Rosenbaum v. Meridian National Bank

Mississippi Supreme Court October 15, 1895

Rosenbaum v. Meridian National Bank, 73 Miss. 267 (Miss. 1895)

Cooper

Opinion of the Court

Cooper, C. J.,

delivered the opinion of the court.

We have searched in vain for evidence in this record on which the third instruction given for the plaintiff can rest.

Wright, the vice president of the bank, with whom the negotiations were had, distinctly states that there was no understanding prior to the release of the attachment he had sued out against Kahn as to how the proceeds of the policy assigned to the bank by Kahn should be applied (record, page 13), and there is nothing in the evidence pointed out by counsel for the bank, or which our own examination has disclosed, tending to show either that Kahn induced the officers to believe, or that they did believe or were justified in believing, that the proceeds of the policy were to be applied to the unsecured debts of Kahn.

The second instruction is erroneous, because it makes the secret purpose and understanding of the officers of the bank, which were not induced by or known to Kahn, a controlling factor in the controversy. Under this instruction the right of the defendant would be measured by the thought of another, and it was quaintly said by Brian, C. J., several hundred years ago, £ ‘ It is trite law that the thought of man is not triable, for even the devil does not know what the thought of man is. ’ ’ Pollock on Contracts, p. 2, note a.

It is a conceded fact that before the policy was realized on, Kahn instructed the bank to apply its proceeds, when collected, to the credit of the note sued on, and we find nothing in the record which excluded him from the right of having the payment applied according to his wishes. If it be accepted as true, as to which the evidence is not at all clear, that the bank had attached Kahn, and had caused garnishments to be served against insurance companies indebted to the defendant in sums *275aggregating the amount due the bank, and dismissed the garnishments as to some of these companies in consideration of the assignment of some of the policies in other companies, it would not follow necessarily, nor probably, that the agreement was made because the bank had the security of Rosenbaum & Sons for a part of the debt due by Kahn. It may be that the agreement was entered into because the bank knew it could not, or doubted its ability to, maintain its action.

Walker & Hall, for the appellee,

Filed a suggestion of error, in which they called attention to the fact that a judgment had been recovered against Mrs. Kahn on the note in controversy prior to the beginning of this suit, and that, on the trial, the action was dismissed as to her, and judgment recovered against D. Rosenbaum & Sons alone. In connection with this, it was further pointed out that, according to the testimony of J. H. Wright, one of that firm had sought Wright’s consent to an application of the proceeds of the transferred policies' to the $1,500 note, before the same had been transferred or the garnishment discharged, and that Wright gave his consent to the proposition. On this it was argued that, when Kahn and Rosenbaum afterwards came forward, and the transfer was made and the garnishment dismissed, without any mention of how the money was to be applied, there was at least an implied understanding that the money was to be appropriated to the unsecured notes,- and D. Rosenbaum & Sons were estopped to insist on any other application.

It was also contended that, the policies having been transferred as collateral security for the entire indebtedness, the bank acquired absolute dominion over the proceeds for such purpose, and, by its acceptance of the transfer, and having treated the policies as collateral to the unsecured notes, six of which were already past due, it had the right to apply the proceeds to that part of the indebtedness, in the absence of any direction to the contrary cotemporaneous with the transfer.

*275On the facts as disclosed by the present record, the defendants were entitled to a peremptory instruction.

Reversed cmd remanded.

*276Suggestion of error overruled.

Reference

Full Case Name: D. Rosenbaum v. Meridian National Bank
Status: Published
Syllabus: 1. Application op Payment. Absence of agreement. Debtor may direct application. Where a bank has procured an attachment, and garnisheed the proceeds of fire insurance policies of its debtor to enforce the payment of certain promissory notes of the latter, held by it, among which is a note upon which third persons are liable as sureties or co-makers, and the debtor transfers to the bank some of the policies, in consideration of its release of the garnishment as to the others, and as collateral security for his entire indebtedness, the debtor, in the absence of any agreement as to the manner in which the proceeds of the policies so transferred shall be applied, may, after such transfer and before collection by the bank, and although then insolvent, direct their application to the payment of the note on which such third persons are liable. 2. Same. Instructions. An instruction that is wholly unsupported by the evidence is misleading and erroneous, and one that makes the secret purpose of one party to a transaction, not induced by or made known to the other, a controlling factor in the controversy, is equally erroneous.