file an answer to plaintiff's complaint. After the commencement of this action, the defendant B. G. Gregg departed this life, and upon petition and order K. T.S. Gregg, as administratrix of the estate of B.G. Gregg, was substituted as a party defendant in the place and stead of B.G. Gregg, and allowed to adopt the answer which B. G. Gregg had previously filed in this cause. Since the commencement of this action, James A. Sutherland has been substituted as receiver of the First National Bank in Florence, S.C. in the place and stead of Charles N. Griffin.
The defendants Ashton H. Williams, as receiver of the Stockholders' Liability Fund of Palmetto Bank Trust Company, and Ashton H. Williams and John R. Webster, as receivers of Palmetto Bank Trust Company, are in default.
For the foregoing reasons, I find:
First. That the allegations contained in plaintiff's complaint are true and correct, and that she is entitled to the relief prayed for.
Second. That the allegations contained in the answer of the defendant Elizabeth B. Douglas are true and correct, and that she is entitled to the relief therein prayed for.
Third. That the allegations contained in the answer of the defendant Charles N. Griffin, as receiver of the First National Bank in Florence, S.C. are true and correct, and that James A. Sutherland, as receiver of the First National Bank of Florence, S.C. is entitled to the relief therein prayed for.
Fourth. That the allegations contained in the answer of the defendants B.G. Gregg, individually and as trustee, and K.T.S. Gregg, are true and correct, and that K.T.S. Gregg, individually and as administratrix of the estate of B.G. Gregg, is entitled to the relief therein prayed for.
Fifth. That the claim of the defendant Mrs. L.S. Barringer that she is the owner of notes Nos. 1 to 5, inclusive, of the series of promissory notes secured by the mortgage set forth in plaintiff's complaint is denied and that said notes be declared by this Court paid in full and satisfied, and, further, that the defendant Mrs. L.S. Barringer has no right of interest whatsoever by subrogation or otherwise in the payments made on the remaining notes of said series.
Sixth. That notes Nos. 6 through 9, inclusive, of said series of nine promissory notes, are all equally and ratably secured by mortgage set forth in plaintiff's complaint.
Seventh. That the plaintiff Mary S. Parrish is the legal owner and holder of notes Nos. 7 and 8 in said series of promissory notes on which there is a balance due by the defendant the W.R. Barringer Company, Inc., of the sum of $3,000.00, with interest from December 31, 1931, at the rate of 6 per cent. per annum, payable annually, and the further sum of $3,000.00, with interest from December 31, 1931, at the rate of 6 per cent. per annum, payable annually, in which amounts the defendant K.T.S. Gregg, as administratrix of the estate of B.G. Gregg, has an equity after the payment to the plaintiff of the sum of $5,000.00, with interest from May 22, 1931, at the rate of 7 per cent. per annum, subject to a credit of $100.00 paid on May 1, 1932, and $100.00 paid June 1, 1932.
Eighth. That there is due the defendant Elizabeth B. Douglas on account of note No. 9 in the series of promissory notes described in plaintiff's complaint the sum of $3,000.00 with interest thereon from January 4, 1932, at the rate of 6 per cent. per annum as to the W.R. Barringer Company, Inc., and at the rate of 7 per cent. per annum as to the defendant K.T.S. Gregg, individually and as administratrix of the estate of B.G. Gregg, deceased.
Ninth. That there is due on note No. 6 of said series now held by James A. Sutherland, as receiver of the First National Bank in Florence, S.C. the sum of $850.00, with interest from November 13, 1931, at the rate of 6 per cent. per annum, payable annually, in which amount the defendant K.T.S. Gregg, as administratrix of the estate of B.G. Gregg, deceased, has an equity after the payment to the defendant James A. Sutherland, as receiver of the First National Bank in Florence, S.C. of the sum of $850.00, with interest at the rate of 8 per cent. per annum from February 11, 1932, subject to a credit of $24.20 paid on January 2, 1932.
Tenth. That the attorneys for the various owners and holders of said promissory notes are entitled to 10 per cent. of the amounts due their respective clients as attorneys' fees for this litigation.
I therefore recommend:
First. That the holders of the promissory notes Nos. 6 to 9, inclusive, as above set forth, have judgments against the defendant the W.R. Barringer Company, Inc., for the respective amounts herein found due thereon, together with 10 per cent. of the amount thereof as attorneys' fees.
Second. That the mortgage described in plaintiff's complaint be foreclosed and the property covered thereby sold at public auction, according to law, by or under the direction of this Court, and that the proceeds arising therefrom, after the payment of any and all taxes and assessments due thereon and the cost and disbursements of this action, be applied to the satisfaction of the judgments against the W.R. Barringer Company, Inc., equally and ratably and in proportion to the respective amounts of said judgments, and that the surplus, if any, be held subject to the further order of this Court.
Third. That the defendants and all persons claiming by, through, or under them be forever barred and foreclosed of all right, title, interest, and equity of redemption in and to the mortgaged premises or any part thereof.
Fourth. That after the completion of the sale of the mortgaged premises and an application of the proceeds to the judgments against the W.R. Barringer Company, Inc., the plaintiff and the defendants Elizabeth B. Douglas and James A. Sutherland, as receiver of the First National Bank in Florence, S.C. have leave to apply to the Court for judgment against the defendant K.T.S. Gregg, individually and as administratrix of the estate of B.G. Gregg, deceased, for any deficiency remaining on account of her liability as above set forth.
All of which is respectfully submitted.
C.W. MULDROW, Master for Florence County.DECREE OF JUDGE SHIPP
This case comes before me upon exceptions to the Master's report which have been taken by the defendant Mrs. L.S. Barringer.
The facts are fully stated in the report of the Master, and it is unnecessary to restate them here in full. This action is for the foreclosure of a certain mortgage of real estate given by the defendant the W.R. Barringer Company, Inc., to Dr. B.G. Gregg, securing a series of nine promissory notes. The controversy has arisen by the intervention of the defendant Mrs. L.S. Barringer, who claims to be the owner of notes Nos. 1 to 5 of said series; these notes being more particularly described in the report of the Master.
Briefly, the position taken by the defendant last named is that she became the owner of the said notes by purchase thereof from certain assignees of the original holder, Dr. Gregg, by whom they had been assigned as collateral security. All other parties in interest, except the defendant the W.R. Barringer Company, Inc., contend that these particular notes were paid.
At the trial of the cause before the Master, said notes Nos. 1 to 5, inclusive, were produced by Mrs. Barringer's attorney, and were offered in evidence. The general rule is that the possession of a negotiable instrument raises a presumption of ownership by the holder thereof, provided the instrument carries the indorsement of the payee. This presumption, however, is rebuttable.
I have carefully examined the entire record and am constrained to hold that the presumption of ownership by the defendant Mrs. Barringer of the notes claimed by her has been completely rebutted by the overwhelming weight of the evidence, and, further, that the overwhelming weight of the evidence supports the contention of the other parties in interest, to the effect that the said notes have been paid. The only witness offered on behalf of the defendant Mrs. Barringer was Mr. L.S. Barringer, her husband. The testimony of this witness, which concerns the alleged purchase of the notes in controversy by Mrs. Barringer, is clearly in violation of the hearsay rule. It, therefore, totally fails to support her contention that she purchased the notes from the assignee of Dr. Gregg.
Moreover, the assignees from whom Mrs. Barringer claims to have purchased, had under the law only a qualified interest in the notes in question. They had no right under the terms of the collateral notes of Dr. Gregg (all of which are in evidence) to do anything in his name but receive payment, and, in addition, the uncontradicted evidence in the cause shows that the said assignees never had any intention of doing anything but to receive payment. No power was given the assignees to sell the collateral to Mrs. Barringer or any one else, except in the event of the nonperformance of the conditions of the collateral notes or the happening of one or more of the contingencies provided for therein. There is a total absence of evidence to show that any of these contingencies ever existed.
"An assignment that is made as collateral security for a debt gives the assignee only a qualified interest in the assigned chose." 5 C.J., 956.
"In the absence of an agreement to such effect, the pledgee has no right to sell the pledged property before maturity of the debt. Such a right, however, may be conferred by the contract of pledge, although provisions therefor are to be strictly construed, and a sale is not authorized except upon happening of the conditions specified. * * * In the absence of special authority of agreement permitting him to do so, a pledgee has no right to sell commercial paper held as pledge, either at public or private sale." 49 C.J., 948.
It is, therefore, ordered, adjudged, and decreed that the exceptions to the report of the Master be, and they are hereby, overruled, and that the said report be, and it is hereby, in all respects confirmed.
It is further ordered, adjudged, and decreed that the plaintiff Mary S. Parrish have judgment against the defendant the W.R. Barringer Company, Inc., for the sum of $6,000.00, with interest thereon from December 31, 1931, at the rate of 6 per cent. per annum, payable annually, subject to a credit of $100.00, paid on May 1, 1932, and $100.00, paid on June 1, 1932, in which judgment the defendant K.T.S. Gregg, as administratrix of the estate of B.G. Gregg, has an equity after the payment to the said Mary S. Parrish of the sum of $5,000.00, with interest from May 22, 1931, at the rate of 7 per cent. per annum, payable annually, together with 10 per cent. of the amount of said judgment as attorneys' fees for the plaintiff's attorneys for his litigation.
It is further ordered, adjudged, and decreed that the defendant Elizabeth B. Douglas have judgment against her codefendant the W.B. Barringer Company, Inc., for the sum of $3,000.00, with interest from January 4, 1932, at the rate of 6 per cent. per annum, payable annually; together with 10 per cent. of the amount of the same as attorney's fee for the attorney for Mrs. Elizabeth B. Douglas for this litigation.
It is further ordered, adjudged, and decreed that the defendant James A. Sutherland, as receiver of the First National Bank in Florence, S.C. have judgment against his codefendant the W.R. Barringer Company, Inc., in the sum of $850.00, with interest from November 13, 1931, at the rate of 6 per cent. per annum, payable annually, subject to a credit of $24.20, paid on January 2, 1932, in which amount the defendant K.T.S. Gregg, as administratrix of the estate of B.G. Gregg, deceased, has an equity after the payment to the defendant James A. Sutherland, as receiver of the First National Bank in Florence, S.C. of the sum of $850.00, with interest at the rate of 8 per cent. per annum from February 11, 1932, together with 10 per cent. of the amount of said judgment as attorney's fee for the attorney for James A. Sutherland, as receiver of the First National Bank in Florence, S.C.
It is further ordered, adjudged, and decreed that the mortgage described in plaintiff's complaint be foreclosed, and the mortgaged premises described in the complaint and hereinbelow set forth be sold by the Master in equity for Florence County, S.C. at public auction before the courthouse door in Florence County and State of South Carolina, after due and legal advertisement, on the 1st day of October, 1934, or upon some subsequent and convenient salesday to be designated by the plaintiff or her attorneys; the said sale to be made during the usual hours of sale. The proceeds of sale shall be applied, first, to the payment of the costs and disbursements of this action; second, to the payment of any taxes and assessments which may be past due and unpaid on the mortgaged premises; third, ratably to the payment of the judgments herein granted against the defendant the W.R. Barringer Company, Inc.; and fourth, the surplus, if any, to be held subject to the further order of this Court.
It is further ordered, adjudged, and decreed that the said Master require the highest bidder at the sale other than the parties in whose favor judgments are herein granted, and all other persons, except such parties who may thereafter raise the bid as provided by law, to make a cash deposit of 5 per cent. of his bid as earnest money or evidence of good faith; the deposit of the last high bidder to be applied on the bid should there be a compliance with the same. If the person making the highest bid at the sale fails to make such deposit immediately at the time of the acceptance of his bid, then the said premises shall be at once resold, at such bidder's risk, on the same salesday or upon some subsequent salesday, at the option of the plaintiff or her attorneys. If the last high bidder making the deposit herein required fails to comply with his bid without legal excuse being duly shown, then such deposit shall be forfeited as liquidated damages, and the premises shall thereafter be resold, upon the same terms, and at such purchaser's risk on some subsequent salesday to be designated by the plaintiff or her attorneys.
It is further ordered, adjudged, and decreed that upon the terms of sale being duly complied with the said Master to make title thereto in fee to the purchaser, who shall be let into possession of said premises on presentation of the deed.
It is further ordered, adjudged, and decreed that the purchaser shall pay for the preparation and recording of all papers, including the requisite revenue stamps.
It is further ordered, adjudged, and decreed that upon the sale of the said premises all right, title, interest and equity of redemption of the defendants to this action as well as of all persons whomsoever claiming by, through, or under them, or any of them in and to the premises or any part thereof herein ordered to be sold, be, and the same are, hereby forever barred and foreclosed.
The following is a description of the premises herein ordered sold:
"All that certain piece, parcel or lot of land lying, being and situate in the City and County of Florence, State of South Carolina, measuring Seventy-seven feet and ten inches (77' and 10") more or less, front on the South side of West Evans Street, and running back in distance therefrom in parallel lines to the lands of W.R. Barringer ninety-two (92) feet more or less, said lot being bounded as follows, towit: On the North by West Evans Street: on the East by lot of Florence Title Trust and Investment Company, upon which is situated building commonly known as skyscraper; on the South by lands of W.R. Barringer; and on the West by lot of Frank H. Barnwell.
"The premises herein conveyed lie between the West Wall of the Florence Title Trust Company on the East and the East Wall of the Frank Barnwell office building on the West, and by parallel lines from Evans Street South to the Barringer property on the South."
Messrs. McEachin Townsend and Preston B. Thames, for appellant, cite: As to possession of document giving title: 91 S.C. 459; 74 S.E., 977; 40 L.R.A., New Series, 454; 103 S.C. 538; 88 S.E., 284; 21 R.C.L., 119; 18 S.E., 39.
Messrs. Royall Wright, Willcox, Hardee Wallace, R.W. Sharkey and D.E. Ellerbe, for respondent, cite: Findings of fact by Master should be affirmed: 169 S.C. 173; 168 S.E., 541. As to payment by maker: 8 C.J., 590; 32 N.H. 238; 64 N.Y., 209; 86 Ga. 438; 125 S.E., 678.
April 9, 1935.
The opinion of the Court was delivered by
On the issues involved in this case, there were concurrent findings of fact by the Master and the Circuit Judge. From a careful review of the record for appeal, we are of opinion, and so hold, that Judge Shipp was right in his conclusions; namely, that the presumption of ownership by the appellant of the notes claimed by her was completely rebutted by the weight of the evidence, and also that the preponderance of the evidence supported the contention of the other parties in interest that the notes had been paid. We therefore approve the result of his decree.
The judgment of the Circuit Court is affirmed.
MESSRS. JUSTICES CARTER and BONHAM and MESSRS. ACTING ASSOCIATE JUSTICES WM. H. GRIMBALL and G.B. GREENE concur.