Case Name: Sledge & Norfleet Co. v. Dye, et al.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1926-01-04
Citations: 140 Miss. 779
Docket Number: No. 25268
Parties: Sledge & Norfleet Co. v. Dye, et al.
Judges: 
Reporter: Mississippi Reports
Volume: 140
Pages: 779–789

Head Matter:
Sledge & Norfleet Co. v. Dye, et al.
(Division A.
Jan. 4, 1926.)
[106 So. 519.
No. 25268.]
J. R. McDowell and G. J. Leftwich, for appellant.
Brooks (& Brooks, Holmes (& Sledge, E. D. Dinkins and Chctrer $ Smith, for appellee.
J. B. McDowell and G. J. Leftiuich, in reply, for appellant.
Headnote 1. Executors and Administrators, 24 C. J., Sections 947, 948.

Opinion:
Cook, J.,
delivered the opinion of the court.
This is an appeal from a decree sustaining a demurrer to a bill of complaint filed in the chancery court of Tate county.
The bill of complaint alleged that on the 16th day of February, 1922, the Coldwater Mercantile Company, Incorporated, executed and delivered to the complainant its promissory note for the sum of twenty-two thousand two hundred twenty-five dollars and seventy-seven cents, which was due and payable on November 15th, after date; that Mrs. R>. A. J ones, prior to her death, which occurred on May 17, 1922, was a stockholder and director of the said Coldwater Mercantile Company, Incorporated, and on account of her large interest in its affairs, she indorsed and delivered to complainant, as collateral security for the payment of the note of said corporation, two promissory notes, payable to her order and executed by the said Coldwater Mercantile Company, Incorporated, for the respective sums of four thousand three hundred eight dollars and forty-five cents and one thousand four hundred ninety-one dollars and sixty-nine cents, both of said collateral notes being past due at the time of their delivery to the complainant. -The bill further alleged that the said Mrs. R. A. Jones died on the 17th day of May, 1922, and that the defendant T. M. Dye was duly appointed and qualified as administrator of her estate; that all the formalities of law were complied with to attach liability against Mrs. R. A. Jones and her estate as the indorser of the two said collateral notes; that the obligation of the said Coldwater Mercantile Company, Incorporated, for the payment of which the two notes were pledged, was not paid when the same became due and payable; and that by reason thereof, being the holder and owner of the two notes indorsed by the said Mrs. R. A. Jones, the complainant was entitled to a decree against her estate for the sum represented by the face of the said collateral notes, together with interest. The bill also alleged that these notes were not probated against the estate of Mrs. Jones, deceased, for the reason that the liability of Mrs. Jones, as represented by said collateral notes, was secondary and not. within the class required by law to be probated against the estate of a deceased person. Other averments of the bill of complaint were either abandoned or are not material to a decision of the question presented by this appeal.
The defendants demurred to the bill of complaint on the ground, among others, that the allegations of the bill of complaint show that the notes were not probated as a claim against the estate of the testatrix within the time required by law. This demurrer was sustained, and, from a decree dismissing the bill, this appeal was prosecuted.
There were several grounds of demurrer assigned in the court below, but in this court appellee seeks to justify the decree of the court below upon one ground only, and that is that, under the facts alleged in the bill of complaint, the claim of liability by virtue of her indorsement of these notes should have been filed and duly probated against the estate of the deceased within six months after the first publication of notice to creditors to probate their claims, as provided by chapter 303, Laws of 1920, amending section 2107, Code of 1906 (section 1775, Hemingway's Code).
The liability of Mrs. Jones, or her estate, by virtue of her indorsement of these notes, is only secondary, as section 192 of the Negotiable Instruments Law (section 2770, Hemingway's Code), expressly provides that, "the person 'primarily' liable on an instrument is the' person who by the terms of the instrument is absolutely required to pay the same," and "all other parties are 'secondarily' liable." Taylor v. Ross, 129 Miss. 536, 92 So. 637; Gresham v. State Bank, 131 Miss. 20, 95 So. 65. Not only was the liability by virtue of this indorsement secondary, but it was contingent upon the failure of the Coldwater Mercantile Company to pay its indebtedness to the appellant when the same became due. Whether, the Coldwater Mercantile Company would pay or fail to pay the note to the appellant, for the payment of which the two notes indorsed by the testatrix were pledged, could only be ascertained after the same became due on November 15, 1922, which was long after the death of the testatrix.
The question for decision then is whether a liability of a decedent, which is secondary and contingent upon the happening of some future event, is required to be probated against the estate of the decedent. It has been repeatedly held by this court that a claim to be probated must be one which, if paid by the executor or administra-' tor, would prima facie entitle him to credit. Sumrall v. Sumrall, 24 Miss. 258; Gray v. Harris, 43 Miss. 421; Robinett v. Starling, 72 Miss. 652, 18 So. 421; Feld v. Borodofski, 87 Miss. 727, 40 So. 816.
In Jones v. Bank, 71 Miss. 1023, 16 So. 344, it was held that the liability of a cashier of a bank' to reimburse the bank on the ground that he had not paid into the bank money received for deposit, and for which the customer was suing the bank, being contingent upon the re- suit of the suit, was not such a claim as was required to be probated, registered, and allowed against his estate.
In the case of Harris v. Hutcheson, 65 Miss. 9, 3 So. 34, in discussing the distinction between claims and liabilities, Judge Campbell said:
'£ There is a distinction between ' claims ' and liabilities. 'All claims' must be registered, but not all liabilities. The claims required to be registered are those for the proof and registration of which provision is made by section 2027 of the Code; those which might be paid by the personal representative when proved and registered. If the decedent was liable in damages for a trespass or the like or to account as a partner, there could not be any registration of a claim against his estate. This shows the distinction between liabilities and claims, which latter are required to be registered, a distinction pointed out by Sharkey, C. J., in Gordon v. Gibbs, 3 [Smedes] S. & M. 473."
In the case of Building & Loan Association v. Tartt, 81 Miss. 276, 32 So. 115, it was held that, although the contingent liability of a surety on a guardian's bond is a debt, within' the meaning of our statute, charging the debts of a decedent upon his lands, it was not such a claim as is required to be probated against the estate as surety.
In the case at bar, if the Coldwater Mercantile Company had paid its indebtedness, as represented by its note in favor of appellant, there could be no enforceable liability against the estate of the deceased on the notes indorsed by her and delivered to the appellant as collateral security, and from the foregoing authorities we have reached the conclusion that a liability against a decedent, which is secondary and contingent before and at the time of his death, is not such a claim as is required to be probated against the estate of the decedent.
It will be noted that the two collateral notes involved were overdue at the time they were indorsed and delivered to appellant, and by virtue of that fact they be came demand obligations, as specifically provided by section 2585 of Hemingway's Code. Being demand obligations, by section 2649, Hemingway's Code, presentment for payment was required to be made within a reasonable time after the negotiation thereof, and we think the bill of complaint sufficiently averred proper and legal presentment and demand, and notice of dishonor.
In support of their contention that the liability of the decedent by virtue of her indorsement of these notes is such a claim as must be probated against her estate, the appellees rely principally upon the cases of Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601, and Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903, in which was involved the question as to whether the statutory liability of a stockholder of a defunct bank, for the benefit of depositors in such bank, is required to bo probated against the estate of a deceased stockholder. We do not think, however, that these cases when properly analyzed support the views of appellees.
In the case of Pate v. Bank of Newton, supra, it was expressly held that the double liability of a stockholder of a bank is a primary liability, while in the case of Board of Bank Examiners v. Grenada Bank, supra, it was held that when, by the insolvency and failure of the bank, this liability becomes fixed and certain before the death of a stockholder, the claim must be probated against the estate of the deceased stockholder. In this case Judge Holden, speaking for the court, used the following language:
"So the simple question in the case is whether or not the liability of the stockholder was fixed and accrued before his death, or whether it was a contingent liability which required a liquidation of the assets of the bank to ascertain the pro rata amount due by the stockholder before the claim passed from the contingent status to one of certainty. . We think the case of Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601, has settled this question in favor of the appellee in the present case. As we understand that decision, a suit may be brought by liquidators against the stockholders on their liability for the full amount of their stock, at any time, after the bank is taken over in liquidation whenever it is reasonably apparent that the assets of the bank will not pay the depositors. . . ."
Prom these quotations from these two cases it seems clear that they are not in conflict with, but rather support, the views herein expressed. In the case at bar the liability of the decedent was secondary and wholly contingent at the time of her death, and could only become fixed and certain by the failure of the principal' debtor to pay its obligation at the maturity thereof, which was long after the death of the one now sought to be charged.
Reversed and remanded.