text:
    FIRST AMERICAN NATIONAL BANK OF IUKA, Mississippi v. ALCORN, INC., et al.
    No. 50162.
    Supreme Court of Mississippi.
    July 12, 1978.
    Rehearing Denied Aug. 9, 1978.

      Wynn & Bogen, Douglas C. Wynn, Green-ville, for appellant.
    Price & Krohn, James E. Price, Sharp & Fisher, Jimmy B. Fisher, Smith, Downs, Ross, Trapp & Coleman, Donald Ray Downs, Corinth, Mitchell, McNutt, Bush, Lagrone & Sams, Guy Mitchell, Jr., Tupelo, for appellees.
    Before PATTERSON, BROOM and BOWLING, JJ.
   PATTERSON, Chief Justice, for the Court:

This is a complex case in which First American National Bank of Iuka, Mississippi, appeals from a decree of the Chancery Court of Alcorn County, naming as appel-lees Alcorn, Inc., Holiday Inns, Inc. (hereinafter Holiday), Westinghouse Credit Corporation (hereinafter Westinghouse), Sam Spain, Dr. James P. McLemore, Jr., and Homer C. Freeman. Alcorn, Inc., Spain and Freeman cross appeal.

Spain and McLemore, residents of Jackson, Tennessee, and Freeman of Alcorn County, Mississippi (hereinafter referred to as the Alcorn Group), entered a business venture to construct a Ramada Inn in Corinth, Mississippi. They organized a Mississippi corporation, Alcorn, Inc., to own and operate the inn. Alcorn, Inc., entered an agreement with Westinghouse for $775,000 to build the motel. This was a five-year short term construction financing contract in which Westinghouse acquired a first deed of trust of February 15, 1973, from this corporation on the motel site as well as a security interest in any after-acquired property.

In 1972 Spain on behalf of Alcorn, Inc., approached the bank for a $75,000 loan which was denied because it exceeded the bank’s loan limits and was insufficiently secured. In April 1973, Clint Reed, a former resident of Jackson, Tennessee, employed by the bank in December, 1972, as vice-president and manager of the Corinth branch, loaned Spain, Freeman and McLe-more $75,000 which was secured by a deed of trust on .33 acre of land adjacent to the construction site of Ramada Inn. At the time Vice-President Reed had authority to authorize secured loans not in excess of $25,000 and the bank’s loan limit was $72,-684. In May, 1973, the bank, pursuant to Reed’s authorization, loaned Spain $25,000 secured only by a $12,500 certificate of deposit. The aggregate of these two loans, $100,000, was used to purchase certificates of deposit which were pledged to secure Westinghouse in its construction loan.

In December, 1973, Alcorn, Inc., entered into an agreement with Inn Keepers Supply Company, a division of Holiday, for the purchase of furniture, furnishings and equipment for the motel at a cost of $97,-635.69. A deposit of $1,000 was paid, leaving a balance of $24,158.93 due before the date of shipment, and it was agreed that a commitment letter would be obtained from the bank for the remaining $72,476.76. Although Spain had been negotiating with the bank for another loan, apparently unsuccessfully, to pay for the furniture and furnishings, nevertheless, without prior bank approval, Reed wrote a letter to Holiday on January 3,1974, signed by one of his subordinates, B. E. Tidwell, Vice-president of the Corinth branch, in which the bank agreed to pay $72,476.76 after the purchaser had approved the invoice and presented it to the bank for payment.

In the spring of 1974, McLemore and Spain purchased certificates of deposit to secure the proposed loan of $90,000 ostensibly to cover the purchase of furniture and equipment with .overruns. According to Spain, Reed had agreed the loan would be made so that the letter of credit could be paid. Spain also testified that he had several conferences with Tidwell regarding the proposed loan in May or June of 1974.

The notes of Spain, Freeman and McLe-more for $100,000 were not paid when they became due in 1974. In June after Reed left the bank’s employment, Spain’s note was renewed and the Alcorn Group’s $75,-000 note was divided into two separate notes, bringing it within loan limits as well as permitting a finance charge. A note for $25,603.50 was executed by McLemore, Spain and Freeman and a note for $52,270 was executed by Alcorn, Inc., being signed by the same individuals in their corporate capacities.

For these loans the bank required greater security and Spain, McLemore and Freeman conveyed the .33 acre, security for the original loan of $75,000, to Alcorn, Inc., which in turn executed a deed of trust on it to secure the $52,270 loan. As additional security the Alcorn Group, together with Mary H. McLemore, wife of Dr. McLemore, and Inez H. Freeman, wife of Homer Freeman, executed an unlimited guaranty agreement wherein each jointly and severally guaranteed all previous indebtednesses to the bank.

The bank did not learn of the letter of credit to Holiday until June 1974 nor receive a copy of it until July 12, 1974, when it refused to acknowledge any obligation under it. After the bank refused to pay Holiday, Claude L. Stiner, contract collection manager for Holiday, agreed to a ninety-day extension of the indebtedness with Alcorn, Inc., for it to secure finances to pay for the merchandise. Holiday agreed on the condition that (1) the bank agree to the extension and furnish Holiday a supplemental letter to that effect, (2) that the members of the Alcorn Group individually execute a promissory note for the full amount due, including overages and interest, and (3) that Alcorn, Inc., give Holiday a security interest in the merchandise. Although the bank agreed to grant such letter, it never did so. However, the Alcorn Group, in their corporate and personal capacities, executed a promissory note to Holiday in the principal amount of $83,970.25. Additionally, Alcorn, Inc., executed a conditional sales contract and Spain executed a financing statement.

Dr. Kelly S. Segars, President of the bank, testified that he had no knowledge of the letter of credit or the $90,000 loan commitment until after Reed departed the bank in May or June of 1974, nor were either discussed at any bank board meetings through June, 1974. J. R. Long, Chairman of the Board and Executive Vice-President of the bank, testified he was not aware of the letter of credit until after July 12,1974, and that the $90,000 loan commitment was not approved by the directors or the loan committee, and moreover, was never discussed with him by Reed.

Holiday completed its delivery of furniture and furnishings and presented its invoice of $80,354.31, then due, representing the amount of the bank’s letter, the overages resulting from change orders and credit for merchandise which had been returned. The invoice was approved by Spain for Al-corn, Inc., and payment was requested of the bank in accord with its letter of January 3, 1974, but payment was refused. In December, 1974, Holiday sued the bank, Spain, McLemore and Freeman in the Circuit Court of Alcorn County to collect under the letter. The suit was transferred to the Chancery Court of Alcorn County and consolidated with another suit between the bank, Alcorn, Inc., Spain, the Freemans, the McLemores, and Westinghouse. Ultimately, the bank became the complainant and the remaining parties became the defendants.

The bank’s bill of complaint was against Alcorn, Inc., Spain, the McLemores and the ' Freemans to recover on the notes and for damages resulting from an alleged conspiracy with Reed; against Holiday to declare the letter of credit unenforceable and in the alternative, if judgment was adverse to the bank, to stay execution until Holiday had made resort to the securities of Alcorn, Inc., Spain, McLemore and Freeman under the doctrine of “marshaling of assets”; and, in the further alternative, against Alcorn, Inc., and Westinghouse on the theory that if it must pay Holiday, then the bank should have a judgment against Alcorn, Inc., with a lien upon the furniture and furnishings with priority over Westinghouse.

Holiday filed a cross bill against the bank for the amount of the letter of credit and against Alcorn, Inc., Spain, McLemore and Freeman to recover the sum of $83,970.25, the amount of the note executed by them on July 5, 1974, plus interest. Alcorn, Inc., filed a cross bill against the bank for breach of contract in failing to honor its loan agreement and failure to pay Holiday pursuant to the letter of credit as well as for damages for libel and slander. The Free-mans and Spain filed separate cross bills against the bank for its alleged failure to honor its loan commitment and for damages for libel and slander.

After a vacation hearing, the chancellor dismissed the McLemores for lack of jurisdiction and the cause proceeded to trial with no judgment being taken against Inez H. Freeman. The chancellor’s decree otherwise held:

1. Westinghouse had a first, prior and paramount lien on the real property, furniture, fixtures, equipment and other personal property described in its security instrument.

2. Holiday was permitted to recover $72,476.76 from the bank under the letter of credit, plus interest from March 13, 1974.

3. The bank was permitted recovery as follows:

(a) From Alcorn, Inc., $72,476.76, the amount of the letter of credit, plus interest from March 13, 1974.
(b) From Spain, $15,526.37, plus interest, the amount due on the May 3, 1973, note in the original amount of $25,000.
(c) From Alcorn, Inc., Spain and Freeman, jointly and severally, $67,721.16, plus interest, the amount due on the Al-corn, Inc., note of June 24, 1974, in the original principal of $52,270.
(d) From Spain and Freeman, jointly and severally, $32,398.88, plus interest, the amount due on the note of Spain, Freeman and McLemore executed on June 24, 1974, in the original sum of $25,603.50.

4. Holiday was granted recovery against Alcorn, Inc., Spain and Freeman, jointly and severally, for $83,970.25, plus interest on the promissory note of July 5,1974, with any amount paid to Holiday by the bank in satisfaction of the judgment rendered on the letter of credit in Paragraph No. 2 above to be credited to the payment of this judgment.

5. The bank was authorized to foreclose on all deeds of trust and pledges of stock executed to it by Alcorn, Inc., Spain, McLe-more and Freeman and to apply such proceeds to its judgment.

6. Other affirmative relief sought by the complainant or cross complainants was denied and dismissed with prejudice.

The assignments of error argued on appeal and cross appeal will be discussed separately.

I.

The appellant bank contends the chancellor erred in granting judgment for Holiday under the letter of January 3, 1974. The questioned letter was addressed to Inn Keepers Supply Company and signed by Bill Tidwell, vice-president, and reads in part as follows:

Our bank agrees to pay for- the furnishings and equipment being purchased by Alcorn, Inc., from Inn Keepers Supply Company, a Division of Holiday Inns, Inc., in the amount of $72,476.76.
These funds will be disbursed to Inn Keepers Supply Company, a Division of Holiday Inns, Inc. upon presentation of the invoice covering the merchandise to the purchaser who will approve for payment and present to our bank.

The bank argues this document is not a letter of credit because it is not a direct promise to pay, does not conspicuously state it is a letter of credit nor is it entitled such so as to accord with Mississippi Code Annotated section 75-5-102(l)(c) (1972), nor does it require a documentary draft as specified by Section 75-5-102(l)(a).

We think the writing constitutes a letter of credit. Section 75-5-103(l)(a), in part, provides:

“Credit” or “letter of credit” means an engagement by a bank or other person made at the request of a customer and of a kind within the scope of this chapter . [§ 75-5-102] that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit.

It is true the document does not specifically state that it is a letter of credit, but such statement is not absolutely essential under Section 75-5-102(1), which provides:

(1) This chapter applies
(a) to a credit issued by a bank if the credit requires a documentary draft or a documentary demand for payment; and
(b) to a credit issued by a person other than a bank if the credit requires that the draft or demand for payment be accompanied by a document of title; and
(c) to a credit issued by a bank or other person if the credit is not within subpara-graphs (a) or (b) but conspicuously states that it is a letter of credit or is conspicuously so entitled.

The bank issued the letter which by its terms requires the invoice, after purchaser approval, to be presented to the bank. The instrument clearly lies within the definition for documentary drafts under Mississippi Code Annotated section 75-5-103(l)(b) (1972) as follows:

A “documentary draft” or a “documentary demand for payment” is one honor of which is conditioned upon the presentation of a document or documents. “Document” means any paper including document of title, security, invoice, certificate, notice of default and the like. (Emphasis added.)

Further, Section 75-5-104(1) provides in part:

Except as otherwise provided in . [§ 75-5-102(l)(c)] on scope, no particular form of phrasing is required for a credit. A credit must be in writing and signed by the issuer and a confirmation must be in writing and signed by the confirming bank. .

Thus, we conclude the document was' a letter of credit.

The bank, however, additionally contends that since its files contain no such invoice, it is not obligated to pay. We are of the opinion there was sufficient evidence of the invoice to establish it even though the bank was unable to produce it. Tidwell testified that he received a copy of the approved invoice requesting payment and delivered it to Reed. Spain also testified that, as a purchaser, he approved the invoice and requested payment under the letter of credit, sending Reed an Alcorn, Inc., check in the amount of the credit preferring payment to be made by Alcorn, Inc., rather than with a check of the bank. Bank board chairman Long testified that Tidwell or Reed had received invoices from Holiday addressed to them as bank officials and stated that as far as the bank was concerned it had been requested to pay under the letter.

The bank next contends that by accepting the note of the Alcorn Group and the conditional sales contract from Alcorn, Inc., Holiday is estopped from seeking relief against it under the letter of credit, or stated differently, that Holiday is estopped because there was a novation of the contract.

A novation involving substitution of debtors is a contract that discharges at once an existing obligation and creates a new contractual obligation by including as the new obligor a party who was not previously obligated. Mississippi Motor Finance, Inc. v. Enis, 254 Miss. 625, 181 So.2d 903 (1966). The rule is also established that the release of one debtor and the substitution of another may be implied from the circumstances absent an express substitution. American Blakeslee Mfg. Co. v. Martin & Son, 128 Miss. 302, 91 So. 6 (1922). However, this requires substantial proof that the creditor impliedly accepted the new debtor in the place of the old and it must not appear that the creditor intended to hold both new and old debtor for the obligation. This determination is factual and necessary to an implied novation and release of the old debtor. American Blakeslee, supra.

The record discloses no express no-vation and we are of the opinion there are no facts relating to the conduct of the parties so as to give rise to an implied novation. In fact, Claude Stiner testified that Tidwell agreed to extend the bank’s obligation under a supplemental letter for a ninety-day extension and if Alcorn, Inc., had not paid in full prior to October 9, then the bank would make payment. It is true the bank repudiated such extension after Tid-well left its employment, but we think this testimony, with other evidence, clearly shows there was no intention for the bank to be released. Consequently, Holiday was not estopped in its pursuit of payment by the letter of credit.

Finally, the appellant argues that the credit is unenforceable because it constitutes an agreement to make advances in excess of its legal loan limit under 12 U.S. C.A. section 84 (1972). On January 2, 1974, the bank’s loan limit was $63,778 and by February 1, 1974, it was $55,965.

Section 84 of 12 U.S.C.A. (1972) provides in part as follows:

The total obligations to any national banking association or any person, copart-nership, association, or corporation shall at no time exceed 10 per centum of the amount of the capital stock of such association actually paid in and unimpaired and 10 per centum of its unimpaired surplus fund. The term “obligations” shall mean the direct liability of the maker or acceptor of paper discounted with or sold to such association and the liability of the indorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such association and shall include in the case of obligations of a copartnership or association the obligations of the several members thereof and shall include in the case of obligations of a corporation all obligations of all subsidiaries thereof

Assuming section 84 above has application and that the obligation of the bank under the credit was a loan, we nevertheless are of the opinion the validity of the letter of credit is unimpaired even if in excess of loan limits. We are persuaded to this conclusion because the comptroller of currency subjects standby letters of credit, with narrow exception to the bank-lending limits as stated in 12 CFR (Code of Federal Regulations) section 7.1160 (1977), as follows:

§ 7.1160 Application of lending limits to standby letters of credit.
(a) Definition. A “standby letter of credit” is any letter or credit, or similar arrangement however named or described, which represents' an obligation to the beneficiary on the part of the issuer (1) to repay money borrowed by or advanced to or for the account of the account party or (2) to make payment on account of any indebtedness undertaken by the account party, or (3) to make payment on account of any default by the account party in the performance of an obligation.
(b) Subject to lending limits. A standby letter of credit is subject to the limitations of section 84 and must be combined with any other nonexcepted loans to the account party by the issuing bank for the purposes of applying section 84.
(c) Exceptions. All standby letters of credit shall be subject to the provisions of this paragraph except where:
(1) Prior to or at the time of issuance, the issuing bank is paid an amount equal to the bank’s maximum liability under the standby letter of credit; or
(2) Prior to or at the time of issuance, the issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank’s maximum liability under the standby letter of credit; or
(3) The Comptroller of the Currency has found that a particular standby letter of credit or class of standby letters of credit will not expose the issuer to the similar risk of loss as would a loan to the account party.

The letter of credit in question was to make payment on account of an indebtedness undertaken by Alcorn, Inc., the account party, and does not come within any of the above exceptions. See also 12 CFR § 337.2 (1977).

Having assumed but not decided this instrument is controlled by the statutory loan limit, we need ascertain its validity as an enforceable agreement.

A loan by a national bank in excess of the restriction is not void as to the borrower but subjects the bank and its officers to penalties upon action by the government. Cooper v. Mercantile Nat’l Bank, 137 Ga.App. 605, 224 S.E.2d 442 (1976). It has been held, absent knowledge of a bank’s loan limit, a borrower is entitled to hold a bank liable for breach of contract to make a loan even though the bank would exceed its limit in doing so. This is so because the purpose of the loan limit statute is for regulation of banking institutions and their officers rather than for frustrating well-intentioned unwary borrowers. Labor Discount Center, Inc. v. State Bank & Trust Co. of Wellston, 526 S.W.2d 407 (Mo.App.1975). Further, contractual obligations exceeding the authority granted or limited by statute when not declared invalid by the lawmakers have often been enforced. Muller v. Harms, 117 Neb. 657, 221 N.W. 898 (1928), and the authorities cited therein. It is noted that 12 U.S.C.A. § 84, as well as Mississippi Code Annotated section 81-5-77 (1972) does not declare such a loan to be invalid although penalties are provided for an officer engaged in such practice.

Although most courts hold such statutes do not make contracts which are violative thereof, void or even unenforceable, nearly all of the decided cases have involved actions against borrowers who seek to avoid the liability thereby. Labor Discount Center, Inc. v. State Bank & Trust Co. of Wellston, 526 S.W.2d 407 (Mo.App.1975). In Bank of College View v. Nelson, 106 Neb. 129, 183 N.W. 100 (1921), it was held that as a general rule courts will not refuse to enforce a bank’s contract for a loan in excess of lending limits. That Court said:

In limiting the amount of an individual loan . . . the statute established a rule for the government of the bank. . The penalty for violating the act applies to “any officer, director, or employee” of the bank. An excessive loan does not subject the borrower to a penalty. He does not stand before the statute in the same light as the offending banker. The penalty is a matter between the state and the lender. The general rule is that an excessive borrower cannot prevent the collection of his debt by pleading and proving a violation of the statute. . . . Where the law permits a bank to enforce a contract for an excessive loan, it should not be permitted to escape liability for the damages resulting from its failure to fully perform such a contract. For these and other reasons, the great weight of modern authority supports the doctrine that courts will not refuse to enforce a bank’s contract for the loan of money, or disallow damages for breach thereof . . . notwithstanding a statute penalizing the banker for exceeding that limit. .
(106 Neb; at 130-131, 183 N.W. at 101)

The bank cites three cases which hold agreements in violation of loan limit statutes to be void. However, they involve agreements between banks or between a bank and an employee so that the parties could be presumed to know the loan limits. See Dove Creek State Bank v. Lawrence Warehouse Co., 157 Colo. 263, 402 P.2d 369 (1965); Jaynes v. First National Bank of Ketchikan, 236 F.2d 258, 16 Alaska 388 (9th Cir. 1956); and Oakes National Bank v. Farmers’ State Bank, 52 N.D. 49, 201 N.W. 696 (1924). In Oakes, supra, it was held the evidence did not support an innocently entered contractual arrangement for borrowing or lending but rather a purposeful arrangement to violate statutes against excess loans and in such case the law would not give a guilty party assistance in enforcing such a contract.

Presently, we do not think the loan limits were common knowledge so that Holiday would have notice the amount of the letter of credit was in violation of banking statutes. The record discloses no reason for Holiday to doubt the bank’s promise or any design by Holiday to violate banking laws. Moreover, there was no reason for Holiday to inquire into the security offered by the Alcorn Group in issuance of the credit. Under Mississippi Code Annotated section 75-5 — 105 (1972) it is stated that no consideration is necessary to establish a credit or to enlarge or otherwise modify its terms. Comment to Section 5-105 of the Uniform Commercial Code (1972) provides as follows:

It is not to be expected that a financial institution will engage its credit without some form of expected remuneration. But it is not expected that the beneficiary will know what the issuer’s remuneration was, or whether in fact there was any identifiable remuneration in a given case. And it would be extraordinarily difficult for the beneficiary to prove the issuer’s remuneration. This section dispenses with such proof.

We think, as did the trial court, that the bank is liable to Holiday under the letter of credit and, therefore, wrongfully dishonored it.

II.

The appellant contends the chancellor erred in awarding Holiday interest from March 13, 1974, on the amount due under the letter of credit. It provided that funds would be disbursed upon presentation of the invoice approved by the purchaser. Although the invoice was dated March 13, 1974, it had not been approved by Spain on behalf of Alcorn, Inc., until sometime after April 16 and on or before May 3. Spain testified that on April 16 a representative of Inn Keepers Supply inquired about payment, but he requested more time in order to inspect the merchandise. On May 3, when the representative called back to determine its status, Spain informed him that he had approved the shipment and instructed the bank to pay. Under the contract between Inn Keepers and Alcorn, Inc., payment was due within sixty days after the requested shipping date which we determine to be February 1, 1974, or seven days after the inn opened to the public on March 17, 1974, whichever date occurred first. However, the bank’s obligation began, in our opinion, at the time the approved invoice was presented. This occurred between April 16 and May 3. Therefore, we are of the opinion the chancellor erred in establishing the default on March 13 rather than May 3, 1974.

III.

Appellant next assigns as error that the chancellor erred in finding Westinghouse’s lien on the merchandise sold to Alcorn, Inc., by Holiday was paramount to the bank’s right, in not establishing it as an equitable lien superior to Westinghouse’s lien, and in refusing to apply the doctrine of marshaling of assets. It further submits that if Holiday’s judgment is affirmed on the letter of credit, then this Court should find that the bank was entitled to equitable subrogation of Holiday’s lien on the merchandise to the extent of the amount of the letter with priority over the general lien of Westinghouse and that it be permitted to foreclose such equitable prior lien. Otherwise, the bank submits that the only security it will have is a first deed of trust on one-third acre of land.

The record discloses that when Westinghouse advanced $775,000 to Alcorn, Inc., in addition to taking a first deed of trust on the real estate, it obtained a security agreement as to after-acquired property as follows:

All present and future rents, issues and profits and all present and future items of furniture, furnishings, supplies, appliances, and equipment used in, on, or in the operation of the premises known as Ramada Inn, located on the Northeast corner of Galyean Road, and U.S. Highway 72, Corinth, Alcorn County, Mississippi. Debtor may not sell, assign, lease, transfer, or otherwise dispose of without secured party’s prior written consent.

It was after this agreement that Alcorn, Inc., entered into an agreement with Holiday for the purchase of furniture, furnishings and equipment.

Appellant argues that as the items purchased from Westinghouse constituted equipment as defined in Mississippi Code Annotated section 75-9-109(2) (1972), that a security interest would have to be perfected under Section 75-9-401(l)(c) by filing financing statements in the Chancery Clerk’s office of Alcorn County and in the office of the Secretary of State. It is undisputed that such a statement was filed in Alcorn County but the bank contends no such statement was filed in the Secretary of State’s office and therefore Westinghouse has no security interest in the personalty. Westinghouse contends that such statement was filed with the Secretary of State and that the document was examined at trial though not made an exhibit. The chancellor found that such a financing statement had been recorded.

Additionally, the sworn answers of Alcorn, Inc., the Freemans, and Spain alleged the bank was given actual and constructive notice of the Westinghouse agreement and knew that Westinghouse had a valid first lien against the equipment purchased from Holiday. Spain testified that during his negotiations the bank was aware that Westinghouse had a first lien on the real property and on the chattels connected with it. Mississippi Code Annotated section 75-9—401(2) (1972) provides as follows:

(2) Except as [otherwise] provided . a filing which is made in good faith in an improper place or not in all- of the places required by this section is nevertheless effective with regard to any collateral as to which the filing complied with requirements of this chapter and is also effective with regard to collateral covered by the financing statement against any person who has knowledge of the contents of such financing statement.

The record is not conclusive, although it is persuasive, that a financing statement was filed with the Secretary of State and since the bank had knowledge of Westinghouse’s interest, we think that Westinghouse properly secured its interest in the after-acquired personalty.

Appellant also argues that Westinghouse failed to give value as required under Section 75-9-204 so that the security interest did not attach. We think this contention is without merit because Westinghouse did give value by advancing the money to Alcorn, Inc., for the project.

Another contention of appellant is that it should be given preference in the collateral under a purchase money security interest. This theory is controlled by Section 75-9-312(4) which provides:

(4) A purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral if the purchase money security interest is perfected at the time the debtor receives possession of the collateral or within ten (10) days thereafter.

The record fails to disclose that Holiday or the bank perfected a purchase money security interest within ten days in accord with the statute. To the contrary, Holiday stipulated it did not claim a purchase money lien superior to the Westinghouse lien. Tid-well and Long confirmed that no purchase money security interest had been obtained by the bank. Appellant claims, however, that Holiday owed it a duty to perfect an interest on its behalf when it advanced sums under the letter of credit. It must be observed the bank drafted the letter of credit and had the opportunity to make it conditional upon Holiday’s obtaining such a security interest and did not do so. We conclude Holiday was under no obligation in this regard.

Therefore, in sum, we are of the opinion that Westinghouse had a prior and paramount lien on the real property and after-acquired property and that the bank is not entitled to equitable subrogation.

As an alternative, appellant urges that the doctrine of marshaling of assets has application. This doctrine has been defined as where a creditor has a lien on two funds in the hands of the same debtor and another creditor has a lien on only one of them, that equity on the application of the latter will compel the former to make his debt out of that fund to which the latter cannot resort. Dilworth v. Federal Reserve Bank of St. Louis, 170 Miss. 373, 150 So. 821 (1933). However, the bank does not have the right to invoke this doctrine because it is not a creditor with a lien on any of the funds. Therefore, we think the chancellor was correct in his refusal to marshal the assets involved.

IV.

Another contention of appellant is that the chancellor erred in finding the unlimited guaranty agreement of June 25, 1974, invalid. It argues that the agreement was supported by valuable consideration. Those signing the agreement jointly and severally guaranteed payment to the bank of any and all indebtednesses that might then or thereafter become due from Alcorn, Inc., Spain, McLemore and Freeman. The bank sought judgment against Alcorn, Inc., Spain, the McLemores and the Freemans, jointly and severally, on all notes due which had been signed by Alcorn, Inc., or any of the Alcorn Group. The lower court found the bank entitled to judgment on the notes but only against those who signed them, failing to find the liability to be joint and several under the unlimited guaranty agreement.

The purpose of dividing the original $75,-000 Alcorn Group note into two lesser ones was to facilitate the sale of part of the indebtedness and to bring the bank within its loan limits. We do not think the guaranty agreement comes within an exception as stated in Morgan v. United States Fidelity & Guaranty Company, 191 So.2d 917 (Miss.1966), as follows:

. It is a general rule that a guaranty of a preexisting debt or obligation of another is not binding on the guarantor without a new and independent consideration to support it. However, an exception to this rule is when the guaranty is connected with, and the inducement to the original credit or obligation, or a result of a previous promise by the guarantor upon the faith of which the credit was obtained, it requires no new or independent consideration, but is a part of the original transaction and the consideration upon which credit was given.
(191 So.2d at 923)

Although appellant contends that its forbearance to sue on the past due (original) $75,000 note was sufficient consideration for the guaranty, the mere fact of forbearance without a promise to forbear or a request to forbear is not sufficient consideration. Dedeaux v. Young, 251 Miss. 604, 170 So.2d 561 (1965); Owen Tie Co. v. Bank of Woodland, 136 Miss. 114, 101 So. 292 (1924). As the record reveals no agreement to forbear, we are of the opinion that the unlimited guaranty agreement was invalid as held by the trial court.

V.

Another assignment of error by appellant is that the chancellor erred in sustaining McLemore’s motion to dismiss for lack of jurisdiction. However, before reaching this issue, we must decide if this Court has jurisdiction to entertain the bank’s appeal against McLemore as it has previously appealed on the same issue.

After McLemore was dismissed on his motion for lack of jurisdiction, the bank was granted an interlocutory appeal on order of the trial court and perfected its appeal to this Court. When seven days after the return day to this Court had passed and appellant had made no effort to prosecute the appeal, appellee McLemore filed a motion to docket and dismiss which we sustained. A rehearing on that action was denied en banc on November 23, 1976. The trial in the lower court proceeded and a final decree was entered on February 13, 1976. After entry of the decree, the bank again appealed to this Court raising McLe-more’s jurisdictional question. Once more McLemore filed a motion to dismiss which was passed to the hearing of the appeal on its merits.

Interlocutory appeals are allowable from chancery courts where the court has sustained a motion dismissing a party for lack of jurisdiction. Mississippi Code Annotated section 11-51-7 (1972) provides in part as follows:

An appeal may in sound discretion be granted by the chancellor in term time, or in vacation, from any interlocutory order or decree ... or when having sustained or overruled a demurrer or motion he may think an appeal proper in order to settle all the controlling principles involved in the cause .

Therefore, we think that this Court has jurisdiction of the interlocutory appeal. And, indeed, the bank does not allege it was without fault in not proceeding with the first appeal but rather states that it abandoned it. However, Mississippi Code Annotated section 11-3-15 (1972) provides as follows:

After the dismissal of an appeal or supersedeas by the supreme court, another appeal or supersedeas shall not be granted in the same cause, so as to bring it again before the court.

This statute has a long history in our jurisprudence and was our law as early as 1822 when its language was “that after the dis-mission of an appeal, writ of error or super-sedeas in the Supreme Court, no appeal, writ of error or supersedeas shall be allowed.” Revised Code of 1823, § 33, p. 156.

This section has been interpreted to the effect that the statute does not apply where the dismissal is without fault of the appealing party or from an irregularity over which he has no control. Stokes v. Shannon, 55 Miss. 583 (1878); Bull v. Harrell, 7 How. 9 (Miss.1843). But where an appeal has been perfected and dismissed for want of prosecution, a subsequent appeal or writ of error is barred. Merrill v. Hunt, 52 Miss. 774 (1876); Smith v. Union Bank of Tennessee, 13 S. & M. 240 (Miss.1849).

We are of the opinion the former dismissal of the appeal was the result of appellant’s inaction and that a second appeal on the same issue is barred. Thus, this assignment of error is without merit.

VI.

Another contention of appellant is that the chancellor erred in dismissing, without prejudice, Spain’s cross bill seeking damages against the bank for failure to make the $90,000 loan and for its slanderous and libelous conduct. The motion for dismissal was made after the hearing on jurisdiction of McLemore and at the beginning of the trial against the remaining defendants.

The right to a nonsuit or dismissal is controlled by statute in Mississippi Code Annotated section 11-7-125 (1972) which provides:

Every plaintiff desiring to suffer a nonsuit on trial shall be barred therefrom unless he do so before the jury retire to consider of its verdict.

This section establishes beyond question the right of a complainant to take a voluntary dismissal without prejudice. Bradley v. Graham, 250 Miss. 244, 164 So.2d 772 (1964). This right exists in a party to a suit in chancery until the time when the cause has been submitted to the chancellor for final decision upon its merits. Allison v. Camp Creek Drainage District, 211 Miss. 354, 51 So.2d 743 (1951).

Although the right of a complainant to take a nonsuit is large, it is not unlimited and lies within the discretion of the court. Mitchell v. Film Transit Co., 194 Miss. 550, 13 So.2d 154 (1943). Griffith, Mississippi Chancery Practice, section 534 (2d Ed. 1950), states that a bill may not be dismissed when the defendant has secured some substantial right which will be destroyed by the dismissal. It further states that what constitutes a sufficient right in the defendant justifying a refusal of dismissal has never been embraced by any definite rule and illustrates with the following:

. Where a bill has made a tender or other certain offers and a defendant by his answer has availed of the same, and thereupon joins in the prayer of the bill, or where the rights of infants would be prejudiced by a dismissal; or where interlocutory decrees have already been made adjudging some rights to the defendants upon the merits of some of the issues in the case; or where a motion to dissolve an injunction has been made. But the defendant acquires no rights by the mere fact that he has been put to the inconvenience or expense of a defense

(§ 534, p. 551)

Appellant argues that it acquired rights by what had occurred to entitle it to a successful objection against dismissal and cites as support Northern v. Scruggs, 118 Miss. 353, 79 So. 227 (1918), and Mitchell, supra. However, both of these cases involve the rights of minors and are therefore distinguishable from the present case. If the dismissal leaves defendant in the same position that he would have stood if the suit had not been instituted, then the right to dismiss is unimpaired until final submission to the chancellor on the merits. Griffith, supra, at page 551; Northern, supra. We think in the present case that the lower court properly granted a dismissal without prejudice to Spain and that this assignment of error is without merit.

VIL

The last contention of appellant is that the lower court erred in dismissing conspiracy charges against the Alcorn Group. Although the record discloses a wrongful course of conduct by Reed to the benefit of the Alcorn Group, it is void of any evidence of a conspiracy between them. Spain admitted that he knew Reed previously in a business and social manner but this fact coupled with Reed’s negligence and wrongful banking transactions is not sufficient to prove a conspiracy. Therefore, we affirm the chancellor in this regard.

VIII.

Alcorn, Inc., Freeman, and Spain cross appeal and assign as error that the chancellor erred in finding that Holiday was entitled to a judgment against Spain and Freeman for $83,970.25, that Alcorn, Inc., and Freeman were not entitled to damages against the bank for libel and slander, and that the bank was entitled to recover from Spain and Freeman on the $52,270 note of June 24, 1974.

Although Spain and Freeman contend that the Holiday note failed because of lack of consideration, Stiner testified that Spain and McLemore requested of him an extension of time for payment for the merchandise. He agreed to extend the payment if, among other things, the Alcorn Group individually executed a promissory note in excess of the amount of the letter of credit. We are of the opinion the note is binding upon Spain and Freeman and affirm the lower court in this regard.

As to the alleged libel and slander, we find insufficient proof in the record to support these charges. Therefore we think this assignment of error is without merit.

Lastly, Spain and Freeman contend they are not liable for the note of June 24,1974. This note of $52,270 which they signed in their corporate capacity for Alcorn, Inc., and a lesser note of $25,603.50 which they signed individually superseded the original $75,000 note for which they were individually liable.

They argue that a novation occurred which supplanted the liability of Al-corn, Inc., for their personal liability. We have previously discussed the law relevant to novation in No. I. above. In this particular instance, the record discloses that in making the promissory note the bank required the Alcorn Group to convey the .33 acre to Alcorn, Inc., which then gave a deed of trust to the bank as security for the new note. The overriding purpose of the new note was to assist the bank in operating within its loan limits. We are of the opinion that the bank intended to extinguish the original debt and substitute Alcorn, Inc., as a new debtor. Therefore, we reverse the chancellor in this regard.

In conclusion, this Court affirms the decree of the chancellor except as to the date from which interest is due to Holiday by the bank under the letter of credit which we think should run from May 3, 1974, and as to the liability of Spain and Freeman on the $52,270 note of June 24, 1974.

AFFIRMED IN PART, REVERSED AND RENDERED IN PART.

SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, LEE, BOWLING and COFER, JJ., concur.

       As defined in this subsection (a), the term “standby letter of credit” does not include commercial letters of credit and similar instruments where the issuing bank expects the beneficiary to draw upon the issuer, which do not “guaranty” payment of a money obligation and which do not provide for payment in the event of default by the account party.


source: Caselaw Access Project

license: Public Domain

text:
    Jessie E. McMILLIAN v. STATE of Mississippi.
    No. 50550.
    Supreme Court of Mississippi.
    Aug. 9, 1978.
    Mitchell M. Lundy, Grenada, for appellant.
    A. F. Summer, Atty. Gen. by Marvin L. White, Special Asst. Atty. Gen., Jackson, for appellee.
    Before ROBERTSON, SUGG and COF-ER, JJ.
   ROBERTSON, Presiding Justice, for the Court:

Jessie E. McMillian was indicted, tried and convicted in the Circuit Court of Grenada County for the murder of James Harvey. The shooting occurred on September 1, 1973, and the trial took place on February 7, 1974. McMillian was sentenced to life imprisonment in the Mississippi State Penitentiary.

In the early evening, September 1, 1973, James Harvey and five of his friends went to Guy Lee’s Cafe-Beer Joint south of Gore Springs in Grenada County. While there he got into an argument with Jessie McMillian. The final outcome was that McMillian got his rifle and shot Harvey three times; he died on the spot. The evidence is undisputed that McMillian shot and killed Harvey, at least three eyewitnesses testifying that they witnessed the whole affair.

On February 7, 1974, defendant McMilli-an and his court-appointed counsel were present in the courtroom, ready for trial. They participated in the voir dire of the jury. After the jury had been impaneled, selected and sworn in, the court recessed about noon for lunch. When court reconvened at 1:00 P.M., the defendant was not present. After attempting to locate the defendant and delaying the trial until 1:35 P.M., the court authorized the issuance of an alias capias for McMillian, and ordered that the trial proceed in his absence. Defense counsel objected, but the court overruled his objection.

McMillian was apprehended in a neighboring county and was returned to the courtroom after the trial had been completed and while the jury was out considering its verdict. McMillian was physically present when the jury returned its verdict of guilty as charged.

After the case had been appealed, court-appointed defense counsel was allowed to withdraw from the case, and the court appointed present defense counsel to represent McMillian on appeal.

Appellant has assigned as error:

1.The trial Court erred in ignoring counsel for the defendant’s objection to the defendant being tried in his absence and directing that the defendant be tried in his absence on a murder charge.
2. The trial Court erred in making prejudicial statements concerning the defendant’s absence from the courtroom in the hearing and presence of the jury.
3. The trial Court erred in overruling the defendant’s Motion for a mistrial and admitting the testimony of Jimmy Pass on rebuttal.
4. The trial Court erred in overruling defendant’s Motion for a New Trial.

McMillian was tried on February 7, 1974. In Capler v. State, 268 So.2d 338 (Miss.1972), the defendant was sentenced to death upon conviction of murder. This Court, in ruling out the death penalty, said:

“We hold that because of the decision in Furman v. Georgia [408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346] the death penalty cannot be inflicted; that the remainder of the statute is valid, and the only other punishment for murder is life imprisonment.” 268 So.2d at 339-340.

Mississippi Code Annotated section 97-3—19 (Supp.1977) defining capital murder (the case at bar does not fit into that definition) and authorizing the imposition of the death penalty for capital murder, was not enacted until April 23, 1974, so on February 7, 1974, the time of the trial, McMillian could not have been sentenced to death and was in no danger of suffering capital punishment.

Mississippi Code Annotated section 99-17-9 (1972), (unchanged since 1857), styled “Trial in the absence of accused”, provides:

“In criminal cases the presence of the prisoner may be waived, and the trial progress, at the discretion of the court, in his absence, if he be in custody and consenting thereto. If the defendant, in cases less than felony, be on recognizance or bail or have been arrested and escaped, or have been notified by the proper officer of the pendency of the indictment against him, and resisted or fled, or refused to be taken, or be in any way in default for nonappearance, the trial may progress at the discretion of the court, and judgment final and sentence be awarded as though such defendant were personally present in court.”

In Stubbs v. State, 49 Miss. 716 (1874), this Court quoted from Price v. State, 36 Miss. 531 (1858):

“ ‘If he is not in custody, so as to be deprived of the power to attend, it would seem that the reason of the rule as to his right to be present would fail; for he is voluntarily absent when he ought to be present and cannot complain of the consequences of his own voluntary act.’ The voluntary absence of the defendant in that case, was held to be a waiver of his right to be present, he being under recognizance, and the court said, ‘his own illegal act should not be permitted to thwart the process of the law to his advantage.’ ” 49 Miss. at 722.

While the case at bar turned out to be not a capital case, this Court held in Thomas v. State, 117 Miss. 532, 78 So. 147 (1918), that when the defendant is in custody even in a capital case, by his voluntary absence he may waive his presence at the trial. In Thomas this Court said:

“We think the meaning, purpose, and intent of the statute are plainly expressed by its language, and that it is valid and constitutional. It simply means that in all criminal cases the accused may waive his presence at any stage of the trial, if in custody, and the trial will proceed in his absence, provided he consents thereto; and provided, further, that such proceeding in the absence of the accused meets with the discretionary approval of the court.
“The statute here makes no exception or distinction between felonies and capital cases. In fact, all capital cases are classed as felonies.” 117 Miss. at 542, 545, 78 So. at 148, 149.

Thomas was being tried for murder and absented himself for a short time when the jury was being voir dired. The court held that he was in custody at the time. Inasmuch as McMillian was present in court when the trial was begun and the jury examined, selected and sworn in, it is our opinion that he was in custody at the time he voluntarily left and fled and thus escaped. In Thomas, the Court went on to say:

“It will be observed that section 1495, Code 1906 (section 1253, Hemingway’s Code), provides that such waiver of his presence by the accused shall be ‘at the discretion of the court.’ This is a sound provision, and is a safeguard against the accused being denied any substantial right at his trial, and its purpose is to protect him, at all events, in securing a fair and impartial trial, in a court presided over by a just and impartial judge. The discretion is given the court to see that the accused obtains a just trial, even though he has waived his right to be present at some stage of it. If it appeared in the lower court, or here on appeal, that the accused did not receive a fair and impartial trial by an impartial jury, a new trial would be granted, even though the failure to secure a fair and impartial trial in the lower court had been on account of waiver of presence by the accused. This safeguard is rightfully reserved in the statute, so that, in the last analysis, the court will see to it that suicide by process of law is prevented, and that no injustice is done the accused on account of his own act of waiver or on account of any wrongful procedure by the trial court.” 117 Miss. at 543, 78 So. at 148—49.

We followed this same line of reasoning in Ford v. State, 170 Miss. 459, 155 So. 220 (1934), Hamburg v. State, 203 Miss. 565, 35 So.2d 324 (1948), and Myers v. State, 268 So.2d 353 (Miss.1972).

McMillian did receive a fair and impartial trial and the trial judge did not abuse his discretion in ordering the trial to proceed in McMillian’s absence.

McMillian next complains of alleged prejudicial statements made by the trial judge in the presence of the jury concerning defendant’s absence.

The judge’s remarks were merely in explanation of McMillian’s absence, the steps being taken to return him to the trial, and the necessity for proceeding with the trial, so they were not prejudicial. Moreover, no objection whatsoever was made at the time these remarks were made. There is no merit in this assignment of error.

McMillian next contends that “the trial court erred in overruling the defendant’s motion for a mistrial and admitting the testimony of Jimmy Pass on rebuttal.” Again, no objection whatsoever was made to Pass’s testimony when it was offered; defense counsel vigorously cross-examined Pass; and waited until the state rested before moving for a mistrial on the ground that the defendant was caught by surprise when Pass changed his testimony. This assignment of error is without merit.

The evidence was undisputed that McMil-lian shot and killed James Harvey. The jury was justified in finding beyond a reasonable doubt that McMillian was guilty of Harvey’s murder.

The conviction and sentence are, therefore, affirmed.

AFFIRMED.

PATTERSON, C. J., SMITH, P. J., and SUGG, WALKER, BROOM, LEE, BOWLING and COFER, JJ., concur.


author: LEE, Justice, for the Court:

text:
    Willie Earl CASEY v. TEXGAS CORPORATION and Jessie D. Mayo.
    No. 50524.
    Supreme Court of Mississippi.
    Aug. 9, 1978.
    Smith & Phillips, Richard T. “Flip” Phillips, Batesville, for appellant.
    Luckett, Luckett, Luckett & Thompson, Walter W. Thompson, Clarksdale, for appel-lees.
    Before PATTERSON, BROOM and LEE, JJ.
   LEE, Justice, for the Court:

Willie Earl Casey filed suit in the Circuit Court of the Second Judicial District of Panola County against Texgas Corporation and Jessie D. Mayo, its driver, for personal injuries. Before trial, Texgas and Mayo admitted liability. The case was submitted to the jury solely on the issue of damages, a verdict was returned and judgment entered in the amount of one thousand dollars ($1,000) for Willie Earl Casey and he appeals.

On January 13,1975, appellant was riding in a vehicle which was struck by one of Texgas Corporation’s trucks and he sustained personal injuries. The collision occurred on Monday, appellant did not return to work that day, but he did work Tuesday through Friday of the same week. Appellant went to see Dr. David Ball on Monday, January 20, complaining of pain in the cervical region. He was seen by Dr. Ball again January 22, 24 and 31. The doctor testified that appellant had no fractures, although he did have cervical muscle spasms. Dr. Ball related the injury to the automobile collision of January 13. He further testified that his last examination, January 31, indicated appellant was free of pain, had a full range of motion in the neck, had no permanent injuries, and was one hundred percent (100%) normal. The medical bill was fifty-five dollars ($55.00), appellant lost one hundred ninety-three dollars fifty cents ($193.50) in wages for nine (9) days and had not been confined to the hospital.

Appellees filed a motion in limine seeking to exclude the testimony, proposed to be introduced by appellant, of Edward L. Burns, personnel director of Poloron Industries, Jerry McCay, Supervisor for United Parcel Service, Calvin Patton, Dunlop & Kyle Company, all of Batesville, David Cole, Chief Administrative Officer for South Panola Consolidated School District, and Martha Lynn Johnson, Guidance Counselor for that school district. Appellees also included in the motion to exclude a certain part of Dr. Ball’s testimony.

The trial court sustained the said motion, appellant assigns as error such action and contends that it was error to deny him recovery for the impairment of his wage-earning capacity resulting from the collision and to deny instructions submitting that issue to the jury.

The testimony of Burns, McCay, and Patton, in substance, was that they (their companies) would not employ appellant or any other person who had a history of previous back or neck injury, regardless of the fact that the applicant may have recovered entirely from the injury and may have been discharged by a physician without any residual impairment. The testimony of David Cole and Martha Lynn Johnson indicated that appellant was qualified primarily for common labor and that he had a low IQ.

In 25A C.J.S. Damages § 162(8)b at 103-104 (1966), the general principle for damages is stated:

“A claim for damages for a lost or diminished earning capacity must be supported by satisfactory proof of the fact of such impairment, the extent thereof, and, in the case of a claim for permanent impairment of earning power, by satisfactory evidence of the permanency of the injury; and the proof should be made by the best evidence available. Proof with certainty or mathematical exactness is not required, nor need the proof be clear and indubitable; but such damages must be established by substantial evidence and cannot be left to mere conjecture.”

Decisions of this Court previously have held that, in order to recover for permanent loss of wage-earning capacity, there must be a showing of permanent physical impairment. This principle also applies to loss of wage-earning capacity in a temporary situation. Mississippi Central Railroad Company v. Smith, 176 Miss. 306, 168 So. 604, cert. den’d. 299 U.S. 518, 57 S.Ct. 313, 81 L.Ed. 382 (1936); Waiters v. Gilbert, 248 Miss. 77, 158 So.2d 43 (1963); and Kincade & Lofton v. Stephens, 50 So.2d 587 (Miss. 1951).

The testimony of Burns, McCay and Patton to the effect that their companies would not employ appellant is speculative and vague, and is not competent to prove loss of wage-earning capacity. Other companies in the area may be willing to employ appellant. He has continued working for Devi-ney, his employer at the time of the accident, and the evidence does not indicate that appellant would not be employed by Deviney as long as that company remains in operation.

The evidence is undisputed that appellant, at the time of his medical discharge, was normal, had recovered entirely and had no permanent impairment or loss of wage-earning capacity. The testimony of David Cole and Martha Lynn Johnson as to appellant’s competence in the labor market and intelligence was not material or relevant to the issue involved. Part of Dr. Ball’s testimony to the effect that many companies will not employ individuals who have been involved in an industrial accident, even though fully recovered, also was not relevant to the issue.

We are of the opinion that the trial court properly sustained the motion in limine to exclude the testimony of the above individuals and properly refused Instructions Nos. 6 and 7 which related to loss of wage-earning capacity for the reason that there was no evidence to support those. instructions.

Therefore, the judgment of the trial court is affirmed.

AFFIRMED.

PATTERSON, C. J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, BOWLING and COFER, JJ., concur.


author: BOWLING, Justice, for the Court:

text:
    Alton NELSON v. STATE of Mississippi.
    No. 50676.
    Supreme Court of Mississippi.
    Aug. 9, 1978.
    Johnston & Steinberger, Albert S. Johnston, III, Karl R. Steinberger, Pascagoula, for appellant.
    A. F. Summer, Atty. Gen., by Calvin Coolidge Williams, Jr., Sp. Asst. Atty. Gen., Jackson, for appellee.
    Before PATTERSON, C. J., and WALKER and BOWLING, JJ.
   BOWLING, Justice, for the Court:

Appellant was indicted, tried and convicted in the Circuit Court of Jackson County. He was sentenced to serve a term of three years under the jurisdiction of the State Department of Corrections with the entire sentence being suspended.

Five assignments of error were advanced on appeal by the appellant. We shall discuss only one assignment as it disposes of the case: that is, the contention that the verdict was against the weight and sufficiency of the evidence.

At the time of the alleged offense, appellant was employed by the City of Pascagou-la, Mississippi, as superintendent of the gas department. The indictment charged that appellant and his co-indictee, Charles Bo-sarge, from May 6 to May 18, 1976, did unlawfully, wilfully, fraudulently and felo-niously send, assign and allow employees of the City of Pascagoula to work on private property for private citizens and did thereby permit city employees to receive salary from the city while performing private work. The indictment further charged that Nelson and Bosarge did unlawfully, wilfully, fraudulently and feloniously go to and enter upon the property of First Chemical Corporation and did supervise work of city employees under their command and control to perform work for private enterprises for their profit while allowing themselves and said city employees to be falsely and fraudulently paid by the said city, all with their unlawful, wilful, fraudulent and felonious intent to cheat, defraud, injure and embezzle from the City of Pascagoula, Mississippi.

In considering the assignment of error that disposes of the case, as hereinbefore set out, we necessarily have to discuss the evidence. This discussion shall be limited to the evidence pertaining to the charges in the indictment.

The first witness for the State was Glenn Roberds, a construction supervisor for First Chemical Corporation. He testified that his company entered into an agreement with W&M Corporation to perform certain pipe-laying work at the company’s plant. In regard to appellant being on the job, his only testimony was that he had seen appellant there, but did not know what day, what time, or whether or not it was on a weekend.

The next witness was Charles Ledbetter, another supervisor for First Chemical Corporation. He testified that on May 18, which was a Tuesday, he issued what he termed a “hot permit” for employees of W&M Corporation to tie in the newly laid pipe to the plant. He testified that he saw two city employees, Boike and Triplett, at the work site. He further testified that during the course of the work he saw both Bosarge and appellant at the work site but could not testify when they were there. The only fact that he was sure of was seeing appellant on one weekend. And finally, Ledbetter testified that he did not see appellant at the work site on Monday or Tuesday, the 17th and 18th, which were the two work days the State averred the work was primarily done.

The State offered witness Nancy Williams, an employee of First Chemical Corporation. She testified that on May 17 she saw co-indictee Bosarge near the work site in a city vehicle. She was not asked anything about appellant and did not mention his name.

Witness Jack T. May was employed by W&M Corporation and was the company representative who handled the work being done at First Chemical Corporation. He explained that he contacted Bosarge and appellant to see if they would perform the work of laying and connecting the water line. He admitted that appellant was reluctant to do the work but agreed to help after the other bidder withdrew. He testified that all checks for the work were made out to Bosarge as payee. He testified that he, Bosarge and Nelson met briefly at First Chemical prior to May 6th to agree on what was to be done. According to May, he did not remember and did not know whether or not appellant was on the work site at other times, during a day or on a weekend. May also testified the job was of such little magnitude that the plans were roughly drawn on the back of a match box. He stated that he did not expect appellant to do the work personally and did not know anything about securing the men who actually performed the work. He admitted on cross-examination that the one time he remembered appellant definitely being on the job was for a short time around the middle of the day, which was before the work was started on May 6.

The next witness to testify was co-indict-ee, Charles Bosarge, whose indictment was later quashed. He explained about May and appellant contacting him regarding the laying of the water line at First Chemical, and about May giving them the plans drawn on a match box. He testified that all checks for the job were made out to him, but that Nelson was to share in the profits. Bosarge admitted that he went to the work site on Monday, May 17, to give instructions about tying in the new line with the old. The reason this was not done on the prior weekend was because of the excessive rain on Sunday and First Chemical’s insistence on doing the work the next day. He testified that appellant stated to him that he could not go to the work site on Monday, but that he, Bosarge, could. Continuing, he testified that city employees Boike and Triplett were doing the tie-in work on Monday and he thought they had come there in Triplett’s truck. However, he had no explanation as to who sent them that day except that he presumed appellant did so as they worked in his department. He testified on cross-examination that he saw appellant on two weekends at the place where the work was being done, but that the only time either of them were at the work site during a week day was when he, Bosarge, was there on the 17th.

Witness Hannah Burnham was employed as Deputy City Clerk. She introduced the city payroll records showing that certain employees of the city, including Boike and Triplett, were paid for regular and overtime work during the week work days between May 6 and May 18. The evidence also revealed that appellant was paid on a regular salary basis.

Witness Kenneth Griffin was employed by the city in the water department and worked for co-indictee Bosarge. He stated that he went to First Chemical on two days; the first day he did nothing, the other day he laid the eight-inch water line. With him were city employees Palestine Dial and Glenn Johnson, who also worked under co-indictee Bosarge. He stated that his being there was solely under the direction and supervision of Bosarge. Other city employees on that day at First Chemical were Boike and Triplett. He did not testify as to any knowledge of who had sent them to the job that day. He did not see appellant Nelson there at any time and stated he could not remember what day he was there. He did positively testify that appellant did not send him to do the work.

Witness William C. Boike testified that he was employed by the gas department under appellant; that he agreed to do the welding work, and so far as he knew it was only to be done on weekends and should not have taken over three weekends; that he did make the final tie-in of the pipes on a week day, a Monday, but that this was done because of the rain on Sunday and the necessity for completing the work. He also stated that appellant was not there at all on that Monday.

The presentation of the above witnesses concluded the evidence. Appellant then moved for a directed verdict mainly on the ground that the State did not prove the charges set out in the indictment. The motion was denied. Appellant then rested without offering any proof and resubmitted his motion, which again was overruled.

As we heretofore have discussed, the indictment charged Nelson and Bosarge with sending city employees to do work on private property during the hours that they were paid by the city, and further charged the co-indictees with entering upon private property and supervising work of city employees for their profit with the fraudulent intent to cheat, defraud, injure and embezzle from the city.

The overwhelming evidence was that except for Monday, May 17, and possibly Tuesday, May 18, the work of laying the pipe was performed on two or three weekends. Appellant, Bosarge and Boike did go to the Chemical Corporation’s premises during the middle of the day before May 6, the beginning date charged in the indictment, but undisputedly this was for a short time and the overwhelming import of the evidence was that it was during the noon hour that day. There is no substantial proof that appellant sent any city employees to do work at the Chemical Corporation when they were being paid by the city. No one stated that appellant sent them on May 17 or May 18. Boike admitted that he and Triplett went on the 17th because of bad weather on Sunday, May 16 — only at the insistence of the Chemical Corporation’s representatives to tie-in the pipe immediately. No witness testifying placed appellant on the Chemical Corporation’s premises for doing any work during the week days. The evidence did show that appellant received a salary for work, eight hours a day for five days each week. Also, no witness placed appellant on the Chemical Corporation’s premises except on a weekend.

Therefore, we conclude that the State failed to prove the charges alleged in the indictment and appellant’s motion for a directed verdict should have been granted. It follows that the verdict of the jury was against the weight and sufficiency of the evidence as contended by appellant. This Court has held in a number of cases that when the evidence is insufficient to sustain a conviction, a peremptory instruction or directed verdict should be granted the accused. State v. Thornhill, 251 Miss. 718, 171 So.2d 308 (1965); Jackson v. State, 185 So. 201 (Miss.1938); Jarman v. State, 178 Miss. 103, 172 So. 869 (1937); Davenport v. State, 144 Miss. 273, 109 So. 707 (1926).

Under the assignment of error involved here it is the duty of this Court to review the evidence and determine whether or not it was sufficient to warrant a conviction and whether or not the accused was entitled to a directed verdict in his favor. See Murphree v. State, 201 Miss. 34, 28 So.2d 238 (1946). Based on the foregoing evidence in the case at bar, this Court is of the opinion there was not sufficient evidence on which to convict the appellant. Therefore, the case is hereby reversed and the appellant discharged.

REVERSED AND APPELLANT DISCHARGED.

PATTERSON, C. J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, LEE and COFER, JJ., concur.


text:
    In the Matter of (1) a Special Annual Assessment of Attorneys Admitted to this Court, (2) a Miscellaneous Docket Fee, (3) the Award of Costs and Expenses, (4) Imposition of an Investigative Fee and (5) Collection Thereof for Operation of Disciplinary Procedures and Agencies, MISSISSIPPI STATE BAR, Petitioner.
    Misc. No. 844.
    Supreme Court of Mississippi.
    Aug. 9, 1978.

      Elzy J. Smith, Jr., Clarksdale, President of the Mississippi State Bar Ass’n, on behalf of the Mississippi State Bar Ass’n.
   PATTERSON, Chief Justice, for the court:

The order in this cause of August 9, 1978, is adopted as the opinion of the Court to be published as are other formal opinions.

SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, LEE, BOWLING and COFER, JJ., concur.

ORDER

This cause came on for hearing upon the Petition of the Mississippi State Bar, called hereafter the Bar, in which the Bar prayed for the following relief:

(1) A special annual assessment to be imposed upon each dues-paying member of the Mississippi State Bar for purposes of financing the disciplinary activities and agencies described in section 73-3-301, et seq., Mississippi Code Annotated (Supp.1977).

(2) A miscellaneous docket fee to be imposed upon each Formal Complaint filed by the Mississippi State Bar with the Clerk of the Supreme Court, said fee to be paid in advance by the Mississippi State Bar and to be recoverable as costs of court as justice and the circumstances of each case may require.

(3) The award of costs and expenses of the Bar connected with litigation of any Formal Complaint as justice and the circumstances of the case may require.

(4) The imposition of an investigation fee upon any attorney disciplined by the Committee on Complaints in an amount not less than Ten Dollars ($10.00) and not more than the actual and reasonably necessary expenses of the investigation.

(5) Collection of items (1) through (4) above as additional Bar dues or in cases of disbarment or suspension as an additional reinstatement fee.

Having heard argument and being advised in the premises, the Court hereby finds as follows:

1) This Court is vested with exclusive and inherent disciplinary jurisdiction over attorneys admitted to practice or otherwise practicing law in Mississippi by its inherent powers as recognized by section 73-3-301 Mississippi Code Annotated (Supp.1977).

2) Section 73-3-373 Mississippi Code Annotated (Supp.1977) acknowledges that the courts of this State have the inherent power to supervise the Bar as an incident to their power to admit attorneys to practice, and recognizes that the judicial branch of government has the inherent power to determine the qualifications of those to be admitted to the practice of law in this state.

3) The inherent rights and powers set forth above are established by other authority including, a) the Mississippi Constitution of 1890, sections 1, 2 and 144, which, respectively, provides separate and distinct departments of government, prohibits one department’s exercise of powers properly belonging to another department, and vests the judicial power in this Court and other constitutionally established courts, and b) former decisions of this Court, ex., In re Steen, 160 Miss. 874, 134 So. 67 (1931), Ex Parte Brown, 1 How. 303, Ex parte Cashin, 128 Miss. 224, 90 So. 850 (1922), In re Higgins, 194 Miss. 838, 13 So.2d 329 (1943), and In re Fox, 296 So.2d 701 (Miss. 1974).

4) By act of the Legislature, certain agencies were established, made available and designated for purposes of assisting this Court in the administration of its exclusive and inherent disciplinary jurisdiction, which agencies this Court hereby adopts and accepts for that purpose; namely, as provided by section 73-3-303 Mississippi Code Annotated (Supp.1977), the Board of Commissioners of the Bar, including the Bar’s Executive Director and the Complaint Counsel, the Bar’s Committee on Complaints, and Complaint Tribunals appointed by this Court.

5) The Board is by statute the governing body of the Bar and is by statute granted certain powers and made subject to Bylaws, not conflicting with statute, which the Bar’s membership may adopt [See sections 73-3—101, et seq., Mississippi Code Annotated (Supp.1977)].

6) However, the Board is an agency of this Court for disciplinary purposes, and when it acts within that agency, it acts for this Court in a function separate and distinct from that of the governing body of the Bar.

7) As an agency of this Court, the Board authorized, empowered and directed the President of the Bar to petition this Court for the relief as requested and above set out.

8) The Court has jurisdiction of this cause.

9) The Bar presently derives its funds from dues fixed by statute from which has come the money necessary to discharge the Board’s disciplinary agency on behalf of this Court.

10) The Board, by use of Bar funds, i. e., dues, has until this time discharged that agency, but due to the increasing number of complaints and the rising costs of all matters necessitated by the discharge of that agency, the Board cannot continue to do so on the funds made available by the collection of dues without grave and imminent danger to both the discharge of that disciplinary agency and the other good and proper duties and functions of the Bar which the dues were also intended to support.

11) This Court’s duty to protect itself, the judiciary, and the citizens of this State from persons unfit to practice law [section 73-3-373 Mississippi Code Annotated (Supp.1977)] should not be hampered by the absence of adequate financing to do the job, and the ability to secure such financing should not be dependent upon the will of a department or entity other than the entity upon which the ultimate burden rests, namely, this Court.

12) It is the duty of this Court to assure such financing so its agencies can properly and meaningfully discharge the “jurisdiction and lawful powers as are necessary to conduct a proper and speedy disposition of any complaint” as granted by section 73-3-307 Mississippi Code Annotated (Supp.1977).

13) The petition of the Bar was held in abeyance by this Court until the members of the Mississippi State Bar could be polled on the question of the relief sought by the Bar in its pending petition. After notice to all members of the Bar, the question was submitted to the membership on June 10, 1978, at the annual meeting of the Mississippi State Bar Association which resulted in eighty-one members voting in favor of the relief requested in the petition with three voting against the relief requested.

THEREFORE, it is hereby ORDERED, ADJUDGED and DECREED as follows:

A) The Board may impose a special annual assessment upon each dues-paying member of the Bar for purposes of financing the disciplinary activities and agencies described in section 73-3-301, et seq., Mississippi Code Annotated (Supp.1977). The special assessment shall not exceed TWENTY FIVE DOLLARS ($25.00) per member for the Bar’s fiscal year beginning June 1, 1978. The special assessment shall be reviewed by this Court at the end of the fiscal year which ends May 31, 1979, at which time the Bar will furnish this Court a statement showing detailed receipts and disbursements of the Bar for the fiscal year then ended. On the basis of this statement and any other information which the Court may request, determination shall be made of the necessity for continuation of the special assessment and the amount thereof.

B) The Bar shall pay unto the Clerk of this Court a miscellaneous docket fee in the amount of FIFTY DOLLARS ($50.00) upon the filing of each Formal Complaint to defray the Clerk’s costs of handling the records of Formal Complaints. The fee may be recovered by the Bar as costs of court, upon order of the Complaint Tribunal, as justice and the circumstances of each case may require.

C) The Complaint Tribunal may award unto the Bar, as costs of court, the costs and expenses of the Bar connected with the litigation as justice and the circumstances may require. The costs and expenses shall be itemized, filed of record, and tendered to the accused attorney within ten (10) days after the decree of the Complaint Tribunal becomes final. The accused may controvert any item claimed as costs or expenses within ten (10) days after receiving a statement of the costs and expenses.

D) Upon appeal of any decree of a Complaint Tribunal, this Court may award unto the Bar, as costs of court, such additional costs and expenses of the Bar connected with the appeal as justice and the circumstances may require. The additional costs and expenses shall be itemized, filed of record, and tendered to the accused attorney within ten (10) days after the decree of this Court becomes final. The accused may controvert any item claimed as additional costs and expenses within ten (10) days after receiving a statement of the costs and expenses.

E) The Committee on Complaints shall impose upon any attorney disciplined by it an investigation fee of not less than TEN DOLLARS ($10.00) and no more than the actual and reasonably necessary expenses of the investigation, said bill of expenses to be itemized and tendered to the attorney prior to or at the time discipline is imposed; or, if the matter is referred for the filing of a Formal Complaint, said bill of expenses shall be incorporated therein and when so incorporated upon affidavit from the Bar’s Executive Director, the itemization shall be prima facie as to the amount due and may be allowed in whole or in part as provided by the foregoing Paragraphs (C) and (D).

F) The Executive Director of the Bar shall immediately collect the assessment for fiscal year 1978-1979, and failure to pay same shall be grounds for suspension from the practice of law upon notice given by the Executive Director in the same manner of notices relating to the failure to pay dues.

G) The Executive Director of the Bar shall receive and keep all funds provided for by Paragraphs (A) through (F) hereof in a separate, distinct and special disciplinary account, or accounts, and if possible, in an interest drawing account, and said funds shall be used exclusively for the disciplinary activities and agencies above mentioned.

H) Not less than once per year, the Board shall, by and through the President of the Bar, report on the financial condition of the agencies hereby funded, which report shall be made to this Court first in writing and then thereafter as requested by the Chief Justice if the Court deems such further report necessary or desirable.

ORDERED, ADJUDGED AND DECREED this 9th day of Aug., 1978.


text:
    Johnnie Warren BAXTER and Marjorie Baxter v. John D. GRAHAM, Rose M. Graham, First City Savings & Loan Association and Louis L. Dungan.
    No. 50548.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    Hurt & Dickerson, Darryl A. Hurt, Luce-dale, for appellants.
    William T. Bailey, Sr., Lucedale, for ap-pellees.
    Before ROBERTSON, P. J., SUGG and COFER, JJ., and J. W. WALKER, Commissioner.
   Affirmed.


text:
    James W. PRYOR v. Carolyn M. PRYOR (Wenzel).
    No. 50669.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    Tubb, Stevens & Morrison, T. Murray Tubb, Thomas J. Tubb, West Point, for appellant.
    Joe 0. Sams, Jr., Columbus, for appellee.
    Before PATTERSON, C. J), and BROOM and COFER, JJ.
   AFFIRMED.


text:
    Larry Neal PAVOLINI v. Georgie Lee PAVOLINI.
    No. 50512.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    Earl B. Stegall, Gulfport, for appellant.
    Patricia C. Champagne, Gulfport, for ap-pellee.
    Before SMITH, P. J., and BROOM and LEE, JJ.
   Affirmed in part, reversed in part, and remanded.

PATTERSON, C. J., ROBERTSON, P. J., and SUGG, WALKER, BOWLING and COFER, JJ., concur.


text:
    Leroy SWAW and Johnny Lee White v. STATE of Mississippi.
    No. 50886.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    W. Eugene Henry, Biloxi, G. William McCarthy, Jr., Ocean Springs, for appellants.
    A. F. Summer, Atty. Gen., by Wayne Snuggs, Sp. Asst. Atty. Gen., Jackson, for appellee.
    Before PATTERSON, C. J., and WALKER and BOWLING, JJ.
   AFFIRMED.


text:
    John Earl HALL v. STATE of Mississippi.
    No. 50400.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    E. Howard Tucker, Jackson, for appellant.
    A. F. Summer, Atty. Gen., by Karen Gil-foy, Asst. Atty. Gen., Jackson, for appellee.
    Before ROBERTSON, P. J., and SUGG and COFER, JJ.
   AFFIRMED.

PATTERSON, C. J., SMITH, P. J., and WALKER, LEE and BOWLING, JJ., concur.

BROOM, J., took no part.


text:
    Mrs. Virginia JACOBI, widow of Louis J. Jacobi, Jr. v. INTERSTATE LIFE & ACCIDENT INSURANCE COMPANY and L. E. Thomas.
    No. 50520.
    Supreme Court of Mississippi.
    Aug. 16, 1978.

      Reid & Hewitt, Gertrude A. Reid, Biloxi, for appellant.
    Favre, Genin & Scafide, John A. Seafide, Jr., Bay St. Louis, for appellees.
    Before SMITH, P. J., and BROOM and LEE, JJ.
   AFFIRMED.


text:
    John W. BRISTOW v. Richard W. HICKMAN and Travelers Insurance Company.
    No. 50525.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    Schissel & Stuckey, W. S. Stuckey, Jr., Greenwood, for appellant.
    Fraiser, Burgoon, Henson & Abraham, James W. Burgoon, Jr., Greenwood, for ap-pellees.
    Before SMITH, P. J., and BROOM and LEE, JJ.
   AFFIRMED.


text:
    Keith DAVIS v. STATE of Mississippi.
    No. 50613.
    Supreme Court of Mississippi.
    Aug. 16, 1978.
    Constance Slaughter-Harvey, Forest, for appellant.
    A. F. Summer, Atty. Gen., by Robert D. Findley, Special Asst. Atty. Gen., Jackson, for appellee.
    Before SMITH, P. J., and BROOM and LEE, JJ.
   AFFIRMED.


author: FAULKNER, Justice.

text:
    Roy ADAMS and Rufus Adams v. BETHANY CHURCH.
    77-69.
    Supreme Court of Alabama.
    June 23, 1978.
    Rehearing Denied Aug. 18, 1978.
    Alice L. Anderson, Enterprise, for appellants.
    . S. Fleetwood Carnley, Elba, for appellee.
   FAULKNER, Justice.

Roy Adams and Rufus Adams appeal from an order in a bill to quiet title finding Bethany Church to be the owner of certain disputed real property. We reverse and remand.

Bethany Church, an unincorporated religious society, claims possession and ownership of certain real property in Coffee County. The Church filed a bill to quiet title pursuant to Tit. 7, § 1109, Code of Alabama 1940, in its own name against Roy and Rufus Adams, individuals who also claim an interest in the property. The Ad-amses filed a “motion to strike the complaint for failure to state a cause of action” and defended on the grounds that Bethany Church cannot hold legal title to real property and consequently cannot maintain this suit. The trial court, treating this motion as a motion to dismiss, denied it. The cause proceeded to trial where the trial court found that Bethany Church was the owner of the disputed real property. The trial court ordered a survey to delineate the boundaries of the property and enjoined the Adamses from any further interference with the Church’s possession. Because the failure to grant the motion to dismiss is dispositive of the issues raised on appeal, we reach only that point.

“It is well established in this jurisdiction that a church association, which is unincorporated, though capable of suing and being sued, Tit. 7, § 142, Code of Alabama, Recompiled 1958, is without capacity to acquire or hold legal title to land in its association name.” _ Enterprise Lodge No. 352 of the Knights of Pythias, Inc. v. First Baptist Church (Colored) of Evergreen, Alabama, 288 Ala. 592, 594, 264 So.2d 153, 154 (1972). Instead title is held by and through the association’s named trustees who are the proper parties to bring an action to quiet title. Hamner v. Carroll’s Creek Baptist Church, 255 Ala. 277, 280, 51 So.2d 164, 166 (1951). As Bethany Church could not itself hold title, it could not bring suit to establish title. The motion to dismiss should have been granted.

REVERSED AND REMANDED.

TORBERT, C. J., and BLOODWORTH, ALMON and EMBRY, JJ., concur.


text:
    Robert T. WADE et al. v. Richard PRIDMORE.
    77-187.
    Supreme Court of Alabama.
    June 23, 1978.
    Rehearing Denied Aug. 18, 1978.
    W. Eugene Rutledge, of Rutledge, Williams, Williams & Norton, Anniston, for appellants.
    Charles A. McGee, of Traylor & McGee, Fort Payne, for appellee.
   FAULKNER, Justice.

This is an appeal from a default judgment entered by the court, when Wade’s counsel, unsuccessful in obtaining a continuance, did not appear for trial as scheduled. We affirm.

Pridmore filed a complaint in the Circuit Court on October 8, 1975, seeking dissolution of Mountain Auto Parts, Inc., and distribution of its assets, not claimed by creditors, to him. Pridmore alleged in his complaint that he was the beneficial owner of all of the shares of stock of the corporation, and owned legal title to 51% of the shares. Wade was to own legal title to 48% of the stock. Lee Clyde Traylor was to own legal title to 1% of the stock. The complaint alleged that Wade was to operate the business of the corporation at a salary of $150.00 per week, and if, at the end of 7 years from the date of incorporation, the arrangement proved profitable, the corporation existed for 7 years, and Wade was still with the business, he was to get 50% of the beneficial or equitable interest of the corporation. The receipt of 50% of the beneficial interest was conditioned on Wade’s efficient operation of the business and his being with the corporation at the end of the 7 years period. If he operated the business in a negligent or wasteful manner, or, if he voluntarily ended his services with the corporation, Pridmore would continue to own 100% of the beneficial interest.

Pridmore alleged that Wade negligently operated the business, and it was necessary to fire him. (The complaint is silent as to when Wade was fired.)

Wade’s answer admitted the corporation, denied the agreement as alleged, counterclaimed for 48% interest in the corporation, prayed for an accounting, punitive damages for breach of Pridmore’s fiduciary obligations, and demanded a jury trial.

Subsequently, Wade moved for a summary judgment on the pleadings, without any supporting evidence, bottomed on the theory that the alleged agreement of stock ownership was oral, and therefore, violated the statute of frauds. The court denied the motion, struck the jury demand as to the issues of ownership of stock, dissolution and accounting, and granted a jury trial as to breach of fiduciary obligation.

On Pridmore’s motion, trial was set for May 10, 1977. On May 10, Wade’s counsel had to appear in this court; consequently, trial was reset for July 25. The case was continued again, on Pridmore’s motion, to October 11. The case was reset for October 25, because Wade’s counsel had laryngitis, and again was appearing in this court. On October 24-25, Wade’s counsel was engaged in trial in a federal court. During the afternoon of October 24, the trial judge was advised of another requested continuance by Wade’s counsel. The judge refused to grant a continuance without the consent of Pridmore’s counsel. He withheld consent.

On October 25 the court held a hearing, attended only by Pridmore’s counsel, on Pridmore’s motion for default judgment. Counsel stated in open court that Wade was neither incompetent nor an infant. Default judgment was entered October 27. Wade filed a motion to set aside the default November 10, but withdrew it November, 15, so that an appeal could be filed in this court on the entrance of the default judgment.

Withdrawing the motion to set aside the default, in our opinion, prevents review of any alleged error of entering the default, because of abuse of discretion by the trial court. (We find no evidence of fraud, collusion or jurisdictional issues.) Rule 55(c) ARCP provides that the court in its discretion may set aside an entry of default and may set aside a judgment by default within 30 days thereafter. While the Rule specifically provides discretion to set aside an entry of default, and does not specifically mention discretion to set aside a default judgment, yet logically it follows that the court also has discretion in setting aside the judgment within thirty days from its entry.

Our Rule 55(c) differs from the Federal Rule in that the Federal Rule provides that an entry of default may be set aside for good cause shown, and “may likewise” set aside a judgment of default “in accordance with Rule 60(b).” Our Rule has no express reference to Rule 60 ARCP. The Committee Comments state:

“This was eliminated in order to insure the court’s power to set aside a default judgment in thirty days in an instance where Rule 60 might not afford justification. No time limit is expressed with respect to an entry of default. Of course, Rule 60 becomes available when more than thirty days has passed since the entry of the judgment by default.”

We opine that a party in default should make a formal motion to set aside a judgment of default. The granting or denying the motion will involve the exercise of the sound discretion of the trial court, and that will be interfered with by an appellate court only where there is an abuse.

As the judgment by default is a final judgment binding the defendant to the same extent as if the allegations of the complaint had been contested, we cannot reach the issue of whether it was error to deny Wade’s summary judgment motion. The order denying the motion was interlocutory — not an appealable order. Consequently, the issues raised in the motion for summary judgment, as well as other issues raised by Wade, could have been litigated at a trial. They were not, and are considered waived by the judgment by default.

AFFIRMED.

TORBERT, C. J., and BLOODWORTH, ALMON and EMBRY, JJ., concur.