Hackett v. Watts
| Decision Date | 03 April 1897 |
| Parties | Hackett et al. v. Watts et al.; Bickel, Appellant |
| Court | Missouri Supreme Court |
Appeal from Clinton Circuit Court. -- Hon. William S. Herndon Judge.
Affirmed.
S. H Corn for appellants.
(1) The court erred in permitting plaintiffs to prove their contract with Watts by parol testimony; that contract, so far as it was intended to create a lien upon the land in question to indemnify plaintiffs as sureties upon Watts' note to the bank, was clearly within the operation of the statute of frauds, and no action can be maintained upon it. R. S., sec 5186; Curle's Heirs v. Eddy, 24 Mo. 117-122; O'Neil v. Capelle, 62 Mo. 203-209; Wooldridge v. Scott, 69 Mo. 669; Chambers v. Lecompte, 9 Mo. 575; Price v. Courtney, 87 Mo. 387-395; Vanstone v. Goodwin, 42 Mo.App. 39; Bender v. Zimmerman, 122 Mo. 194-202. (2) Conceding that Watts deposited his contract with the Missouri Wesleyan Institute in the bank in compliance with his agreement with plaintiffs, that did not create a lien on the land. The doctrine that the deposit by a debtor with his creditor of the title deeds to his land creates a lien in equity upon the land, has never prevailed in the United States. 1 Hillard on Mort., ch. 23, p. 457; 1 Jones on Mort. [3 Ed.], ch. 5, sec. 185; 3 Pomeroy Eq., ch. 7, sec. 7, p. 275, secs. 1265, 1266; Curle's Heirs v. Eddy, 24 Mo. 122. This doctrine required an actual, bona fide and immediate deposit of the title deeds with the creditor himself; a parol agreement to deposit would not be enforced. 4 Kent 149, 150; 2 Story's Eq., sec. 1020. (3) Plaintiffs relied solely upon the honor of Watts, and not upon the validity or value of any security promised. They took his word for everything, and signed the note without requiring any preliminary act. Whatever failure there was on Watts' part was simply a breach of promise and this furnishes no ground for the interference of a court of equity with the operation of the statute of frauds. Chambers v. Lecompte, 9 Mo. 575-578; 1 Story's Eq. Jur. [10 Ed.], 755, sec. 760; Wooldridge v. Scott, 69 Mo. 672. (4) Plaintiffs certainly have no higher claim to an equitable lien on this land than they would have had if they had bought it and paid their $ 5,000 to Watts as purchase money, relying on his parol promise to make them a deed; and the authorities all agree that such part performance will not take a case out of the operation of the statute. 1 Story's Eq. [10 Ed.], 755, secs. 760, 761; Galway v Shields, 1 Mo.App. 546; Id., 66 Mo. 313; Lydick v. Holland, 83 Mo. 703. (5) The demurrer to the evidence ought to have been given. The bank of Watson lost its right of action against the plaintiffs as sureties upon its notes against Watts, by its misconduct in relation to the securities deposited by Watts for their protection. It detained them for its own benefit until after the sale of the land. Ferguson v. Turner, 7 Mo. 497; Rice v. Morton, 19 Mo. 263-280; Bank v. Matson, 24 Mo. 333; Taylor v. Jeter, 23 Mo. 244; Dodd v. Winn, 27 Mo. 501; Smith v. Rice, 27 Mo. 507; Biggerstaff v. Hoyt, 62 Mo. 481; Triplet v. Randolph, 46 Mo.App. 569; Bank v. Bartle, 114 Mo. 276; Priest v. Watson, 75 Mo. 310. (6) Having predicated their action upon their contract with Watts, plaintiffs can not recover upon a contract between Watts and the bank. Sumner v. Rogers, 90 Mo. 324; Newham v. Kenton, 79 Mo. 382; Muenks v. Bunch, 90 Mo. 500. (7) The memorandum deposited with the bank at the time Watts obtained the second loan was not sufficient to create an equitable lien, or other interest in the land claimed. It was uncertain in every essential, and utterly meaningless unless aided by parol testimony, and that is not permissible. Brown on Statute of Frauds, sec. 371; Fry on Spec. Per. Cont., sec. 325; Fox v. Courtney, 111 Mo. 147; Ringer v. Holtzclaw, 112 Mo. 519; Rucker v. Harrington, 52 Mo.App. 481; Weil v. Willard, 55 Mo.App. 376. (8) The depositing of the contract was a pledge only of the instrument itself, and created no equitable mortgage or lien upon the land, enforceable against a purchaser even with notice. 3 Pom. Eq., supra.
Lewis & Ramsay for respondents.
(1) There is no controversy about the intention to secure plaintiffs by pledging or transferring Watts' equitable interest in the Cameron property as evidenced by his contract with the Wesleyan Institute. It was deposited with the bank as agreed upon, and was subsequently assigned in writing to the bank which held the note on which they were sureties. It was the well defined purpose to appropriate this property to the security of the debt, and, whether formal or not, is binding in equity and may be enforced. 3 Pomeroy's Eq., secs. 1235-1237; McQuie et al. v. Peay et al., 58 Mo. 56-58; Martin v. Nixon, 92 Mo. 26-34; Ketcham v. St. Louis, 101 U.S. 306-318; 6 Am. and Eng. Ency. of Law, 681-682, and notes; Jones on Mort. [3 Ed.], secs. 163 to 170. And it may sometimes be done by parol. Id., secs. 164 and 165. (2) The assignment by the vendee of a contract or certificate of purchase of lands creates a mortgage and "the rules applicable to a mortgage of real property govern it, both as to the effect of it and the mode of enforcing it." 1 Jones on Mort. [3 Ed.], sec. 172. Property or its proceeds may be followed so long as it can be identified. Am. Sugar Ref. Co. v. Fauch, 27 L. R. A. 75. Equitable interests may be transferred by parol where party is put in possession. Rosenberger v. Jones, 118 Mo. 559-566; Grumley v. Webb, 48 Mo. 562. A mortgage permit at request of mortgagor with verbal promise of lien creates a lien. Moore v. Lindsley, 52 Mo.App. 480; Wilson v. Brown, 13 N.J.Eq. 277; Norton v. Highleyman, 88 Mo. 621-624. (3) Watts' interest in the Cameron property was evidenced by an unacknowledged written contract, only purporting to create an equitable title, and not entitled to record; that and his possession under it represented his whole title. Nothing rightly could appear of record and the mere deposit of the contract as collateral security both on principle and authority would create an equitable lien. 6 Am. and Eng. Ency. of Law, 683, and note; Bispam's Eq. [2 Ed.], sec. 357; Jarvis v. Dutcher, 16 Wis. 307; 1 Jones on Mort. [3 Ed.], secs. 179 to 188. (4) A vendee who advances money towards purchase of lands upon a verbal contract where vendor refuses to convey, may have a lien upon the lands for the amount paid, which is not a more persuasive equity than the one at bar. Pratt v. Clark, 57 Mo. 189; Stewart v. Wood, 63 Mo. 252. (5) If this were a case where the defense of the statute of frauds was otherwise warranted it could not avail as a defense here for the reason that it has not been pleaded as a defense. Maybee v. Moore, 90 Mo. 340. (6) If the deposit of the contract with the bank of Watson for the purpose of securing plaintiffs, created an equitable lien, then the subsequent assignment to the bank with notice of that fact simply made the bank a trustee for that purpose to extent of plaintiff's liability. Bailey v. Winn, 101 Mo. 649-655; Stillwell v. Hamm, 97 Mo. 579. If such deposit did not have that effect and the assignment simply secured the bank on all claims, then plaintiffs having paid the debt would be entitled to be subrogated to the place of the bank. Schell City Bank v. Reed, 54 Mo.App. 94; Benne v. Schnecko, 100 Mo. 250-257. And all other claims to the bank having been adjusted and no one else having an interest under the assignment, the whole of the collateral remaining would in equity belong to plaintiffs to secure them. Furnold v. Bank, 44 Mo. 336-339; Clark v. Bank, 57 Mo.App. 277-283.
This is an action by plaintiffs to recover against the defendant Watts the sum of $ 5,586.65, paid by them to the Watson Bank as surety for said Watts; to be subrogated to the rights of said bank in and to a certain contract for the purchase of a tract of land therein described, one life policy of insurance and four hundred shares of stock in the Sioux Valley Stone Company, deposited by said Watts with said bank as collateral security for said debt; to set aside a certain deed from the Missouri Wesleyan Institute to the defendant Bickel for said land; that he be declared to hold title to same for the use and benefit of plaintiffs; and that said land, policy of insurance, and shares of stock be sold, and that the proceeds arising from such sale be applied to the payment of their demand.
On the second day of March, 1891, defendant Watts purchased from the Missouri Wesleyan Institute a tract of land in the city of Cameron, Missouri, at the agreed price of $ 1,000. The purchase money was paid at the time, but instead of making Watts a deed for the land the Institute executed to him an instrument of writing by which it obligated itself to execute to him a deed in fee simple by deed of general warranty upon the payment of the purchase money. This instrument, although not acknowledged, was filed for record in the recorder's office of Clinton county, Missouri, on the twenty-first day of September, 1892. Watts built a house on the land at a cost of $ 5,000 to $ 6,000, and moved into it with his family.
On August 18, 1891, Watts, desiring to borrow $ 5,000 from said bank, applied to the plaintiffs to become his sureties on a note for that amount, and to indemnify and save them harmless from their liability he proposed to transfer to them his contract for the purchase of said land, together with his life insurance policy, and certificates for two hundred shares of stock in the Sioux Valley Stone Company. The trial court found that under these conditions plaintiffs signed the note as Watts' sureties, and that he received the money on the note, and at that time...
To continue reading
Request your trial