Board of Trustees of Westminster College v. Peirsol

• Decision Date: 26 March 1901
• Citation: 61 S.W. 811,161 Mo. 270
• Parties: BOARD OF TRUSTEES OF WESTMINSTER COLLEGE, Plaintiff in Error, v. PEIRSOL et al
• Court: Missouri Supreme Court

61 S.W. 811

161 Mo. 270

BOARD OF TRUSTEES OF WESTMINSTER COLLEGE, Plaintiff in Error, v. PEIRSOL et al

Supreme Court of Missouri, Second Division

March 26, 1901

Appeal from Morgan Circuit Court. -- Hon. D. W. Shackleford, Judge.

Reversed and remanded (with directions).

Ross & Washburn for plaintiff in error.

(1) The objection to the introduction of any evidence because of the alleged insufficiency of the petition is not well taken. It stated a cause of action to foreclose the deed of trust, and that was all the defendant Fry was interested in. (2) The deed of trust was competent. There is nothing in the objection that the note therein described is not the one offered in evidence. The deed of trust does not contain a verbatim copy of said note but the description in the deed of trust is sufficient to identify it beyond question. It is not necessary that the mortgage contain a literal copy of the instrument thereby secured. It is sufficient to describe it according to its legal effect. Aull v. Lee, 61 Mo 160; Stevens v. Hampton, 46 Mo. 404; Williams v Bank, 72 Mo. 292. (3) This was primarily a bill to foreclose a deed of trust. (a) To sustain a bill to foreclose a mortgage, it is only necessary to produce in court the note thereby secured. Pharis v. Surrett, 54 Mo.App. 9. (b) The production of the note or mortgage purporting to have been properly executed makes out a prima facie case, though such execution is denied by verified answer. 13 Am. and Eng Ency. (2 Ed.), p. 822. (4) Plaintiff offered the note and its indorsements in evidence. Defendant Fry interposed the objection that he was not liable for the payment of the same and that it had not been shown that plaintiff was the legal holder thereof. Fry was not sued on said note, was not a party to it. Only the land in which he bought an equity was sought to be reached. Plaintiff was in possession of the note, and offered said note and its indorsements in evidence. (a) Possession of a negotiable note, indorsed in blank by the payee, gives a prima facie right to recover on it which can be overcome only by direct evidence. Lachance v. Loeblin, 15 Mo.App. 460. (b) The production of a note in court with the indorsement of the payee thereon constituted prima facie evidence of ownership in the plaintiff. Ashbrook v. Letcher, 41 Mo.App. 369; Banister v. Kenton, 46 Mo.App. 462. (c) "The holder of a note is prima facie the owner of it." Humes v. McKenney, 3 Mo. 383; Singleton v. Mann, 3 Mo. 464. (d) "The possession of negotiable paper by an indorsee or by an assignee, where the paper is payable to bearer or indorsed in blank, is universally held to be prima facie proof of bona fide ownership, and the burden of proving the contrary is thrown upon the defendant in the action. The bona fide holder is not subject to equitable defenses so called." Tiedeman on Commercial Paper, sec. 303, pp. 523 and 524. (e) Actual possession of a negotiable instrument payable to bearer or indorsed in blank, is plenary evidence of title in the holder until other evidence is produced to control it. Collins v. Gilbert, 94 U.S. 753; Story on Bills (10 Ed.), 119; Chitty on Bills (12 Ed.), 257; 2 Parsons on Bills and Notes, 479; Milles v. Barbour, 1 Mees. & W. 425; Murray v. Lardner, 2 Wall. 110; Goodman v. Simonds, 20 How. 343; Gillham v. Bank, 2 Ill. 246; Palmer v. Gardner, 77 Ill. 143; Wyant v. Pallorff, 37 Ind. 512; Glum v. Porter, 49 Ind. 500; Jackson Township v. Barnes, 55 Ind. 136; Wallace v. Reed, 70 Ind. 263; Palmer v. Bank, 78 Ill. 380; Scoville v. Landers, 50 N.Y. 686; Hays v. Hathorn, 74 N.Y. 486; Herrick and Burnside v. Swomly, 56 Md. 439; Hesser v. Doran, 41 Iowa 486; Keith v. Champer, 69 Ind. 477; Bedell v. Timothy, 33 N.Y. 381; Hyde v. Lawrence, 49 Vt. 361; Eggen v. Briggs, 23 Kas. 500. (5) The answer of defendant Fry amounts to nothing, and his testimony falls of its own weight when opposed by the deed of trust he executed to secure to McNutt the payment of $ 1,600. (6) The court gave judgment in favor of "defendants." This was error. Piersol made default. Melcher v. Scruggs, 72 Mo. 406.

Wm. Forman for defendants in error.

(1) The note declared on in the petition was a seven per cent compound interest note, interest payable annually, while that described in the deed of trust offered in evidence was a seven per cent simple interest note, both principal and interest due five years after date of note. The note described in the deed of trust was not due at the time this suit was instituted. Koehring v. Muemminghoff, 61 Mo. 403. There was a fatal variance between the deed of trust pleaded and the deed of trust offered in evidence. Faulkner v. Faulkner, 73 Mo. 327; Gray v. Race, 51 Mo.App. 553. (2) It was necessary under the pleadings for plaintiff to prove it was the owner and holder of the note secured by the deed of trust offered in evidence. This it wholly failed to do. Cases cited by plaintiff in his brief on this point do not dispense with the necessity of proof of ownership in plaintiff. (3) The contention of plaintiff that it was sufficient to produce on trial the note secured by the deed of trust is not borne out by the authorities cited in its brief on this point. Under the well-settled rule in this State a debt is the principal thing in a mortgage given to secure it, and a transfer of the debt carries with it the security. Mitchell v. Ladew, 36 Mo. 526; Watson v. Hawkins, 60 Mo. 550; Pharis v. Surrett, 54 Mo.App. 9. Under the pleadings in the case at bar, in order to recover it was incumbent on plaintiff to prove its ownership of the note declared on. This it failed to do. (4) The answer of defendant, Fry, set up a good defense to plaintiff's petition and was fully supported by the evidence in his behalf. The law is well settled on this proposition, as will be seen by the following authorities: (a) Possession of lands by a vendee is constructive notice of his contract of purchase, and of his equity in the land. (b) He is not bound to examine the records for subsequent incumbrances of the land by his vendor, nor is the record notice thereof to him. (c) A mortgage on the lands, executed by the vendor, while the purchaser is in possession, is subordinate to his rights under the contract; and until actual notice of the mortgage, the purchaser may safely continue to make payments of the purchase money to his vendor. (d) Such mortgage is, however, a valid lien on the interest remaining in the mortgagor at the time of its execution, which, before conveyance, is the legal title and a beneficial estate in the land to the extent of the unpaid purchase money; and payments made on the purchase money to the vendor, after the purchaser has notice of the mortgage, will be unavailing as against the mortgagee. Jaeger v. Hardy, (Ohio) 27 N.E. 863; Boyer v. Chandler, 32 L. R. A. 113. Where a vendee of property is in possession, and the vendor conveys the property to a third person, the possession of the vendee is notice to the grantee, and to all the world, of all claims of the vendee. Railroad v. Boyd, 7 N.E. 487; Phelan v. Brady, 8 L. R. A. 211; Ranney v. Hardy (Ohio), 1 N.E. 523. The only sensible rule is, that actual residence upon the land is notice to all the world of every claim which the tenant may legally assert in defense of his possession. Bartlett v. Glasscock, 4 Mo. 62; Davis v. Briscoe, 81 Mo. 37; Leavitt v. La Force, 71 Mo. 353; Farrar v. Heinrich, 86 Mo. 521; Levy v. Holberg, 67 Miss. 526; Bryan v. Hodges, 107 N.C. 492; Lance v. Gorman, 136 Pa. St. 200; Freeman v. Moffitt, 119 Mo. 301. (5) In reference to the McNutt deed of trust to secure the payment of $ 1,600, defendant Fry testified that he was unable to read or write and that the McNutt deed of trust was not read over to him before signing same. But, even had he knowingly signed the same, he is not estopped to deny the validity of the incumbrance on the land. "It is well settled that where the incumbrance is not made a part of the consideration and not deducted from it, and where it is not assumed by the grantee, the recital in a deed that the conveyance is subject to an incumbrance does not estop the grantee from showing that what purports to be an incumbrance is not one in fact because of its invalidity, or because it has been satisfied." Brooks v. Owen, 112 Mo. 260. Moreover, if plaintiff relies on estoppel, he must plead it. Plaintiff's reply is a general denial.

BURGESS, J. Sherwood, P. J., and Gantt, J., concur.

OPINION

BURGESS, J.

This is an action to foreclose a deed of trust upon certain lands in Morgan county, executed by defendants Peirsol and William A. Lattimer on the first day of April, 1893, to secure the payment to Lattimer of a certain promissory note therein described.

The petition, after alleging the execution of the deed of trust by defendant John C. Peirsol and Lue H. Peirsol his wife, and describing the lands, proceeds as follows:

"Plaintiff further states that by mistake, or oversight, in the scrivener, or the grantors in said instrument, the name of the trustee was not inserted; but that said conveyance was made in trust to secure the payment of certain indebtedness on the part of the said John C. Peirsol to one William A Lattimer, the party of the third part, the beneficiary in said deed of trust; that said indebtedness is evidenced by a certain promissory note dated April 1, 1893, for the sum of $ 8,000, due five years after date thereof, together with interest thereon from date, at the rate of seven per cent per annum, which interest shall be due and payable annually, and if not so paid when due to become as principal, and bear the same rate of interest; that said deed of trust and said note are of even date, both being dated April 1, 1893, and both are filed herewith, and marked respectively "A" and "B;"...