Brown v. Bass - 71 U.S. 262 (1866)
U.S. Supreme Court
Brown v. Bass, 71 U.S. 4 Wall. 262 262 (1866)
Brown v. Bass, 71 U.S. 262 (1866)
71 U.S. (4 Wall.) 262
1. Brown Brothers & Co. had filed a creditor's bill against the Bank of Mississippi before having obtained judgment at law, which, however, was obtained soon after the bill was filed. After this, a receiver was appointed and proceeded to take possession of the assets of the bank, to collect debts and compromise with debtors, and with the proceeds to pay the debts of the bank.
2. The defendant, Mrs. Bass, having purchased land upon which the bank had a mortgage, made an arrangement with the receivers by which the latter transferred to her the mortgage and took her notes secured by mortgage on the same land. These notes he passed to Brown Brothers & Co. in part satisfaction of their judgment against the bank. Subsequently, after these proceedings had gone on for twelve years, the creditor's bill filed by Brown Brothers & Co. was dismissed for want of jurisdiction
because no judgment had been obtained before the bill was filed, and the receiver was ordered to bring into court the assets of the bank which he had received and the proceeds of such as he had parted with. Failing to do this because he had surrendered the assets to the debtors and turned over the proceeds to the creditors of the bank, the bank on his report of these facts obtained a decree for the value of the assets which had come into his possession, including the mortgage surrendered to Mrs. Bass.
3. This suit being brought upon her notes and to foreclose the mortgage given by Mrs. Bass in the settlement with the receiver, she set up is defense,
1st., that the notes were without consideration, because the receiver had no authority to transfer to her the mortgage debt, in settlement of which they were given, and thus that debt was still a charge upon her land; 2d, that if the notes given by her were valid, they belonged to the bank, and not to the complainant, because the receiver had no authority to transfer them to Brown Brothers & Co.
4. Held that the bank, by electing to charge the receiver with the value of the securities surrendered by him in the settlement with Mrs. Bass and Brown Brothers & Co., had affirmed the transaction, and relinquished all claim against Mrs. Bass or her land, and that consequently the defense set up by her was not sustained.
A bill was filed in the court below to foreclose a mortgage executed by C. R. Bass, now deceased, and Eugenie his wife, on the 22d November, 1851, to Brown, to secure the payment of two promissory notes -- one for the sum of $1,704.03 and the other for $1,703.16 -- payable respectively 15 January, 1854, and 1855, at a house in New Orleans.
The answer set up, by way of defense, in substance that Brown, to whom the mortgage and notes were given, was not the legal or equitable owner of the same, but on the contrary that the property in them belonged to the Bank of Mississippi, and that the transaction out of which they arose was illegal, and the notes and mortgage in the hands of Brown void. The court below sustained the defense, and the case was now here for review.