Citizens Nat. Bank v. Yazoo Grocery Co. , 113 Miss. 87 ( 1916 )

Holden, J.,

delivered the opinion of the court.

We think the decree of the chancellor is wrong in this that the appellant was denied the right to share pro rata with the other creditors of the Loch Lomond Mill & Lumber Company in the distribution of the proceeds of the insurance policy collected by appellant on the property destroyed by fire. We are of opinion that the assignment of the proceeds of the insurance policy by the debtor to appellant bank, without notice to his creditors within five days after such loss, and the assignment being made before the expiration of ten days after the fire and such notice, and the payment of the policy to the assignee bank before fifteen days elapsed after the fire was a flagrant violation of the statute. Chapter 100, section 2, p. 90, Acts 1908. We here set out the act:

‘ ‘ That in case of the destruction of a stock of merchandise by fire upon which there is insurance against such loss, the holder of such insurance policies shall within five days after such loss notify his creditors to whom he is indebted for merchandise, of his loss and the amount of insurance carried, and no such policy or policies of insurance shall be transferred or assigned for ten days after such notice, nor shall any such insurance be paid for fifteen days next after the occurrence of any such fire.

The violation of the law by the appellant in obtaining the proceeds of the policy and appropriating it to the' payment of its own claim and other debts due by the debtor, as directed by him, to the exclusion of the claims of ap-pellee creditors, renders appellant trustee of the funds for the benefit of all creditors. Ruling Case Law, vol. 12, pp. 529, 530; Fecheimer Keifer Co. v. Burton, 128 Tenn. 682, 164 S. W. 1179, 51 L. R. A. (N. S.) 343.

We think the statute was enacted for the purpose of preventing what happened in this case. It was evidently intended to protect all creditors, and if it does not apply in the case before us, it is indeed valueless for that purpose.

The decree of the chancellor will be reversed, and the case remanded, with direction that the lower court distribute the funds wo rata to all of the creditors whose claims are just, and appear as such, including those claim paid by appellant. The one hundred dollars attorneys’ fee to be first allowed out of the funds.

Reversed and remanded.