Crawford v. Aultman & Company

• Citation: 40 S.W. 952,139 Mo. 262
• Parties: Crawford, Appellant and Respondent, v. Aultman & Company et al., Respondents and Appellants
• Decision Date: 25 May 1897
• Court: United States State Supreme Court of Missouri

40 S.W. 952

139 Mo. 262

Crawford, Appellant and Respondent, v. Aultman & Company et al., Respondents and Appellants

Supreme Court of Missouri, Second Division

May 25, 1897

Appeal from Barton Circuit Court. -- Hon. A. L. Thomas, Special Judge.

Reversed and remanded.

T. W Ditty, Robinson, Cole & Burnett for appellant and respondent.

(1) Where a note secured by a deed of trust has been obtained by the payee through fraud, and the maker of the note files a sufficient bill in equity in the proper court to set aside the note and deed so obtained, and files a sufficient notice of the pendency of said suit in the office of the recorder in the proper county, then the negotiation of said note, after filing said bill and such lis pendens, will not give the purchaser of such note the benefit of the security provided by the deed of trust, free from the equities existing in favor of the maker against the original payee; on the contrary, every such purchaser takes right to the security as an incident to the note, but subject to the same equities that exist in favor of the maker against the original payee. R. S. 1889, sec. 6759; Potter v. McDowell, 43 Mo 93; Johnson v. Carpenter, 7 Minn. 176; Mulanphy Sav. Bank v. Shott, 135 Ill. 655; 2 Black on Judg., sec 550; Taber v. Fox, 9 N.W. (Iowa) 897; First National Bank v. Bryan, 17 N.W. 165. (2) So far as the land is concerned a lis pendens binds everyone who purchases pending the litigation, whether the action be at law or in equity. Cheever v. Minton, 13 Am. St. Rep. 258; 12 Colo. 557. See note to this case. Real Savings Inst. v. Collonious, 63 Mo. 290; Jacob v. Smith, 89 Mo. 673. (3) The purchaser of a note secured by a mortgage takes the security subject to all the equities fastened upon it by stipulation or recital contained in any recorded instrument which forms a part of the chain of title. Orrick v. Durham, 79 Mo. 174; Bennett on Lis Pendens, sec. 281. (4) The doctrine that the record imparts notice runs through all the principal authorities, which hold that "the mortgage is but an incident of the note, partakes of its negotiability, and passes to a purchaser free from equities." Hagerman v. Sutton, 91 Mo. 532; Anderson v. Baumgartner, 27 Mo. 87; Joerdon v. Schrimpf, 77 Mo. 287. (5) The court had the subject-matter of the suit within its grasp; had jurisdiction of that, and likewise of the parties; and the doctrine is too well settled to admit of either discussion or dispute, that when a court of equity has once acquired jurisdiction of a case it will not relax its grasp to the res until it shall have avoided a multiplicity of suits by doing full, adequate, and complete justice between the parties. Real Savings Inst. v. Collonious, 63 Mo. 290; Corby v. Bean, 44 Mo. 379; Rozier v. Griffiths, 31 Mo. 171; Keeton v. Spradling, 13 Mo. 321; Primm v. Raboteau, 56 Mo. 407; McDaniel v. Lee, 37 Mo. 204. (6) Where a deed of trust was procured by fraud, by which the maker was led to sign such deed under the belief that the paper she was signing was a mere formal matter, and not a deed of trust, and the evidence shows such deed of trust was never in fact acknowledged by the maker, although the party guilty of the fraud indorsed a certificate of acknowledgment on such deed, its record imparts no new validity to it, and it is of no more force or effect in the hands of the assignee of the note which it secures, than it would be in the hands of the fraudulent payee of such note.

McCluer & Bowling for respondents and appellants.

(1) The rule that under the general prayer for relief a party may have any relief to which he may show himself entitled, is limited to relief founded on and consistent with the facts set out in the bill, and not such as may be proven at the hearing. Newham v. Kenton, 79 Mo. 382; Central National Bank v. Doran, 109 Mo. 40; Reed v. Bott, 100 Mo. 62; Ross v. Ross, 81 Mo. 84. (2) Plaintiff could not recover the amount of the note for the reason that she had not paid same, was refusing to pay, and even had the enforcement of same enjoined. She should not, in a court of equity, be allowed to recover the amount of the note, and still refuse to pay same. Whelan v. Reilly, 61 Mo. 565. (3) Graff should have been made a party defendant so that the whole controversy might be settled in the one suit. Hare v. Hadley, 28 Atlantic, 452; Butler v. Lawson, 72 Mo. 227; O'Fallon v. Clopton, 89 Mo. 284; Hayden v. Marmaduke, 19 Mo. 403. (4) This being a suit in equity the court will examine the evidence, and the defendant respectfully submits that the overwhelming burden of proof shows that no fraud whatever was perpetrated by the agent of the defendant, but that the entire transaction was fair; that the matter was conducted in the ordinary way of securing claims and without fraud. (5) A promise to pay a debt barred by the statutes of limitations is based on a good consideration. Glover v. Cheatham, 19 Mo.App. 661; 1 Daniel on Neg. Instruments, sec. 182; Story on Prom. Notes, sec. 185; Metropolitan Bank v. Taylor, 62 Mo. 338; Boeckler v. McGowan, 9 Mo.App. 373; Meyers v. Van Wagoner, 56 Mo. 115; Meads v. Hutchinson, 111 Mo. 620. (6) There was no notice given that the deposition of M. E. Johnson, taken in the injunction case, would be offered in this case, and same was not filed in this case, and should have been excluded. Samuel v. Withers, 16 Mo. 541. (7) The note and mortgage are held by an innocent purchaser, and the courts have always held that ownership of negotiable instruments is not affected by lis pendens. Keiffer v. Ehler, 18 Pa. St. 388; Carr v. Lewis Coal Co., 96 Mo. 158; s. c., 15 Mo.App. 555. (8) This note was out of the jurisdiction of the court when the suit was commenced. Even if removed after suit commenced it would be sold free of any equities. If lis pendens applied it would not be good beyond the limits of the State of Missouri. Car v. Lewis Coal Co., 96 Mo. 149; Shelton v. Johnson, 70 Am. Dec. 263. (9) An assignment of a note carries with it the security for the same without any transfer of same. Boatmen's Savings Bank v. Grewe, 84 Mo. 477; Anderson v. Baumgartner, 27 Mo. 87.

Burgess, J. Gantt, P. J., and Sherwood, J., concur.

OPINION

Burgess, J.

This is a suit in equity, the object being, as appears from the allegations of plaintiff's petition, to set aside and cancel a certain note for $ 823, executed by plaintiff to C. Aultman & Company on the fifteenth day of September, 1891, due ninety days after its date, and a deed of trust executed at the same time by her to one H. H. McCluer as trustee for said Aultman & Company on a tract of land in Barton county, Missouri, to secure its payment, upon the ground that they were obtained by fraud and fraudulent representations.

The trial resulted in a judgment and decree by which Aultman & Company were required to pay to plaintiff the principal of said note, together with eight per cent interest on the same from its date to its maturity, which amounted to $ 836, and an order that execution issue against said company therefor. Both plaintiff and Aultman & Company appeal.

The material allegations of the petition are as follows:

"Plaintiff states that heretofore, to wit, on the 15th day of September 1891, she was the owner in fee of a certain tract of land, situated in the county of Barton, in said State, of the value of fifteen hundred dollars; that said land was bought with the proceeds of life insurance of her husband now deceased, taken out and made payable to her at his death. That defendants, desirous of obtaining possession of said land, fraudulently and wickedly devised a scheme by which they might obtain possession thereof, acquire a lien thereon, and acquire the title thereto, without paying to plaintiff the value thereof. That said land is described as follows, to wit:

"'The south half of the northwest quarter of section number 32, except twenty acres off the east side thereof, and also the north half of the northwest quarter of section number 32, except twenty acres off the east side thereof and except, also, ten acres off the west side thereof, all in township number 31, of range number 32, containing in all one hundred and ten acres, more or less.'

"Plaintiff states that she is, and was at the date aforesaid, in bad health; that she is the mother of five children, all under the age of eighteen years; that within the past six months she lost her husband by death; that by reason of the cares and responsibilities upon her thrown, and by reason of the mental suffering to her caused by her husband's death, as aforesaid, and by reason of her ill health, as aforesaid, she is, and was, incapacitated from carefully and properly attending to business; that the defendant, C. Aultman & Co. by their agent, one Geo. E. Bowling, taking advantage of plaintiff's said incapacity, wickedly, falsely, and fraudulently did represent to the plaintiff that they were possessed of and held a legal, valid, and subsisting claim against her said above described land; that said claim would be at once enforced against said land and the land sold to pay the same; that by plaintiff executing a deed of trust upon said premises for the use and benefit of said C. Aultman & Co., for the sum of eight hundred and twenty-three dollars, plaintiff would save her said land, otherwise it would be lost to her; that they would serve papers on her, the same as an execution, immediately. That after the representations made as aforesaid were made as aforesaid plaintiff asked the said Geo. E. Bowling, agent as aforesaid, if he would not give plaintiff time to consult an attorney, to which said Bowling replied, that if plaintiff did not execute the deed of trust on the land, he would have papers served to take the land away from her immediately; that if plain...