Case Name: Morrissey v. Bologna, et al.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1960-10-10
Citations: 240 Miss. 284
Docket Number: No. 41525
Parties: Morrissey v. Bologna, et al.
Judges: McGehee, C.J., and Hall, Kyle, Holmes, Arrington and McElroy, JJ., concur.
Reporter: Mississippi Reports
Volume: 240
Pages: 284–304

Head Matter:
Morrissey v. Bologna, et al.
No. 41525
October 10, 1960
123 So. 2d 537
Brunini, Everett, Grantham & Quin, Vicksburg, for appellant.
Teller, Bieclenharn & Rogers, Vicksburg; Lott & Sanders, Greenwood, for appellees.

Opinion:
Lee, J.
Miss Hazel Morrissey filed her bills in the Chancery Court of Warren County against Giuseppe Bologna and J. G. Sherard, substituted trustee, to cancel certain deeds of trust as clouds on the title of her lands as described therein. At the conclusion of the evidence, the court dismissed the bills without awarding any relief whatever. From the decree entered, Miss Morrissey appealed.
This litigation grew out of the following facts and circumstances: For many years, Mite T. Morrissey had been engaged in the illegal liquor business in this State. He operated in Vicksburg under the firm name of Delta Distributing Company.
Bologna had operated a wholesale liquor business in Baton Rouge, Louisiana, for many years. The sale of liquor in that state was lawful. He had sold whiskey to Morrissey since 1946. Deliveries were made from his place of business to Delta Distributing Company under the bills of lading, showing delivery to Vicksburg, Mississippi.
Morrissey got in arrears in his account and Bologna insisted on payment. Mrs. Elizabeth M. Morrissey, the wife of Mike, owned considerable real estate in Warren County, known as the "Southall Place" and the home in the City of Vicksburg, known as "Grey Oaks." She knew that her husband was engaged in the liquor business, but she herself had no interest therein. To secure the payment of this outstanding debt of her husband to Bologna, Mrs. Morrissey on April 29, 1953, executed and delivered to L. A. Conaty, trustee, a note and deed of trust in the amount of $25,000, payable six months after date, covering the land known as the "Southall Place" and again on August 5, 1955, she and her husband executed and delivered to L. A. Conaty, trustee, a note and deed of trust in the amount of $75,000, payable in twenty-five equal installments of $3,000 on September 1, 1956, and annually thereafter, covering ' ' Grey Oaks ' '.
Bologna, on February 1, 1958, by separate instruments, substituted J. G. Sherard as trustee in the place of L. A. Conaty in these two deeds of trust; and on February 13, 1958, the substituted trustee began foreclosure proceedings to sell, on March 7, 1958, the properties described in the two deeds of trust.
Mrs. Elizabeth M. Morrissey, on February 19, 1958, filed separate bills against J. G. Sherard in which she alleged that Bologna, the beneficiary in the deeds of trust, knowingly and unlawfully sold intoxicating liquor to her husband, Mike T. Morrissey, and unlawfully exacted the deeds of trust as pretended security for such sales; that such indebtedness arose out of the illegal sale of intoxicating liquor, in violation of the laws of this State; that under Section 2612, Code of 1942, Recompiled, the debt claimed and the notes and pretended security therefor were utterly and completely void; and that Bologna and his substituted trustee were barred from collecting or attempting to collect the same. In her prayer, she sought a temporary and permanent injunction against the foreclosure and a declaration by the court that the indebtedness and the deeds of trust were void and of no effect, and that the same should be noted on the land records of the county.
Temporary injunctions were issued. Although the substituted trustee, in his answer and pleadings, suggested that Bologna, the beneficiary in the deeds of trust, and Mike T. Morrissey were necessary parties, neither was in fact made a party. After the evidence bad been heard, counsel for tbe defendant Sberard again expressly called to tbe attention of tbe court tbe fact that these two named persons were not parties to tbe action.
At tbe conclusion of tbe evidence, tbe chancellor made a finding of fact and conclusions of law to tbe following effect: That Mrs. Morrissey executed tbe notes and deeds of trust in question of her own accord and without any request or duress from tbe beneficiary therein; that these instruments evidenced tbe debts of her husband, Mike T. Morrissey, for whiskey which be purchased in Louisiana and transported to Mississippi for resale; that she knew of her husband's business and tbe nature of tbe indebtedness, which she was securing, and that she was assisting her husband in continuing bis unlawful business; and that she must be deemed in pari delicto and not entitled to tbe aid or interposition of a court of chancery. For that reason, be left tbe parties where be found them, dismissed tbe complaints and dissolved tbe injunctions, but held that tbe substituted trustee was not entitled to tbe statutory damages allowable under Sec-ion 1352, Code of 1942, Recompiled.
Tbe defendant Sberard appealed from that portion of tbe decree denying to him tbe recovery of damages, made mandatory, as be contended, by tbe statute; and on that appeal, in tbe case entitled J. Gr. Sberard, substituted trustee, v. Mrs. Elizabeth M. Morrissey, No. 41,157, this Court affirmed, without an opinion, tbe action of tbe trial court in denying tbe recovery of damages.
Two deeds of trust, which were first liens, were outstanding in favor of tbe First National Bank & Trust Company of Vicksburg, dated July 30, 1952, and December 15,1954, against "Southall Place" and ,f ' Grey Oaks", respectively. Both deeds of trust were in default and payment bad been demanded. On October 7, 1958, for considerations of $3,992.01 and $388.87, and tbe assump tion of the payment of these deeds of trust, Elizabeth M. Morrissey, in the first instance, and she and her husband, Michael T. Morrissey, in the second instance, conveyed and warranted the ' ' Southall Place ' ' and ' ' Grey Oaks", in each instance correctly described, to Hazel Morrissey, a sister of Michael T. Morrissey.
Thereafter, Miss Hazel Morrissey, on October 8, 1958, filed this suit, being two separate bills in which she made both J. G. Sherard, substituted trustee, in the deeds of trust, and Giuseppe Bologna, defendants. She alleged that she was the owner in fee simple of both the ' ' South-all Place" and "Grey Oaks", describing the properties in detail. She charged that her title was derived from the U. S. Government, and by mesne conveyances, through Mrs. Elizabeth M. Morrissey. Copies of her deeds were attached as exhibits to the bills. She averred that the claim of the defendants arose by reason of the deeds of trust of the same Mrs. Elizabeth M. Morrissey, the common source of title, executed by her to them on the same property under the dates of April 29, 1953, and August 5, 1955, as heretofore mentioned. She also charged that the indebtedness for which the deeds of trust had been given as security was incurred by Mike T. Morrissey, husband of Mrs. Elizabeth M. Morrissey, for the purchase of intoxicating liquor from the defendant, Bologna, in violation of the laws of Mississippi, and that the debt and the deeds of trust were void and of no effect and were unenforceable in this State. Inasmuch as the defndants were undertaking to foreclose the deeds of trust and to claim the property, she prayed that the deeds of trust should be declared null and void, and that they should be cancelled and removed as clouds upon her title. When it subsequently appeared that the substituted trustee had consummated the sales on October 9,1958, the court permitted an amendment of the original bills so as to pray for cancellation also of the trustee's deeds which were executed pursuant thereto.
Sherard, the substituted trustee who was served with process ou October 8, 1958, iu his answer, reported that he had made the sale on October 9, 1958, and asked to be discharged. The answer of the defendant, Bologna, who was served with process on October 9, 1958, after denying all of the material allegations of the bills, asserted that he had acquired title by virtue of the trustee's deeds, and set up several special pleas in which he maintained the following: (1) That in the previous proceedings, it was adjudicated that Mrs. Elizabeth M. Morrissey, in assisting her husband to continue his illegal business of selling whiskey in Mississippi, had no right in a court of equity to receive any affirmative relief; that the complainant knew and was charged with knowledge thereof; that the conveyance to her was a mere sham or pretense; that she was not a bona fide purchaser for value; and that her position was no different from that of Mrs. Elizabeth M. Morrissey. He pled the doctrine of res judicata; but said also that if it was not applicable, then he invoked the doctrine of estoppel by judgment. He further set up that Mike T. Morrissey's indebtedness was validly incurred in Louisiana, where the sale of liquor was lawful, and such contract should not be impaired.
Bologna, called as an adverse witness, admitted that he had been selling liquor to Mike T. Morrissey, operating in the City of Yicksburg as Delta Distributing Company since 1946; that his place of business was in Baton Rouge, Louisiana; that he went back and forth to Yicksburg to confer with Morrissey; that bills of lading for the shipments were made to Yicksburg and the liquor was sold to Morrissey in Mississippi; that he knew that Morrissey was selling this liquor in Mississippi; that the notes and deeds of trust involved in this litigation were given as security for Morrissey's purchases of liquor; that he knew that the sale of liquor in Mississippi was illegal; that he had been in Morrissey's place of busi ness about fifty times, and, on occasions, had made collections while there; and that the notes and deeds of trust were executed and delivered in Mississippi.
The learned chancellor, at the conclusion of the evidence, took the case under advisement for decision in vacation, and, thereafter, without making a finding of fact or conclusion of law, simply entered a decree dismissing the bills at the cost of the complainant. It was from this decree that Miss Morrissey appealed.
The appellee contends that the final decree, which dismissed the complaints filed by the appellant's predecessor, Mrs. Elizabeth M. Morrissey, in the chain of title, are res judicata of the present suit; that since Mrs. Elizabeth M. Morrissey was in pari delicto with her husband, Miss Hazel succeeded to no better position; and that this same doctrine operates as a bar to any relief to the appellant. He says also that the indebtedness was incurred in Louisiana, where it could be validly contracted, and the same must be governed by the laws of that state; and that the court should uphold the title vested.
The appellant contends that res judicata does not apply; that Hazel was not a party in the first suit; that the decree in the first suit was not rendered on the merits, but because of the disability of Elizabeth to sue on account of the fact- that she was in pari delicto; that it did not adjudicate title in Bologna nor immunize him from a challenge of his void mortgages; and that no right of property was decided. She further says that she was not in pari delicto with him; that she had no connection with Mike T. Morrissey's business nor with the deeds of trust; that she bought no whiskey, sold no whiskey, and gave no security for any whiskey debt; that she had no dealings with Bologna; and that her purchase of the property was a bona fide transaction for a valuable consideration.
The essentials to constitute res judicata were set forth in Palmer v. Clarksdale Hospital, 213 Miss. 611, 57 So. 2d 476, as follows: "They are (1) identity in the thing sued for; (2) identity in the cause of action; (3) identity of persons and parties to the action; and (4) identity of quality in the persons for or against whom the claim is made." These essentials were reaffirmed in Rawlings v. Royals, 214 Miss. 335, 58 So. 2d 820; Tobias v. Tobias, 225 Miss. 392, 83 So. 2d 638; The Fidelity and Casualty Company of New York v. State Building Commission, 228 Miss. 37, 87 So. 2d 449; Campbell v. Campbell, 231 Miss. 658, 97 So. 2d 527.
In the original proceedings, injunctive relief was sought. In the present case, title to property is involved. In those procedings, Mrs. Elizabeth M. Morrissey, complainant, and J. Gr. Sherard, substituted trustee, defendant, were the sole parties. Even though the answer of the defendant suggested that the beneficiary in the deeds of trust, Bologna, was a necessary and indispensable party, he was not joined. The defendant in that case, again, before the case was decided, called this matter to the attention of the court, and also suggested that Mike T. Morrissey had been shown by the proof to be a necessary party. Yet nothing was done.
Obviously the court was without power to award a decree against Bologna, the alleged creditor and holder of the deeds of trust, when he was not even made a party to the proceedings. The court properly chose not to pass on his rights in absentia. Since the proof showed that Mrs. Elizabeth M. Morrissey, with knowledge of her husband's business, executed the notes and deeds of trust, and her act enabled him to continue his illegal operations, the court held that she was in pari delicto with her husband, and left the parties where it found them.
The essentials for the application of the doctrine of res judicata did not exist in this case. Consequently the present cause is not affected by the original proceeding. This is true because "The general rule is that a judgment rendered because of a defect of parties does not operate to bar a subsequent action. This rule prevails whether the judgment is based upon a want of parties, a misjoinder of parties, a temporary disability of the plaintiff to sue, or a mistake of the plaintiff as to the character or capacity in which he brings suit. ' ' 30 Am. Jur., Judgments, Section 350, pp. 392-393.
Section 2612, Code of 1942, Recompiled, provides as follows: "If any person shall trust or give credit to another for intoxicating liquors, he shall lose the debt, and be forever disabled from recovering the same or any part thereof; and all notes or securities given therefor, under whatever pretense, shall be void." (Emphasis supplied.)
Bologna trusted and gave credit to Mike T. Morrissey for intoxicating liquors. Under the statute, he lost his debt and is forever disabled from recovering it. The notes and deeds of trust were given for the purpose of securing the debt. Again, the statute makes these securities absolutely void.
The liquors were sent by Bologna from his place of business in Baton Rouge to Morrissey at Vicksburg with bills of lading attached. He knew at the time that such liquors would be retailed by Morrissey in Mississippi in violation of the law. In Goodman v. Swett, 108 Miss. 224, 66 So. 535, where the liquors were delivered by the appellants to a common carrier in St. Louis for delivery to the appellee's intestate in this State, and it was contended that Section 2612, supra, had no application for the reason that the debt sued on was contracted in the State of Missouri, the opinion said: "There is no merit in this contention, for the reason, that this section is not limited in application to debts due for intoxicating liquor sold in the State of Mississippi. It bars all persons from collecting in the courts of this state any debt so contracted." Thus the appellee's contention that his debt is valid because it was contracted in Louisiana is untenable.
Under the statute, Bologna had lost his debt, and his notes and deeds of trust were void. He had nothing. In law, he was not even a creditor. The defense of pari delicto is not available to aid him in acquiring property to which he has no right whatever. In pari delicto is a corollary of the equitable maxim that he, who comes into equity, must come with clean hands. There are important limitations on this rule. "Even where the contracting parties are in pari delicto, the courts may interfere from motives of public policy. Whenever public policy is considered as advanced by allowing either party to sue for relief against the transaction, then relief is given to him. In pursuance of this principle, and in compliance with the demands of a high public policy, equity may aid a party equally guilty with his opponent, not only by canceling and ordering the surrender of an executory agreement, but even by setting aside an executed contract, conveyance, or transfer, and decreeing the recovery back of money paid or property delivered in performance of the agreement. The cases in which this limitation may apply and the affirmative relief may thus be granted include the class of contracts which are intrinsically contrary to public policy, — contracts in which the illegality itself consists in their opposition to public policy, and any other species of illegal contracts in which, from their particular circumstances, incidental and collateral motives of public policy require relief." Pomeroy's Equity Jurisprudence, 4th Ed., Section 941, pp. 1998-9.
In the first suit, Mrs. Elizabeth M. Morrissey was adjudged to be in pari delicto with her husband. No one is attacking that adjudication. This is not a suit between the husband and wife. It is true that Miss Hazel succeeded to the title of Elizabeth. While she may be in delicto on account of that conveyance, she is not in pari delicto with anybody. O'Conner v. Ward, 60 Miss. 1025; McClellan v. McCauley, 158 Miss. 456, 130 So. 145; Kidd v. Kidd, 210 Miss. 465, 49 So. 2d 824.
The public policy of this State, as expressed in Section 2612, supra, is registered most strongly against the collection of whiskey debts and the enforcement of liens attaching on that account. Another maxim of equity, namely, "Equity follows the law", is just as potent as the "clean hands" doctrine.
The following acts had already occurred when the sale was made by the trustee: (1) The bills of complaint, charging the deeds of trust to be void, had been filed. (2) Both Sherard, the trustee, and Bologna, the beneficiary, had been served with process in these suits. (3) A representative of the appellant appeared at the place of sale, and fully informed all would-be purchasers of the invalidity of the deeds of trust. In spite of the fact that Bologna had full knowledge that he had lost his debt, and that his deeds of trust were void, and that an issue in this regard had been tendered to the court, he caused his trustee to cry off the property, and he himself was the sole and only pretended purchaser.
On account of this sale, he maintains that his title is good, even though, as a matter of fact, it has been held that a check, in payment of the purchase price of intoxicating liquors, under the statute, is void in the hands of the holder, although it was taken for value and without notice of the character of the consideration. Elkin Henson Grain Company v. White, 134 Miss. 203, 98 So. 531. Under the circumstances, Bologna gained nothing from this sale.
Obviously a court of equity, bound to follow the law, should not permit a person to circumvent completely the provisions of the statute and to make a shambles of the law. Indeed Bologna could not, by this foreclosure, have title vested in himself, and thereby enforce an in valid debt, which, by statute, had been lost, and the security for which had become wholly void.
From which it follows that the decree of the chancery court must be reversed, and a decree will be entered in favor of the appellant, cancelling the deeds of trust and the trustee's deeds thereunder, as clouds on the title of the appellant to the lands in question.
Reversed and decree here for appellant.
McGehee, C.J., and Hall, Kyle, Holmes, Arrington and McElroy, JJ., concur.