Case Name: James Dick et al. vs. James H. Mawry
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1848-01
Citations: 9 S. & M. 448
Docket Number: 
Parties: James Dick et al. vs. James H. Mawry.
Judges: 
Reporter: Mississippi Reports
Volume: 17
Pages: 448–456

Head Matter:
James Dick et al. vs. James H. Mawry.
D. having become the purchaser of a piece of property, wrote to M. to procure from S. the release of a mortgage made by 0. to indemnify S. against loss as indorser for 0. on two notes ; D. authorized M. to pay S. five thousand dollars for the release, out of moneys to be collected by M. for D.; S. thereupon executed the release of the mortgage, gave to M. one of the notes secured by it, and promised to give the other to him when procured by S. ; upon which M. executed his agreement to pay S. five thousand dollars out of moneys to be collected for D.; afterwards he paid S. three thousand dollars, and S. assigned to H., M.’s agreement as to the residue; when H. delivered to M. his agreement to pay S. the residue, and took from M. a new agreement to pay to him the residue due on the agreement to S. out of the moneys to be collected for D.; S. never delivered to M. or D. the second note secured by the mortgage, but that note, at the time of S.’s release of the mortgage and promise to deliver it to M. was held by a third person, who had then obtained judgment against S. upon it, and intended to foreclose the mortgage for its payment; upon this D. forbade M. to pay the residue of the moneys collected for D. to any one but himself, while H. insisted on payment to him. M. filed a bill of interpleader with D. and H. to ascertain to whom he must pay the money ; held, that M. had not performed his agency for D. to procure the release-of the mortgage; the outstanding note being still an incumbrance on the property ; and had exceeded his agency in assuming to pay the residue of the money to EL, and that as between D. and H. the former was entitled to it.
When a note, secured by a mortgage, is assigned, the assignee is entitled to the benefit of the mortgage ; and may assert his right by foreclosure of the same.
Where a maker of a note executes a mortgage on his property to indemnify Ms accommodation indorsers on the note, the holder of the note will be entitled to the benefit of the mortgage, and may in equity subject the mortgaged property to the satisfaction of his debt; nor can the indorser by a release of the mortgage deprive the creditor of that right.
On appeal from the superior court of chancery ; Hon. Robert H. Buckner, chancellor.
James H. Mawry states in his bill, which was filed on the 1st day of February, 1842, that in the year 1840, James Dick, and Harry R. W. Hill and others, trading in partnership, under the style of N. & J. Dick & Co., bought a tract of land of one Sims, which was subject to a mortgage conditioned for the payment of two notes made by Sims in favor of Horatio N. Spencer; that Spencer offered to release the mortgage to N. & J. Dick & Co. for $5000. Complainant had in his hands, as attorney at law, for collection, claims due N. & J. Dick & Co., who wrote to him on the 21st of February, 1840, of their purchase of the land, of the incumbrance on it, the offer of Spencer to release it, and instructed complainant to procure the release, and pay, or assume the payment of the money to Spencer. Complainant thereupon procured a release of the mortgage, an assignment of one of the notes, and an agreement to deliver up the other when he should be able to procure it; these two notes constituting, as complainant understood, the incumbrance on the land; and complainant assumed the payment of 'he $5000 to be paid out of the funds of N. & J. Dick & Co., when collected. Shortly after complainant paid Spencer $3000, in cash. Before the residue of the $5000 was collected, Spencer and one Thomas Hundley had a settlement of accounts, and Spencer offered to Hundley, in part payment of what he owed him, an order on complainant for the$2000 due, which Hundley agreed to take; the order was drawn by Spencer on complainant, and accepted to be paid out of the moneys to be collected for N. & J. Dick & Co. That this order was drawn about the 31st of March, 1840, and complainant had now collected funds sufficient to pay it; but that N. & J. Dick & Co. ordered him not to pay it to Hund-ley, but to themselves; inasmuch as Spencer had wholly failed to relieve the incumbrance on the land, had deceived and defrauded them, the other note being still outstanding, and in judgment against both Sims and Spencer. On the other hand Hundley insists that he took the order from Spencer bona fide, and that complainant must pay the money to him. Complainant stated that he was ready to bring the money into court, and prayed that N. & J. Dick & Co. and Hundley might be com pelled to interplead, and settle by decree of the court their conflicting demands; and both be enjoined from suing him at law therefor.
The following is the letter of H. R. W. Hill, of the firm of N. & J. Dick & Co. to Mawry, viz.:
“ Canton, M., February 21, 1840.
“ James H. MawRy, Esq.
“ DeaR Sir,
“ Mr. H. N. Spencer, of your place, has a mortgage on a piece of land I own in Yazoo, which he will explain to you. The mortgage he proposes to release by the payment of $5000, in any of the post notes of the Natchez banks, except the Railroad, Union Bank, Grand Gulf Bank, Rodney and Port Gibson. I have not the money now to give him, and write him that you will assume it out of our collections in your hands. If he declines this, close the matter by giving my notes for the $5000, which I will pay in six months, or less time, in the above currency. When I bought the land I was assured by Sims there was only $2000 on it, or I never would have gone to the expense on it I have. I am now building a gin, that will cost me $2000. Write me as soon as you see him, and give me a statement how our matters stand in your hands.
H. R. W. Hill.”
Hundley answered the bill, and stated that he knew nothing of the transactions between N. & J. Dick & Co. and Spencer and Mawry. He took the obligation of Mawry in good faith, on the supposition that it was for a valuable consideration, and would be paid. That, Spencer being in debt to him, he took from Spencer, N. & J. Dick & Co.’s order on Mawry, accepted by him, on which about $2000 was due, in payment of the debt, and received from Mawry his written obligation, viz.:
“Out of the collections of money that I shall make for N. & J. Dick & Co. I was directed to pay five thou.sand dollars to H. N. Spencer, all which is paid to Spencer, except the sum of two thousand and thirty-seven dollars, and twenty-five cents, •which balance having been transferred by Spencer to Thomas Hundley, and the acceptance of said payment having been given up to me, I therefore hereby agree to pay to Thomas Hundley the said sum of two thousand and thirty-seven dollars, and twenty-five cents, out of said collections, and as soon as that amount shall be collected by me, to bear interest from thisdate; this 18th April, 1840. Jas. H. MawRy.”
That upon receiving this agreement he released Spencer from his debt to him, and Spencer was now insolvent; but could have then arranged the debt so that it wrnild not have been lost.
Hundley further denied Mawry’s right on the case made by the bill to an interpleader, and demurred to the bill.
Dick and others, survivors of J. & N. Dick & Co., also answered the bill, and state that having purchased a tract of land from Sims, they were informed that Spencer and one Passmore Hooper had a mortgage on it to secure certain notes; that they applied to Mawry to procure a release of the mortgage, and to pay $5000 for it, or assume to pay it out of their funds. They never authorized him to execute any acceptance to Hundley, or promise to him or any one else, unless he first procured a release of the mortgage, which was distinctly specified to Mawry. That-Mawry had not procured a release of the mortgage, but of only part of it; one of the notes being still outstanding, secured by the mortgage, and in judgment against Spencer in the circuit court of the United States, at the time Spencer arranged the matter with Mawry; that Spencer deceived and defrauded Mawry. They insist that they are entitled to the money; it is theirs; Mawry had no right to accept in favor of Hundley nor Spencer, without a release of the mortgage. It was done without their knowledge, consent, or ratification. If Mawry has made himself liable, the defendants ought not to suffer for it. They insist the money shall be decreed to them. Mawry brought the money into court, and it was placed in the hands of a receiver.
At the June term 1845, the chancellor ordered an interpleader; when the following agreement of counsel was made: “It is agreed by parties in this cause by their counsel, that all the formalities pertaining to a bill of interpleader should be waived, and the cause submitted, and decided by the chancellor according to the merits of the cause and the rights of the parties.”
The deposition of James H. Mawry, the complainant in the bill, was taken, who, besides the allegations in his bill, proved that the mortgage was made by Benjamin G. Sims to secure Horatio N. Spencer and Passmore Hooper against liabilities as in-dorser for him; he made the mortgage and the release a part of his deposition; he admitted the correctness of this agreement, filed with Hundley's answer; he had made no other agreement with Spencer than what was contained in the release of the mortgage. The second note named in it had never been delivered to the witness; nor did he know what had become of it.
Robert Robinson proved, that the second note embraced in the mortgage dated May 2, 1835, due March 1, 1838, for $2000, was sued upon in the United States circuit court, at Jackson, in favor of Messrs. Lancaster, Derby <fc Co.; and judgment obtained on it in November, 1839 ; that Lancaster, Derby & Co. had assigned the note to J. B. Oliver, of New Orleans, who had assigned it to witness for collection, who designed to foreclose the mortgage given for its payment, unless it were otherwise paid.
The mortgage of Sims, referred to, was also read; it bore date the 4th day of May, 1835, and recited, that whereas Spencer & Hooper had indorsed certain notes for him, which are described, including the one spoken of by the witness Robinson, and he, Sims, “ was desirous to secure and save Hooper and Spencer against all responsibility as indorser of the notes; therefore this indenture witnesseth that the said Sims, as well for and in consideration of the securing the said indorsers from the payment of the said notes, as the further consideration of one dollar, &c.” conveyed the land in Yazoo county to Spencer & Hooper, to their only use; “provided, that if Sims, his executor, &c. should pay the notes described when due, and save harmless and indemnified Spencer & Hooper from the payment of the notes and all cost, damages, or charges as sureties,” then the indenture was to be void.
The release given by Spencer & Hooper was in these words :
“ In consideration of the sum of five thousand dollars to us paid by Henry R. W. Hill, we do hereby release to him all right, claim, estate, or demand or lien that we, or either of us, have in and to the within described tracts or parcels of land, or any part thereof; and we do hereby assign to him the note of Benjamin G. Sims for two thousand one hundred and fifty-eight dollars and thirty-two cents, due the first day of March, 1837, and also the note of said Sims, due the first day of March, 1838, so as to invest him with full right to demand, receive and recover the amounts thereof of said Sims, when we shall have paid the second of said notes; the first having been taken up by us and is delivered to said Hill. In witness whereof we do hereto set our hands and seals, this 20th February, 1840.
H. N. Spencer, (seal.)
Teste, J. H. Mawry. Passmore Hooper, (seal.)”
The chancellor decreed the money to be jjpid to Hundley, and the defendants, Dick & Hill, survivors of N. & J. Dick & Co. appealed. The appeal bond was taken, payable to Mawry, reciting a decree in favor of Mawry, and an appeal therefrom.
W. Yerger. for appellants, Dick & Hill.
First. Mawry was to procure a release of the mortgage. The proof shows that he has not done so; but that one of the notes outstanding still encumbers the land.
A release is the discharge of a right of action which one has against another on his land. It is an instrument whereby estates or other things are extinguished, &c. 3 Tomlin’s Law Diet. 322. Now it is manifest that Mawry has not procured g. release of the mortgage, and has therefore exceeded his authority.
Secondly. Mawry has exceeded his authority, in assuming to pay directly to Hundley. His authority from Hill was to as sume to pay to Spencer. The difference betwixt the two is material. So long as the contract was betwixt Hill and Spencer, and Mawry and Spencer, Hill, at any time he discovered a failure of consideration, or a fraud on Spencer’s part, had a right to stay the payment of the money. That he would have such power in a direct promise made to Hundley is denied by Hundley, thus showing the materiality of a compliance with the power conferred upon the agent.
That Hill is not bound by the acts of Mawry, for both of the above reasons, see Story on Agency, 156, 157, 160, 169; Batty v. Carswell, 2 Johns. R. 48. Any deviation from the authority, which would defeat the manifest object or intention of the principal, would be void, whether beneficial to the principal or not. Story on Agency, 166; 2 Kent, 3d ed. 618, 619.
Thirdly. Hundley cannot resist the claim of Dick & Hill, because he is not a bona fide holder of their paper without notice, and therefore takes it subject to the equities existing between the parties. He advanced nothing to Mawry for his promise; he paid out nothing, and will lose nothing, if Dick & Hill recover. His object was to save a desperate debt. He will be remitted to his former ¿¡laim against Spencer, and will occupy no worse position than he did, and cannot therefore complain. "20 Johns. R. 657; 9 Wend. 170; 10 lb. 85; 11 lb. 533; 12 lb. 600, 601; 16 lb. 660.
William Thompson, for Hundley.
1. Mawry is certainly bound to pay Hundley. Hundley denies that he had anything to do with the dealings between N. and J. Dick & Co., and Spencer, or knew anything of them. He says, that Spencer owed him, and on their settlement he told him he held the order of N. & J. Dick & Co. on Mawry, and assigned it to him; that he released or gave up so much of his demand on said Spencer, upon Mawry’s accepting said order from Spencer; and that Spencer is now insolvent.
2. Even if Mawry had exceeded his authority, still we consider he is bound to pay Hundley; for he knew all about the facts on which Spencer’s claim rested. Hundley was ignorant of them. To say now, that Mawry can get clear of paying Hundley, it seems to us would be contravening the decisions in the following cases. Pasley v. Freeman, 3 Burn. & East, 51; Eyre et al. v. Duns ford, 1 East, 318; Hamer v. Johnston et al. 5 Howard, 698; Burrotoes v. Lock, 10 Vesey, 470, 475. This last case we invite the particular attention of the court to.
3. There is no proof of any fraud whatever on Hill by Spencer ; and Mawry’s gratuitously getting the agreement from Spencer to give up this note, cannot affect Hundley. Mawry waited near two years; Spencer has become insolvent; and now, we contend he cannot get clear of paying Hundley.

Opinion:
Mr. Justice Thacher
delivered the opinion of the court.
Mawry filed his bill to compel Dick and Hill, and Hundley to interplead under the following circumstances: Hill, by letter, authorized Mawry to obtain from Spencer the release of a certain mortgage held by Spencer and Hooper, the mortgagees, upon a tract of land purchased by N. & J. Dick & Co., and to pay therefor the sum of $5000 out of money to be collected for them. Mawry obtained the written release of the mortgage from Spencer and Hooper, the assignment and delivery of one note mentioned in the mortgage and the assignment, and a promise to deliver another, also mentioned therein, when it should have been paid by Spencer and Hooper. Mawry, in return, gave Spencer his undertaking to pay him $5000, as directed in the letter of Hill, and at that time, or shortly after, made him a cash payment of $3000. Subsequently, Spencer, being indebted to Hundley, settled with him, by transferring to him the amount still remaining to be paid by the undertaking of Mawry, and Mawry, upon receiving from Hundley the acceptance of the payment to be made to Spencer, entered into an undertaking to pay Hundley the amount unpaid. The second note, spoken of above, has never been delivered to Mawry, but it appears from the evidence, that, anterior to the date of Spencer's promise to deliver it up, a judgment had been obtained upon it against Spencer in the United States circuit court for Mississippi, by the holder, a stranger to these proceedings, who still held the judg ment unsatisfied, and who designed to pursue his remedy for satisfaction as subrogatee under the mortgage.
Mawry's agency for Hill was to procure a release of the mortgage from Spencer. The mortgage in this instance was an indemnity to Spencer and Hooper against their liability as indors-ers for Sims, the mortgagor, and principal debtor in the notes, but a creditor, the holder of the note or notes, would be entitled to the benefit, and might in equity reach such security to satisfy his debt. 1 Story Eq. 481, § 502. The indorsement of the note, even thus secured by the mortgages, by Spencer, carried the benefit of the mortgage along with it to the assignee or holder. 6 S. & M. 139. It appears from Mawry's transaction with Spencer, that he was apprized that there was still an outstanding unpaid note, which was included in the mortgage, because in their release they undertake to deliver the remaining note " when it shall have been paid by them," and this release was made after the maturity of that note. Therefore it is manifest, in the first place, that Mawry did not perform the transaction required by his agency. In the next place, Mawry exceeded his authority in changing the contract of payment from Spencer to Hundley. He had no authority to make a direct promise to Hundley. Story's Agency, 166. Therefore, as between Hundley and Hill, the latter is entitled to receive the money as the terms upon which it was otherwise to have been disposed of were not complied with.
The decree of the superior court of chancery is therefore reversed, and a decree ordered to be entered up, directing the amount in the receivers hands to be paid to the survivors of the firm of N. & J. Dick & Co.