Gross v. Oatis , 74 Miss. 357 ( 1896 )

Woods, J.,

delivered the opinion of the court.

If the evidence offered to support the view of Oatis, as to the understanding and agreement of Gross and himself, in the making of the transfer to him by Gross of the note of Woodman & Bro., and the trust deed given to secure its payment, be correct, the bill of complaint exhibited herein by Gross is without any merit, and should have been dismissed outright. And if the theory of Oatis’ answer is shown to be false, and the evidence offered to maintain it appears unworthy of credence, still the bill should have been dismissed, unless there was shown bad faith on the part of the J ohnsons in the transaction, whereby they became holders of the paper above referred to.

The evidence discloses that on .the same day in which Oatis executed his note and trust deed in favor of Gross, and on which Gross bases his claim in this suit, the latter transferred by indorsement, in writing, both the note and trust deed, theretofore made by Woodman & Bro. in his favor, to Oatis, and by such indorsement clothed Oatis with all the £ £ rights and privileges, and such title as vested in ” him (Gross), to the property described in the trust deed. Gross, by this act, held Oatis out to the world as the absolute owner of the note and trust deed, with the right to deal with the same according to his own pleasure, and thereby, even if we accept his theory of the character of the understanding and agreement between himself and Oatis and Woodman, which resulted in the transfer of the Woodman & Bro. note and trust deed to Oatis, put Oatis in a position, not open to challenge, to impose upon innocent third parties, in any sale he might make of the paper. Gross must pay the penalty of his own folly, and bear the loss of bis security rather than the J ohnsons, provided their conduct in the purchase of the paper was characterized by good faith. We have been unable to find, in the record before us, any satisfactory evidence of bad faith on the part of the Johnsons; they appear to have been purchasers from Oatis under the authority to sell and transfer the paper conferred by Gross, and appearing on the paper itself, and there were no circumstances attendant upon the purchase by them which may be held sufficient to rouse any suspicion that Oatis had no authority to do what he proposed with the Johnsons to do, and which Gross’ written indorsement on the paper empowered him distinctly to do.

The question in this case is, were the J ohnsons bona fide holders of the paper indorsed by Gross to Oatis, and by Oatis indorsed to them % If they were not — if fraud tainted their purchase — they had no title to the paper. If they were, they should be made secure, not in the amount of money laid out by them in purchasing the paper, but in the fruits of the property to which they acquired title. The learned court below only erred in not denying the appellant any relief. It is true, Gross, under his subsequent or intervening trust deed from Oatis, had an equity in the cattle embraced in the trust deed, but, on the facts disclosed, that equity was utterly worthless, and any attempt to work it out by the court was idle, because the debt secured by the trust deed assigned by Oatis to the Johnsons was largely in excess of the value of the cattle, as appears conclusively from an inspection of the transcript. The Johnsons had also bought the equity of redemption of the Woodmans, and having a debt confessedly larger than the value of the property intended to secure it, Gross was left remediless, as to the cattle, under his deed of trust from Oatis.

The decree on direct appeal is affirmed, and reversed on cross appeal, and appellcmfs bill is dismissed. Let the proper order be here entered.