Opinion
No. 32663.
March 29, 1937.
1. CHATTEL MORTGAGES.
Where Federal Land Bank, as condition for making loan to debtor with which to pay existing indebtedness, required creditor to agree to scaling down of debt, chattel mortgage taken by creditor for difference between original indebtedness and amount received in satisfaction thereof was void as against public policy.
2. ACCORD AND SATISFACTION.
Party may validly accept less than amount due in full satisfaction of debt.
3. CONTRACTS.
Contract made in violation of public policy is void.
APPEAL from circuit court of Jasper county. HON. EDGAR M. LANE, Judge.
O.M. Oates and G.N. Brown, both of Bay Springs, for appellant.
The verdict of the jury was absolutely contrary to the law and the evidence in this case.
It is the law that where a creditor accepts an amount from a third party for his debtor in a sum less than the debt and gives a receipt in full it is accord and satisfaction of the full payment of indebtedness.
Y. M.V.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669; May Bros. v. Doggett, 124 So. 476, 155 Miss. 849; Phillips v. St. Paul Fire Marine Ins. Co., 125 So. 705, 156 Miss. 41; Cooper v. Ry. Co., 35 So. 162, 82 Miss. 634; Clayton v. Clarke, 21 So. 566, 74 Miss. 499; Darrill v. Dodds, 30 So. 4, 78 Miss. 912; A. V.R. Co. v. Kropp, 129 Miss. 616, 92 So. 691.
In the case at bar, a loan was consummated by appellant at the request and approval of appellee from the land bank commissioner, a third party, and receipts were issued to third party in full payment and with a promise not to attempt to collect any balance under the old debt. The rule is in a case of this kind that accord and satisfaction is available as a defense for without this debtor probably would not have been able to pay any portion of the debt.
1 R.C.L., page 193, pars. 28, 29.
It is the prevailing rule of law that it favors the debtor; and that where a receipt is definitely descriptive of what is intended to be affected by it, it cannot be assailed by parol testimony except for fraud.
21 R.C.L., pages 122-123, par. 136.
Appellant further contends that the court erred in not sustaining his motion for new trial.
Welch Cooper, of Laurel, and J.A. McFarland, of Bay Springs, for appellee.
Appellant says that the deed of trust was given for money which Miss Russell was to advance but which was not advanced. The jury did not believe this. They believed that since the attorney for the Federal Land Bank had represented that the bank was not concerned about anything except the land and appellant could go ahead and give a valid deed of trust on the mule and this was agreed to by all parties, then there was a valid obligation.
It is very true that the cases cited by appellant correctly represent the present state of the law in Mississippi. But we are not dealing with such a situation. Miss Elizabeth Russell refused to scale her debt and would not sign any of the documents unless the appellant agreed to give this deed of trust on the mule. The Federal Land Bank's own attorney represented that the release referred to the lands and not to personal property. If this be true, it would be thoroughly inequitable and unjust to permit the appellant to utilize the release to defeat a claim when appellee's execution of that release was induced by the appellant's promise to execute the instrument whose property is here involved.
Appellee, J.A. McFarland, substituted trustee in a trust deed in favor of Elizabeth Russell, instituted this suit in a justice of the peace court which rendered a judgment in favor of appellee from which an appeal was taken to the circuit court resulting in a jury verdict for appellee, hence this appeal by appellant. This is a replevin suit for one mule alleged to be of the value of $75.
It appears from the record that S.L. Jones, the appellant, executed a trust deed to Elizabeth Russell to secure a note due by him to her for, approximately, $600, conveying thereby real estate and personal property. In the early part of 1934, Elizabeth Russell needed the money due her under said deed of trust, and an arrangement was made with the Federal Land Bank for a loan to S.L. Jones amounting to $453.10. Elizabeth Russell signed an agreement to accept this amount in satisfaction of her debt and deed of trust, said agreement, among other things, reciting that: "Whereas, the Federal Land Bank of New Orleans and or the Land Bank Commissioner, has loaned to debtor the moneys with which to pay said indebtedness upon the condition and agreement that said indebtedness would be reduced and scaled down, and that the undersigned would accept from debtor a sum less than the amount due in full payment and satisfaction of said indebtedness. Now, therefore, the undersigned, for and in consideration of the above, and in further consideration of the sum of $453.10 in hand paid by debtor, receipt of which is acknowledged, does hereby accept said sum of $453.10 in full and final payment and satisfaction of said indebtedness and or any other indebtedness owed by debt or to the undersigned. Undersigned further agrees not to collect, attempt to collect, or revive in any way, any further part of said indebtedness, nor take any new security therefor. And undersigned states that she has no understanding or arrangement with debtor whereby, when the loan or loans hereinabove referred to are closed, any consideration will be given him by debt or for the amount which the debt has been scaled down, or any part thereof."
According to S.L. Jones, appellant, the deed of trust in controversy in which the mule was conveyed was given to secure "furnish" for the year 1934, and that such "furnish" was never given to him by Elizabeth Russell.
For the plaintiff, appellee here, it was contended that the attorney for the Federal Land Bank had stated, when the loan was procured, that the bank did not care anything about the personal property and that it would be all right to release the land and take security on the personal property for the difference.
We are of the opinion that, accepting the contention of the appellee, as the court below did, as being the correct understanding on which the deed of trust was executed, nevertheless it is in violation of public policy and is void.
The Federal Land Bank had the right to scale down the debt and to obtain an agreement from Elizabeth Russell as a condition for making the loan to S.L. Jones, the appellant. The policy of the government, in making such loans, was to assist debtors unable to meet their obligations. This policy is in furtherance of sound public policy to relieve the financial condition of the country, and a plan by which the deed of trust here involved was taken was a fraud both upon the debtor and upon the Federal Land Bank.
It has long been the law in this state that a party may validly accept less than the amount due in full satisfaction of a debt. Clayton v. Clark, 74 Miss. 499, 21 So. 565, 22 So. 189, 37 L.R.A. 771, 60 Am. St. Rep. 521; Darrill v. Dodds, 78 Miss. 912, 30 So. 4; Cooper et al. v. Yazoo M.V.R. Co., 82 Miss. 634, 35 So. 162; Greener et al. v. Cain et al., 137 Miss. 33, 101 So. 859; May Bros. v. Doggett, 155 Miss. 849, 124 So. 476; Phillips v. St. Paul Fire Marine Ins. Co., 156 Miss. 41, 125 So. 705, and Yazoo M.V.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669. Contracts made in violations of public policy are void. Whittington v. Cottam Co., 158 Miss. 847, 130 So. 745, 76 A.L.R. 332. See also, other authorities cited in Mississippi Digest, title, Contracts, Key Nos. 136, 137.
From what we have said, it follows that the court below erred in permitting the plaintiff to recover, and the judgment, therefore, will be reversed and judgment entered here for the return of the property to the appellant, S.L. Jones, and the case will be remanded to the circuit court for the assessment of damages on account of the unlawful issuance of the replevin suit.
Reversed and remanded.