Opinion
12837
February 14, 1930.
Before DENNIS, J., Florence, December, 1926. Affirmed.
Action by the Farmers Merchants Bank of Johnsonville against J.T. Eaddy, W.O. Eaddy, and another, which by agreement was tried with an action by W.O. Eaddy, by his guardian ad litem and committee, J.T. Eaddy, against the Farmers Merchants Bank of Johnsonville and others. From the decree, W.O. Eaddy, by his guardian ad litem and committee, appeals.
The decree appealed from was as follows:
This litigation has its inception in a suit brought by the Farmers' Merchants' Bank of Johnsonville, S.C. through its liquidating agent, upon a note payable to its order, executed by J.T. Eaddy and endorsed by Hettie and W. O. Eaddy. The defendants, J.T. Eaddy and Hettie Eaddy, in that action defaulted, whereupon judgment was entered against them, but W.O. Eaddy procured the appointment of a guardian ad litem and answered the complaint, alleging mental incapacity on his part to endorse the said note, and that the said bank had full knowledge of his disability. By consent of counsel this case was referred to the Master in Equity to take the testimony and report his findings of fact and conclusions of law to the Court. This he did, together with the testimony taken before him. The Master made five findings of fact, all of which are that W.O. Eaddy at the time of the transaction involved in this case, was of such unsound mind as not to be able to understand or appreciate the nature of a business transaction and the liability incurred thereby, that the alleged endorsement was not his voluntary act, but was made under undue and improper influence by his brother, J.T. Eaddy; and that the bank was guilty of negligence in allowing J.T. Eaddy to obtain and return to it a note endorsed by his incompetent brother. In due time the plaintiff bank excepted to the Master's report.
In the meantime the same bank recovered other judgments against J.T. Eaddy, as did the Johnsonville Wholesale Grocery Company.
At about this time the Union Wholesale Lumber Company became interested in purchasing the timber on the tract of land described in the case styled second in the caption of this Decree, but was unwilling to accept a title thereto, in view of the litigation pending and the judgments appearing against J.T. Eaddy, the deed to W.O. Eaddy from J.T. Eaddy for the said land being unrecorded. Then an application was made to the probate Court and a committee and guardian ad litem appointed for W.O. Eaddy, who brought an action against the judgment creditors of J.T. Eaddy, asking that such judgments be declared non-effective as liens against the premises. The judgment creditors, Farmers Merchants Bank and Johnsonville Wholesale Grocery Company answered in this case, setting up their judgments and alleging the same to be liens on this real estate. The judgment creditor, Commercial Savings Bank of Lake City, defaulted. The Union Wholesale Lumber Company answered, offering Five Thousand Eight Hundred and no/100 ($5,800.00) Dollars for the timber on the land in question and asking that it be permitted to pay this sum into Court, pending the outcome of this litigation, and a deed for the timber made to it by the Court.
By consent of counsel this matter was referred to the Master in Equity, who took testimony and found the amount offered for the timber to be adequate and recommended a sale of the same and deposit in Court of an amount sufficient to satisfy the judgments, should it so be ordered in this action. The Master reiterated his finding of mental incapacity of W.O. Eaddy and recommended that the judgments mentioned above be adjudged to constitute no liens upon the land in question. To this report the Farmers Merchants Bank of Johnsonville and the Johnsonville Wholesale Grocery Company excepted.
By agreement of counsel the two cases were argued together before me, upon the exceptions in each case, with the understanding that one decree covering the issues in both cases may be made.
Upon the argument of this case, I made an order directing the master to convey the timber to the Union Wholesale Lumber Company, upon payment by it into his hands of the purchase price, and that the funds then be paid to the probate Judge to be held by him, pending a decision in these cases.
The issues before me, simply stated, are:
(1) Was W.O. Eaddy mentally incapacitated to endorse the note in question?
(2) Are the judgments of the Farmers Merchants Bank and Johnsonville Wholesale Grocery Company liens upon the land involved in the second action?
As to the first question, the Master has erred in finding W.O. Eaddy of unsound mind. The rule is that the burden is on the party alleging mental incompetency to prove the same by the preponderance of the evidence. I have most carefully reviewed the testimony and evidence submitted to me, and I cannot concur in the Master's finding. The testimony convinces me that W.O. Eaddy was of sufficient mental capacity to endorse the note in question and is, therefore, liable to the plaintiff.
It is, therefore, ordered that in the first case, the plaintiff, Farmers Merchants Bank of Johnsonville, have judgment against the defendant therein, W.O. Eaddy, for the sum of sixteen hundred forty and 24/100 ($1,640.24) dollars.
As to the second question, it appears that on January 30, 1895, J.T. Eaddy traded lands with W.O. Eaddy, each executing fee simple conveyances to the other. The deed from W.O. Eaddy to J.T. Eaddy was soon after recorded, but the conveyance from J.T. Eaddy to W.O. Eaddy has never been recorded and for the many years intervening the records have disclosed J.T. Eaddy to be the owner thereof. The statutes of this State require recording of conveyances and provide that an unrecorded deed shall not be effective against subsequent creditors, unless such creditors have actual notice of the instrument, and further, that no possession shall be notice of the instrument itself.
The evidence does not show actual notice of the deed to the judgment creditors. There is some inference in the testimony that these creditors knew W.O. Eaddy owned land, but there is no definite evidence that they were aware of the ownership by him of this particular tract, which, according to the testimony, lies at Hanna, some fifteen miles distant from the places of business of these judgment creditors. Further, J.T. Eaddy testified that he had all these years been in charge of the land and if possession under the statutes were notice of ownership, then these judgment creditors could only have inferred that J.T. Eaddy was the owner.
Having already held that W.O. Eaddy is of sufficient mental capacity, it follows that it was his duty to record his deed. His counsel, however, has urged that W.O. Eaddy is of insufficient mentality and, therefore, not required to record the instrument under which he is supposed to have acquired this land. It may not be amiss to say that, even had I held him to be incompetent, still I would hold the judgments in question to be liens upon this land, because during all these years the mother and brother of W.O. Eaddy were fully aware of the existence of the conveyance, and, according to the testimony, were caring for him and his property. Surely, then, it was their duty, as near relatives, to have properly recorded this instrument and, further, to have applied for the appointment of a committee, but no such application has ever been made. In the meantime W.O. Eaddy has been conveying land to others, entering into contracts for fertilizer, executing chattel mortgages for borrowed money and when a mortgage was foreclosed upon land in which he had an interest, no application was made for the appointment of a guardian ad litem.
If it be true that W.O. Eaddy is an incompetent, then his brother, J.T. Eaddy, stands in a bad light and the law certainly will not countenance such an injustice being done to those who have fairly and squarely dealt with these two brothers.
Having held that W.O. Eaddy is mentally sufficient to be liable upon his endorsement and that the judgments mentioned are liens upon the land involved, it follows that the judgment creditors, namely, Farmers Merchants Bank of Johnsonville and Johnsonville Wholesale Grocery Company, are entitled to payment out of the proceeds of the sale of timber, which is considerably more than sufficient to pay the same.
There is no dispute as to the priority of these judgments, nor the amounts due thereon. It is therefore ordered:
That J.R. Lawrence, Judge of Probate for Florence County, into whose hands the funds from sale of the timber has been deposited, pending the outcome of this action, do pay to the judgment creditors, Farmers Merchants Bank of Johnsonville, S.C. Johnsonville Grocery Company, or their attorneys, the amounts shown by the judgments of record in the office of the Clerk of Court for Florence County, to be due thereon, taking proper receipts therefor and causing the said judgments to be properly canceled.
It is further ordered that upon settlement of these judgments as aforesaid, the real estate involved in this action be, and the same is hereby, confirmed unto W.O. Eaddy and that any funds then remaining in the hands of the said probate Judge be held by him until the further order of this Court.
Messrs. Philip H. Arrowsmith, and C.C. Cannon, for appellant, cite: "Negligence": 135 S.C. 107; 29 Cyc., 417; 122 S.C. 203. Incompetent: 24 S.C. 272; 46 S.C. 188; 51 S.C. 405; Bail. Eq., 116; 3 Strob., 389; 8 Rich Eq., 286; 3 Brev., 448.
Mr. Preston B. Thames, for respondent, cites: Mentally sound: 144 S.E., 85; 142 S.C. 477; 150 S.C. 36; 135 S.C. 335; 3 Brev., 389; 8 Rich. Eq., 286. Recording: Secs. 5212, 5313, 2178, Code; 64 S.E., 423; 29 S.C. 147; 72 S.C. 235; 79 S.C. 286; 23 S.E., 549.
February 14, 1930. The opinion of the Court was delivered by
The action under the title first above stated was begun in the Court of Common Pleas for Florence County upon a note executed by J.T. Eaddy and indorsed by Hettie Eaddy and W.O. Eaddy. The defendants, J.T. Eaddy and Hettie Eaddy made default and judgment was entered against them; the defendant W.O. Eaddy, however, procured the appointment of a guardian ad litem, who as such answered the complaint, alleging the mental incapacity of W.O. Eaddy on his part to indorse the note, and that the bank had full knowledge of his disability.
By consent of counsel the case was referred to the master to take testimony and report his findings of fact and conclusions of law to the Court.
The master took the testimony and found that W.O. Eaddy, at the time of the transaction involved, was of such unsound mind as not to be able to understand or appreciate the nature of a business transaction and the liability incurred thereby; that the original indorsement was not his voluntary act, but was made upon undue and improper influence by his brother, J.T. Eaddy, and that the bank was guilty of negligence in allowing J.T. Eaddy to obtain and deliver to it a note signed by his incompetent brother.
In due time the plaintiff bank excepted to the master's report.
In the action under the title second above stated, W.O. Eaddy, by his committee and guardian ad litem, brought an action in the Court of Common Pleas for Florence County against the bank and other judgment creditors of J.T. Eaddy, asking that such judgments be declared of noneffect, as liens against the land then apparently standing in the name of J.T. Eaddy, upon the ground that it had been conveyed by J.T. Eaddy to W.O. Eaddy by a deed, which, however, had not been recorded. The judgment creditors answered the complaint setting up their judgments as liens upon the land.
Prior to the commencement of this last action, the Union Wholesale Lumber Company became interested in purchasing the timber on the land, but was unwilling to accept title thereto in view of the litigation then pending, and the judgments against J.T. Eaddy.
The Union Wholesale Lumber Company offered $5,800 for the timber upon the land in question, and asked that it be permitted to pay this sum into Court pending the outcome of this litigation, and that a deed for the timber be made to it by the Court.
By consent of counsel this second action was referred to the master to take the testimony and report his conclusions of law and fact to the Court.
He found that the amount offered for the timber was adequate, and recommended a sale of the same and a deposit in Court of an amount sufficient to satisfy the judgments, should it be so ordered in this action.
The master reiterated his finding of the mental incapacity of W.O. Eaddy, a matter that was really irrelevant to the conclusions in the second action. He recommended that the judgments above referred to, be adjudged to constitute no liens upon the land in question. To this report the judgment creditors excepted.
By agreement of counsel the two cases were argued together, before his Honor, Judge Dennis, upon the exceptions filed in both cases with the understanding that one decree covering the issues in both cases be made.
An order was made by his Honor, Judge Dennis, directing the master to convey the timber upon the land referred to, to the proposed purchaser, the Union Wholesale Lumber Company, upon the payment by it into the hands of the master of the purchase price above mentioned, and that the same be paid to the probate Judge to be held by him pending a decision in these cases.
His Honor, Judge Dennis, filed a decree in which he reversed the finding of the master, in the case first above mentioned, holding that the testimony satisfied him that W.O. Eaddy was of sufficient mental capacity to be bound by his indorsement upon the note and directing judgment against him thereupon for the sum of $1,640.24.
He also held that the judgments were liens prior in rank to the unrecorded deed from J.T. Eaddy to W.O. Eaddy.
From this decree, W.O. Eaddy by his guardian ad litem and committee has appealed to this Court.
The action first above stated was clearly an action at law and there being testimony which tended to establish the allegations of the complaint in that action, this Court is powerless to interfere with the conclusions of the circuit Judge. His judgment is equivalent to a verdict of a jury. It must therefore be concluded that the judgment of the Bank v. W.O. Eaddy must stand which solves the defense of the mental incapacity of W.O. Eaddy against him.
The question of the mental incapacity of W.O. Eaddy is not at all involved in the action second above stated, and the conclusion of the circuit Judge in reference thereto is satisfactory to the Court and must stand.
The judgment of this Court is that the judgment in the first above-stated case be affirmed, and that the decree as to the second above-stated action be affirmed also.
MR. CHIEF JUSTICE WATTS and MESSRS. JUSTICES COTHRAN, BLEASE and STABLER concur.