Groves v. Sentell

This was a bill of interpleader by George W. Sentell against Martha Groves, William J. Groves, and others. From the decree thereon, said Martha Groves and William J. Groves, and Thomas A. Pogue, administrator of Rosetta Rhea, deceased, appealed.

Fanny B. Lambeth and Dora Lambeth, as heirs of their deceased father, were the owners, in equal undivided proportions, of certain parcels of real estate situated in the parish of Avoyelles in Louisiana. Two of these parcels were known, respectively, as the 'Leinster Plantation' and the 'Lucky Hit Plantation.' Fanny B. Lambeth was married in April, 1865, to Christopher M. Randolph. The Leinster plantation was leased during 1865, 1866, and 1867 to John Rhea, who died in October, 1867, pending the lease.

On the 15th day of January, 1868, Fanny B. Lambeth, wife of Christopher M. Randolph (whom we shall hereafter refer to as Mrs. Randolph), and Miss Dora Lambeth appeared before Generes, a notary in the parish of Avoyelles, and acknowledged themselves indebted to Mrs. Rosetta Rhea, widow of John Rhea, of Madison county, Ind., in the sum of $8,970.12, which they declared was a balance due by them for the purchase price of certain movable property-mules, cane, implements, etc.-which belonged to Rhea at the time of his death, and which had been placed on the Leinster plantation by him, for use in its cultivation. The act declared that the movable property which they bought belonged to Mrs. Rhea, who was the widow of John Rhea, and as such was, under the laws of Indiana, where Rhea was domiciled, his sole heir, as he died intestate and left no ascendants or descendants. To evidence the indebtedness, Mrs. Randolph, authorized by her husband, and Miss Lambeth, drew their joint note, as follows:

'$8,970.12. Avoyelles, La.,

'Leinster Plantation, January 1st, 1868.

'Two years after date we promise to pay to the order of Mistress Rosetta Rhea, at the Citizens' Bank of Louisiana, in the city of New Orleans, eight thousand nine hundred and seventy and 12-100 dollars, for value received, with interest at the rate of eight per cent. per annum from date until paid. Not negotiable.

'Fanny B. Randolph.

'C. M. Randolph.

'Dora Lambeth.' Mrs. Rhea bound herself to obtain a judlcial recognition from the courts of Indiana of her right of inheritance to her husband's estate before enforcing payment of the note.

To secure this note, Mrs. Randolph and Miss Lambeth, by the same act, mortgaged-First, the Leinster plantation; second, a tract of land adjoining the Leinster plantation, known as the 'Faulkland Tract.' This act of mortgage was duly inscribed.

In September, 1868, Christopher M. Randolph, the husband of Fanny B. Lambeth, died. In December, 1868, Dora Lambeth married T. O. Stark. We refer to her hereafter as Mrs. Stark.

In December, 1868, 'In the Matter of the Estate of John Rhea, deceased, in the Court of Common Pleas of Jefferson County, Indiana,' Rosetta Rhea was recognized as his sole heir, and as such was decreed to be entitled to the promissory note set forth above, and all the rights securing the same.

On the 9th of January, 1873, Mrs. Randolph and Mrs. Stark made between them, by voluntary and private agreement, a partial partition of their father's estate. Mrs. Randolph took a portion of the Leinster plantation and other lands, and Mrs. Stark took the remaining portion of that plantation, also with other lands. Thus, by the terms of the partition, a portion of the land which had been mortgaged to secure the debt due to Mrs. Rhea was allotted to Mrs. Randolph and a portion to Mrs. Stark. Nothing was said in the partition as to the then existing mortgage in favor of Mrs. Rhea.

On the 23d of April, 1873, Mrs. Randolph and Mrs. Stark constituted T. O. Stark their 'true and lawful attorney in fact, for us and in our names, to settle and establish the payments made and amounts still due by them on a mortgage note of eight thousand nine hundred and seventy 12-100 dollars ($8,907.12), dated January 1, 1868, held by Mrs. Rosetta Rhea; to indorse on said note the amount paid thereon; to interrupt prescription; to consent to any subrogation in favor of any person or persons or commercial firm who may pay a portion of their said indebtedness on said note, and thus divide their said indebtedness, and to appear and sign, in their name, any agreement, document, or notarial act carrying out said subrogation, with any clauses or conditions which said attorney may, in his discretion, deem fit; to enter into said arrangements with said Mrs. Rhea, her agents or attorneys, to obtain an extension of time for the payment of the balance due on said promissory note, said extension of time to be granted and accepted upon such terms and conditions as to our said attorney may seem fit; to sign a notarial act for that purpose, and to acknowledge therein, in their name, that they recognize said Mrs. Rosetta Rhea as the rightful owner of said note, in her quality of sole heir of her deceased husband, the late John Rhea, of Madison county, Indiana, recognized as such by the court of Jefferson county, Indiana, in the matter of the estate of John Rhea, deceased, and alone entitled to claim payment of said note, with full power of substitution; and generally to do everything necessary to carry out the premises as fully as if done by us in person,-hereby ratifying all and whatsoever our said attorney may lawfully do or cause to be done by virtue hereof.'

On the 28th day of April, 1873, by act before Trist, a notary public in New Orleans, Stark, as agent of Mrs. Randolph and of his wife, and Victor Olivier, Esq., as agent of Mrs. Rhea, declared that the note which had been given Mrs. Rhea, and secured by the mortgage as aforesaid, had been reduced by partial payments, all arrears in interest having been paid, to the sum of $7,577.34; and the time for the payment of this balance was extended by Olivier, as agent for Mrs. Rhea, to the 1st day of March, 1874, interest thereon to be paid at the rate of 8 per cent. from the 28th of April, 1873. Both Stark and Olivier, on behalf of their respective principals, declared that, 'after a careful computation of interest and deduction of partial payments made at different times to Mrs. Rosetta Rhea by the drawers of said note,' the aforesaid sum was due.

In May, 1875, Mrs. Randolpy acknowledged herself indebted to Johnson & Goodrich, a commercial firm of the city of New Orleans, in the sum of $8,000, evidencing her debt by her notes, secured by a mortgage of the portion of the Leinster plantation which had been allotted to her in the partition, and also of her interest in an undivided tract of land which she had inherited from her father's estate, and which had not been included in the partition. In June, 1875, Johnson & Goodrich transferred this note to G. W. Sentell & Co., in liquidation.

In October, 1883, G. W. Senteel, and W. B. McLean, as executor of B. Conyers, a deceased partner of the former firm of G. W. Sentell & Co., both representing the interest of the firm in liquidation, sued in the district court of the parish of Avoyelles to foreclose the mortgage which the firm in liquidation had, as stated, acquired by subrogation from Johnson & Goodrich. On the 24th of December, 1883, judgment was rendered dered in favor of Sentell & Co. in liquidation, and against Mrs. Randolph, accompanied by a decree for a sale of the mortgaged property. Under this decree, on the 1st of March, 1884, the sheriff of the parish of Avoyelles sold the portion of the Leinster plantation which had been allotted to Mrs. Randolph, and the undivided interest in the tract of land, both of which had been included in her mortgage to Johnson & Goodrich. The property had been adjudicated to G. W. Senteel for $12,002. The mortgage in favor of Mrs. Rhea being on record, and ranking the Johnson & Goodrich mortgage, Sentell, the purchaser, retained in his hands from the amount of his bid, to pay the same:

For principal.................... $4,873 00

For interest up to date of sale... 1,164 12

--

Total   $6,037 12

The sum thus retained by Sentell to pay the principal of the note was the actual amount due. At the time of the sale the principal had been reduced from $7,577.34, as stated in the notarial act of 1873, to $4,873, as mentioned in a writing on the reverse of the note. The payments which brought about this reduction were numerous, and made at brief intervals. Some of them were evidenced by notarial acknowledgments between Stark and Olivier, agents; some merely by indorsements upon the back of the note. Some had been made by Sentell, who took subrogations; these last, however, being made subordinate in rank of mortgage to the amounts due on the original note.

All of these payments were made on the entire note, without any indication that they were imputed particularly to any portion of the debt due by either of the parties. Hence all the payments were credited at the times they were made on the entire debt. The last credit on the principal of the note is as follows:

'The principal of the within note has been reduced by payment on the same to $4,873.00, with interest thereon to March 5, 1881, to which date the payment of said sum has been postponed.

'New Orleans, April 28, 1880.

'Victor Olivier, Jr.,

'Agent for Mrs. Rosetta Rhea.

'T. O. Stark,

'Agent for Mrs. Randolph and Mrs. Stark.'

There are two additional credits of payments of interest,-the first up to March, 1882, and the second up to March 5, 1884; one of these interest credits being accompanied by a repetition of the statement that the principal of the note was, at the time, $4,873.

In April, 1886, Martha Groves, of Indiana, and William J. Groves, of Ohio, sister and brother of Mrs. Rosetta Rhea, were duly recognized by the circuit court of Jefferson county, Ind., as her sole heirs and distributees, and, as such, entited to all the rights of Rosetta Rhea in and to the note to which we have referred.

In April, 1886, Martha Groves and William J. Groves, and Pogue, administrator of Rhea, sued, in the United States circuit court, G. W. Sentell for $4,873, with interest thereon at 8 per cent. from March 5, 1884, until paid. The object of this suit was to compel Sentell to pay the balance thus stated to be due on the note out of the sum which he had retained. Sentell thereupon filed in the circuit court of the United States a bill of interpleader, in which he averred the fact of his purchase, and his retaining the amount in his hands, and that there were conflicting claims to the fund. He alleged-First, that he had been notified by Mrs. Randolph not to pay over the amount apparently remaining due on the note, as the same was not due; second, that he had also been notified by W. B. McLean, as liquidator of G. W. Sentell & Co., and also as executor of B. Conyers, a deceased member of the firm of G. W. Sentell & Co., that such firm in liquidation was entitled to the fund retained. He averred that he had always been ready and willing to pay over the fund, and prayed that the defendants might be decreed to interplead and adjust between themselves their rights and interests in the money due and payable under the mortgage. He made defendants to the bill Mrs. Martha Groves, William J. Groves, Fanny B. Randolph, and William B. McLean, as liquidator of the firm of G. W. Sentell & Co., and as testamentary executor of B. Conyers. Upon this bill an injunction was issued, restraining Martha Groves and William J. Groves from prosecuting their suit. Sentell deposited in the registry of the court $5,743.46, to abide the result of the litigation. Mrs. Randolph answered, and charged the nullity of the note on the grounds (1) that it had been given for a debt of her husband, for which she was incompetent to bind herself; and (2) that the note, if it was originally binding (which she denied), represented nothing due by her, since it had been extinguished, so far as she was concerned, by payment. She charged that this extinction would result from the proper credit to her of the amounts which had been paid, and that many payments had been erroneously credited to the note generally which should have been imputed to her portion of the debt. McLean, liquidator and executor, practically joined in the claim set up by Mrs. Randolph. He charged the nullity of the note because it was given by Mrs. Randolph for a debt of her husband. He further alleged that, as the second mortgage creditor on the property sold, the firm of G. W. Sentell & Co. in liquidation was entitled to the entire balance of the fund, to be applied to the payment of their junior mortgage. He in addition, averred that, if any portion of the note was payable out of the proceeds of the property allotted in the partition to Mrs. Randolph, the holders of the note could not exercise their right against such proceeds without previously exhausting their remedy against that portion of the mortgaged property which had been allotted to Mrs. Stark; that, as junior mortgage creditor on the portion of the property allotted to Mrs. Randolph, he had a right to compel the creditor to exhaust Mrs. Stark's property before proceeding against the proceeds of Mrs. Randolph's property; and, finally, that the holder of the note was not entitled to be paid the amount due on Mrs. Randolph's half of the debt from the proceeds of her property, unless the holder gave to the second mortgage creditor a subrogation to the rights of the holder against Mrs. Stark's share of the property, which subrogation, he averred, the note holder was unable to give because the proportion of the debt due by Mrs. Stark had become prescribed. During the course of the proceedings below, Mrs. Stark was, by order of the court, made a party defendant to the bill. She demurred on the ground that she was not a necessary party to the cause.

On these issues the case was tried. The court below held that Mrs. Randolph, having frequently ratified the debt after the death of her husband, was estopped from claiming that she was not bound therefor, and hence rejected the claim of Mrs. Randolph and Sentell & Co. in liquidation as to the unllity of the note. After reference to a master, to examine and report as to the payments, it appeared that the full amount of the payments had been applied, and that the application of them all did not reduce the amount due on the note below the sum of $4,873, with interest from March 5, 1884, as stated in the last credit on the note. The court, however, concluded that, as many of the payments had been in fact made from Mrs. Randolph's individual funds, they should have been imputed to her share of the obligation, instead of to the debt as a whole. It held that the correction of the imputations of payments in accordance with this finding reduced the sum remaining due by Mrs. Randolph, on her share of the note, to $601, and this amount it decreed to be paid from the proceeds deposited by Sentell. Deducting this $601 from the total amount due on the note-$4,873-left $4,273 due by Mrs. Stark, as her portion of the original obligation. Treating this sum due by Mrs. Stark as not secured by mortgage on that portion of the property which had been allotted to Mrs. Randolph by the partition, the court decreed the payment of the entire remaining proceeds to Sentell & Co. in liquidation, as the junior mortgage creditor. It allowed to the solicitor of the complainant a fee of $250, to be paid from the fund deposited. It dismissed the bill as to Mrs. Stark on the ground that, as she had been made a party solely for the purpose of charging her with notice of the accounting and distribution, and this purpose had been subserved by her appearance, her demurrer must be sustained.

From the decree of the lower court Martha Groves, William J. Groves, and Pogue, administrator of Rosetta Rhea, appealed, citing on the appeal G. W. Sentell, Mrs. Fanny B. Randolph, Mrs. Dora Stark, and W. B. McLean, executor of Benjamin Conyers, deceased, and liquidator of the firm of G. W. Sentell & Co.

Chas. W. Hornor, George A. King, and W. S. Benedict, for appellants.

E. M. Hudson, E. T. Merrick, Sr., E. H. Farrar, B. F. Jonas, and E. B. Kruttschnitt, for appellees.

[Argument of Counsel from pages 473-475 intentionally omitted]

Mr. Justice WHITE, after stating the case, delivered the opinion of the court.