Patterson v. Booth

• Citation: 15 S.W. 543,103 Mo. 402
• Parties: Patterson v. Booth et al., Appellants
• Decision Date: 23 February 1891
• Court: United States State Supreme Court of Missouri

15 S.W. 543

103 Mo. 402

Patterson v. Booth et al., Appellants

Supreme Court of Missouri, First Division

February 23, 1891

Appeal from St. Louis City Circuit Court. -- Hon. James A. Seddon Judge.

Affirmed.

Hitchcock Madill & Finkelnburg for appellants.

(1) The testimony as to the final and annual settlements of Horner as curator of plaintiff was inadmissible. It was res inter alios acta. 1 Wharton on Neg., secs. 175-6, 760; 1 Phillips on Ev [4 Amer. Ed.] p. 748. (2) The circuit court erred in its decree as to said final settlement. It was not competent for the circuit court, by the same decree, to declare that the final judgment of the probate court was and should remain in force, and yet deny its legal operation and effect. State v. Evans, 83 Mo. 322, and cas. cit.; Johnson v. Beazley, 65 Mo. 250; Smith v. Sims, 77 Mo. 269, 272-3; Freeman on Judgments, sec. 319a; sec. 491, citing Pratt v. Northam, 5 Mason, 95; Ferguson v. Carson, 9 Mo.App. 497, 500; Young v. Bircher, 31 Mo. 136; Dickerson v. Chrisman, 28 Mo. 141; Bauer v. Gray, 18 Mo.App. 173; French v. Stratton, 79 Mo. 562-3. (3) On the pleadings and proofs plaintiff was not entitled to equitable relief, under established rules of equity. The circuit court erred in overruling defendant's motion to dismiss the bill on the pleadings and proofs, and in rendering the decree appealed from, and in overruling defendant's motions in arrest and for a new trial. 3 Pomeroy's Eq. Jur., sec. 1364, and cas. cit. in note 1; State ex rel. v. Engelmann, 86 Mo. 562-3; Hotel Ass'n v. Parker, 58 Mo. 329, and cas. cit.; George v. Tutt, 36 Mo. 142; Reed v. Hansard, 37 Mo. 199, 203; Dobbs v. Ins. Co., 72 Mo. 191; Carolus v. Koch, 72 Mo. 647; Landrum v. Bank, 63 Mo. 48, 56-7; Kelly v. Hurt, 74 Mo. 561, 571-2; Bobb v. Graham, 89 Mo. 208; Schradski v. Albright, 93 Mo. 48; Bresnehan v. Price, 57 Mo. 423-4; Damschroeder v. Thias, 51 Mo. 100, 105; Crim v. Handley, 94 U.S. 653; Bateman v. Willoe, 1 Scho. and Lefr. 204; 2 Story's Eq. Jur., secs. 894-6, and cas. cit.; 1 Pomeroy's Eq. Jur., sec. 419, and cas. cit.; Smith v. Clay, 3 Bro. Ch. 635; 2 Pomeroy's Eq. Jur., sec. 607, and cas. cit.; Barnard v. Campau, 29 Mich. 162; 1 High on Injunctions, secs. 194, 210, 216, 222, 278. (4) The judgment of the probate court, approving Horner's final settlement and discharging him as curator, was rendered in open court by deliberate and express consent of plaintiff, fully advised and appearing by competent counsel, on January 10, 1887, although in December, 1885, plaintiff and said counsel were put on inquiry as to Horner's transactions, with actual notice of his legal title to the lots in question. Said judgment was entered under circumstances which, under established rules of law, were notice to plaintiff of Horner's deed of trust, on record since June, 1881, and of the falsehood of Horner's statements in December, 1885. Mason v. Black, 87 Mo. 341-2, citing Mertins v. Jolliffe, 1 Ambler, 311; Rhodes v. Outcalt, 48 Mo. 370; Speck v. Riggin, 40 Mo. 405; Funkhouser v. Lay, 78 Mo. 466; Hughes v. Littrell, 75 Mo. 573; 2 Pomeroy's Eq. Jur., sec. 608; 2 White & T. L. C. Eq. 123 (54*), p. 159, citing Price v. McDonald, 1 Md. 403; Hudson v. Warner, 2 Har. & Gill, 415; Dart on Vendors, ch. 3, sec. 15, p. 786; Peto v. Hammond, 30 Beav. 495. (5) In April, 1887, plaintiff and his counsel became fully aware of Horner's deed of trust of June 25, 1881, and of the falsehood of Horner's statements in December, 1885. Under Revised Statutes, 1879, section 2616, plaintiff then still had three months within which he could, but did not, appeal from said final judgment and have said final settlement passed on de novo in the circuit court, whereby he could have obtained complete relief at law against Horner's administrator and the sureties on Horner's bond. This suit was not brought until September 9, 1887, eight months after final judgment was rendered by consent in the probate court, five months after actual knowledge of the fraud complained of, and two months after his remedy at law was barred by his own neglect. This was laches against which the plaintiff can have no relief in equity. R. S. 1879, sec. 2616; Stockton v. Ransom, 60 Mo. 538-9; Reed v. Hansard, 37 Mo. 202-3, citing Matson v. Field, 10 Mo. 100; Hotel Ass'n v. Parker, 58 Mo. 327, 329; Carolus v. Koch, 72 Mo. 647; Freeman on Judgments, secs. 502-3, 506; Mastick v. Throp, 29 Cala. 444; 3 Pomeroy's Eq. Jur., sec. 1361, and cas. cit., sec. 1364, note 1; 2 Story's Eq. Jur., sec. 895a; Hendrickson v. Hinckley, 17 How. 443, 445; Earl of Oxford's Case, 2 Wh. & T. L. C. Eq. 1329-30, 1335, 1356-8, 1372, 1376, 1380-1; 1 High on Injunctions, secs. 194, 216-17, 221-2. (6) Equity will not enforce such trust in favor of plaintiff, as against the equal or superior equity of any intermediate incumbrancer; a fortiori after deliberate acts amounting to a release or confirmation by plaintiff, when he was aware, or ought and might with reasonable diligence have become aware, that such incumbrance existed, but neglected his remedy at law. 2 Pomeroy's Eq. Jur., secs. 964-5, and cas. cit.; 1 Perry on Trusts, secs. 218, 228; 1 Story's Eq. Jur., secs. 409-11; Ranken v. Patton, 65 Mo. 416, and above authorities. (7) Defendants were holders in good faith for value before maturity of Horner's $ 2,500 note, having purchased it in the ordinary course of business as a "transient security," extended, reissued and again made negotiable by the maker. The mortgage security was merely an incident to the debt, passing by assignment of the note alone, and it was the nature of the debt, not the mortgage, which determined the rights, remedies and equities of the parties thereto. Mason v. Bank, 16 Mo.App. 281; Light v. Kingsbury, 50 Mo. 333; Beeler v. Frost, 70 Mo. 186; 2 Daniels' Neg. Inst., sec. 1241; Watson v. Hawkins, 60 Mo. 550, 554; Mitchell v. Ladew, 36 Mo. 526, 533; Logan v. Smith, 62 Mo. 455; Goodfellow v. Stilwell, 73 Mo. 17; Joerdens v. Schrimpf, 77 Mo. 385; Lee v. Clark, 89 Mo. 558. (8) In such case the rule as to what will constitute notice to such purchaser of prior equities is to be determined by the law merchant, not by the law applicable to estates in land. That rule is, that nothing short of bad faith on the part of the purchaser will defeat his title; suspicious circumstances or even gross negligence on his part will not have that effect. Mays v. Robinson, 93 Mo. 114, 122-3; Hagerman v. Sutton, 91 Mo. 519, 531-2; Hamilton v. Marks, 63 Mo. 167, 173, 177-8; Edwards v. Thomas, 66 Mo. 483; Johnson v. McMurray, 72 Mo. 282; 1 Daniels' Neg. Inst., sec. 803; Mason v. Bank, 16 Mo.App. 281-2; Goodman v. Simonds, 20 How. 366. (9) Under the circumstances the defendants obtained a perfect title to the note and the mortgage security incident thereto, free from any prior outstanding equity whatever. Their equity was not only equal but superior to plaintiff's. Crawford v. Spencer, 92 Mo. 509; Deere v. Marsden, 88 Mo. 514; Smith v. Worman, 19 Ohio St. 148; 1 Daniels' Neg Inst., sec. 829; Saffron v. Rayner, L. R. 14 Ch. Div. 406; 2 Pomeroy's Eq. Jur., sec. 666, note 7; 668, note 3; 670-2. (10) On the facts proved, defendants (appellants) are not chargeable with constructive notice of any right or equity in plaintiff, even under the rules applicable to interests in land, as distinguished from the rule relating to negotiable paper. No actual notice to them was alleged or proved. Hagerman v. Sutton, 91 Mo. 531-2; Drey v. Doyle, 99 Mo. 467; Mason v. Black, 87 Mo. 342; Rhodes v. Outcalt, 48 Mo. 370, citing Williamson v. Brown, 15 N.Y. 354, 359; Roan v. Winn, 93 Mo. 511; Kitchen v. Railroad, 69 Mo. 265; Leavitt v. LaForce, 71 Mo. 356; Cornet v. Bertelsmann, 61 Mo. 126; Goodman v. Simonds, 20 How. 366; 2 Pomeroy's Eq. Jur., secs. 606-7.

Alexander Martin and John P. Ellis for respondent.

(1) The land described in the petition and included in the deed of trust was held by Horner wholly in trust for plaintiff. Bispham's Prin. Eq., sec. 86; Phillips v Overfield, 100 Mo. 466; Pom. Eq. Jur., sec. 951; Martin v. Wyncoop, 12 Ind. 266; Bank v. Torry, 7 Hill. 260; Thornton v. Irwin, 43 Mo. 153; Harper v. Mansfield, 58 Mo. 17; Mitchell v. McMullen, 59 Mo. 252; Clarke v. Drake, 63 Mo. 354; Roberts v. Mosely, 64 Mo. 507; Shaw v. Shaw, 86 Mo. 594. (2) The execution of the deed of trust now held by appellants was a breach of trust. Beal v. Harmon, 38 Mo. 435; Strauss v. Drennan, 41 Mo. 289; Richardson v. Richardson, 49 Mo. 29; Thomas v. Pullis, 56 Mo. 211. (3) The holder of the note and the deed of trust in controversy had notice of the trust and breach of it by the curator. They had constructive notice of the facts which constituted the trusts. (4) In applying these principles to conveyances, it is universally held that every purchaser is burdened with constructive and conclusive notice of everything contained or recited in the deeds constituting the chain of title under which he holds. 2 Spencer Eq. Jur., secs. 622, 626, 629, 630; 2 Lead. Cas. Eq. 160; Scott v. McCullock, 13 Mo. 13; Durette v. Briggs, 47 Mo. 356; Orrick v. Durham, 79 Mo. 174; Tydings v. Pitcher, 82 Mo. 379; Morris v. Hoyle, 37 Ill. 155; Rall v. Rea, 12 A. (N. J.) 505; Association v. Erb, 8 A. (Pa.) 62; Huber v. Bossart, 70 Iowa 718. (5) The facts recited and appearing in the deeds forming appellants' chain of title constituted Horner trustee for his ward at the sale, irrespective of whence moved the consideration. A fiduciary holding the secured paper of his ward on real estate, and moving the sale, could not become a purchaser for himself. He could take the title only for his ward. Pomeroy's Eq. Jur., sec. 958; Martin v. Wyncoop, 12 Ind. 266; Thornton v. Irwin, 43 Mo. 153; Harper v. Mansfield, 58 Mo. 17; Mitchell v. McMullen, 59 Mo. 252; Clarke v. Drake, 63 Mo. 354; ...