Bishop v. Chase

• Citation: 156 Mo. 158,56 S.W. 1080
• Court: United States State Supreme Court of Missouri
• Decision Date: 20 March 1900
• Parties: BISHOP et al. v. CHASE et al.

56 S.W. 1080

156 Mo. 158

BISHOP et al. v. CHASE et al.

Supreme Court of Missouri, Division No. 2.

March 20, 1900.

PAYMENT — WHAT CONSTITUTES — APPLICATION — BILLS AND NOTES — INDORSEMENT — ALLONGE — BONA FIDE PURCHASERS — EXECUTORS AND ADMINISTRATORS — CHARGES AND CREDITS — ESTOPPEL.

1. An executor, in negotiating for the purchase of real property for the estate, insisted that the price should be applied on a note and mortgage incumbering the property, and accordingly paid the principal and interest of the note to the holder by his individual check, for which a receipt was given to his grantor, reciting that the money was received to pay the loan, and the note was assigned to him by the payee without recourse. Held, that the payment of the money was a satisfaction of the note and mortgage.

2. An indorsement of a note written on a separate piece of paper, reciting that the note, with deed of trust accompanying, was placed as collateral security for a loan on another note, and attached to the original and collateral notes by a pin, where there is plenty of room on the note for the indorsement, was insufficient to invest the transferee with the rights of a bona fide purchaser.

3. A negotiable note secured by a mortgage on real property, purchased by an executor of the estate of his decedent, having been placed as security for an individual loan to the executor by an irregular indorsement, amounting to a mere assignment, the devisees may defend against an enforcement of the note and mortgage by showing payment, though not parties to the transaction.

4. An executor purchased land for the estate, and subsequently was removed by the devisees, and an administrator d. b. n. appointed. A final settlement was made between the executor and administrator, the devisees being represented by attorney, in which settlement the executor was not credited with the purchase of the land, but the purchase price was included in other debts to the estate for which execution was obtained against the executor and his sureties. Held, that the devisees and administrator were estopped to claim any interest in the land.

Appeal from circuit court, Jackson county; John W. Henry, Judge.

Suit by Mary E. Bishop and others against Charles W. Chase and others to set aside trustee's sale of land. From a decree for defendants, plaintiffs appeal. Affirmed.

This is a suit in equity by plaintiffs to set aside a trustee's sale of a small tract of land in Kansas City, Mo., made by defendant O'Neill, sheriff, and trustee under a deed of trust on said land executed by J. T. Chambers and his wife, Othelia, on the 19th day of April, 1889, to Samuel Foster, trustee, for the use and benefit of Charles R. Hicks, to secure the payment of a promissory note for the sum of $3,700, dated on the 17th day of April, 1889, due three years after its date, and executed by said Chambers and wife to said Hicks. In 1878, one John Jones died testate in Ohio, possessed of real and personal property in Jackson county, this state. He left surviving, as his only heirs at law, two children, viz. Mary E. Bishop and Edward J. Jones. By his will, which was duly admitted to probate in said county, the testator named Charles W. Chase as his executor, who thereafter qualified as such. By his will the testator directed his executor to sell all of his real estate, and, after paying some bequests, to invest the balance of the proceeds in unincumbered real estate, the interest and profits arising from which were to be divided equally among his two children during their natural lives. The investments were to be made in Kansas City. The executor sold the land as directed by the will, realizing therefrom something over $22,000. He then began negotiations with Matt H. Crawford for the purchase of the land in litigation, for which the latter asked $5,000. It had formerly been owned by said Chambers and wife, from whom Crawford derived title, and while they owned it they had placed upon it the deed of trust under which it was sold at trustee's sale, at which defendant Arnold became the purchaser. In the negotiations between Chase and Crawford for the purchase of the land, it was developed that it was incumbered by said $3,700 deed of trust, and they went to Hicks, to whom the note was executed, to see what could be done about it. Hicks had negotiated the note, and did not have it in his possession, but promised to get it back; and thereupon Chase, by his individual check, paid $3,852.11, the amount of the note and four coupons notes then due, and 2 per cent. commission thereon, to Hicks. At the same time Hicks made out in the name of Hicks & Foster (of which firm he was a member), and delivered to Crawford, the following receipt: "$3,852.11. Kansas City, July 22nd, 1890. Received of M. H. Crawford, Esq., three thousand eight hundred fifty-two and 11/100 dollars, to pay loan No. 211, made April 17th, 1889, by J. T. Chambers and wife, on north 32½ feet of south 65 feet lots 1, 2, 3, and 4 (except 5 feet off lot 4), block 3, Jas. Goodin place, which is to be delivered within ten days. [Signed] Hicks & Foster." About August 1, 1890, the $3,700 note was returned to Hicks, and he then indorsed and delivered it and the coupon notes to Chase, and, by the terms of the indorsement, made the notes payable to the order of Chase without recourse upon him (Hicks). Hicks testified that he had no knowledge that Chase was executor of Jones, or that the money paid him belonged to the Jones estate. On September 16, 1890, Chase borrowed from the defendant Lahme $1,000, and to secure its payment executed to him his note for that amount, due one year after that date, and as collateral security thereto delivered to him the note for $3,700, and executed and delivered to him the following instrument of writing: "Kansas City, Mo., September 16th, 1890. The attached note (with deed of trust accompanying), for $3,700, dated Kansas City, Mo., April 17th, 1889, due 3 years from date, signed by J. T. Chambers and wife, is placed as collateral security with Adolph Lahme for payment of my note of $1,000, due in one year from date. C. W. Chase." At the same time Chase took the $3,700 note of Chambers and wife, a blank letter head of H. C. Kumpf & Son, the above collateral agreement, written upon a letter head of H. C. Kumpf & Son, and the $1,000 note, and, placing them one on top of another in the order as set out above counting from the bottom, attached them all four together by a pin through the upper left-hand corner, and delivered them to Lahme. Six years passed by. During this time Chase made two payments of interest to Lahme on the $1,000 note, the payments being made in years 1892 and 1893. In March, 1896, Lahme requested respondent O'Neill, who was sheriff of Jackson county, to act under the power in the Chambers deed of trust, and sell the land; the trustee, Foster, having left the state. The sheriff, acting under the power and in regular manner, proceeded to advertise and sell the land on March 30, 1896. While there was room on the $3,700 Hicks note to have written the collateral contract given to Lahme, there was not sufficient room on the coupon notes to have written the same. The collateral agreement was put on another piece of paper, and pinned to the notes, because it was more convenient to do it that way. Lahme testified that he loaned the $1,000 to Chase through George Kumpf, who was acting for Chase, and that he took the notes in question without any knowledge of any lack of title in Chase to the $3,700 note and coupons, or that it was paid, or that there was any claim that it had been paid, and that he took this note on the strength and validity of the same as the property of Chase and as security for such loan. This evidence of Lahme was undisputed by any witness in the case, and the undisputed evidence of George Kumpf was that the loan of $1,000 was made and the security taken by Lahme before the maturity of the $3,700 Hicks note, or the coupons attached thereto, and without any knowledge on his part that the last-named note had been paid, or was claimed by any one to have been paid, and with the thought that the bond was straight, as it appeared on its face. Attorney Evans testified that he, acting for the plaintiffs, learned from Chase of the alleged payment by Chase of the $3,700 note as long ago as September or October, 1890, and then demanded of Chase this note, but failed to get it. Between four and five years after the transaction aforesaid between Chase and Lahme, and after Attorney Evans, representing the plaintiffs, had first learned of the alleged payment of the $3,700 note out of the funds of the Jones estate, and after he had tried and failed to get this note from Chase, these plaintiffs caused Chase's settlements as executor to be set aside, and him to be removed as executor, and his account as executor of the Jones estate to be examined and recast, and through their attorney's efforts a judgment for $18,198.81 to be obtained in the probate court in favor of Seehorn, the administrator de bonis non of the estate, against Chase and his sureties in said estate, including therein as a credit to Chase the purchase price of the property, including the $3,700 note involved in this suit. This judgment of the probate court against Chase and his sureties for $18,198.81 was obtained on January 20, 1896, and included the $5,000 purchase money of the property in question, and $1,316.65 interest thereon, and Chase was expressly charged in said judgment with having used said $5,000 for his own private uses, and no credit therefor from said estate was there or elsewhere allowed to Chase. Next following the charges in the settlement aforesaid in the probate court between Chase, executor, and Seehorn, administrator de bonis non, of the estate of John Jones, of January 20, 1896, is the following finding, entered then and there by the probate court: "And the court further finds that the executor has...