Opinion
No. 30770.
February 4, 1935. Suggestion of Error Overruled April 1, 1935.
1. LOGS AND LOGGING.
Provision of timber deed, reserving vendor's lien, that grantee might cut and remove timber, but should pay grantor stipulated amount per thousand feet, did not impliedly authorize grantee to sell timber cut nor waive lien thereon.
2. LOGS AND LOGGING.
Rights of lumber company as real party to its president's contract to sell and make advances on lumber manufactured by another company from timber conveyed to latter by corporation acquiring it under recorded deed reserving vendor's lien held subject to such lien.
3. LOGS AND LOGGING.
Lumber company, manufacturing lumber from timber conveyed to grantor of company for which former company's president contracted to act as sales agent, shipping lumber with bills of lading issued in its name, approving all sales thereof and collecting and appropriating all money paid therefor, held liable to grantor's vendor for conversion, so as to entitle such vendor to recover amount owed him from proceeds of such sales without discharging vendor's lien reserved by his deed.
4. LOGS AND LOGGING.
Timber seller's letter consenting to lease of lumber yard to president of corporation, for which he contracted to sell lumber manufactured by corporation to which purchaser conveyed timber, and seller's knowledge of such contract, held not to constitute waiver of vendor's lien reserved by seller's deed.
5. VENDOR AND PURCHASER.
Evidence of seller's waiver of or estoppel to assert vendor's lien reserved by deed must be clear and convincing.
6. MORTGAGES.
Mortgagee's mere knowledge that mortgagor is selling mortgaged premises or incumbering them by subsequent mortgage does not bind prior mortgagee to release his security.
7. BANKRUPTCY.
Bankruptcy trustee, whose predecessor simply entered appearance in suit to enforce vendor's lien on timber conveyed to bankrupt, filed no cross-bill, tendered no issue, stated no ground for relief, and offered no evidence of his authority from federal bankruptcy court, cannot complain on appeal of decree for corporation to which bankrupt's property was released by parties' consent.
APPEAL from the chancery court of Warren county.
HON. J.L. WILLIAMS, Chancellor.
Suit by P.B. Swift against the Aberdeen Lumber Company, J.N. Woollett, and another, in which defendant Woollett filed a cross-bill. From a decree for the first-named defendant in part, plaintiff appeals. Reversed and remanded.
Wm. I. McKay and Hirsh, Dent Landau, all of Vicksburg, and Gilliland, Taylor Gilliland, of Memphis, Tenn., for appellant.
Swift had a valid, expressly reserved, and timely recorded vendor's lien, and also a valid, cumulative, and timely recorded purchase money trust deed lien, on the standing timber, sold and conveyed by him to the Delta Hardwood Lumber Company, and by the latter subsequently sold and conveyed to the Delta Hardwood Company, the latter vendee expressly assuming the payment of the purchase money notes so secured.
Swift's purchase money liens followed the logs and lumber.
A mortgage given for the unpaid balance of purchase money on a sale of land, simultaneously with a deed of the same and as part of the same transaction, is entitled to the highest consideration of a court of equity, and takes precedence of prior judgments and all other existing and subsequent claims and liens of every kind against the mortgagor, to the extent of the land sold.
41 C.J. 528; Walton v. Hargroves, 42 Miss. 18.
Grant of option to cut and remove on deposits is no waiver of liens.
11 C.J. 625.
Swift's consent to lease is no waiver of his liens.
The intention to waive the lien must be clearly evident.
41 C.J. 504; 40 Cyc. 261-3.
In the absence of conduct creating an estoppel, a waiver should be supported by an agreement founded upon a valuable consideration.
40 Cyc. 263-4; 13 C.J. 544-5.
Swift was not estopped to claim priority of liens.
Before an estoppel can be raised there must be certainty to every intent, and the facts alleged to constitute it are not to be taken by argument or inference.
21 C.J. 1139 and 1156; Turnipseed v. Hudson, 50 Miss. 420; Cole-M.-N. Co. v. DuBard, 135 Miss. 20; Ware v. Cowles, 24 Ala. 446; Davis v. Butler et al., 128 Miss. 847; 55 Miss. 255-261; 69 Miss. 403; Hart v. Foundry Co., 72 Miss. 830.
We cannot conceive of any controversy over the conclusion that the Delta Hardwood Company contracted with Woollett, merely in bare name only, but with the Aberdeen Lumber Company, in truth and reality, to act as its sales agent, and likewise in the matter of the lease, letter, and trust deeds purporting to secure the advances.
Swift's mortgage security was confused and commingled.
Swift's liens attach to the whole confused mass.
12 C.J. 496.
Swift's mortgaged property was wrongfully converted.
Heard v. James, 49 Miss. 236; 11 C.J. 632.
Where the mortgagor wrongfully appropriates the mortgaged chattels to his own use, he is liable for conversion.
11 C.J. 588; Witczinski v. Everman, 51 Miss. 841.
The proceeds of the mortgaged property sold stand in the place of the thing sold.
Watson v. Cement Co., 93 Miss. 553; 135 Miss. 20.
Contracts, in name of Woollett, of Aberdeen Lbr. Co. are void.
Bank v. Stone, 118 So. 413.
Both liens were duly and timely recorded. The records thereof were notices to the world of Swift's liens.
11 C.J. 424.
The Aberdeen Lumber Company not being authorized to do business in our state, the attempted contract to do business in our state was void and unenforceable.
Quartette Music Co. v. Haygood, 108 Miss. 755; Peterman Const. Co. v. Blumenfeld, 125 So. 548.
By assuming the mortgage debt the purchaser is estopped from attacking the validity of the mortgage for any defect in its execution, or for failure to record.
11 C.J. 633.
An agent or commission merchant receiving and selling mortgaged property for a mortgagor, although with no notice other than that given by the record of the mortgage, is liable to the mortgagee for conversion, even though such selling agent is an auctioneer.
11 C.J. 632; 2 Kent's Com., 363, note 1 c.; Chandler v. DeGraff, 25 Minn. 88.
Where a wrongdoer has intentionally mixed the goods of another with his own, so as to be indistinguishable from his own, such other has the right to select the quantity due him from those with which they are confused or intermingled, and the innocent purchaser from the wrongdoer gets no greater right.
Strubble v. Trustees, 78 Ky. 481; Jewett v. Dringer, 30 N.J. Eq. 304; Blodgett v. Seals, 78 Miss. 522; Peterson v. Polk, 67 Miss. 163; Alexander v. Ziegler, 84 Miss. 560; Watson v. Cement Co., 93 Miss. 553; C. McI.-N. Co. v. DuBard, 135 Miss. 20; Evans v. Morgan, 69 Miss. 328; Ouillette v. Davis, 69 Miss. 762; 25 C.J. 412; Hughes v. Abston, 59 S.W. 296.
A junior mortgagee with notice of a senior mortgage is liable to the senior mortgagee for conversion where he takes possession of the property and appropriates it to his own use, where he receives the property and puts it beyond the reach of execution under the senior mortgage, where he sells or assists in the sale of the property for a full consideration and without recognizing the rights of the prior mortgagee, where he induces a purchaser to buy from the mortgagor.
11 C.J. 591 and 592; 20 A.L.R. 128; 28 A.L.R. 694; 36 A.L.R. 1379; 43 A.L.R. 395. Leonard E. Nelson, of Vicksburg, for cross-appellant.
The Aberdeen Lumber Company is not entitled to any relief.
This cross-appellant holds the legal title to, and constructive possession of all the lumber in controversy, and as such was a necessary and indispensable party to the cross-bill of Woollett; otherwise this cross-appellant without being in court or a party to the proceeding as to Woollett and the Aberdeen Lumber Company is deprived of all the property of his estate to his prejudice and that of creditors of said estate without having had the opportunity to contest the validity of the alleged liens of the parties obtaining the relief.
It is well settled not only that any decree rendered in such a case is a nullity in so far as it affects the rights of a person not a party thereto, but the court upon discovering the absence of a necessary and indispensable party even on appeal will raise the objection of its own motion.
21 C.J. 328.
This cross-appellant was clearly an indispensable party to the proceedings under which the relief was granted.
An objection made for the first time at the hearing, or on appeal, is not favored and will not be sustained unless the absent parties are clearly indispensable.
21 C.J. 229-230.
In order that Woollett or the Aberdeen Lumber Company may enforce their alleged liens on the lumber in the case at bar, this cross-appellant as the owner of the legal title thereto must be made a party thereto.
The Aberdeen Lumber Company is real party in interest.
Contracts and liens of Aberdeen Lumber Company in name of Woollett are unenforceable in Mississippi.
Sections 4140-4164, Code of 1930; 14a C.J. 1270; Dalton Adding Machine Co. v. Commonwealth of Virginia, 88 S.E. 167; Singer Sewing Machine Co. v. Brickell, 233 U.S. 304; London Assurance Co. v. Marreiro, 167 U.S. 160; Dozier v. Alabama, 218 U.S. 124-8, 28 L.R.A. (N.S.) 264; Rearick v. Pennsylvania, 203 U.S. 507; Norfolk v. Simms, 191 U.S. 441.
It is plain not only that independently of the question whether the Aberdeen Lumber Company's business was generally local or interstate, it was doing business in Mississippi and so within the statute, but also it was in fact doing a substantial local business in Mississippi within the meaning of the law of interstate commerce.
Bohn v. Lowry, 77 Miss. 427, 27 So. 605.
The trust deed on stack of lumber is void.
Bank of Coffeeville v. Stone, 118 So. 413; Bank v. Goodbar, 73 Miss. 566; Andrews v. Partee, 79 Miss. 80; Johnson v. Tuttle, 65 Miss. 492; Baldwin v. Little, 64 Miss. 126; Britton v. Criswell, 63 Miss. 394; Oil Company v. Carr, 97 Miss. 234.
Brunini Hirsch, of Vicksburg, for appellees.
Swift has purchase money liens. It is admitted that Swift did have a vendor's lien on the standing timber for the balance of the purchase money due him; that it was further protected by a deed of trust; and that the obligation to pay the balance of said purchase money besides rested upon the Delta Hardwood Lumber Company and the Delta Hardwood Company.
Standing timber may be conveyed separately from the land by deed or grant, or as heretofore shown may be excepted or reserved to the grantor in a conveyance of the land. In this event two distinct estates are created, one in the land and the other in the timber.
Butterfield Lbr. Co. v. Guy, 92 Miss. 361; 38 C.J. 153, 157 and 162.
The phrase "cut and remove," this honorable court will recognize, is repeatedly used throughout lumber contracts and in the decisions of this honorable court and the courts of the land. The word "remove" means "to take away," or "to transfer from one place to another." We see in so many cases the term "cut and remove" imposes on the purchaser the duty not only to cut the logs, but to "remove" the same, and in many cases the failure of the purchaser to remove the logs from the land where cut within a reasonable time, as fixed by the contract, causes the logs to revert to the vendor.
Stewart v. Herring, 138 Miss. 719; Ladnier v. Ingram, 135 Miss. 632; Smith v. Salmen Brick Lbr. Co., 151 Miss. 329.
If the agent, the lumber company, failed to perform its duty, it is accountable to Swift, but not the Aberdeen Lumber Company.
38 C.J. 177.
The lien is lost where the vendor consents to a sale of the lumber on which the lien is retained for the purpose of obtaining funds to meet deferred payments due the vendor and the vendor may be estopped by his conduct from asserting his lien.
38 C.J. 178; 5 R.C.L. 445.
The power of a vendee under a deed to "cut and remove" the standing merchantable timber and to deposit every thirty days so much per thousand therefor in a bank to pay the purchase money may be implied therefrom to cut and remove and sell.
Certainly if no rights exist against the purchaser, no rights will exist against the commission merchant.
11 C.J., page 624, sec. 339, and page 626, sec. 340; Seavey v. Godbold, 99 Miss. 113.
This honorable court, in the case of Cohn v. Smith, 64 Miss. 816, held that one purchasing with knowledge of the lien of the landlord, or with knowledge of facts sufficient to put him on inquiry, made the purchaser liable to an action for the liened products. But Mr. Chief Justice Cooper held that even in such case, if the landlord had consented to the sale by his tenants of the products to the purchaser thereof, and such consent had not been withdrawn at the time of the sale, then the purchaser was not liable in an action even though the landlord's consent was given without consideration and was not acted upon nor relied upon by the purchaser.
Phillips v. Thomas, 128 Miss. 729; Judd v. Delta Grocery, 133 Miss. 866; Seavey Sons v. Godbold, 99 Miss. 113, 54 So. 838; Tonnar v. Washington-Issaquena Bank, 140 Miss. 875; Hawkins v. Nash, 163 Miss. 500; McCormich v. Bloom, 75 Miss. 81.
Where the mortgagee expressly or impliedly consents to a sale of mortgaged property of the mortgagor, he thereby waives his lien, and the purchaser takes the title free from the mortgage, whether the latter knew of the existence of the mortgage or not, and notwithstanding the lack of knowledge on the part of the purchaser that such a consent had been given.
11 C.J. 624.
Want of knowledge on the part of the mortgagee that sale has been made is immaterial if he gave the mortgagor general authority to sell the mortgaged property.
Pratt v. Maynard, 116 Mass. 388; Luther v. Lee et al., 204 P. 365; Northern State Bank v. Ryan, 292 Fed. 10.
Where a mortgagee consents to a sale of the mortgaged chattels by the mortgagor, he waives the lien of his mortgage, and the purchaser takes the title free of the mortgage lien.
Knollin v. Jones, 7 Idaho, 466, 63 P. 638; Bellevue State Bank v. Hailey National Bank, 37 Idaho, 121, 215 P. 126.
This is a general rule universally upheld, and necessary for the protection of purchasers of mortgaged chattels who have relied upon such consent. It is a well recognized rule that a sale of mortgaged chattels will not be valid as against the mortgagee when the consent of the mortgagee is qualified and upon a condition which the purchaser has promised but failed to perform.
Dodson v. Dedman, 61 Mo. App. 209; Oswald v. Hayes, 42 Iowa, 104; Bailey v. Costello, 94 Wis. 87, 68 N.W. 663; Monson v. Renaker, 60 S.W. 924; Trabue v. Wade Miller, 95 S.W. 616; Rolette State Bank v. Minnesota Elevator Co., 195 N.W. 6; Western Seed Marketing Co. v. Pfost, Sheriff, 262 P. 514.
We submit under the facts in this case the general rule prevails and not the exception, because in the first place there was no condition, and in the second place if there was, the purchaser, Woollett, was not a party to the promise.
Where separate chattels mortgaged to different persons are confused the court will divide the property or its proceeds according to the proportionate interest of each.
12 C.J. 497; Belcher v. Cassidy, 62 S.W. 924; Clay v. Lawson, 146 N.W. 1095.
Just what is doing business in the state of Mississippi depends upon the facts and circumstances of each case. There is no arbitrary rule.
Out of the great mass of cases on the question of what constitutes doing business within the meaning of statutes fixing the terms or conditions upon which foreign corporations may do business in a state, it clearly appears that the question is largely one of fact to be determined by the circumstances of each particular case.
Wiley Electric Co. v. Electric Storage Battery Co., 147 So. 773; Dodds v. Pyramid Securities Co., 147 So. 328; Peterman Construction Supply Co. v. Blumenfeld, 156 Miss. 55; Section 4528, Hemingway's 1927 Code.
Foreign corporations not only have a right to do business in this state by the comity of nations, unless prohibited from so doing by statutes, but have been given express permission so to do by section 914, Code of 1906.
Springfield Grocery Co. v. DeVitt, 126 Miss. 169.
Our statute has no application to transactions within the protection of the commerce clause of the Federal Constitution.
City Sales Agency v. Smith, 126 Miss. 202.
It might be well to bear in mind that the Aberdeen Lumber Company has no office in the state of Mississippi, no agents soliciting orders, no person to accept service, no meetings, no bank account, and nothing at all in the way of an established business, and transacted and transacts all of its business in Illinois.
Wiley Electric Co. v. Electric Storage Battery Co., 147 So. 773.
Another test of whether or not a foreign corporation was doing business within the meaning of our statutes was whether or not it is doing such acts as are within the function of its corporate powers.
Peterman C. S. Co. v. Blumenfeld, 156 Miss. 55; Ford Motor Co. v. Hall Auto Co., 147 So. 603.
By the decisions of this honorable court the statute does not apply to interstate commerce transactions.
Union Cotton Oil Co. v. Patterson, 116 Miss. 802; City Sales Agency v. Smith, 126 Miss. 202; 14a C.J., page 1283, sec. 3993, and page 1276, sec. 3982; Swing v. Brister, 87 Miss. 516; Hart v. Livermore, 72 Miss. 809.
The decree of the chancellor should be affirmed.
Argued orally by W.I. McKay, for appellant, and by John Brunini, for appellee.
By his original bill and subsequent amendments, the appellant, Swift, sought to enforce a vendor's lien for the purchase money of certain standing timber sold by him to the Delta Hardwood Lumber Company, and alleged to have been converted by that company, J.N. Woollett, and the Aberdeen Lumber Company, in disregard of his paramount, superior lien. Upon issue being joined by the answer of J.N. Woollett, cross-bill, and answer of Swift to the cross-bill, and separate answer of the Aberdeen Lumber Company, the proof was heard and the court below decreed to Swift a vendor's lien with the enforcement thereof on forty thousand feet of lumber, and decreed the balance of the lumber to be subject to a lien in favor of the Aberdeen Lumber Company, and giving it a right to sell same in pursuance of a sales agency contract. From that decree, the appellant, Swift, prosecuted an appeal here.
We shall set forth such evidence as we deem necessary to a proper understanding of the case.
On May 29, 1929, Swift and the Delta Hardwood Lumber Company, a Louisiana corporation, entered into a contract by which Swift agreed to sell, and the Delta Hardwood Lumber Company agreed to purchase, certain standing timber on ____ acres of land in Warren county, Mississippi, together with a sawmill, and a lease of the fifty-acre tract on which the sawmill was located.
On June 1, 1929, Swift executed a deed conveying the standing timber and the sawmill to the Delta Hardwood Lumber Company for a consideration of twenty-four thousand dollars cash, and eighteen thousand dollars evidenced by six notes for three thousand dollars each, due December 1, 1929, March 1, 1930, September 1, 1930, December 1, 1930, and March 1, 1931, all bearing six per cent interest per annum, and providing for ten per cent attorney's fees if placed in the hands of an attorney for collection.
The vendor's lien reserved in the deed, after describing the notes, is as follows: "And all payable at the Merchants National Bank in Vicksburg, Mississippi, and secured by a vendor's lien on the property hereinafter described and by a trust deed." After a lengthy description of the timber and of the sawmill, there appears an agreement that Swift reserved the right to use, without rental charge, that part of the fifty-acre tract upon which he (Swift) had stacked lumber, and then follows this stipulation: "It is further understood and agreed that the standing merchantable timber described above purchased by the Delta Hardwood Lumber Company may be cut and removed at its option under the terms and conditions above set out. The Delta Hardwood Lumber Company, when removing same, will deposit in cash in the First National Bank in Vicksburg, Mississippi, every thirty days, seven dollars per thousand for all hardwood timber cut except beechwood, and for beechwood cut shall deposit two dollars per thousand." The next and last paragraph in the deed reads, in part, as follows: "A vendor's lien is hereby retained to secure all deferred payments for purchase money."
On June 27, 1929, Swift signed a letter which had been prepared by Woollett in which Swift consented that the Delta Hardwood Company might lease the lumber yard of fifty acres for the purpose of stacking lumber in pursuance of the sales contract entered into by the Delta Hardwood Company and Woollett. This letter is claimed to be an estoppel, and will be considered in detail when we reach that point. The Delta Hardwood Lumber Company is a Louisiana corporation, and the Delta Hardwood Company is a Mississippi corporation, and the Louisiana corporation conveyed the standing timber acquired from Swift to the Delta Hardwood Company on August 1, 1929.
On June 27, 1929, the Delta Hardwood Company executed a proposal to enter into a sales contract with Woollett which was, by him, duly accepted. This contract was in anticipation of the acquisition by the Delta Hardwood Company of the standing timber conveyed to the Delta Hardwood Lumber Company by Swift.
The Delta Hardwood Lumber Company became a guarantor of the performance of the Delta Hardwood Company's contract with Woollett, and likewise, the Aberdeen Lumber Company became a guarantor on behalf of Woollett of his sales contract.
The sales contract provided, in short, that Woollett should be sales agent of all lumber manufactured by the Delta Hardwood Company, and Woollett agreed to make advances upon lumber by the Delta Hardwood Company, which, in turn, agreed to permit supervision of any lumber to be stacked on certain alleys, the stacks to be numbered, and deeds of trust were to be executed in favor of Woollett by the Delta Hardwood Company to secure payment of the advances. All of the output of the mill was to be exclusively sold by Woollett.
The Delta Hardwood Company began its operations and began drawing on the Aberdeen Lumber Company for advances before it acquired title to the Swift timber, and all transactions affecting the sale of the lumber and the advancement of money, throughout the whole course of the business, were made by the Aberdeen Lumber Company, and except for the use of Woollett's name in the sales contract and in the many deeds of trust, all the actual transactions were between the Hardwood Company and the Aberdeen Lumber Company, and the proof amply sustains the charge in the original bill, as amended, that the Aberdeen Lumber Company was the real party to the sales contract. Woollett was the president of the Aberdeen Lumber Company and the sole owner of the stock therein.
The evidence shows that the Aberdeen Lumber Company had full knowledge of the method of business, and that it had frequent reports as to the amount of lumber on hand, and furnished money for the purchase of other logs and other standing timber than the Swift timber. The logs purchased and the timber cut from other lands, as well as the timber cut from the Swift lands, were commingled, and the lumber manufactured was commingled.
The sales contract and the deeds of trust executed to Woollett by the Delta Hardwood Company were all subsequent to the recordation of Swift's deed to the Delta Hardwood Company and its deed of trust on the standing timber and other property in favor of Swift.
The evidence also shows that all sales of timber by the Delta Hardwood Company were conducted through the Aberdeen Lumber Company, and that collections were made by it and accounting made to the Hardwood Company. If the Hardwood Company sold direct, the sale could not be effectuated without being approved by the Aberdeen Lumber Company.
It was found by the court at the time of its decree in this case that the Hardwood Company owed the Aberdeen Lumber Company sixty-three thousand dollars. There was no accounting entered into between Woollett and the Hardwood Company, nor does the record note any accounts existing between Woollett and the Aberdeen Lumber Company.
The note due December 1, 1929, was paid, and, in addition, eight hundred ninety dollars was paid in December, 1929, on the note falling due on March 1, 1930. On March 1, 1930, the Delta Hardwood Company filed its bill against Swift, alleging the failure of the title to the standing timber, and that none of the notes for the deferred payments should be collected, and obtained a temporary injunction restraining Swift from undertaking to collect any of five remaining notes for the deferred purchase money.
Upon issue made up, the chancery court dissolved the injunction, and on December 31, 1929, entered its final order by which the bill of the Hardwood Company was dismissed and the injunction finally dissolved, and on Swift's cross-bill the court decreed that Swift might recover from the Hardwood Company the amount due on all the notes, $ ____, and ordered a sale of all lumber on the yards at Bovina, Mississippi, for the purchase-money lien thereon.
Swift had an attachment issued and served upon all the lumber then on the yards of the Hardwood Company. Subsequently, a considerable portion of the lumber was destroyed by fire, and there was collected from the insurance companies by virtue of their policies the sum of fourteen thousand seven hundred forty-eight dollars and thirty-three cents, which, by agreement of all parties, was paid over to the clerk of the chancery court to abide the decree of the court without prejudice to the rights of any of the parties. It was further agreed that this money was held subject to garnishment of Swift, the original complainant, and that all lumber remaining might be sold by the Aberdeen Lumber Company, and it was decreed that the amount of cash held by the clerk was sufficient to satisfy any decree which might be rendered in favor of Swift.
The evidence is undisputed that Woollett and the Aberdeen Lumber Company both had actual and constructive knowledge of Swift's vendor's lien on the standing timber in controversy.
By June 30, 1930, the Hardwood Company had cut and removed to its mill all of the standing timber on the Swift lands, and had sold all of it except forty thousand feet, and at a time when Swift was enjoined from enforcing his lien for the purchase money.
In December, 1931, the Hardwood Company was adjudged a bankrupt, and one Nelson was appointed a trustee. On amendment, he was made a party as trustee in bankruptcy. He answered Swift's bill denying any knowledge of the facts in this cause, and stating that the liens were more than the value of the property involved, and prayed that the court award him whatever might be found to be due him. The answer showed neither authority to appear, nor want of it, from the bankrupt court which appointed him. The trustee in bankruptcy was not a party to the cross-bill of Woollett, nor did he make answer thereto. Subsequently, Sol Felner was appointed trustee instead of Nelson, and Felner was permitted by this court (See Swift v. Wollett, 148 So. 181) to appeal from the decree of the lower court in favor of the Aberdeen Lumber Company.
It was agreed in the lower court that more than two million feet of timber (stumpage) which, when cut and manufactured, would yield two million four hundred thousand feet, was cut and removed from the Swift lands, and that this was worth more than the amount of Swift's lien for the purchase money.
An examination of this record, and the many pages of briefs filed, discloses, we are convinced, that this case turns upon two propositions of law: (1) Did Swift, by the language in the deed, retain an effective vendor's lien on the standing timber conveyed? and (2) Did the letter of June 27, 1929, together with Thomas' evidence, constitute an estoppel on the part of Swift?
On the first proposition, in order to uphold the decree, it is the contention of the Aberdeen Lumber Company that the second paragraph, reserving a vendor's lien and permission to cut and remove the timber, impliedly grants to the vendee the power to sell, and that the provision for payments by the vendee, after cutting the timber, on the first of each month, constituted a waiver of the lien and further made the vendee the agent of the vendor, and the failure so to do became a mere matter of debt and not a lien. This position is novel and ingenious, but it is unavailing.
In the first paragraph quoted above, the vendor's lien on the standing timber is retained unreservedly by him. In the second paragraph, there was permission expressly granted to cut and remove the timber, but upon condition that, when removing it, the vendee should have paid a stipulated price for the timber so cut, and it was subject to the first provision for a vendor's lien.
It will be observed that the grantor herein and the grantee both understood from the very terms of the deed that this timber was being sold for the vendor and purchased by the vendee for the purpose of being manufactured into lumber.
The vendee had purchased a sawmill in connection with the timber at Bovina, Mississippi, as shown by the deed. He had leased, for stacking the manufactured lumber, the lumber yard; the fifty-acre tract on which the sawmill was located.
It is perfectly patent that the vendor was selling timber to the vendee on credit for the express purpose and with the understanding that it would be manufactured into lumber. The words "cut and removed" are not subject to the implication that a power of sale is included therein, and every stipulation of the deed is in conflict with such a construction, which is at war with the prime purpose of the instrument. It is susceptible of the construction, readily and easily, viewed as a whole, that the parties intended to cut the timber, that is, fell the trees, for a month, pay for the amount so cut, and then they would be permitted to remove it. And this construction is rendered plain when we observe that, by the last paragraph of the deed and immediately following the language in reference to the cutting and removing of the timber, this broad statement is shown: "A vendor's lien is hereby retained to secure all deferred payments for the purchase money." The preceding paragraph had provided for payments for the trees after they were felled by the woodsman's axe, and these payments were for the purchase money, and if deferred, and if not made, a lien was immediately declared to exist upon the timber after it was cut. So that, after the timber was borne to the sawmill and the lumber yard, the lien went with it as to the logs, and when the logs were transformed and manufactured into lumber, the lien still existed. There is no doubt about constructive notice of the contents of this deed in Woollett, as an individual, and as president of the Aberdeen Lumber Company. The deed was recorded, and both Woollett and the Hardwood Company entered into the sales agency contract, and mortgages were taken by Woollett on the stacks of lumber manufactured from the logs. This was a contractual vendor's lien granted by the vendee and retained by the vendor, and when the Aberdeen Lumber Company, as the equitable owner, and Woollett as president, entered into this agreement, the Aberdeen Lumber Company took whatever right it obtained thereby in the lumber subject to the vendor's lien with full notice thereof, and the rights of Swift thus became paramount and superior, and the Aberdeen Lumber Company, at best, occupies the position of a junior mortgagee with notice of the superior lien. See Walton v. Hargroves, 42 Miss. 18, 97 Am. Dec. 429, and 41 C.J. 528.
And the evidence is clear and undisputed that the Aberdeen Lumber Company, with notice of Swift's prior, superior lien, had the lumber manufactured from Swift's timber, and shipped to various points within and without this state, with bills of lading issued in its name, and no sale was permitted without its approval thereof, and it collected and appropriated all collections therefor; a clear-cut case of conversion of mortgaged property. It had no right so to do, and, by so doing, it wrongfully appropriated mortgaged chattels to its own use, control, and benefit, and it is liable for the conversion. 11 C.J. 588; Witczinski v. Everman, 51 Miss. 841; Watson v. Cement Co., 93 Miss. 553, 46 So. 707, and Cole-McIntyre-Norfleet Co. v. Du Bard, 135 Miss. 20, 99 So. 474.
Consequently, Swift is entitled to recover herein the amount of his debt, which clearly exists, from the proceeds of the sale of lumber on which he had a vendor's lien, and which was wrongfully received and appropriated by the Aberdeen Lumber Company without discharging the lien.
While the Hardwood Company was busily engaged in removing the timber, Woollett, president of the Aberdeen Lumber Company, knew that the collection of these notes had been enjoined by the chancery court of Warren county, Mississippi.
We conclude therefore that, so far as the language of the deed is concerned, the vendor's lien for the purchase price of the timber was retained, and, as stated, the words "cut and remove" did not imply a power to sell, nor were they a waiver by implication of the lien stipulated for in the contract between the parties.
2. On the second proposition, which is based mainly on the letter dated June 27, 1929, signed by Swift and mailed to Woollett in Chicago, the letter having been prepared by Woollett in anticipation of the sales contract, we find that this letter establishes the fact that Swift knew that the Delta Hardwood Company had given a lease on the lumber yard at Bovina, Mississippi, and that he consented thereto, calling attention to the book and page in which his deed is recorded, and stating, "I agree and consent to this lease to you for the purposes and uses therein mentioned and set forth, and in order to properly protect advances you may make on said lumber," and further stated that there would be no charge from him on that account.
The testimony given by Thomas is to the effect that at some time, in a conversation with Swift, he told Swift the substance of his contemplated contract with Woollett, which establishes that Swift knew that Woollett or the Aberdeen Lumber Company was the exclusive sales agent of the Hardwood Company, and that the Hardwood Company would secure advances and give mortgages to secure same on manufactured lumber in stacks, and, so far as the record shows, raised no objection thereto.
This is the strongest possible view of the facts submitted to the court below, and, without hesitation, we say that this constituted no waiver of his lien on the part of Swift, even if this conversation with Thomas had been communicated to Woollett individually or as president of the Aberdeen Lumber Company, by Thomas, as the representative of the Hardwood Company. It was not so communicated.
The letter of June 27, 1929, and Swift's knowledge of the manner in which the Hardwood Company would conduct its business, constitute no waiver. These could not have induced Woollett or the Aberdeen Lumber Company to enter into any arrangement. The letter contained no language indicating an intention to waive the superior lien, and the rule is that the evidence of such a waiver or estoppel must be clear and convincing, and the mere fact that a mortgagee prior in right knows that the mortgagor is selling the premises or incumbering same by mortgage does not bind the mortgagee to release his security. 41 C.J. 504. There was no conduct in this case creating an estoppel. There was no agreement of estoppel.
Appellee cites the case of Seavey v. Godbold, 99 Miss. 113, 54 So. 838, and others following the rule announced therein, the effect of which is that where a landlord permits a tenant to sell property upon which he has a landlord's lien, and one purchases from the tenant, the latter is not liable to the landlord for the conversion. These authorities cannot be adjusted to the facts in this case. Here there was no estoppel by the conduct of the parties. Swift did not consent to waive his lien.
We therefore conclude that Swift is entitled to recover from Woollett and the Aberdeen Lumber Company the amount of the balance of the indebtedness due him under the vendor's lien reserved in his deed, as evidenced by the notes and the entire contract as exhibited by the deed and the notes. We cannot say with certainty what amount, because the dates of payment are not set forth in the record. The decree herein, therefore, should establish liability on the vendor's lien in favor of Swift against the named defendants. It appearing that the parties have set aside fifteen thousand dollars in the hands of the clerk of the chancery court of Warren county, Mississippi, deeming it, at that time, sufficient, and that this amount may or may not be sufficient, the court below will ascertain the amount of the indebtedness and adjudge it in accordance with this opinion, and will order that it be paid over to Swift, and that if the fifteen thousand dollars is insufficient, it will be paid to Swift by said clerk as a credit upon the judgment.
As to the trustee in bankruptcy, the assignment of error points exclusively to a decree in favor of the Aberdeen Lumber Company, and we are of the opinion that, as this decree has been reversed by this court, and as this appears to have been the aim of the trustee in bankruptcy, it would seem that we are not called upon to express any further opinion on this branch of this case. Nelson, the predecessor of Felner, simply entered his appearance in the lower court in response to Swift's bill. He filed no cross-bill, tendered Swift no issue, stated no ground for relief, and offered no evidence therein as to his authority, or want of it, from the federal court of bankruptcy. He absolutely pleaded nothing, and furnished the court nothing upon which to base any decree. He did not dispute Swift's debt, nor his vendor's lien, and it now appears to us that by the consent of P.B. Swift and the Aberdeen Lumber Company all the property of the bankrupt was "released and discharged from any claim and/or liens of said P.B. Swift and from said attachment and from the jurisdiction of this court," save and except the amount of the proceeds of the fire insurance policies, which must be, if sufficient, paid over to Swift to satisfy his indebtedness, and, if insufficient, credited upon said indebtedness, by the decree herein of the lower court. If the trustee in bankruptcy, Felner, has any remedy, it must rest with the court which appointed him, or with the chancery court of Warren county. Certainly, he cannot raise a question in this court which was in no wise presented to the lower court.
There are many other questions presented, but, in view of the conclusion we have reached, we do not think it now necessary to consider them.
Reversed and remanded.