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(100 So.)

general issue and several special pleas. CURRIE-MCGRAW CO. v. H. & J. FRIED- These special pleas were demurred to by the MAN. (No. 24080.)

appellant, the demurrers were overruled, the

(Supreme Court of Mississippi, Division B. appellant declined to reply thereto, and judgMay 26, 1924. Suggestion of Error Overruled June 9, 1924.)

(Syllabus by the Court.)

1. Bills and notes 365 (2)-Maker of note bearing date of secular day estopped as against innocent holder to show execution on Sunday.

When a party makes and puts in circulation a negotiable instrument purporting to be made and bearing date of a secular day, he is estopped as against an innocent holder from showing that it was actually executed and delivered on Sunday.

2. Bills and notes 149-Postdated instrument negotiable.

The fact that a negotiable instrument was postdated does not destroy its negotiability or permit the making of the defenses existing between the original payer and payee.

3. Bills and notes 149-Failure to place federal revenue stamps on instrument does not affect negotiability.

The failure to place the proper revenue stamps on a negotiable instrument in accordance with the federal law does not render it nonnegotiable in this state.

4. Bills and notes 369-Payee's negotiation of instrument in violation of agreement with payer no defense as against innocent purchaser for value without notice.

The fact that a negotiable instrument was negotiated by the payee in violation of his agreement with the payer is no defense to a suit by an innocent purchaser for value without notice.

Appeal from Circuit Court, Lafayette County; Thos. E. Pegram, Judge,

Suit by the Currie-McGraw Company against H. & J. Friedman. Judgment for defendants, and plaintiff appeals. Judgment reversed, demurrers to pleas sustained, and case remanded.

ment final was entered in favor of the appellees. From which judgment this appeal is prosecuted.

It becomes necessary to consider the sufficiency of these pleas. The first special plea demurred to alleges, in substance, that the check sued on was executed because of a contract which was made on Sunday between Kramer, the payee in the check, and the defendants; that the check itself was made and delivered on Sunday; and for this reason both the contract and check are void. Another special plea alleges that the check was delivered to the payee, Kramer, to be held in trust by him until Kramer had complied with a certain agreement, and that in disregard of this trust Kramer transferred the check to the plaintiff; and nothing was ever paid to the defendants by Kramer for the check. Another special plea in substance alleges the same facts. None of the above pleas deny that the plaintiff (appellant) was a holder in good faith for value. Another special plea alleges that plaintiff was not a holder in due course, because the check was postdated by a matter of six days when delivered by defendants to Kramer, and that the plaintiff received the check two days before its matu- . rity; and that under federal law postdated checks are required to be stamped and canceled; that this check was not stamped and canceled and this failure put the plaintiff on notice of the defenses of defendant to the check which are stated in the above pleas. Another special plea merely alleges the fact that the check was postdated, received by plaintiff two days before its maturity date, and therefore plaintiff was put on notice of, the defenses of defendant to this check.

From the contents of these pleas, there are two questions presented for decision:

(1) Is a check which bears a legal date, issued on Sunday, in pursuance of a business transaction and agreement made on Sunday Montgomery & McClure, of Sardis, for in violation of our Sunday law, void in the appellant.

L. C. Andrews, of Oxford, for appellees.

SYKES, P. J. The appellant, plaintiff in the circuit court, brought suit against the defendants, a copartnership, for $1,500 with interest, based upon a check executed by these defendants payable to one P. E. Kramer or his order, and by Kramer properly made payable to appellant. The appellant accepted the check in good faith for value received. The declaration alleges the presentment of the check in due course for payment and the refusal of the bank to honor same at the instance and request of the defendants. The check is dated April 1, 1922. To this declaration there was a plea of the

hands of a holder in due course?

(2) Is a postdated check transferred to a holder before the due date, which does not contain proper revenue stamps duly canceled, subject to the defenses existing between the payer and payee?

Section 1102, Hemingway's Code (section 1366, Code 1906), makes it a misdemeanor to to do certain work on Sunday. Under this law this court has held that notes executed on a secular day in compliance with contracts made on Sunday are void. Kountz v. Price, 40 Miss. 341. Likewise it is held that a promissory note executed on Sunday to secure payment of a balance found due is void. Miller v. Lynch, 38 Miss. 344.

We have examined all the decisions of this For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 100 SO.-18

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court which have been called to our atten-, tion, and which we have been able to find, dealing with this question. These cases are all between the parties who made the contract and who had knowledge that it was made on Sunday; in short, they were suits between parties who were in pari delicto. The rights of innocent holders for value were not there discussed. The case which is perhaps nearer in point than any of these cases is that of Duggan v. Champlin, 75 Miss. 441, 23 South, 179. In that case the court used this language:

"Her signature on Sunday is a void act against one with knowledge of that fact, but the delivery of the deed on a secular day to a grantee not cognizant of the fact that it was signed on Sunday, is valid as to the wife and all persons claiming under her."

In the case of Elkin Henson Grain Co. v. White, 98 South. 531, this court held a check void in the hands of an innocent purchaser when given in payment for intoxicating liquor. Headnote 3 in that case is as follows: "The general rule is that illegality of consideration is no defense to an instrument in the hands of a holder in due course, but to this rule there is the well-established exception that when a statute, expressly or by necessary implication, declares the instrument absolutely void, it acquires no validity by its transfer to an innocent holder for value, and no recovery can be enforced thereon."

Section 1102, Hemingway's Code, makes it a misdemeanor to do certain kinds of labor or work on Sunday. It does not expressly make the giving of any instrument on that day void. In the Elkin Case, supra, the statute expressly made void the check. We are not called upon in this case to decide whether this Sunday or Sabbath law by necessary implication would make void an instrument dated that day.

In the case at bar the check is given a legal date, namely, April 1st. It is in the hands of a holder in due course without notice of the fact that it was issued on Sunday. This holder is an innocent purchaser for value without notice. To permit this defense would be to allow these defendants to take advantage of their own wrong, to profit by the fact that they had violated the Sunday law; while, on the other hand the plaintiff has violated no law and had no knowledge of its violation by the defendants. To permit this defense would be to allow the party who alone has been guilty of a breach of the law to set up his illegal act as a defense to a suit by an innocent party. This court will not entertain such a defense.

The Court of Appeals of Alabama, in passing upon a similar question says:

"The great weight of authorities seem to hold that one who gives to an instrument a legal date, thereby authorizing innocent parties to deal with it as such, cannot be heard to

deny the legality of date in a suit against him by an innocent holder, who came into possession as a bona fide purchaser for value, without notice. It would seem that this rule, as just, and based on sound reason." Moseley v. applicable to commercial paper, is essentially Bank, 3 Ala. App. 614, 57 South. 91; Gordon v. Levine, 197 Mass. 263, 83 N. E. 861, 15 L. R. A. (N. S.) 243, 125 Am. St. Rep. 361; Cranson v. Goss, 107 Mass. 439, 9 Am. Rep. 45.

In the case of Knox v. Clifford, 38 Wis. 651, 20 Am. Rep. 28, the rule is thus well stated:

"Where a party makes and puts in circulation a negotiable note purporting to be made and bearing date on some secular day, he is estopped, as against an innocent holder, from showing that it was actually executed and delivered on Sunday. We cannot well conceive of a stronger case for the application of the doctrine of estoppel than such a case presents."

Another case in point is Johns v. Bailey, 45 Iowa, 241.

In the case of Love v. Wells, 25 Ind. 503, . 87 Am. Dec. 375, the court said that, assuming that a deed was delivered on Sunday and void, the party who executed it and gave it a secular date could not set up the invalidity of the deed against a subsequent vendee who purchased the land for a valuable consideration without notice of the transaction having transpired on Sunday. To allow the defendant such a defense would permit him by his own unlawful act to perpetrate a gross fraud upon innocent purchasers, and to such an act the law will not lend its aid or give its sanction.

[1] We therefore conclude that the defendant is estopped from pleading the Sunday law in this case.

[2] II. The fact that the check was postdated does not destroy its negotiability or permit the making of the defenses existing between the original payer and payee.

Section 12 of the Negotiable Instruments Act, section 2590 of Hemingway's Code, is as follows:

"The instrument is not invalid for the reason only that it is antedated or postdated, provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as of the date of delivery."

The pleadings in this case do not allege that the check was postdated for an illegal or fraudulent purpose. The purpose for which the check was postdated was for the payee, Kramer, to hold until he had complied with certain agreements, which agreements were not illegal or fraudulent.

Section 2634, Hemingway's Code, provides that

"To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is

(100 So.)

negotiated must have had actual knowledge of the infirmity or defect or knowledge of such facts that his action in taking the instrument amounted to bad faith."

There is no allegation in any of these pleas that the holder of this check had actual knowledge of any infirmity or defect or knowledge of any facts on which he could be charged with bad faith. While there are some authorities to the contrary, we think the general rule is that a check which is negotiable in form is not rendered nonnegotiable because it is postdated, and that the indorsee of such a check is not put on notice of any defects because the check is negotiated prior to its date. The following authorities sustain this decision: Triphonoff v. Sweeney, 65 Or. 299, 130 Pac. 979; Albert v. Hoffman, 64 Misc. Rep. 87, 117 N. Y. Supp. 1043; American Nat. Bank v. Wheeler, 45 Cal. App. 118, 187 Pac. 128; Wilson v. McEachern, 9 Ga. App. 584, 71 S. E. 946; Johnson y, Harrison, 177 Ind. 240, 97 N. E. 930, 39 L. R. A. (N. S.) 1207.

[3] The failure to put the proper revenue stamps on the check, in accordance with the federal law, does not render it nonnegotiable in this state. In the case of Sowell v. Rankin, 120 Miss. 458, 82 South. 317, this court held that

"The formalities to be observed in the making and recording of a deed to real property is a matter of regulation by the state in which the property is situated, and not by the general government, so that the United States Internal Revenue Law providing that unstamped instruments of writing shall be invalid and not subject to record has no application thereto."

and without notice of the breach of trust may
recover upon the instrument. *
*. It is no
defense against a bona fide purchaser for value
to prove that the person to whom the paper
was intrusted was authorized to use it only for
a particular purpose, and fraudulently convert-
will be liable to a bona fide purchaser for value
ed it to a different purpose.
A person
on negotiable paper which he intrusts to an
agent for negotiation, and which the agent mis-
appropriates. The theory of these cases is
that where a principal clothes his agent with
apparent authority to negotiate negotiable pa-
per, i. e. by indorsing such a note in blank, be-
act of the agent, though wholly unauthorized,
fore maturity for a valuable consideration, the
will bind the principal as effectually as if no
defect of authority existed. Again, the reason
is given, that where one of two innocent par-
ties must suffer a loss, the loss must fall upon
the one who, by his trust and confidence has
enabled the perpetrator of the fraud to com-
mit it."

208 et seq. See, also, Despres et al. v. Drug
See, also, same authority, page 298, par.
Co., 123 Miss. 598, 86 South. 359; Huddleston

v. McMillan, 112 Miss. 168, 72 South. 892.
pleas should have been sustained.
The demurrers interposed to these special

The judgment of the court is reversed, the demurrers are sustained, and the case is remanded.

Judgment reversed, demurrers sustained, and the case remanded.

Hence a deed unstamped is valid, is legally entitled to be recorded, and the fact that it is regarded as an unstamped deed is constructive notice under the law of Mississippi. in the same manner as if it was stamped in accordance with the laws of Congress in this respect.

AUSTIN v. SULLIVAN. (No. 24119.) (Supreme Court of Mississippi, Division A. June 2, 1924.)

(Syllabus by the Court.)

Taxation 421 (6)-Description of land

on tax assessment roll construed.

roll as W. 2 of N. W. 4 less railroad right A description of land on a tax assessment of way containing 45 acres, includes all of the The reasoning applied by the court in that land in the subdivision other than the railcase applies in this case. Our Negotiable In-road right of way, although containing more struments Act is silent upon the subject of revenue stamps to be carried on checks or notes, and a failure to comply with the federal law upon this subject does not destroy the negotiability of the instrument in this state.

[4] III. It is also perhaps proper to state that the fact that the check was negotiated by the payee in violation of his agreement with the payer is no defense to a suit by the innocent purchaser for value without notice. This rule is thus stated in R. C. L. vol. 3, p. 1013, par. 221:

"Where a negotiable instrument is put in circulation fraudulently and in violation of authority by one to whom the owner has intrusted the instrument, a bona fide holder for value

than 45 acres, a part of which is not owned by the person to whom the assessment is made, and which is separately assessed to the owner thereof.

2. Taxation 623-Where two sufficient assessments and taxes paid under either, sale under other assessment void.

If there are two sufficient assessments of land and the taxes due thereon are paid under either, a sale of the land under the other assessment is void.

Appeal from Chancery Court, Forrest County; T. P. Dale, Chancellor.

Suit by C. W. Sullivan against I. V. Austin, From a decree for plaintiff, defendant appeals. Reversed, and bill dismissed.

For other cases see same topic and KEY-NUMBER In all Key-Numbered Digests and Indexes

Davis & Hill, of Hattiesburg, for appel-pellee being that under which he claims and lant. here seeks to have confirmed.

D. E. & C. W. Sullivan, of Hattiesburg, for appellee.

SMITH, C. J. This is a suit by the appellee to confirm the tax title held by him to certain land, which, unless the tax title is good, is owned by the appellee.

One of the appellant's contentions is that the sale to the state for taxes is void for the reason that all the taxes due on the land for

1914 were paid under the assessment, thereof to Robert E. Burkett.

One of the appellee's contentions is that, when the several assessments of the land embraced in the W. 2 of the N. W. 4 of the section here in question are taken into consideration, it is manifest therefrom that the first assessment thereof to Robert E. Burkett was not intended to include all of the W. 2 of the N. W. 4 less the railroad rights of way, but only 45 acres in the W. 2 of the N. W. 4, which assessment would be valid un

In 1909 Robert E. Burkett owned the W. 1⁄2 of the N. W. 4 of Sec. 23, Tp. 4, R. 13 W., less that part thereof included in the rights of way of several railroads which cross the land. Burkett executed a deed of trust thereon to Griffin to secure an indebtedness to him. Afterwards and prior to 1913, he sold a portion of the land to other parties, among them being his brother John B. Burk-der sections 4283 and 4285, Code of 1906 (secett, to whom he sold the land here in contro- tions 6917 and 6919, Hemingway's Code). versy. In 1913 the W. 1⁄2 of the N. W. 1/4 of Sec. 23, Tp. 4, R. 13 W., was assessed on the county assessment roll as follows: Robert E. Burkett, W. of the N.W, less railroad right of way, containing 45 acres valued

Robert E. Burkett, part of the S.W.1⁄4 of
the N.W 4, lying between G. & S. I. R. R.
and N. O., M & C. R. R., less part sold
T. S. Jackson, 4 acres, valued...
Hattiesburg Wood Reduction Company part
of the W. of the N.W., part of the
N.W.% of the N.W., containing 12 acres,
valued

John B. Burkett, part of the N.W.% of the
N.W., lying between M. C. and N. O., M.
& C. R. R, 6 acres, valued.....
Tatum Lumber Company, 50 feet across W.
of N.W., 2 acres, valued..

Tatum Lumber Company, 50 feet across
S.W.4 of the N.W., 1 acre valued....
Total acres assessed in the W.% of the
N.W., Sec. 23, 70 acres

Total value assessed..

Total acreage in railroad rights of way, 10.

$ 450 00

50 00

[1, 2] The description of the land assessed to Robert E. Burkett is plain and unambiguous, and covers the whole of the W. 1⁄2 of the. N. W. 4. less the railroad right of way. It is true that the land included in this description is more than 45 acres, but the error in the statement of the number of acres therein included is not material and can have no effect on the description thereof. This being true, what here occurred was simply that that part of the N. W. 4 of the N. W. 1⁄4 of 600 00 Sec. 4, between the M. C. and N. O., M. & C. R. R. here in controversy was assessed twice, 50 00 but, having been paid on under one of the assessments thereof, could not be sold for taxes 10 00 under the other. Dodds v. Marx, 63 Miss. 443.

10 00

$1,170 00

The deed of trust executed by Robert E. Burkett to Griffin was foreclosed, and the land was purchased at the sale by Griffin, who in December, 1914, conveyed it to the appellant; the two Burketts joining with him in the deed.

The decree of the court will be reversed, and the bill dismissed.

Reversed, and bill dismissed.

CENTRAL NAT. BANK v. PERRY.
(No. 24104.)

(Supreme

Court of Mississippi, Division B.
May 26, 1924.)

Before purchasing the land the appellant
was advised by Stokes V. Robertson, the at-
torney and agent for Griffin and Robert E.
Burkett, that the land was free of all incum-
brances, and that the taxes for 1914 had been
paid. Robertson, himself, as Griffin's agent,
paid the taxes due on the two assessments of
the land to Robert E. Burkett hereinbefore
referred to. He was not aware of the as-
sessment of the 6 acres here in question to
John B. Burkett, and supposed that the as-
sessment to Robert E. Burkett covered all
the land. The taxes based on the assessment
of the 6 acres here in question to John B.
Burkett not having been paid, the land was
sold thereunder by the tax collector, struck
off to the state, and afterwards sold by the
state land commissioner to the appellee; the
deed from the land commissioner to the ap- ty; J. T. Brown, Special Judge.

(Syllabus by the Court.j Abatement and revival 37-Bank entitled to prosecute action to judgment on merger with other bank pending suit.

Where a suit is filed by a bank which at the time of the suit owned the cause of action, but pending the suit it merged with another corporation and thereby lost its corporate identity, and the cause of action became by the merger vested in the new corporation, it was error to direct a verdict for the defendant on the theory that the plaintiff had no cause of action because section 497, Hemingway's Code (section 717, Code of 1906), provides the cause in such case may be prosecuted to judgment in the name of the original plaintiff.

Appeal from Circuit Court, Neshoba Coun

(100 So.)

Suit by the Central National Bank against | original party, or the court may allow the perC. L. Perry. From judgment denying plain- son to whom the transfer or assignment of tiff's motion to substitute other bank with such interest has been made, upon his applicawhich it had become merged as plaintiff, tion therefor, to be substituted as a party plaintiff appeals. Reversed and remanded. plaintiff in said action." Jones & Boydstun, of Louisville, for appellant.

Wilson & Dees, of Philadelphia, for appel

lee.

ETHRIDGE, J. The Central National Bank of St. Louis, Mo., brought suit against Dr. C. L. Perry upon three acceptances dated April 1, 1919, due 4 months, 6 months, and 8 months after date, respectively, drawn by the National Novelty Import Company on Dr. C. L. Perry, and accepted by him and assigned to the Central National Bank. The defendant pleaded the general issue and certain special pleas, alleging in the special pleas that the Central National Bank was not the bona fide holder, in due course, before maturity, and without notice, and that both the Central National Bank and the National Novelty Import Company were guilty of fraud with reference to the acceptance, and that the bank well knew that said acceptances were secured by fraud, and also that there had been a complete failure of the consideration. To which special pleas replications were filed.

This suit was filed on the 23d day of December, 1919, and was returnable to the Feb

ruary term, 1920, of the circuit court. For

Under this section it was not necessary for the new corporation to be substituted as a plaintiff, but the action would proceed to judgment in the name of the original plaintiff, and judgment be entered thereon for the use of the real owner. It was therefore error, for the court below to sustain the motion and to strike out the evidence on the motion of the defendant, and it should have permitted an amendment by the plaintiff after this question was raised and passed upon. The judgment will therefore be reversed, and the cause remanded. Reversed and remanded.

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LOVE, Superintendent of Banks, v. MURRY, State Treasurer. (No. 24071.) (Supreme Court of Mississippi. June 2, 1924.) (Syllabus by the Court.)

Banks and banking 15-State funds deposited in bank which has not qualified as depository protected by guaranty fund.

Money belonging to the state, deposited in a bank which has not qualified as a state depository, is protected by the state bank guaranty fund.

En Banc.

Appeal from Chancery Court, Coahoma County; C. L. Lomax, Chancellor.

Action between J. S. Love, Superintendent of Banks, and W. M. Murry, State Treasurer. From judgment rendered, the former appeals. Affirmed.

Flowers & Brown and C. L. Hester, all of Jackson, for appellant.

Green. Green & Potter and Cassedy & Potter, all of Jackson, for appellee.

some reason the cause was not tried until the February term, 1923. In the time between the filing of the suit and the trial the Central National Bank and another bank of St. Louis merged; the constituent corporation taking over the assets of each bank, and this appeared in the plaintiff's depositions. At the conclusion of the plaintiff's evidence the defendant moved the court to exclude the testimony on the part of the plaintiff and direct a verdict for the defendant, because the testimony offered on behalf of the plaintiff shows that this suit was instituted in 1919 in the name of the Central National Bank, and the testimony shows that in 1920 the plaintiff, the Central National Bank, and the Liberty Bank merged, and that from said date there was no such identity as the Central National Bank. This motion was sustained by the court below, and the plaintiff excepted. Thereupon the plaintiff moved the court to permit him to amend so as to insert the new corporation The identical question was decided by this instead of the Central National Bank, which court recently in Wardlaw v. Planters' Bank motion the court denied. From this judg- of Clarksdale, 131 Miss. 93, 95 South. 135, ment the plaintiff prosecuted this appeal. in which it is held that the funds of a muUnder section 497, Hemingway's Code (sec-nicipality in such a case are protected by tion 717, Code of 1906), it is provided: "In case of a transfer or an assignment of any interest in such chose in action before or after suit brought, the action may be begun, prosecuted and continued in the name of the

HOLDEN, J. The only question involved in this case is whether or not money belonging to the state of Mississippi, deposited in a bank which has not qualified as a state depository, is protected by the state bank guaranty fund.

the state bank guaranty fund. The same rule applies here, and we decline to over

rule the Wardlaw Case; therefore the judgment of the lower court is affirmed.

Affirmed.

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