Anderson v. Baumgartner

• Decision Date: 31 March 1858
• Citation: 27 Mo. 80
• Parties: ANDERSON, Respondent, v. BAUMGARTNER et al., Appellants.
• Court: Missouri Supreme Court

27 Mo. 80

ANDERSON, Respondent,

v.BAUMGARTNER et al., Appellants.

Supreme Court of Missouri.

March Term, 1858.

1. The transfer of a debt secured by mortgage or deed of trust carries the security with it as an incident; if several promissory notes, secured by the same instrument, be assigned to different persons, the assignee of each note will, as a general rule, acquire an equitable interest in the mortgage.

2. The interest which the assignee thus acquires in the security is purely equitable; it may be lost through his negligence; it will be so lost where the rights of innocent purchasers intervene who have been misled by improper representations on his part, or lulled into security by his silence when it was his duty to speak.

Appeal from St. Louis Land Court.

The object of this suit was to compel the trustees under a deed of trust to advertise and sell the premises described therein, and to apply the proceeds in payment of certain promissory notes alleged to be secured by said deed. Baumgartner and Robbins, the trustees, and Andrew Christy, the assignee of other notes secured by the same deed of trust, and George B. Michael, the purchaser at a sale under a junior deed of trust, were made parties defendant to the suit. The petition states in substance that on the 19th day of May, 1846, one John S. Watson made forty promissory notes, payable to George M. Moore; that nineteen of these notes were for the sum of eighty dollars each, and were made payable consecutively at intervals of three months from their common date, May 19, 1846; that twenty of these notes were for $100 each, payable consecutively every three months after five years from their common date; that one of said notes was for $4,000, payable in ten years from date; that the plaintiff, Anderson, is the bona fide assignee and holder under Moore of seven of said notes, to-wit: those payable in 51, 54, 57, 60, 63, 66 and 69 months from date; that all those falling due prior to said seven notes held by plaintiff were paid and satisfied; that all the other notes had been assigned to Andrew Christy; that to secure said notes Watson gave a deed of trust on certain real estate, in which deed Baumgartner and Robbins were named as trustees; that Michael subsequently became the purchaser of the estate of Watson in the land embraced by said deed of trust, and holds subject to said deed; that at the time of his purchase he had both actual and constructive notice that the seven notes held by the plaintiff were a charge on the land, and were unpaid. The plaintiff prayed the court for an order “requiring and directing said Baumgartner and Robbins to advertise and sell the premises described in said deed of trust in the manner in said deed provided, and to apply the proceeds of such sale, according to the provisions of said deed, first, to the payment of the costs and expenses of said trust; next, to the payment of plaintiff's demand, and the balance,” etc.

The defendants, Michael, Christy and Baumgartner, answered, alleging that after the making of said deed of trust by Watson to Moore, Watson made, on the 3d day of June, 1851, another deed of trust of the same premises to the plaintiff as trustee to secure a note of $7,000 to one Barclay, payable in one year after date; that, shortly after, plaintiff, Anderson, purchased and became the owner of this last mentioned note and deed of trust; that the seven notes mentioned in the petition became due and unpaid, and a sale under the deed of trust to Moore was advertised; that before the day of sale said notes were paid by Watson or the plaintiff, and were given up to be cancelled; that immediately thereafter Moore transferred the remaining notes to Christy and assigned to him the deed of trust; that afterwards the plaintiff made a sale of the premises to satisfy the second deed of trust to Barclay; and applied to Michael to become the purchaser, representing that there was nothing unpaid on the first deed of trust, except the notes transferred to Christy; that Michael applied to Moore and Christy for information, and was told by them that nothing was due on the first deed of trust, except the notes in the hands of Christy; that on the faith of these representations Michael became the purchaser under the second deed of trust at the sum of $7,500; that he had no notice that said seven notes were subsisting encumbrances on the land; that Christy had no notice at the time of his purchase that said seven notes were still unsatisfied; that Baumgartner refused to sell the land for the satisfaction of said notes, because he was informed by Moore, while he was a holder of the first deed of trust, that the notes had been paid.

The cause was tried by the court without a jury. In its finding the court sets forth the execution of the notes and the deed of trust by Watson, as stated in the petition, and then proceeds as follows: “That on the 21st day of June, 1851, said Watson executed a second deed of trust on the same property to the plaintiff, as trustee, to secure the payment of a second note for $7,000, payable to one Barclay; that said property was sold by said Anderson, as such trustee, under said second deed of trust, on the 6th day of September, 1852, and purchased by one Carpenter, who transferred his bid to the defendant Michael, to whom the plaintiff, as such trustee, made a deed on the 13th of September, 1852; that Michael thereby acquired all title remaining in said Watson in said property subject to senior encumbrances; that on the 16th day of March, 1851, all of said notes secured by said first deed of trust remaining unpaid, and also said deed of trust, were in the hands of Henry B. Belt, to whom they had previously been delivered by said Moore as collateral security for moneys advanced by Belt to Moore; that said notes, when left by Moore with Belt, were endorsed by said Moore in blank, without recourse; that said property being then advertised for sale under said first deed of trust for the satisfaction of the notes then due, the plaintiff, at the time being the holder of the Barclay note, secured by said second deed of trust, for the purpose of stopping said sale and protecting his interest as junior encumbrancer, became the purchaser for value of seven of said notes then due, namely: three for the sum of eighty dollars each, payable respectively in 51, 54 and 57 months after date, and four for the sum of one hundred dollars each, payable respectively in five years, 63, 66 and 69 months after date, which were then delivered by said Belt to said plaintiff thus endorsed, and said sale was stopped; that said seven notes were the only notes then due and unpaid; that on the 16th of March, 1851, all the remaining unmatured and unpaid notes described in said deed of trust, and the deed itself, were passed over to defendant, Christy--the notes being assigned by Moore without recourse, who also transferred, in writing, without seal, his interest in the deed of trust to said Christy; that said seven notes thus purchased by plaintiff have never been paid; and that he acquired them in good faith, and is the holder and owner of the same; that afterwards he requested the said trustees to sell said property for the satisfaction of the notes held by him; that Robbins was willing to execute the trust, but Baumgartner refused on the supposition that said notes had been paid, and were no longer a lien on said property.

Thereupon the court declares the law as follows: That plaintiff is entitled to have satisfaction of his said seven notes and interest, by a sale of the property described in said deed of trust from Watson and wife to said Baumgartner and Robbins; said sale to be made according to the terms and conditions in said deed mentioned and herein recited. And the court doth order and adjudge that said defendants, Baumgartner and...