Opinion
No. 33027.
February 14, 1938. Suggestion of Error Overruled March 28, 1938.
1. MORTGAGES.
The circuit court had jurisdiction of ejectment action to recover land purchased at foreclosure sale.
2. APPEAL AND ERROR.
The overruling of motion to transfer ejectment action from circuit court to chancery court is not reviewable.
3. MORTGAGES.
An instrument appointing substitute trustee for trust deed when named trustee resigned, was valid though not under seal and though executed on behalf of bank which held trust deed by bank's president, without order of directors.
4. BANKS AND BANKING.
A bank that held trust deed ratified its president's action in appointing substitute trustee without order of directors, by claiming the mortgaged property by virtue of the trust deed.
5. MORTGAGES.
A deed made by trustee under trust deed will be prima facie presumed to have been made in compliance with requirements of notice of time, place, and terms of sale, unless recitals in the deed show otherwise (Code 1930, section 2167).
6. EVIDENCE.
A trustee's deed, made pursuant to trust deed, reciting that notice of sale was published "for the length of time as required by law," was sufficient without reciting that notice was published weekly, in absence of evidence that publication was not made weekly (Code 1930, section 2167).
7. MORTGAGES.
A trustee's sale of land for $125, under trust deed securing indebtedness of $685.84, would not be held inadequate in absence of evidence concerning quantity or quality of land, or its value when sold.
APPEAL from the circuit court of Lowndes county. HON. JOHN C. STENNIS, Judge.
Loving Loving, of Columbus, for appellants.
The lower court erred in refusing to transfer this case to the chancery court.
Hesdorffer v. Welsh, 127 Miss. 261, 90 So. 3; Foster v. Campbell, 145 Miss. 502, 113 So. 550.
The court made reversible error in permitting the appellee to introduce the substituted trustee's deed, for the reason that the substituted trustee's deed was invalid and void and conferred no title, unless the appointment of a substituted trustee was a legal appointment. For it to have been a legal appointment, it would have been necessary to introduce the original trust deed to show an indebtedness, and to show that in the trust deed, that a trustee was named, and that someone had the power and authority to appoint a trustee and the conditions under which the appointment could be made existed, and then after showing this, it would be necessary for the appellee to have shown the legal appointment, and that the sale was made and the deed executed after legal formalities had been properly carried out, and not having done this, the court erred in permitting this substituted trustee's deed to be introduced in evidence.
Whittington v. Clarke, 8 S. M. 485, 21 Am. Eng. Enc. Law 884; Sharpley v. Plant, 79 Miss. 175, 28 So. 799.
In the case at bar it will be observed that the only conditions under which the appointment of a substituted trustee could be made, was in case of death, resignation, removing or refusing to act, or becoming unable or unfit to act, and that the only party who could make the substitution was the third party, that is, the Bank of Brooksville, or its representatives or assigns, and as the sale is pretended to have been made under a deed to the Bank of Brooksville, and no assignment having been shown, the Bank of Brooksville or the third party, is the only one who could make the appointment.
The Bank of Brooksville being a corporation, it could only act through its board of directors, there being in this trust deed no authority under the conditions existing, authorizing any one except the corporation itself to make appointment of a substituted trustee.
Allen v. Alliance Trust Co., 84 Miss. 319, 36 So. 285; Perry, Trusts, sections 294-511; Clark v. Wilson, 53 Miss. 119 ; Bonner v. Lesslley, 61 Miss. 392; Hartley v. O'Brien, 70 Miss. 825, 13 So. 241; Scottish American Mortgage Co., Ltd. v. Butler, 99 Miss. 56, 54 So. 666.
If the deed of trust provides that the appointment must be under the name and seal of a corporation and the appointment shows no seal, the appointment is void.
Watson v. Perkins, 88 Miss. 64, 40 So. 643.
If a person not named in a deed of trust or distinctly described by his office or character, makes an appointment, or if the circumstances do not warrant the new appointment, the appointment is void.
Clark v. Wilson, 53 Miss. 119.
The appointment of a substituted trustee is void unless the terms of the power clearly and distinctly authorizes the appointment in the particular event which may have occurred.
McNeill v. Lee, 30 So. 821, 79 Miss. 455; Powers v. Interstate Trust Banking Co., 139 So. 318, 163 Miss. 30.
It has been held by this Honorable Court that where the conditions under which a substituted trustee could be appointed are only from neglect or refusal to carry out the trust, that should the trustee die, that this was not neglecting or refusing to carry out the terms of the trust, and that an appointment under such conditions would be void, and that the beneficiary in the trust deed could only resort to a court of chancery.
Guion v. Pickett, 42 Miss. 77.
A corporation, as in the instant case, is not clothed with all the power of an individual, and being creatures of the law, they must comply with the law, and can only act through its agents, and those selected by the stockholders.
Southern Electric Securities Co. v. State, 91 Miss. 195, 44 So. 785; 49 C.J. 1253, sec. 13; Littelle v. Creek Lbr. Co., 99 Miss. 241, 54 So. 841.
In conveying lands the conveyance must be in accordance with the law of rei situs and an instrument or a conveyance founded upon an appointment, not under seal, by a corporation would be void and would not carry the legal title with it, and not carrying the legal title, it would not be available in a suit of ejectment.
Gibbs v. McGuire, 70 Miss. 646, 12 So. 829; Brown v. British American Morg. Co., 86 Miss. 388, 38 So. 312.
It will be observed that this is a suit in equity and would not be available in ejectment and would only be an authority in the instant case as to how the appointment would be made; that if the appointment had been made under an appointment by the directors, then, as the law does not require a board of directors to have a seal, no seal would be necessary, but that if the appointment was made by a corporation, that is, by itself, a seal would be necessary.
Appellants must insist that the sale and the deed executed by the substituted trustee on the sale, is void, for the reason that the deed executed by the substituted trustee does not show that the property was advertised as required by law and by the terms of the trust deed.
We must insist that under an appointment of a substituted trustee and their action that everything must be shown to have been complied with strictly and we must insist that the advertisement as shown in the deed is not sufficient.
Jones v. Frank, 123 Miss. 280, 85 So. 310; Smith v. The Natchez Steamboat Co., 1 How. 479.
L.L. Martin, of Macon, for appellee.
The lower court made no error in refusing to transfer this case to the chancery court.
It was not necessary for the appointment of trustee by the Bank of Brooksville to have the seal of said bank affixed.
Brown v. Mortgage Co., 86 Miss. 397.
The deed executed by the substituted trustee on the sale is not void for the reason as contended by appellants that such deed does not show that the property was advertised as required by law and by the terms of the trust deed.
Jones v. Frank, 85 So. 310, 123 Miss. 280.
The appointment of T.J. Wilkins as substituted trustee in place of E.C. Halbert under the powers contained in the trust deed is legal and valid.
Meitzger v. Southern Bank, 98 Miss. 108, 54 So. 241.
An examination and analysis of this appointment of substituted trustee we believe will show plainly that G.T. Heard, president, was not acting in an individual capacity as an executive officer of the bank as contended by the learned counsel for appellants, but this instrument is actually signed Bank of Brooksville by G.T. Heard, president, and the instrument itself states that he is acting for and on behalf and as the act of the said Bank of Brooksville. The only way any corporation can act is through its officers or agents and the fact that the instrument is signed as it is should dispel any doubt as to the fact that the execution of the instrument was by the Bank of Brooksville, acting through its president, who was also, in addition, the bank manager, largest stockholder and a director of the Bank of Brooksville. The acknowledgment shows that he delivered the foregoing instrument as and for "the act and deed of the said Bank of Brooksville."
John F. Frierson, of Columbus, for appellee.
The real point and the only point in this case is in reference to the substitution of the trustee. The property was conveyed under the foreclosure by the deed of T.J. Wilkins, Jr., substituted trustee. The only point of attack was as to whether the substitution of Wilkins as trustee instead of E.C. Halbert, duly resigned, was in accordance with law and with the provisions of the deed of trust.
This substitution was made by the Bank of Brooksville. It was made by an executive officer of the Bank of Brooksville, to-wit, by G.T. Heard, president. It recites the resignation of Halbert, and then says: "I, as executive officer of the Bank of Brooksville, do by these presents for and on behalf and as the act of the Bank of Brooksville, do hereby appoint T.J. Wilkins, Jr., substituted trustee to act in the place and stead of E.C. Halbert, and hereby clothe the said substituted trustee with all the power and authority vested in the said deed of trust." That instrument is signed: "Bank of Brooksville, by G.T. Heard, president."
In the case of Brown v. British American Mortgage Co., 38 So. 312, the two points at issue were the same two points raised in reference to the substitution of trustee (1) that there was no corporate seal of the bank; (2) that it did not appear that the substitution of the trustee had been authorized by the bank. Judge Campbell, C.J., said: "The court erred in excluding the bill of sale, and the proposed testimony of the witness Gray, and in the general instruction for the plaintiff. It is a mistake to suppose that a corporation may not speak or act except by a seal or that the agency for it may not be procured as for a natural person, or that authority conferred by a corporation may not be implied as in other cases. Woodworth was the manager of the business of the corporation in this state, its sole representative here, and the person through whom the plaintiff had become the creditor of the corporation for the debt in suit; and, prima facie, he had authority to sell the property of the corporation to pay its debts, as he had authority to contract the debt with the plaintiffs."
In the case of Metzger v. Southern Bank, 54 So. 241, 244, on the point of agency, the court says: "One of the fundamental errors running through the instructions given for the appellee in the case, seems to have been the impression that a corporation was bound only by those acts of its agents which have been authorized in express terms by its board of directors. This, of course, is not the law. The corporation is as much bound as a natural person by duly implied authority of its agents, as well as by authority expressly given; and a corporation is governed, like an individual, by the same principles as to the ratification of the acts of its agents as to estoppel in pais. It is distinctly held in the case of Cary-Haliday v. Cain, 70 Miss. 628, 13 So. 239, that agency for a corporation may be proved, and authority to act for it implied, just as in the case of a natural person."
Allen Gravel Co. v. Nix, 93 So. 244; 14A C.J. 358.
A trustee is only an instrument or an agent for a purpose, and that purpose is to foreclose in case of breach of the contract. The foreclosure in chancery may be had without a trustee, or after a trustee is dead, a new one need not be appointed.
Waughop v. Bartlett, 43 N.E. 197.
We respectfully submit that Section 2120 and rules of law generally as to how a corporation may convey real estate, are not in any wise applicable as to how a corporation may substitute a trustee. All the cases cited on this point by counsel for appellants had under consideration the proposition of conveyance of lands by a corporation.
We respectfully submit that counsel for appellants is in error that the substitution of the trustee can only be done as in the conveyance of land. It is a different act. As stated in the opinion from the case of Brown v. British American Lbr. Co., 38 So. 312, the substitution of the trustee is only a power of appointment, and the requirements in the deed of trust were fully met.
This is an action in ejectment in which the appellee was the plaintiff in the court below. The appellee purchased land at a foreclosure sale by a substituted trustee in a deed of trust given the appellee thereon by J.W. Chandler, the then owner of the land, to secure an indebtedness of $685.84. A motion made by the appellee to transfer the case to the chancery court was overruled. The case was then tried, by agreement, without a jury.
As to the motion to transfer, it will be sufficient to say that the case is one of which the circuit court has jurisdiction, but aside from that the overruling of the motion is not reviewable here. Federal Compress Warehouse Co. v. Coleman, 143 Miss. 620, 109 So. 20.
The appellee's other complaints are:
1. The deed from the substituted trustee to the appellee should not have been admitted in evidence, for the reason that the appointment of the substituted trustee is void, because (1) not made by the appellee bank, but by its president; (2) did not have the appellee's seal affixed thereto; and (3) it does not appear that the land was advertised by the trustee for the time, and in the manner, required therefor.
2. The deed by the substituted trustee was made for a grossly inadequate consideration, and is therefore void.
The appointment of the substituted trustee was made by a recorded instrument reading as follows: "The trustee named in the trust deed from J.W. Chandler to the Bank of Brooksville, and duly recorded in Book III — page 474 Records of Lowndes county, Mississippi, having resigned and refused to act, I, as executive office of the Bank of Brooksville do by these presents for and on behalf and as the act of the said Bank of Brooksville, do hereby appoint T.J. Wilkins, Jr., Substituted Trustee to act in the place and stead of E.C. Halbert and hereby clothe the said substituted trustee with all the power and authority vested in the said trust deed. Witness the signature of the executive office of the said Bank under the corporate seal of said Bank, this June 30th, 1921. Bank of Brooksville, by G.T. Heard, President."
This instrument was valid, though not under seal, and made by the president of the bank; Brown v. British American Mortg. Co., 86 Miss. 388, 38 So. 312, without an order of the directors directing him to do so; Allen Gravel Co. v. Nix, 129 Miss. 809, 93 So. 244. Moreover, this act of the president has been ratified by the bank by its claiming the property through the instrument, c.f. Metzger v. Southern Bank, 98 Miss. 108, 54 So. 241.
The deed of trust requires the trustee therein to give "twenty-one days' notice of the time, place, and terms of sale," as required by law. Under section 2167, Code 1930, the sale of lands under a deed of trust must "be advertised for three consecutive weeks preceding such sale, in a newspaper published in the county, or, if none is so published, in some paper having a general circulation therein, and by posting one notice at the courthouse of the county where the land is situated, for said time." The substituted trustee's deed recites that he "did on the 8th day of December, 1926, give notice of the time, place and terms of sale by posting a notice thereof at the courthouse door of Lowndes county, Mississippi, and by advertising said sale in `The Daily Discoverer,' a newspaper published in the city of Columbus, Lowndes county, Mississippi, for the length of time as required by law." A deed made by a trustee will be presumed, prima facie, to have been made after compliance with its requirements of notice, of time, place, and terms of sale; Graham v. Fitts, 53 Miss. 307; Tyler v. Herring, 67 Miss. 169, 6 So. 840, 19 Am. St. Rep. 263; McCaughn v. Young, 85 Miss. 277, 37 So. 839, unless it appears from the recitals in the deed that he did not observe these requirements, Jones v. Frank, 123 Miss. 280, 85 So. 310. The objection to the recitals in this trustee's deed is that while it recites that the notice was published "for the length of time as required by law," it does not recite that it was published weekly, as required by law. This recital does not negative weekly publications, and in the absence of evidence that the publication was not so made, the presumption that it was prevails.
Assuming, but merely for the purpose of the argument, that a sale of land by a trustee in a deed of trust for a wholly inadequate consideration would avoid the sale in a court of law, no such fact appears here. The land was sold for $125, but no evidence was offered as to its value when sold, nor does its quantity or quality appear.
Affirmed.