Brants v. Runnels, 16789.

• Decision Date: 27 January 1930
• Docket Number: No. 16789.,16789.
• Citation: 26 S.W.2d 1004
• Parties: BRANTS et al. v. RUNNELS et al.
• Court: Missouri Court of Appeals

26 S.W.2d 1004

BRANTS et al. v. RUNNELS et al.

No. 16789.

Kansas City Court of Appeals. Missouri.

January 27, 1930.

Rehearing Denied February 2, 1930.

Certiorari Denied April 8, 1930.

Appeal from Circuit Court, Jackson County; Ben Terte, Judge.

"Not to be officially published."

Suit by Felix F. Brants and another against Clara M. Runnels and another. Decree for plaintiffs, and defendant named appeals.

Reversed and remanded, with directions.

Stubenrauch & Hartz, of Kansas City, for appellant.

L. L. Watts and G. W. Rice, both of Kansas City, for respondents.

BLAND, J.

This is a suit in equity wherein plaintiffs seek to have canceled a deed of trust on Kansas City real estate, securing their note in the sum of $2,000.00, on the ground that the note has been paid. The answer denies payment of the note and prays the court to decree the deed of trust securing same a first lien on the property. The court found the issues for the plaintiffs and entered a decree cancelling the note and the interest coupons attached thereto, and that the deed of trust be satisfied upon the records of the recorder of deeds. Defendant, Clara M. Runnels, has appealed.

The facts show that the J. R. Allen Mortgage Company was a corporation doing business in Kansas City. It was engaged in the real estate business, making real estate loans and writing, as agent, insurance upon property. Defendant, Clara M. Runnels (hereinafter called the defendant), between June, 1922 and January, 1928, when the Mortgage Company became bankrupt, purchased four notes secured by deeds of trust on real estate from it, including plaintiffs' note.

On June 20th, 1924, defendant purchased from the Mortgage Company the note in question. The note and mortgage were dated June 7th, 1924, and were made by plaintiffs as makers in favor of the Mortgage Company. The note was payable five years after date and bore 7% interest payable semi-annually. The change of the ownership of the loan in question was never brought to the attention of the plaintiffs for two and one-half years and until after they paid the Mortgage Company the amount thereof. They paid the semi-annual interest at the office of the Mortgage Company and in due time received in person or through the mail, their canceled interest coupons. The note did not provide that it could be paid before due but believing that the Mortgage Company continued to hold and own their note plaintiffs entered into a verbal agreement with it, on June 7th, 1926, by the terms of which the note could be paid before it's maturity by the payment of the principal due or any part thereof and accrued interest. There is no evidence that defendant had any notice or knowledge of this agreement. However, acting on this agreement, plaintiffs paid to the Mortgage Company the sum of $1,500.00 on December 7th, 1926 and the balance of $500.00 on June 7th, 1927, with accrued interest and the fee for releasing the mortgage. At the time of the $500.00 payment the Mortgage Company did not have the note and mortgage in it's possession but it told plaintiffs that it would satisfy the mortgage and mail all papers to them in a few days. This it never did.

Payments on the principal made by plaintiffs were placed on the books of the Mortgage Company in it's collections account to the credit of defendant. The Mortgage Company did not apprise defendant of these collections but on interest paying dates the Company remitted the interest to the defendant as usual until it went into bankruptcy.

It is claimed by plaintiffs that through a course of dealing had between defendant and the Mortgage Company the latter constituted the former her agent to make the collections, not only of the interest but of the principal of the note in question. There is no evidence, nor is it claimed, that there was any direct authority given by defendant to the Mortgage Company to collect the principal of this loan. The question, therefore, is whether or not there is sufficient evidence (the evidence on this point being practically undisputed) of a course of dealing had between defendant and the Mortgage Company to establish agency in the latter for the purpose of making the collections in controversy. On this question the evidence shows that aside from the four real estate mortgages mentioned the Mortgage Company handled collections of interest upon two other notes secured by deeds of trust and owned by defendant as well as the matter of extending them and the insurance on the property involved in these loans. One of these two loans was the so called Handler note which had originally been purchased by defendant's father from the Mortgage Company and inherited by her from him at the time of his death in March, 1923, and the other, the Sappington loan, which defendant also inherited from her father but which had been acquired otherwise than from the Mortgage Company.

We will now take up the circumstances surrounding these six loans. The first loan is the Max Handler note in the sum of $3,500.00 made to the Mortgage Company on April 24th, 1920, due April 24th, 1923, bearing interest at the rate of 7% per annum, payable semi-annually. This note was extended to April 24th, 1926, and was paid to the Mortgage Company on May 20th, 1926. On April 19th, 1926, defendant took all of the papers, including the note and deed of trust, to the Mortgage Company and received it's receipt therefor which recited that "all papers" were left with the Mortgage Company for collection or extension. The borrower, however, decided to pay off the note and paid it on May 20th, 1926. Defendant left this money ($3,500.00) on deposit with the Mortgage Company intending to use it to purchase other paper owned by the Company. Defendant, however, was never able to purchase another loan so the money remained on deposit with the Mortgage Company until the time of it's failure. Defendant, in the meantime, received interest from the Mortgage Company on this money at the rate of 6% per annum.

The next loan is the K. W. Jones note, dated November 21st, 1923, due November 21st, 1926, and bearing 7% interest per annum, payable semi-annually. This note was made to the Mortgage Company and was paid in full to that company on December 10th, 1926. It was purchased by defendant from the Mortgage Company on December 4th, 1923. On November 24th, 1926, defendant, at the request of the Mortgage Company, took all papers relating to this loan to the office of the company and it gave her a receipt reciting that it had received "all papers * * * for collection." The proceeds of this note ($2,000.00) were left by defendant with the Mortgage Company for the same purpose as she left the money from the Handler note, but as in the Handler case she never purchased another loan from the Mortgage Company but received 6% interest on the money until that company failed.

The next loan is the Edward P. Sappington note, in the sum of $3,600.00. This note was dated September 13th, 1920, was due September 13th, 1923 and bore 6% interest per annum, payable semi-annually. This loan has never been paid off and all of the papers have at all times been in possession of the defendant. However, this note was extended three times by defendant through the Mortgage Company, but at no time was the note extended without the Company first having secured the consent of defendant.

The next loan is the J. W. Roberts note for $2,500.00. It was made in favor of the Mortgage Company and was dated October 19th, 1922. It was due on October 19th, 1925. It bore 7% interest, payable semi-annually. This note was purchased by the defendant from the Mortgage Company on December 2nd, 1924. This note was extended by the Mortgage Company to October 19th, 1926, and later to October 19th, 1927. However, defendant's consent to these extensions was secured in each instance before they were made. It was paid to the Mortgage Company on October 5th, 1927 and before maturity. However, defendant was never advised of this payment until after the failure of the Mortgage Company and did not receive it from that company. The company paid her the interest as though the principal had not been paid off.

The next loan is the Elizabeth Wagner note, made in favor of the Mortgage Company. It was dated June 8th, 1922 and was due on June 8th, 1927. This note was in the sum of $2,000.00 and bore 7% interest, payable semi-annually. It was purchased from the Mortgage Company by defendant on June 24th, 1922. On June 16th, 1924, the Wagner note was paid off in full, the Mortgage Company making the collection. When defendant was in the office of the Mortgage Company to collect the interest on the Wagner note she was requested by it to bring in her papers the next time she came down town as Wagner wanted to pay off the note. She next came down town about June 20th, 1924, taking the papers with her and giving them to Mr. Warner, agent of the Mortgage Company, with whom she transacted practically all of her business.

The next loan is the Brants note involved in this suit. Defendant purchased this note with the proceeds of the Wagner note when she was in the office of the Mortgage Company on June 20th, 1924. At this time she took the deed of trust and all the papers which have remained in her possession ever since.

The evidence further shows that the Mortgage Company at the time it sold the four notes to the defendant agreed, either directly or by implication, to collect without charge defendant's interest on the different notes at the time the interest became due and to attend to the matter of insurance on the property. In each instance it seems it would write a policy in a company which it represented as agent. The Mortgage Company also collected the interest on the Handler and the Sappington notes and looked after the insurance on the property involved in these loans. When the interest was collected on any of the six notes the Mortgage Company would remit the same to the defendant. The...