Case ID: miss_18/html/0120-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice ShaRkey", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William T. Lewis et al. vs. Theodore O. Starke.
    As a general rule, a mere change in the form of the evidence of indebtedness, will not operate to discharge a lien given to secure the debt, unless it is apparent that the parties intended to extinguish the lien ; while the debt exists the lien lasts.
    A prior equity generally sinks or merges in a subsequently acquired legal title, unless there be some declared intent to prevent it or some beneficial purpose to the holder, not inconsistent with the rights of others ; a court of equity will keep alive an incumbrance, or consider it extinguished, as will best serve the purposes of justice and the actual and just intention of the party; so the purpose be innocent and injurious to no one.
    S. accepted certain bills of exchange for M., and took a deed of trust on the slaves of M. for his indemnity; the first of these hills S. paid, but instead of enforcing the deed of trust as he might have done, he took of M. a note for the amount, payable to himself, and indorsed it to a bank, which was still the holder of it. Held, that S. could not subject the slaves to the payment of this note; by taking M.’s note he either extinguished the lien of the deed of trust, or, if not, he transferred that lien with the note to the bank, in whom, if anybody, the right rested to enforce the lien.
    An indorser of a note, who has received indemnity against the indorsement by deed of trust from the maker, cannot proceed to subject the property conveyed, to the payment of the debt, until he has paid the note and taken a reassignment of it.
    Where a deed of trust is given by the maker of a note to indemnify Ms accommodation indorser from loss by reason thereof, the holder of the note thus secured cannot enforce the deed of trust directly ; he can only do so by a bill in chancery to have the benefit of the deed in his behalf; and if he do not choose to file such bill, a court of chancery will not force it on him.
    M. gave S. a deed of trust on slaves to indemnify S. for certain accommodation acceptances for M. held by B.; B. being in debt to the Merchants Bank, M. by arrangement with B. executed his five notes to the bank, and took up the bills of exchange in settlement of B.’s debt to the bank, and gave the bank a deed of trust on the same slaves, to secure the notes thus given. After this, S. bought these slaves of M., and agreed, in payment of them, to take up M.’s five notes to the bank, and did, by an arrangement with the bank, execute his own notes to the bank in lieu of those of M. and procured an order for their delivery by the agent of the bank which held them for collection to M. and delivered it to him; these slaves thus in S.’s possession were levied on under execution against M., older than the sale to S., and older than the deed of trust by M. to the bank, but younger than the original deed of trust to secure S. as accommodation acceptor; S. filed a bill to enjoin the sale under these executions, and to have the original deed of trust set up between the judgment creditors and the slaves; held, that the bill could not be maintained by S.; that if the original deed of trust were not extinguished by the execution of the notes by M. to the bank, neither was it by the execution of the notes by S. to the bank to take up those of M. ; and the bank was the party entitled to the benefit of the lien; and S., therefore, could not enforce it, as he could not protect himself under an equity of the bank, which might never be asserted by the bank.
    Where a man buys incumbered property, and agrees for the purchase-money to pay off the incumbrance and does pay it off, it seems the incumbrance is thereby extinguished and he cannot afterwards set it up and keep it alive for his own protection, when no such intention was manifested at the time.
    Where a deed of trust on slaves was executed by M. to secure S. against loss as accommodation acceptor for M., and M. afterwards took up. the bills thus accepted by S., by executing his own notes to the holder of the bills, and secured their payment by a deed of trust on the same slaves ; which deed of trust the holder refused to take, unless M. would procure the release of another incumbrance junior to the original one to S., which was done; it was held that the arrangement between M. and the holder of the bills showed an intention to abandon and relinquish the lien of the original deed of trust, and look only to the one directly to the holder; and the original deed of trust wqs, therefore, extinguished by the execution of the new notes and deed of trust.
    S. bought certain slaves of M. subject to a deed of trust, 'and in payment agreed to extinguish the deed of trust; there were judgments against M. older than the deed of trust or sale to S.; S. extinguished the incumbrance on the slaves, and they were levied on under the judgments ; S. filed his bill for a rescission of the contract of purchase: Held, that S. was not entitled to have the contract rescinded; M. had made no false representations; nor had S. been at all deceived, and must abide by his bargain.
    On appeal from the superior court of chancery; Hon. Robert H. Buckner, chancellor.
    Theodore O. Starke filed his bill, in which he states, that in 1836 he was in partnership with Thomas Oxnard, jr. and William L. Hodge, in Woodyille, under the name of Hodge, Starke & Co., and in New Orleans of Hodge, Oxnard & Co.; on the 28th June, 1836, Henry A. Moore and H. N. Martin purchased from John Henderson twenty-three slaves, and, in payment, gave a bill of exchange on said firm for $7,853.39, due January 1, 1837, and three other bills for $5,000 each, due January 1, 1838, which were accepted; Moore and Martin executed a deed of trust to Edwin W. Morse, as trustee, on these negroes, to secure the acceptors from loss. Hodge, Oxnard <fc Co. paid the first bill at maturity, and were not indemnified for a considerable length of time by Moore and Martin, and finally only by a note for $7,855, still unpaid, but transferred by Hodge, Oxnard & Co. to the Commercial Bank of Natchez, who held the same at that time with Hodge, Oxnard & Co., indorsers thereon.
    The three last bills were at maturity held by the Merchants Bank of New Orleans, and Moore proposed to renew the same by giving five notes for different sums due at different periods, with indorsers. The proposition was accepted, the notes prepared and delivered, but before the arrangement was completed and the parties released from the bills, Moore, who had become sole owner of the slaves, executed a deed of trust to Thomas Henderson, dated August 8, 1838, and filed for record December 10, 1838, to secure the five notes referred to.
    Previous to the execution of the last deed, Moore, to secure sundry indorsers for his accommodation, executed a deed of trust on the 10th of April, 1838, to Morse, which, among other property, includes said slaves; the cestuis que trust in this deed released their claim on these slaves for the benefit of the cestui que trusts in the deed to Henderson; after which said bills of exchange were delivered up to be cancelled, and the notes of Moore received. Moore, on the 13th April, 1839, at New Orleans, sold to complainants all of these slaves, who placed them on his plantation in East Feliciana, La., and in payment for them complainant obtained an order from the Merchants Bank at New Orleans on the Commercial Bank of Natchez, for the five notes of Moore, which order was delivered to Moore, and was then in possession of D. Woodward, his administrator.
    In October, 1839, William T. Lewis, the sheriff of Wilkinson county, by stratagem, procured these slaves to be brought into Wilkinson county, and levied on them as the property of Moore to satisfy various executions against him, and had advertised them for sale on the 8th of October, 1839; the execution creditors are very numerous; it is not necessary to set out their names. Complainant had solicited Lewis to desist from his attempt to subject these slaves to said executions, but combining with the execution creditors, about sixty in number, he refused to do so, and threatens to sell.
    The bill prays for an injunction, on final hearing, to be perpetual; that the slaves may be surrendered to complainant, &c. Or, in the event they shall be decreed liable to satisfy the executions, that a rescission of the contract between complainant and Moore may be decreed, and Woodward be compelled to redeliver said order to complainant.
    Starke afterwards filed an amended bill, stating that the three bills of exchange drawn by Moore and Martin on Hodge, Starke & Co. for $5,000 each were at their maturity the property of Briggs, Lacoste & Co. and not of the Merchants Bank, and so continued when the five notes of Moore and deed of trust were accepted by the Merchants Bank on account of Briggs, Lacoste & Co.; and the three bills were by Briggs, Lacoste & Co. surrendered up to be cancelled.
    Most of the judgment creditors answered the bill, denying all knowledge of its allegations and calling for proof. The answer of Lewis, the sheriif, who was also a judgment creditor of Moore, in effect admitted the allegations of the bill; set out and insisted on the paramount liens of the judgments, which were rendered in the years 1837, 1838 and 1839, in favor of the respective judgment creditors. He states that said slaves were in the possession of Moore, in Wilkinson county, from the purchase in 1836 till April, 1839, when they were privately run out of the state. That he believes Moore sold the slaves to complainant in fraud of the creditors, and to defeat the judgments; complainant, before the sale, well knew of the judgments against Moore and his embarrassed circumstances.
    It was proved on the part of Starke by Robert Copeland, cashier of the Merchants Bank, that Starke, by an arrangement with the bank, took up Moore’s five notes due that bank and procured an order on the Commercial Bank of Natchez for them, at which latter bank they were lodged for collection.
    Moise proved that this order had been by Starke subsequently delivered to Moore, and was then in his administrator’s possession. ^
    Thomas Henderson proved that he has the five notes of Moore given to the Merchants Bank in settlement of so much of. the debt of Briggs, Lacoste & Co. to that bank, in his possession as cashier of the Commercial Bank of Natchez; he also has the deed of trust executed for their payment, and does not know who the owner is.
    Charles A. Lacoste proved the agreement between Moore and Briggs, Lacoste & Co. and the Merchants Bank, by which the former paid Briggs, Lacoste & Co.’s debt to the latter, by executing his five notes as stated; and Briggs, Lacoste & Co. delivered up to Moore the three original bills of exchange accepted by Hodge, Oxnard & Co-, for $5,000 each, which they held at maturity, and which Moore thus paid and took up; the arrangement was conducted by Thomas Henderson, as agent of the Merchants Bank.
    T. S. Moise proved the sale from Moore to Starke of the slaves, in substance, as stated in the bill.
    M. M. Simmons proved the delivery of the slaves to Starke, and their secret removal from this state to Louisiana.
    The original deed of trust to Hodge, Oxnard & Co., and the deed of trust to the Merchants Bank were also in proof.
    It is not deemed requisite to notice at greater length the evidence in the 'case.
    The chancellor decreed a perpetual injunction against the judgments at law; and the defendants appealed.
    
      G. Winchester, for appellants,
    contended,
    1. That the main question was, Did Starke show a title to the slaves older and better than the judgment liens % He insisted he did not; 1, because his purchase was junior to those liens; 2, the deed of trust to Henderson for the Merchants Bank' was also junior to them ; and 3, the original deed of trust was extinguished by Moore, when he released the acceptors of the bills by giving his five notes to the Merchants Bank, and taking up the acceptances.
    2. The evidence of Lacoste and Henderson wholly disprove the allegations of the bill of the continuance of the original debt, for which the acceptances were originally given; that, debt was wholly paid by the execution of the new notes by Moore to a new party; it was not a mere change of the evidence of the debt or of securities ; but the taking up, payment, cancelment, extinguishment of the deed of trust originally given, and the substitution of a new contract in its place with different parties.
    3. The purchase by Starke of the slaves was in fraud of the judgment creditors’ liens. (As the court did not pass on this point, the evidence and argument bearing on it are not further noticed.) On this point, the counsel for appellants reviewed the testimony at length, and cited 8 Term Rep. 530; Shep. Touch. 67 ; Douglas, 88; Rob. on Fraud. Con. 578; Ibid. 406 ; 1 John. Cases, 53; Cowper, 432, 434; 4 Binn. 474; 8 John. R. 451; 6 East, 257; Grisioold v. Marshall, 2 Ch. Ca. 17; Crisp v. Heath, 2 Yin. Abr. 52, E.; 2 Yent. 361; Willoughby v. Willoughby, 8 Tenn. R. 763; Sug. Yend. 303.
    Gordon, for Lewis, on same side,
    reviewed and commented on the testimony, and assumed substantially similar positions.
    
      Montgomery and Boyd, for appellee,
    insisted,
    1. That the original deed of trust was not extinguished by the arrangement with the Merchants Bank; they cited Dunham v. Dey, 15 John. R. 555; Starr v. Ellis, 6 John. Ch. R. 393; Anderson v. Davies, 6 Munf. 484; Pratt v. Lato, 9 Cranch, 456; McIntyre v. Agricultural Bank, Freem. R. 105.
    2. That there was no fraud in the purchase by Starke; on this point, the testimony was reviewed, and 9 Peters S. C. Rep. 625, cited.
    3. That Lewis, as sheriff, who also claims to be a judgment creditor, could not assert any right that could oppose the claim of Starke successfully. Slow v. Tifft, 15 John. R. 459 ; Roads v. Symmes, 1 Ham. 281; Calhoun v. Snider, 6 Binn. 135.
    4. The court of chancery had jurisdiction of the bill, even though the complainant may have had a remedy by a trial of the right of property at law, on the ground that the single suit in chancery would prevent the multiplicity of suits at law.
   Mr. Chief Justice ShaRkey

delivered the opinion of the court.

The appellee filed his bill in the superior court of chancery, to enjoin the sale, under executions, of certain slaves therein mentioned, and obtained a decree in his favor, from which the respondents below appealed.

The complainant claimed the slayes by a purchase from H. A. Moore, made on the 30th of April, 1839. The judgments, however, were older in date, and constituted liens, to avoid which, the complainant endeavors to protect himself under a deed of trust made by Moore, before the rendition of the judgments, by which the same slaves were conveyed in trust for the purpose therein mentioned.

The history of the transaction is as follows : In June, 1836, H. A. Moore and one Martin, purchased the slaves of John Henderson, giving him in payment four bills of exchange, one for the sum of $7853, and three others for the sum of $5000 each, drawn on a commercial firm in New Orleans, of which complainant Starke rvas a member, and by them accepted. To indemnify them for their acceptances, Moore and Martin conveyed the slaves to one Moise, in trust. This was the first incumbrance. The first bill of exchange, for $7853, was paid by the acceptors, and they were not indemnified for some time afterwards, and ultimately only by the note of Moore, who had purchased Martin’s-interest very soon after they purchased the negroes. This note was transferred by the commercial firm, to the Commercial Bank of Natchez, the complainant Starke being still liable thereon as indorser.

The other bills of exchange fell into the hands of Briggs, Lacaste & Co., who, it seems, were indebted to the Merchants Bank of New Orleans. By a mutual arrangement between the parties, Moore undertook to pay the Merchants Bank the amount of the three bills for Briggs, Lacoste & Co. This he did by giving five notes, with the further security of a deed of trust on the same slaves, to Thomas Henderson, for the use of the bank. The bills were taken up, and Briggs, Lacoste & Co. credited by the amount of Moore’s notes. This was in August, 1838, but the deed was not recorded until December, 1838.

Prior to this arrangement, Moore had executed another deed of trust on these negroes to secure certain indorsers, who, however, relinquished their lien in favor of the bank. It would seem that the bank refused to consummate the arrangement until this relinquishment was procured.

On the 13th of April, 1839, Moore sold the negroes to Starkd. The sale took place in New Orleans, and the negroes were afterwards taken from Wilkinson county in this state, and delivered in Louisiana. In payment for the negroes, Starke agreed to lift the five notes which Moore had given to the Merchants Bank. He accordingly made some arrangement with the bank, and procured an order on the Commercial Bank of Natchez for the notes, they having been deposited there for collection. This order was withheld from Moore, until he should relieve the negroes from some incumbrance. It was, however, ultimately delivered to him, and is now in the hands of his administrator, though the notes never have been delivered.

In October, 1839, the sheriff of Wilkinson county, by some stratagem, procured the negroes to be brought back to that county, and levied sundry executions on them, and was about proceeding to sell when this bill was filed. The judgments, with one exception, are younger than the first deed of trust given to Moise to secure the acceptors of the bills; and all but two, older than the deed given to Henderson to secure the bank; and.all older than the purchase by Starke. It is evident, therefore, that Starke cannot protect himself under his own purchase, because the judgments constitute prior liens. For the same reason he cannot rely on the deed given to Henderson to secure the bank. He therefore endeavors to shelter himself under the first deed, given to -secure his firm for their acceptances, and the question is, can he do so?

As a general rule, a mere change in the form of the evidence of indebtedness, will not operate to discharge a lien given to secure a debt, unless it is apparent that the parties intended to extinguish the lien. Whenever it is clear that the creditor still intended to retain it, his right is not affected by a mere change of the instrument, which is the evidence of the debt, as the debt itself is the thing for which the lien was given. But can Starke, who professes to have acquired a legal title, claim also under a prior equity ? A prior equity generally sinks or merges in a subsequently acquired legal title, but not so as to affect any valid lien. This is a legal consequence, and it will follow, unless there be some declared intent to prevent it, or some beneficial purpose to the holder not inconsistent with the rights of others. A court of equity will keep an incumbrance alive, or consider it extinguished, as will best serve the purposes of justice, and the actual and just intention of the party. It must, at all events, be an innocent purpose, and injurious to no one.” Starr v. Ellis, 6 John. C. R. 393. The facts in this case do not indicate anything like a design to keep the first incumbrance alive. On the contrary, the parties do not seem to have looked to that as constituting an available lien to the holders of the bills.

In the first place, Starke & Co. had accepted bills, and took a lien to save themselves harmless. The first bill they paid. They might have enforced the trust to that amount. They did not do so, but took a note for the amount, which they transferred to the Commercial Bank of Natchez. This note was either a payment of the debt, or it was not.' If it satisfied the debt as so much money would have done, then of course to that extent their lien was extinguished. If it did not satisfy the debt, then by transferring the note, they also transferred the lien. That they are liable as indorsers, does not entitle them to proceed on the lien until they pay the debt and take a reassignment. This is the condition of complainant with regard to the first bill.

In regard to the other bills, as Starke & Co. did not pay them, they, of course, had no right to enforce the trust as to them. If any one had such right, it vested in Briggs, Lacoste & Co. as holders. They did not claim it. The security was not given to them. A bill in chancery was therefore requisite before they could avail themselves of the deed of trust. Suppose they could have done so, still a court of 'chancery will not force it on them. But if they were entitled to the benefit of the security, what became of that right in their arrangement with the bank ? It was either extinguished, or it was transferred. If it was transferred, the bank has either relinquished or still holds it. If it wais not extinguished by the bank in taking the notes of Moore, neither was it extinguished by taking the notes of Starke in exchange for those of Moore. Starke does not say that he paid the debt to the bank; and if the security is to be kept alive as long as the debt exists, it must of course be a security in the hands of the holder of the debt. Starke is therefore attempting to protect himself under the equities of others, which may never be asserted. On this view of the subject, Starke owes a debt to the bank, which is collaterally secured by a deed of trust, of which he of course can claim no benefit.

But the transaction with the bank looks very much like a waiver of any prior lien, if any existed. We must suppose that the deed of trust to Henderson to secure the five notes of Moore, was looked to and intended as the true and only security. Starke did not take an assignment of the incumbrances, or purchase them in. He purchased an incumbered property, giving no other price than the debt for which it was incumbered. This can be regarded in no other light than a payment. He purchased the incumbrance from the bank, if it existed, and gave it to' Moore for the thing incumbered. Starke now claims to be the owner of the property which was once incumbered, and in order to protect it, wishes to rely on the incumbrance, although no intention was manifested to keep it alive. On the contrary, every act in connection with this matter, seems to favor the idea that the original lien was abandoned. The bank relied upon the security of the deed of trust to Henderson, and even refused to consummate the arrangement until the property-should be released from another deed of trust, which was subsequent to the original lien given to Starke. After all this, it is too late to resort to an equitable incumbrance which once existed, but which in fact has been discharged by payment.

The prayer is in the alternative, that if the relief should not be granted, then that the «contract between Starke and Moore be rescinded. There is no ground for a rescission; no allegation of fraud. Starke purchased with notice, and if his bargain has turned out to be an unfortunate one, that is no reason for its rescission. He had not only constructive notice of the judgment liens, but seems to have had actual notice. The whole transaction shows this — Moore made no false representations, nor did Starke labor under any deception from any source. He is consequently not entitled to have the contract rescinded.

Decree reversed.