Cannon v. Blake

• Decision Date: 05 September 1944
• Docket Number: 38870
• Parties: Alexander Cannon and Ethel E. Cannon v. Fred A. Blake and Fred Grueninger, Defendants, and Mrs. Findlay J. Pinkerton, Appellant
• Court: Missouri Supreme Court

182 S.W.2d 303

353 Mo. 294

Alexander Cannon and Ethel E. Cannon v. Fred A. Blake and Fred Grueninger, Defendants, and Mrs. Findlay J. Pinkerton, Appellant

No. 38870

Supreme Court of Missouri

September 5, 1944

Appeal from Circuit Court of County of St. Louis; Hon. Fred E Mueller, Judge.

Affirmed.

Michael J. Ebeling for appellant.

(1) The court erred in admitting plaintiffs' Exhibits D, F and I because there is no proper showing that Blake was authorized to act for Mrs. Pinkerton. Sec. 3354, R.S. 1939. (2) Defendant has never released or relinquished her right to full reimbursement for the amount represented by the deed of trust herein involved. (3) The H.O.L.C. Act does not prohibit a second deed of trust on properties covered by their loans. Title 12, Sec. 1463, paragraph (d) U.S.C.A.; Meek v Wilson, 283 Mich. 679, 278 N.W. 731. (4) No offense against public policy transpired in the making of this deed of trust. Ridge Inv. Corp. v. Nicolosi, 193 A. 710.

Redick O'Bryan for respondents.

(1) The judgment and decree are for the proper parties. United State v. Kreidler, 11 F.Supp. 402; McAllister v Drapeau, 92 P.2d 911; Adams Co. v. Pacific States Sav. & Loan, 94 P.2d 370; Woods v. Kern County Mutual B. & L., 93 P.2d 837; Wilcox v. Cobb, 58 Ga.App. 39, 197 S.E. 517; Cook v. Donner, 145 Kan. 675, 66 P.2d 587, 110 A.L.R. 244; Meek v. Wilson, 283 Mich. 679, 278 N.W. 731; Pye v. Grunert, 201 Minn. 191, 275 N.W. 615, 276 N.W. 221; Markowitz v. Berg, 11 A.2d 107; Stager v. Junker, 14 N.J.L. 913, 188 A. 440; Chaves County B. & L. v. Hodges, 40 N.M. 326, 59 P.2d 671; First Citizens Bank & Trust Co. v. Speaker, 294 N.Y.S. 737; Jessewich v. Abbene, 154 Misc. 768, 277 N.Y.S. 599; Dayton Mtge. & Inv. Co. v. Theis, 62 Ohio App. 169, 23 N.E.2d 511; Anderson v. Horst, 132 Pa. Supr. 140, 200 A. 721; H.O.L.C. v. Aiello, 5 A.2d 649; Local Federal Sav. & Loan Assn. v. Harris, 107 P.2d 1012; Smelzer v. McCory, 101 S.W.2d 850, 124 S.W.2d 339; Schram v. Walton, Eastern Dist. Mich., 35 F.Supp. 889; Bealkowski v. Powers, 35 N.E.2d 386, 310 Ill.App. 662; United States v. Kay, 58 S.Ct. 468, 82 L.Ed. 607, 303 U.S. 1. (2) This judgment and decree are in personam and there is no appeal by defendants Blake and Grueninger. (3) The note and deed of trust are void because they were taken in violation of Title 12, Sec. 1463, paragraph (d), U.S.C.A., as against public policy. See cases cited under (1). (4) The Statute of Frauds (Sec. 3354, R.S. 1939) does not apply in this case, because all holders of notes and deeds of trust being paid off by the H.O.L.C. had to be surrendered to the H.O.L.C. at the time of closing the H.O.L.C. loan for release of record. Title 12, Sec. 1463, paragraph (d), U.S.C.A.; Also rules and regulations of the H.O.L.C. in force and effect as of March 20, 1934.

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

Suit to cancel a note and deed of trust, and to restrain a foreclosure. It is contended that the deed of trust is void ab initio. This court has jurisdiction, as title to real estate is involved. Peters v. Kirkwood Federal Savings & Loan Assn., 344 Mo. 1067, 130 S.W. 2d 507. An appeal was perfected from a decree of cancellation.

In 1933, plaintiffs-respondents were indebted to defendant-appellant, Mrs. Findlay J. Pinkerton; their promissory note evidencing this debt was secured by mortgage on their home. Their property was also encumbered by a second mortgage to secure a note, defendant Fred A. Blake, payee. Respondents made application to Home Owners' Loan Corporation (hereinafter referred to as H.O.L.C.) for a loan of $ 4750. (See Home Owners' Loan Act of 1933, Title 12, U.S.C.A., sec. 1461 et seq.) December 2, 1933, appellant signed a mortgagee's consent to take bonds in the sum of $ 4220 "in full settlement of the claim of the undersigned." December 4, 1933, defendant Blake signed a like consent to take bonds in the sum of $ 481.70 in full settlement of his claim. The "consents" were to be binding for a period of ninety days from date. H.O.L.C. rejected the loan, but reconsidered, and closed a loan of $ 4400 in bonds, March 20, 1934, having received a letter under date of February 24, 1934, as follows,

"We have your letter of Jan. 11th in reference to the property of Alexander Cannon at 7519 Folk Avenue, Maplewood, Mo., in which you show an appraisement of $ 5,500.00 and make a bond loan of $ 4,400.00.

"As representative of the holder of the first deed of trust and second deed of trust, and also the owner of the property, have to advise that we will accept this bond loan of $ 4,400.00 and have to request that you proceed as quickly as possible to make arrangements for this loan."

The letter was signed "John S. Blake & Bro. Realty Co., By Fred A. Blake, Vice Pres."

March 20, 1934, an authorization for delivery of $ 3875, H.O.L.C. bonds, was signed "Fred A. Blake by Fred W. Moeller." After the H.O.L.C. loan was completed, plaintiffs executed a note for $ 830 secured by a deed of trust (second and subservient to the lien of the deed of trust of H.O.L.C.), defendant Fred Grueninger, payee and beneficiary, defendant Fred A. Blake, trustee. The principal ($ 830) was the difference between the sum of the secured debts, originally owing unto appellant and defendant Blake, and the $ 4400, bonds, the consideration of the note secured by the first lien executed to H.O.L.C.; that is, the sum of $ 830 was a part of the indebtedness which H.O.L.C. refunded. It is the validity of the note of $ 830, owned by appellant, and of the second deed of trust securing it, which is involved in the case at bar.

Appellant contends herein (1) that there was no showing that Fred A. Blake (or Fred W. Moeller) had authority to act for her; (2) that she has "never released or relinquished her right to full reimbursement for the amount represented by the deed of trust herein involved"; (3) that the Home Owners' Loan Act does not prohibit liens subservient to the first liens of H.O.L.C., and the execution of the second lien did not offend public policy. Respondents contend that the $ 830 note and the lien securing it are in violation of Paragraph (d) of Section 1463, Title 12, Home Owners' Loan Act of 1933, supra, and against public policy.

Of appellant's contention that Fred A. Blake and Fred W. Moeller were not authorized to act for her -- we can only say that Blake and Moeller assumed to act for appellant, and nowhere herein is it asserted that she did not receive and retain a portion of the bonds of H.O.L.C. She should not now say that the acts of Blake and Moeller in participating in the consummation of the H.O.L.C. loan were unauthorized by her. St. Louis Mut. Life Ins. Co. v. Walter, 329 Mo. 715, 46 S.W. 2d 166; Markowitz v. Berg et al., 127 N.J.Eq. 90, 11 A.2d 107; Vol. I, Restatement of the Law of Agency, sec. 91, p. 219.

And her acts through her agents in the procurance of the H.O.L.C. bonds, though at a time more than ninety days after December 2, 1933, must have related back and reaffirmed the "consent" given in her letter of that date, no evidence being introduced showing that H.O.L.C. (which was acting in the administration of the Act for the benefit of respondents, as we shall presently see) was advised that she was not accepting the bonds "in full settlement" of her claim. Markowitz v. Berg et al., supra; Stager v. Junker et al., 14 N.J. Misc. 913, 188 A. 440.

The Home Owners' Loan Act of 1933 was enacted by the Congress "To provide emergency relief with respect to home mortgage indebtedness, to refinance home mortgages, to extend relief to the owners of homes occupied by them and who are unable to amortize their debt elsewhere, . . ." See Public Act No. 43, 73d Congress (H.R. 5240). Enacted during a period of serious economic depression, the Act is an emergency measure with the very apparent purpose of relieving the burden of liens to an extent that a home owner may be able to "carry" and ultimately discharge his indebtedness, and so retain the ownership of the dwelling place of an American family. Such benefits as accrue to the lienholder by virtue of the Act are incidental. The Act does not compel the lienholder to discount the debt secured by his lien, and he can lawfully exact the full amount of his claim. But should he elect to participate in the refunding of the home owner's indebtedness, the lienholder emphatically may be said to be benefited by receiving H.O.L.C. tax-exempt bonds, guaranteed by the United States government; and by avoiding the necessity of either extending forbearance, or of foreclosing his lien with possible resultant onerous ownership of the property in him. The legislation was enacted primarily for the benefit of the home owner, however.

Observe that the H.O.L.C. bonds exchanged in the case at bar were of the face value of $ 4400, or 80 per centum of the appraised value ($ 5500) of the property. It is provided that the face value of the bonds authorized to be exchanged by H.O.L.C shall not exceed "80 per centum of the value of the real estate as determined by an appraisal." Paragraph (d), sec. 1463, supra. November 3, 1933, by resolution, pursuant to authority to adopt regulations as in the Act provided (Paragraph (k), sec. 1463, Title 12, U.S.C.A.), it was resolved by H.O.L.C., "In the case of bond exchange loans, if the home owner owes more than 80 per cent of the value of his premises he may remain indebted for that portion that the Corporation cannot refund, provided the Corporation secures a first lien, and he may secure the excess indebtedness with a second lien. However, such refunding will not be carried through unless such excess indebtedness is placed on a payment basis so that the home owner will have a reasonable opportunity to pay the same and meet his...