Borgess Inv. Co. v. Vette

• Citation: 44 S.W. 754,142 Mo. 560
• Parties: BORGESS INV. CO. v. VETTE et al.
• Decision Date: 16 February 1898
• Court: United States State Supreme Court of Missouri

44 S.W. 754

142 Mo. 560

BORGESS INV. CO. v. VETTE et al.

Supreme Court of Missouri, Division No. 2.

February 16, 1898.

WITNESSES — INCOMPETENCY — EVIDENCE — ACCOUNT BOOKS — MORTGAGE NOTES — BONA FIDE PURCHASERS — VENDOR AND PURCHASER.

1. Plaintiff waives the incompetency of defendant, under Rev. St. 1889, § 8918, to testify to transactions with a deceased person through whom plaintiff derived his interest in suit, by taking defendant's deposition, though it was not used at the trial.

2. Where defendant identified a debit book kept in his business, and his bookkeeper, who made most of the entries, testified that he made a certain entry therein contemporaneous with the purchase of the note in controversy, and concerning the transaction, the book is admissible in evidence.

3. When a negotiable instrument is transferred before maturity, the presumption is that the transferee takes it in good faith, and without notice of equities, or that the instrument is without consideration.

4. A bona fide purchaser, before maturity, of a note secured by a trust deed, takes the security free from claims.

5. A mere suspicion that the note is without consideration, without actual bad faith, will not put a proposed purchaser, before maturity, on inquiry.

6. In regard to setting up equities against a note in the hands of a bona fide purchaser, it is immaterial that the suit is in equity.

7. An innocent purchaser of real property, after recording of a release of a certain trust deed by the trustee therein named and the payee of the note secured, is not protected by such release, where defendant had previously acquired for value, before maturity, the secured notes from the payee, thereby passing the trust deed as an incident of the note, since the release thereafter given was without authority and void.

Appeal from St. Louis circuit court; David Dillon, Judge.

Suit by the Borgess Investment Company against John H. Vette and John W. Dryden, trustee. The bill was dismissed, and plaintiff appeals. Affirmed.

Steward, Cunningham & Eliot, for appellant. Lubke & Muench, for respondents.

BURGESS, J.

This action was begun by plaintiff, in the circuit court of the city of St. Louis, to enjoin and restrain the defendants from selling, under a power of sale in a deed of trust given to secure the payment of a promissory note, certain real property in that city. A temporary injunction was granted, which upon final hearing was dissolved, plaintiff's bill dismissed, and judgment rendered against it for costs. From the judgment, plaintiff appeals.

The petition averred that plaintiff owned a certain lot of ground in the city of St. Louis, which it acquired on January 23, 1894, from Louis Berneso and others, who acquired it in February, 1893, from William J. McGrade, to whom it had been conveyed on February 1, 1893, by one Josephine Wellington; that Josephine Wellington was the owner of said property on October 25, 1892, on which day she executed a deed of trust thereon to J. V. Boucher, as trustee, to secure to Alonzo K. Florida payment of her notes of even date, being one principal note of $5,000, payable in two years, and one principal note for $3,000, payable in six months after date, one semi-annual interest note for $240, payable in six months, and three semiannual interest notes of $150 each, payable in 12 to 24 months after date, said deed of trust being duly recorded in the recorder's office of the city of St Louis; that on January 14, 1893, Alonzo K. Florida, being then the holder and owner of said notes, conjointly with J. V. Boucher, the trustee in the deed, for value made to Josephine Wellington a deed of release and quitclaim, whereby they discharged the property from the lien of said deed, which deed of release was also duly recorded, whereby any lien of said deed of trust was alleged to have been fully released; that the defendant Vette, notwithstanding such release, claims to be the owner and holder of one of said promissory notes of $3,000, and to be entitled to a lien therefor on said realty, and has procured the appointment of his co-defendant, John W. Dryden, as trustee, with the powers conferred by said deed of trust; that said Dryden is advertising the property, under said deed of trust, for sale on February 1, 1895; that said Dryden, notwithstanding his appointment by the court, has no right in said real estate, and said Vette is not legally or equitably entitled to have it sold under said deed, but that, notwithstanding, the defendants are about to make such sale for the purpose of satisfying said $3,000 note, and to deliver a deed at said sale which will be prima facie proof of the recitals therein, and will thus create a cloud upon plaintiff's title to the property, inasmuch as there is nothing upon the records of said city to show that said Vette is not the owner of said note; that said Vette and Dryden have custody and possession of said deed of trust, and of the $3,000 note, but are not in fact the owners thereof, as the same have been paid and satisfied. Plaintiff prayed that defendants might be enjoined from advertising or selling said property, or executing any deed of sale; that the defendants be required to surrender the deed and note for cancellation, to be declared null and void; and for a temporary injunction pending the suit. On October 7, 1895, defendants entered their voluntary appearance to the cause, and filed their answer and motion to dissolve the injunction, wherein they admitted that defendant Vette was the holder of the $3,000 note, and that defendant Dryden was appointed and acting as trustee under the deed of trust in question; and all other allegations of the petition were denied. Affirmatively, the answer set forth that defendant acquired the note from the legal holder, before maturity, for value, in good faith, without notice of any supposed equities, and that, if any releases of the deed of trust were entered on the records, the same are illegal, as not having been joined in or authorized by defendant Vette, the legal holder of the note and deed of trust; that the whole amount of said note is still due and secured by said deed. Florida originally owned the property described in the petition, and, on the same day that the deed of trust in question was executed by Josephine Wellington, he conveyed it to her. On the trial, plaintiff showed title to the property to be in it, and also read in evidence the deed of trust which was held by defendant Vette; also, the deed of release made by Florida and J. V. Boucher, trustee, dated January 14, 1893, and recorded January 27, 1893. For the defendants, defendant Vette was called as a witness. Plaintiff objected to his competency. The attention of the trial court was called to the fact that plaintiff had made him a competent witness by examining him, by way of deposition, in this case. This was admitted by plaintiff, but it was claimed that plaintiff had not offered this deposition, and that, in the same, plaintiff had avoided asking the witness questions concerning this particular deed of trust and note held by Vette. The court overruled plaintiff's objection. The deposition in question was not called for or read, and witness testified, in substance, that he was examined as a witness in a deposition taken by Mr. Eliot, attorney for plaintiff, and in that deposition was asked by Mr. Eliot concerning dealings with Florida for some years preceding his death. He identified a paid check of $2,640, dated November 4, 1892, which on that day he paid to Alonzo K. Florida for the $3,000 note in question; he having dealt with Florida for years. This check was in the usual form, on the National Bank of the Republic, St. Louis, signed by Vette, payable to A. K. Florida, indorsed by the latter, and cleared by the St. Louis clearing house on November 5, 1892. Vette received the recorder's card for the deed of trust and the $3,000 note contemporaneously with the delivery of the check. It took about three weeks to have a deed recorded. He held the note ever since, and for a while had it in bank for collection. He never knew that a deed of release had been made, and had the note in his possession at that time. Witness did not remember whether he received an abstract of title at the same time. Florida was in the habit of delivering an abstract, and then, later on, borrowing it, in connection with an effort to sell the deed of trust. None of the other notes were received by witness. He did not know Josephine Wellington. He bought the note on the strength of Florida's statement. Florida usually wanted cash, and whenever he had the cash in his office he would pay it in that form. Until asked to look it up carefully, he was under the impression that this was a cash payment. He always charged Florida a discount. If Florida had a piece, he would bring it in, and either discount the whole of it, or say he wanted so much money. There was no other understanding of any kind about it. If he had known anything of an attempted release, he would have stopped it very quick. Florida has paid him higher discounts than this. Witness identified a number of checks which Florida paid him from time to time, and explained that they were for different loans and indebtedness. Witness had a lot of Florida's paper, and the latter would come...