Sinclair Refining Co. v. Wyatt

• Decision Date: 03 April 1941
• Docket Number: 36652
• Citation: 149 S.W.2d 353,347 Mo. 862
• Parties: Sinclair Refining Company, a Corporation, Appellant, v. Paul v. Wyatt, Wilbur W. Wyatt, U. v. Wyatt and E. S. Wilhite, all residing in Cass County
• Court: Missouri Supreme Court

149 S.W.2d 353

347 Mo. 862

Sinclair Refining Company, a Corporation, Appellant, v. Paul v. Wyatt, Wilbur W. Wyatt, U. v. Wyatt and E. S. Wilhite, all residing in Cass County

No. 36652

Supreme Court of Missouri

April 3, 1941

Rehearing Denied March 12, 1941.

Motion to Transfer to Court in Banc Denied April 3, 1941.

Appeal from Cass Circuit Court; Hon. Leslie A. Bruce Judge.

Affirmed.

Roger B. Jones, Crouch & Crouch and Wm. M. Kimberlin for appellant.

(1) Respondents, acting in concert, fraudulently conspired to change their former course of conduct and thus defraud the plaintiff, which acts rendered the foreclosure a nullity. The facts and circumstances of each case determine the presence or absence of fraud. 23 Am. Jur. 753. Fraud is proven by certain circumstances known as "badges of fraud" and if the entire transaction is one out of the usual course of business and the parties have knowledge, this is a circumstance of fraudulent intent. Munford v Sheldon, 9 S.W.2d 907; Farmers Bank v. Handly, 9 S.W.2d 880; Black v. Epstein, 221 Mo. 286. Where the transaction is between relatives, a court of equity will closely scrutinize the transaction and the relationship is a circumstance to consider. Barrett v. Foote, 187 S.W. 67; First Natl. Bank v. Fry, 216 Mo. 24, 115 S.W. 439; First Natl. Bank v. Vogt, 126 S.W.2d 199; Russell v. Franks, 120 S.W.2d 37. Respondents did not testify in this case. After the facts of the foreclosure were shown by appellant, the failure of respondents to testify raises a presumption that their testimony would have been unfavorable to them. Russell v. Franks, 120 S.W.2d 37; Baker v. C., B. & Q. Ry. Co., 327 Mo. 986, 39 S.W.2d 535. Equity will intervene to relieve against fraud in a foreclosure where rights of innocent purchasers do not intervene. Masonic Home of Mo. v. Windsor, 338 Mo. 877, 92 S.W.2d 713; Schwarz v. Kellog, 243 S.W. 179; Judah v. Pitts, 333 Mo. 301, 62 S.W.2d 715. Since the premises were occupied by appellant as tenant, this possession conveyed notice to all persons of the rights and interests of appellant or required inquiry of such rights to be made. Langford v. Wilton, 48 S.W.2d 860; Lee & Boutell Co. v. Brockett Cement Co., 341 Mo. 95, 106 S.W.2d 451; Squires v. Kimball, 208 Mo. 110, 106 S.W. 502; Beach v. Lynn, 299 Mo. 127, 252 S.W. 437; McBride Realty Co. v. Grace, 223 Mo.App. 588, 15 S.W.2d 957. The lease dated April 17, 1935, executed by Paul V. Wyatt and delivered to appellant April 26, 1935, when executed by appellant, related back and became fully effective as of the date of the lease. 4 Tiffany, Real Property (1939 Ed.), p. 241; Schooler v. Schooler, 258 Mo. 83, 167 S.W. 444; Johnson v. Shelley, 54 Utah 305, 180 P. 431; Tonopah Colorado Leasing Co. v. Seeman Inv. Co., 237 P. 161; Kelley v. Briggs, 290 S.W. 105. (2) The mortgagor, causing his own deed of trust to be foreclosed and purchasing the property at the sale, caused no title to pass but merely satisfied the deed of trust. Under the evidence the respondents were partners or joint adventurers and the act of one was the act of all. Hobart-Lee Tie Co. v. Grodsky, 329 Mo. 706, 46 S.W.2d 859. A purchase by one such partner or joint adventurer, regardless of any fraud or illegality in the sale, satisfied the debt of the deed of trust. Freeman v. Moffitt, 119 Mo. 280, 25 S.W. 87; Voelpel v. Wuensche, 74 S.W.2d 14; Polliham v. Reveley, 181 Mo. 622, 81 S.W. 182. (3) A court of equity has authority to enter any appropriate order in this case. The amendment sought by appellant at the trial was proper. Sec. 819, R. S. 1929; 1 Houts, Mo. Pl. & Pr., sec. 143, p. 288; Mellor v. Mo. Pac. Ry. Co., 105 Mo. 455, 16 S.W. 849; Conn. Mut. Life Ins. Co. v. Smith, 117 Mo. 261, 22 S.W. 623; Bank of Pocahontas v. Miller, 223 S.W. 908; Adams v. Boyd, 332 Mo. 484, 58 S.W.2d 704. A court of equity has an arm long enough and strong enough to handle a situation so as to accomplish complete justice between the parties and the court will not relax this grasp on the res until it shall have given adequate and complete justice between the parties. Harger v. Barrett, 319 Mo. 633, 5 S.W.2d 1100; Rains v. Moulder, 338 Mo. 275, 90 S.W.2d 81; Wm. H. Johnson Co. v. Belt, 329 Mo. 515, 46 S.W.2d 143; Munford v. Sheldon, 9 S.W.2d 907; Waugh v. Williams, 342 Mo. 903, 119 S.W.2d 223; Jelly v. Lamar, 242 Mo. 44, 145 S.W. 799.

Rosenberg, Hargus & Koralchick, Will H. Hargus and C. E. Groh for respondents.

(1) On appeal plaintiff may not change from its trial theory based on the priority of its lease over the mortgage to the radically different theory of fraudulent foreclosure. (a) An assignment of error that "a court of equity has authority to enter any appropriate order in this case" is a mere legal generality with respect to charging the trial court with error for refusing an offered amendment and the assignment is inadequate to preserve the point. S.Ct. Rule 15; Jeck v. O'Meara, 343 Mo. 559, 122 S.W.2d 905; Majors v. Malone, 339 Mo. 1118, 100 S.W.2d 300; Clay v. Owens, 338 Mo. 1061, 93 S.W.2d 914. (b) The offered amendment was a departure from the pleadings and presented a theory different from plaintiff's trial theory. Sec. 819, R. S. 1929; Carter v. Dilley, 167 Mo. 564, 67 S.W. 232; State ex rel. v. Shain, 123 S.W.2d 5; Park v. Park, 259 S.W. 417. (c) Denial of permission to amend should not be disturbed. Yerxa-Andrews & Thurston v. Randazzo Macaroni Mfg. Co., 315 Mo. 927, 288 S.W. 20; Friedel v. Bailey, 329 Mo. 22, 44 S.W.2d 15; Park v. Park, 259 S.W. 417. (d) The theory of the cause of action is determined from the petition and no recovery can be had on a different theory. White v. Scarritt, 341 Mo. 1004, 111 S.W.2d 21; Peak v. Peak, 181 S.W. 395; Pervis v. Hardin, 343 Mo. 652, 122 S.W.2d 939; Park v. Park, 259 S.W. 417; Henry County v. Citizens Bank, 208 Mo. 209, 106 S.W. 626. (2) The mortgage had priority over plaintiff's lease as a result of being first executed, delivered and recorded. (a) Absent any agreement to subordinate mortgage to the lease, the priorities established by the record stands. 41 C. J., sec. 449, p. 513. (b) Equity will not deny protection to one who by superior diligence obtains a legal advantage. 21 C. J., sec. 180, p. 193. (c) The date on the lease is only prima facie evidence of the date of execution. 35 C. J., p. 1151, sec. 407. (d) A lease must be signed by lessor and lessee to be valid in Missouri. Sec. 2965, R. S. 1929; Reid v. Gees, 277 Mo. 556, 210 S.W. 880; Valle v. Kramer, 4 Mo.App. 570. (e) Livingston's answer was a mere legal conclusion and not an admission which must relate to matters of fact. 21 C. J., p. 1147, sec. 151. (f) Provisions of a purchase contract not included in the warranty deed pass out of the case. Barger v. Healy, 276 Mo. 157; Bean v. Munger Land Co., 265 S.W. 847; Employers Indemnity Corp. v. Garrett, 327 Mo. 874, 38 S.W.2d 1054. (g) Admissions by counsel are binding on plaintiff. Evans v. Sears-Roebuck & Co., 129 S.W. 57. (3) The foreclosure was not fraudulent and effectively eliminated plaintiff's interest in the property. (a) Plaintiff proved no fraud; fraud is not presumed and evidence thereof must be clear, cogent, and convincing. Hardwicke v. Hamilton, 121 Mo. 465, 26 S.W. 342; Schwarz v. Kellogg, 243 S.W. 179. Plaintiff's speculative method of computing the value of the property here involved independently of the record is not sustained by authority. DePaige v. Douglass, 234 Mo. 84. It is not fraud for a person not obligated to pay plaintiff or the mortgagee to be interested in a foreclosure. 41 C. J., sec. 1119, p. 894. Defendant's failure to testify under the circumstance here presented was no badge of fraud. Thomas v. Scott, 221 Mo. 283, 119 S.W. 1098. The trustee was under no duty to give plaintiff notice of foreclosure. Jopling v. Walton, 138 Mo. 485, 40 S.W. 101. Plaintiff cannot complain unless it proves that it would have purchased at foreclosure sale if notified thereof and that it was damaged. Peterson v. K. C. Life Ins. Co., 339 Mo. 700, 98 S.W.2d 776; 26 C. J., pp. 1167, 1169, sec. 77; 21 C. J., p. 107, sec. 82. (b) The foreclosure extinguished plaintiff's lease. McFarland Realty Co. v. Gerardi, 202 Mo. 597, 100 S.W. 577; Roosevelt Hotel Corp. v. Williams, 227 Mo.App. 1063, 56 S.W.2d 802. Having pleaded title was in Paul V. Wyatt, plaintiff is estopped to deny the allegations of the pleading. Kelley v. Briggs, 290 S.W. 107; Mayes v. Cunningham, 204 S.W. 404. Tenant is estopped to deny landlord's title or to claim that landlord is a trustee for another. Stagg v. Eureka Tanning & Currying Co., 56 Mo. 317; Baker v. Nall, 59 Mo. 265. (c) There was no proof of joint venture among defendants; joint venture must be pleaded. 47 C. J., pp. 985, 986, sec. 528; Denny v. Guyton, 327 Mo. 1030, 40 S.W.2d 571; Taussig v. Poindexter, 30 S.W.2d 636. The law favors a construction which is consistent with fair dealing. Farmers & Merchants Bank of Festus v. Funk, 338 Mo. 508, 92 S.W.2d 592. If the foreclosure is instigated by purchaser at foreclosure sale, said purchaser can evict lessee. Plum v. Studebaker, 89 Mo. 162, 1 S.W. 217; Episcopal Church v. Mack, 17 Cent. L. J. 372; Greene v. Spitzer, 343 Mo. 751, 123 S.W.2d 57.

OPINION

Tipton, P. J.

This is an appeal from a decree in the Circuit Court of Cass County, Missouri, of an equitable suit to determine title, wherein that court found that the appellant had no legal or equitable interest or title to a lot on which was situated a filling station located in the town of Belton, Missouri.

In order to determine the issues that were before the trial court, we will briefly summarize the pleadings. The appellant's petition avers that Paul V. Wyatt derived title to the real estate in question by purchase from J. O Sole and Ada M. Sole by warranty deed dated ...