Southern Commercial Savings Bank v. Slattery's Administrator

• Decision Date: 19 February 1902
• Parties: SOUTHERN COMMERCIAL SAVINGS BANK v. SLATTERY'S ADMINISTRATOR et al., Appellants
• Court: Missouri Supreme Court

66 S.W. 1066

166 Mo. 620

SOUTHERN COMMERCIAL SAVINGS BANK v. SLATTERY'S ADMINISTRATOR et al., Appellants

Supreme Court of Missouri

February 19, 1902

Appeal from St. Louis City Circuit Court. -- Hon. Jas. E. Withrow Judge.

Affirmed.

Noble & Shields for appellants.

(1) Evidence on which decree is based is incompetent. The record shows that Street and Hofmeister conducted the negotiations with Lange in question, that Lange is dead, and that Street and Hofmeister were stockholders and directors of plaintiff and its agents in these very transactions, and were not competent witnesses. 1 Whart. Ev., sec. 466; Leach v McFadden, 110 Mo. 584; 1 Greenl. Ev., secs. 333, 386 389, 390; Williams v. Perkins, 83 Mo. 379; Meier v. Thieman, 90 Mo. 442; Bagnall v. Bank, 70 Mo.App. 506; Lightner's Adm. v. Gregg, 61 Mo.App. 653; Lins v. Lenhardt, 127 Mo. 290; Berry v. Hortzell, 91 Mo. 136; Messmer v. McCoy, 113 Mo. 282; Wendover v. Baker, 121 Mo. 273; Chapman v. Dougherty, 87 Mo. 617; Curd v. Brown, 148 Mo. 95; Wilcoxson Bank v. Rood, 132 Mo. 263; Wood v. Mathews, 73 Mo. 477; Butts v. Phelps, 79 Mo. 302; Williams v. Edwards, 94 Mo. 451; R. S. 1889, sec. 8918; Brim v. Fleming, 135 Mo. 597; Green v. Ditsch, 143 Mo. 9; Eyerman v. Piron, 151 Mo. 115; Kuhn v. Ins. Co., 71 Mo.App. 309; Holman v. Lange, 143 Mo. 106; Baker v. Reed, 162 Mo. 341; Henry v. Buddecke, 81 Mo.App. 364; Newspaper Co. v. Jung, 81 Mo.App. 577. Plaintiff having taken Slattery's deposition on the whole case, he was a competent witness in his own behalf. Tomlinson v. Ellison, 104 Mo. 105; Holman v. Lange, 143 Mo. 107; Hoehn v. Stuttenon, 71 Mo.App. 402; Ess v. Griffith, 139 Mo. 329; Borgess v. Vette, 142 Mo. 570. (2) If this court should hold Street and Hofmeister competent, the judgment should be for Slattery's administrator on the whole evidence. The referee reported all the evidence, and this is an equity case, and this court will review the evidence and render such judgment as ought to be rendered. Blount v. Spratt, 113 Mo. 48; Lins v. Lenhardt, 127 Mo. 271; Warren v. Ritchie, 128 Mo. 311; Clark v. Bank, 57 Mo.App. 277; Ely v. Ownby, 59 Mo. 437; Holt v. Simmons, 16 Mo.App. 97; Lewis v. Donovan, 8 Mo.App. 603; Knapp v. Publishers' Co., 127 Mo. 53; Heman v. Brinton, 14 Mo.App. 121; Benner v. Markle, 37 Mo.App. 234; Prendergast v. Eyermann, 16 Mo.App. 387. (3) Delivery of deed of trust to Renner is immaterial. Delivery is a question of intention. Lange never intended to deliver deed of trust and notes to Renner, who was his tool, except for the purpose of making the notes negotiable. Powell v. Banks, 148 Mo. 632; Ayers v. Milroy, 53 Mo. 521. To constitute delivery, deed must pass under power of grantee with consent of grantor. So long as grantor retains control of the deed he retains title. Invers v. Pumphrey, 24 Ind. 240; Wilson v. Cassidy, 2 Ind. 562; Elmore v. Marks, 39 Vert. 541; Cook v. Brown, 34 N.H. 475; Parker v. Dustin, 2 Foster, 424; Maynard v. Maynard, 10 Mass. 456; Hawks v. Pike, 105 Mass. 583; 1 Daniels, Neg. Inst. sec. 67, p. 85; Stokes v. Anderson, 118 Ind. 533; Kenney v. Ford, 52 Barb. 194. (4) Deed of trust is an incident to the debt and when a debt is created by negotiation of the notes, the deed partakes of the negotiability of these notes and passes with them as security. Logan v. Smith, 62 Mo. 455; Hagerman v. Sutton, 91 Mo. 519; Johnson v. Johnson, 81 Mo. 336; Bell v. Simpson, 75 Mo. 485; Bank v. Carondelet, etc., Co., 150 Mo. 570; Kingsland v. Chrisman, 28 Mo.App. 314; Mays v. Robinson, 93 Mo. 123. (5) Plaintiff's notes not the notes secured by deed of trust. Plaintiff's case is supported by statements and actions of the deceased maker of the notes and deeds of trust narrated five years after the occurrences by interested witnesses. Such testimony is not to be relied on. Johnson v. Morles, 42 Mo. 437; Underwood v. Underwood, 48 Mo. 531; Wendover v. Baker, 121 Mo. 297. (6) Notes held by Slattery were negotiated by Lange on July 13 or 14, 1892, for value, before bank's set were negotiated, and as they were notes described in the deed of trust they carried the deed with them. Slattery also had deed, certificate of title and insurance policies. These notes becoming the only true set of notes by negotiation for value to Slattery, continued such, and when hypothecated again with Slattery for value, carried the deed of trust, and are entitled to its security. George v. Somerville, 153 Mo. 14. (7) The doctrine of delivery by relation has no application, as rights of innocent third parties intervened. Jackson v. Griswold, 4 Johns. 230; Jacobus v. Life Ins. Co., 27 N. J. E. 604; Judge v. Lockenger, 62 N.Y. 270; Durfee v. Noels, 2 N.Y.S. 466; 3 Caines R. 261. (8) Two sets of notes existing, possession of the deed of trust and insurance policies by one purchasing the same for value, should be conclusive as to which notes were intended to be secured by deed of trust, in the absence of competent and convincing testimony to the contrary. (9) The bank put it in the power of Lange by its conduct to defraud Slattery, and by its negligence in not retaining possession of the deed or recorder's receipt enabled Lange to negotiate Slattery's set of notes, and where one of two innocent parties must suffer, he must bear the burden or loss whose acts or neglect has been the occasion of the suffering. Simpson v. Bk. of Commerce, 43 Hun, 50 S.Ct. (N.Y.) 161; Bank v. Cartright, 22 Wend. 348; McNeal v. Bank, 46 N.Y. 325; Simpson v. Del. Hugo, 94 N.Y. 189; Preston v. Witherspoon, 109 Ind. 419; Hunter v. Bradley, 68 Ill. 553; Carpenter v. Langan, 16 Wall. 271; Pa. Rd. App., 86 Pa. 81; White v. Springfield, 3 Seld. 22; Ladd v. Campbell, 56 Vt. 529; Porter v. King, 1 F. 755; 1 Am. Ency. Law, p. 417, sec. 1; Bottevick v. Potter, 63 Mo. 212; Guffey v. Riley, 88 Mo. 429; Terrell v. Andrew Co., 44 Mo. 312; Smith v. Perkins, 8 Biss. 73; Olcott v. Crittenden, 68 Mich. 230. (10) A subsequent bona fide purchaser who has been vigilant will be protected against a prior one who has not been vigilant. Judson v. Cocoran, 17 How. 615; Dean v. Hale, 3 Russell, 1; Loveridge v. Cooper, 3 Russell, 160; Mongells v. Dickson, McN. & G. 437; Borley v. Greenleaf, 7 Wheat. 46; Murray v. Withrow, 2 John. Ch. 442; Moon v. Holcombe, 3 Leigh, 507; Baker v. Wood, 157 U.S. 216; Executor v. Leist, 13 Ohio St. 419; Falkner v. White, 45 N.W. 1122. (11) The evidence as to signing and stamping Slattery's notes by Singer and Renner in the fall of 1892, falls of its own weight, and does not impair Slattery's evidence or his title to his notes and the security of the deed of trust. In answer to plaintiff's contention that estoppel is not pleaded, we cite Savings Bk. v. Branch, 104 Mo. 440.

W. M. Kinsey and Rassieur & Rassieur for respondent.

(1) Both Hofmeister and Street were competent witnesses. This proceeding is not adverse to any one whose "lips have been sealed by death." Lange's estate is not affected by it and the parties here stand upon equal terms each claiming priority of right against the other through a separate and distinct transaction had with the deceased and through which the other claims nothing. 1 Wharton's Evidence (3 Ed.), sec. 470; Looker v. Davis, 47 Mo. 140; Amomett v. Montague, 63 Mo. 201; Brim v. Fleming, 135 Mo. 606; Downs v. Belden, 46 Vt. 674; Hostetter v. Schalk, 85 Pa. St. 220; Bates v. Forcht, 89 Mo. 121; Leach v. McFadden, 110 Mo. 584. (2) If it should be held by this court that Hofmeister was incompetent to testify regarding the transaction with Lange on the ground that he was a contracting agent on behalf of the bank, Street's testimony can not be excluded for the same reason, because he was not such contracting agent. Banking House v. Rood, 132 Mo. 256. (3) Respondent became a holder for value of the set of notes relied upon by it on the morning of July 13, 1892, before the deed of trust securing them had been recorded and before the inception of Lange's first transaction with Slattery. The offer of this set of notes and deed of trust by Lange as collateral security for a renewal of his past due loan of $ 10,000 and an increase of the amount to $ 16,000, and their acceptance by the bank upon the terms offered, was a negotiation for value of the notes at that time. What was done afterwards was in further execution only of a valid contract then made. Deere v. Marsden, 88 Mo. 512; Oates v. National Bank, 100 U.S. 827; Daniel's Neg. Inst. (4 Ed.), secs. 826, 827. (4) Respondent was not affected with notice of Lange's intention to duplicate the notes described in the deed of trust, because he was one of its directors. Bank v. Lovitt, 114 Mo. 519; Johnson v. Shortridge, 93 Mo. 227. (5) The transfer by Lange to respondent, on the morning of July 13, 1892, of the notes held by it before he had any transaction with Slattery, in which a similar or duplicate set were used for the first time, vested in respondent title to the security. The security passed as an incident to the debt evidenced by respondent's set of notes without any formal assignment, or, as has been held by very high authority, without even delivery or mention of it. Hagerman v. Sutton, 91 Mo. 531; Carpenter v. Longan, 83 U.S. 275; Kernohan v. Manss, 29 L. R. A. 317; Morris v. Bacon, 123 Mass. 58. (6) There is no evidence in this case that either party had any notice or was put upon inquiry as to Lange's dealings with the other in respect to the security in question until after his death. Both dealt with him in good faith, and in entire ignorance of his fraudulent designs. The party holding the legal title to the security must therefore prevail. Kernohan v. Manss, 29 L. R. A. 317. (7) Appellants seem to rest their case upon the proposition that Lange, being permitted by the bank to retain the recorder's ticket receipt for the deed of...