Bates v. Dana

• Citation: 133 S.W.2d 326,345 Mo. 311
• Decision Date: 22 November 1939
• Docket Number: 35542
• Parties: D. W. Bates, Superintendent of Banking of the State of Iowa, Receiver of the American Savings Bank & Trust Company, of Burlington, Iowa, v. Amos W. Dana, Jennie Dana, John Hoerr, and Rose Hoerr, Respondents, Anna Sellner, Appellant
• Court: United States State Supreme Court of Missouri

133 S.W.2d 326

345 Mo. 311

D. W. Bates, Superintendent of Banking of the State of Iowa, Receiver of the American Savings Bank & Trust Company, of Burlington, Iowa, v. Amos W. Dana, Jennie Dana, John Hoerr, and Rose Hoerr, Respondents, Anna Sellner, Appellant

No. 35542

Supreme Court of Missouri

November 22, 1939

Appeal from Marion Circuit Court; Hon. Ben E. Hulse Special Judge.

Reversed and remanded (with directions).

Boudreau & Kramer for appellant.

(1) The agreement of March 30, 1929, is an enforceable undertaking according to its effect, and constitutes a good and complete defense to plaintiff's suit, and an enforceable obligation on appellant's cross-bill. It is based on a good consideration and all rights in the premises became and are merged in it. Story's Equity Jurisprudence (14 Ed.) sec. 69, p. 767; Pomeroy's Equity Jurisprudence (3 Ed.) secs. 385, 401, 916; Barrie v. United Ry. Co., 138 Mo.App. 645; 21 C. J. 174, sec. 152; Whelon v. Reilly, 61 Mo. 569; Woodward v. Mastin, 106 Mo. 362; Kline v. Vogel, 90 Mo. 245; 42 C. J. 36, sec. 1538; Papadakos v. Soares, 177 Cal. 411, 170 P. 1114; Bertram v. Mullenhof, 3 Porto Rico, 380. (2) The purported defenses stated in plaintiff's reply do not state and constitute matters of defense to appellant's cross-bill or against appellant having benefit of the obligations of the agreement of March 30, 1929. (a) No equitable estoppel operates against appellant. Story's Equity Jurisprudence (14 Ed.), pp. 569-570, 585. (b) Appellant, in filing her claim on her note under said agreement of March 30, 1929, in the insolvency proceedings of plaintiff's insolvent in the District Court of Des Moines County, Iowa, did not elect to accept the position of a general creditor in substitution for the security of said contract nor waive the special benefits thereof. It rather constituted an election to have the benefits of the agreement according to its terms and effects. Richardson v. Turner, 28 So. 160; Mead v. Randall, 71 N.W. 31; Holden & Co. v. Applebaum, 248 N.W. 882; Schaeffer v. Seller, 64 P.2d 1336; Bell v. Fleming's Exrs., 12 N.J.Eq. 13; Tayloe v. Thompson, 5 Pet. 369; Farmers & Merchants Bank v. Wood Bros. & Co., 143 Iowa 635, 118 N.W. 282, 120 N.W. 625; In re Skoll, 66 N.W. 986; Mershon v. Wheeler, 45 N.W. 95. (c) This is a suit in equity. The chancery rule is to the effect that the filing of a claim in the insolvency proceedings and its allowance as a general claim, and receipt of dividends on it, does not constitute a waiver of the benefit of security held, and does not constitute an election to substitute the position of general claimant only, for that of a secure creditor; nor does it work a release of nor an estoppel against claiming the benefit of the security. 32 C. J. 882-884, sec. 176; State v. Yellowstone Valley Bank, 75 Mont. 43, 243 P. 815; U.S. Fidelity & Guaranty Co. v. Centropolis Bank of Kansas City, 17 F.2d 913; American Surety Co. of N. Y. v. DeCarle, 25 F.2d 19; Natl. Surety Co. v. Jenkins, 18 F.2d 710; U.S. Fidelity & Guaranty Co. v. McClintock, 26 F.2d 947; Merrill v. Natl. Bank of Jacksonville, 173 U.S. 146; Chemical Natl. Bank v. Armstrong, 59 F. 378; Washington-Alaska Bank v. Dexter Horton Natl. Bank, 263 F. 306; People v. Remington & Sons, 24 N.E. 794; Wisconsin Natl. Bank of Milwaukee v. Kingston, 252 N.W. 154; Harrington v. Gilchrist, 99 N.W. 909.

Charles C. Clark, John L. Plowman and Elgin T. Fuller for respondent.

(1) There is no evidence of any fraud perpetrated by the bank upon appellant or any one, or in anywise imputable to it, and the defendant, Anna Sellner, failed to prove any fraud on the part of the bank. Fraud is never presumed. 27 C. J., sec. 170 L., p. 44; Decker v. Deimer, 229 Mo. 296; Gass v. Evans, 244 Mo. 329; Kansas City v. Woerishoeffer, 249 Mo. 1; 14 Amer. & English Encyclopedia of Law, sec. XV 1a, p. 190; Jones v. Nichols, 280 Mo. 653; Reger v. Reger, 316 Mo. 1310. (2) The rights of the parties are to be determined by the agreement of March 30, 1929. Blanke Bro. Realty Co. v. Amer. Surety Co. of N. Y., 297 Mo. 41; Liggett v. Levy and Union Natl. Bank, 233 Mo. 590; Pittsburg Bridge Co. v. St. Louis Transit Co., 135 Mo.App. 579; Douglas v. Hammel, 313 Mo. 514; Boggs v. Pac. Steam Laundry Co., 86 Mo.App. 616; Birdsall v. Coon, 157 Mo.App. 439; Wright v. Great Eastern Cas. Co., 206 S.W. 428; Hicks v. Natl. Surety Co., 169 Mo.App. 479. (3) Respondent had the right to amend his petition by adding a second count, declaring on the judgment based upon the same debt as that represented by the note sued upon in the first count; no additional process being necessary upon such amendment. State ex rel. Noe v. Cox, 19 S.W.2d 695, 323 Mo. 520; Sec. 798, R. S. 1929; 49 C. J., sec. 680, p. 517; State ex rel. Dunklin County v. McKay, 325 Mo. 1075, 30 S.W.2d 83; Amos v. Fleming, 221 Mo.App. 559, 285 S.W. 134. (4) The court had no jurisdiction to render a personal judgment against any defendant upon constructive service. Smith v. Cutchen, 38 Mo. 416; Moss v. Fitch, 212 Mo. 484; Givens v. Harlow, 251 Mo. 231; Elvins v. Elvins, 176 Mo.App. 645; Assurance Co. v. Walden, 238 Mo. 49; State ex rel. v. Blair, 238 Mo. 132; Jones v. Anheuser-Busch Brewing Assn., 188 S.W. 82.

Bohling, C. Cooley and Westhues, CC., concur.

OPINION

BOHLING

This is a controversy between mortgagees. The Superintendent of Banking of the State of Iowa and Receiver of the American Savings Bank and Trust Company, of Burlington, Iowa (hereinafter referred to as the Bank), instituted the action against Amos W. Dana, Jennie Dana, Anna Sellner, John Hoerr and Rose Hoerr, seeking, broadly stated, a judgment foreclosing the rights of said Danas, mortgagors, and defendant Sellner in and to certain real estate to discharge an indebtedness due said Bank; the appointment of a receiver pending the sale, and the reinbursement to plaintiff of $ 4,574.44 advanced to discharge tax liens against said real estate. Constructive service was had on the Danas. John and Rose Hoerr, husband and wife, were tenants on the land. Anna Sellner, a resident of Illinois, held a second mortgage against the real estate and an agreement, dated March 30, 1929, of said Bank. Her pleadings included a cross-complaint. The decree was that the Bank's mortgage be foreclosed and the proceeds applied to, in the order named, the discharge of the indebtedness due plaintiff, the discharge of the indebtedness due Anna Sellner, and the remainder, if any, to Amos W. Dana. Anna Sellner appealed. The litigants state the case turns on the instrument of March 30, 1929, and, consequently, we eliminate collateral issues. A proper perspective for an equitable determination of the issues calls for a narrative of the essential facts.

Dr Amos W. Dana was and is a resident of Burlington, Iowa. He held title to approximately 330 acres of land in Iowa and 390 acres in Marion county, Missouri. About June, 1923, of the Missouri real estate forty acres secured a $ 2500 indebtedness due E. Webbles; 150 acres secured an unpaid balance of the purchase price of $ 9500 due Anna Sellner; and 202.4 acres secured an indebtedness of $ 11,000 and also a second indebtedness of $ 7, 000 due said Bank. The aforesaid $ 18,000 was further secured by a mortgage on said Iowa lands, subject to a prior encumbrance securing $ 31,000 due said Bank. Dr. Dana desired to improve the Missouri real estate, tile it, etc. He requested the Bank to advance the necessary funds. The Bank was willing to advance a part but not all of the estimated amount (between $ 14,000 and $ 15,000) necessary for carrying out Dr. Dana's plans. Dr. Dana conceived the idea that if he could secure the consent of Anna Sellner to accept, after the completion of the improvements, an encumbrance on all the Missouri land subordinate to an encumbrance in favor of the Bank in lieu of her first mortgage on the 150 acres, he could make the necessary arrangements with the Bank. He took the matter up with Mr. Sellner, and secured Mrs. Sellner's consent to accept a new mortgage upon all the Missouri land subordinate to a mortgage securing $ 26,500 due the Bank upon the completion of the plans. Dr. Dana communicated the results of his negotiations with the Sellners to the Bank, and was informed the Bank would lend $ 36,000 on the Iowa land and $ 30,000 on the Missouri land. The improvements were completed and, among other things, the Webbles' debt was discharged. It appears that the Bank or its representative undertook to attend to the details of the transactions, including the necessary steps for the protection of Anna Sellner's interest. At the time of drafting the papers, the Bank's representative telephoned Dr. Dana at his office and obtained his consent to secure the $ 66,000 indebtedness due the Bank by a mortgage covering the Iowa and Missouri lands. Anna Sellner had no knowledge of and did not consent to any modification of her understanding with Dr. Dana. The note evidencing the $ 66,000 due the Bank was dated June 8, 1923, payable five years after date, and was secured by a mortgage of even date on the Iowa and Missouri lands. The mortgage was recorded in Marion county, Missouri, on June 11, 1923. The note evidencing the $ 9,500 due Anna Sellner was dated June 9, 1923, payable six years after December 31, 1922, and was secured by a mortgage on the Missouri land of even date and was acknowledged as of said date; but this mortgage was not recorded until April 2, 1927. Dr. Dana testified he advanced to the Bank the necessary money for recording the two mortgages. No mention is made in the $ 9,500 mortgage with respect to its being subject to any prior encumbrance. These papers were all part of one transaction. Mr. Boudreau, a lawyer, employed by the Sellners, ascertained, in 1927, that the $ 9,500 Sellner...