Chance v. Jennings

• Decision Date: 12 February 1901
• Parties: CHANCE v. JENNINGS et al.
• Court: Missouri Supreme Court

61 S.W. 177

159 Mo. 544

CHANCE v. JENNINGS et al.

Supreme Court of Missouri, Division No. 1.

February 12, 1901.

EQUITY—PLEADING—PETITION — AMENDMENT — CONFORMING TO PROOF — EXCEPTIONS — TIME TAKEN—DEED—MORTGAGE—EVIDENCE — SUFFICIENT — ESTOPPEL IN PAIS — NOT PLEADED—LACHES—FINDING—CONVEYANCE —DEFRAUDING CREDITORS—HOMESTEAD.

1. In a proceeding in equity to have a deed absolute on its face declared a mortgage, it was not error for the court to allow complainant to amend his petition to conform to the facts as proved, before the entry of the final decree, where no new cause of action was stated by such amendment.

2. Where complainant was allowed to amend his petition before the entry of the decree to conform to the facts proved, and no exception was made by defendants at the time, nor any assignment of such amendment as error on the motion for a new trial, such amendment cannot be urged as error in the appellate court for the first time, since an exception must not only be taken to the alleged error at the time, but must also be urged in a motion for a new trial, and made part of the record by the bill of exceptions.

3. Plaintiff executed to the defendant a note for the amount defendant had paid to relieve plaintiff's property from two trust deeds, and, for the purpose of securing the same, plaintiff gave defendant a warranty deed of his homestead. At the same time defendant executed a quitclaim deed to the premises, and signed, with the plaintiff, a memorandum on the back of the note that, on the payment of the note, the plaintiff should receive the quitclaim deed, but, if default was made in the payment of the debt or interest, the defendant should cancel the debt and treat the conveyance as absolute. The defendant had demanded a warranty deed as security to avoid the expense of foreclosing a mortgage in case of default. Plaintiff continued to occupy the premises, which were worth considerable more than the amount of the note, without paying rent, until ousted by an innocent purchaser of the property. The interest when due was paid, and on maturity the amount of the principal was tendered in payment, which was refused. Held sufficient evidence, in a proceeding in equity to have the deed declared a mortgage, to support a finding that the deed, though absolute on its face, was a mortgage.

4. Where plaintiff had executed a warranty deed absolute on its face as security for a three-year note, with the defeasance indorsed thereon, and had paid interest, without objection, to a transferee of the note, such facts not having been pleaded or set up in defense in the lower court, the defendant, in a proceeding to declare the deed a mortgage, could not urge for the first time in the appellate court that plaintiff, by such payment of interest, was estopped from enforcing the contract on the note, since an estoppel in pais is an affirmative defense, and must be pleaded.

5. Plaintiff executed a warranty deed absolute on its face as security for a three-year note, on which the defeasance contract was indorsed. Defendant, six months later, conveyed the property, and transferred the note to his brother, without plaintiff's knowledge, who discovered the fact when the annual interest became due. Plaintiff paid the interest to such grantee, and, by the acts of the original grantee, was led to believe that the contract would be carried out by such transferee. Plaintiff continued in possession of the property without paying rent until ousted by an innocent purchaser of the property. A month before the maturity of the note, plaintiff tendered the principal, with interest to maturity, and demanded a performance of the contract. On refusal to accept the money tendered, this action to have the deed declared a mortgage was brought. Held, that the plaintiff was not precluded from invoking the aid of equity by his failure to bring the action as soon as the transfer of the note and property was discovered, since by the defendant's acts he was induced to believe the contract would be performed.

6. On an issue whether a deed absolute on its face, given to secure a note, was executed for the purpose of defrauding the grantor's other creditors, a finding of the trial court that the deed was not executed for such purpose, there being evidence to support it, will not be set aside by the appellate court.

7. Where a deed of a homestead, absolute on its face, was given as security for a note, with the agreement that on payment of the note the property was to be deeded back, the contention, in a proceeding to have the deed declared a mortgage, that the deed was executed for the purpose of defrauding the grantor's creditors, is without merit, since a homestead is not subject to the claims of general creditors.

Appeal from circuit court, Boone county; John A. Hockaday, Judge.

Bill by E. B. Chance against W. W. Jennings and another. From a decree in favor of the complainant, the defendants appeal. Affirmed.

Fry & Clay and H. S. Booth, for appellants. J. H. Cupp and Turner & Hinton, for respondent.

ROBINSON, J.

This is a proceeding in equity brought by the former owner of certain real estate in Boone county against W. W. and S. J. Jennings, the general object and nature of which is to have a deed absolute on its face declared a mortgage, and to obtain a reconveyance of a part of the property included therein, and to recover the excess in value, above the debt, of a part of the property which had been conveyed away by the grantee. The statement made by the counsel for the plaintiff seems to be full, clear, and impartial, and we therefore adopt the following portion thereof: "The petition alleged, in substance, that on the 16th day of February, 1894, the plaintiff executed and delivered to the defendant W. W. Jennings his certain promissory note of that date for the sum of $937, due in three years, with eight per cent. interest from date, and that at the same time, for the purpose of securing said note, he conveyed a forty-acre tract of land to said defendant by deed of general warranty, and also transferred to him a title bond under which he held a twenty-acre tract, and that contemporaneously therewith a written memorandum was indorsed on the back of the note providing that the plaintiff should have a reconveyance of the property upon payment of the debt and interest at or before maturity; that thereafter the defendant W. W. Jennings, without plaintiff's knowledge or consent, conveyed the forty-acre tract, which was worth largely more than the debt, to the defendant S. J. Jennings, and that thereafter, in 1896, S. J. Jennings wrongfully conveyed said tract to an innocent purchaser; that plaintiff had paid the annual interest on said note as the same became due, and before the maturity thereof caused the full amount of the note and interest to maturity to be tendered to the defendant W. W. Jennings, who refused to accept the same. The plaintiff, by his bill, which was filed before maturity of this note, offered to pay whatever the court might find due thereon, and this offer was renewed in open court at the trial. The answer of the defendant W. W. Jennings, which is rather out of the ordinary, consisted: (1) Of a general denial; (2) of an allegation to the effect that the plaintiff had conveyed the property in controversy to him `for the purpose and with the view of paying to him a note due him of $937, due three years after date, with all interest due thereon,' but that such conveyance was made on the plaintiff's part for the purpose of defrauding his other creditors; (3) of an admission that defendant had signed the following memorandum on the back of the note: `Should E. B. Chance pay this note on or before due, and keep the annual interest paid each year, he shall be entitled to deed herewith; but if he fails to pay the annual interest when due, or pay entire note, said Jennings or his legal representatives may cancel deed and this note, and declare the conveyance void and of no force,'—coupled with an averment that such memorandum was insufficient under the statute of frauds. The answer of the defendant S. J. Jennings was a general denial. The evidence showed that the plaintiff had owned the forty-acre tract for some ten or twelve years, during all of which time he had occupied it with his family as a homestead, and had planted on it quite a large orchard, which gave it its chief value. He also held a title bond to a twenty-acre tract adjoining, which he had purchased in 1891 from the Rollins executors, on which he had made one payment of $25. This twenty-acre tract was unimproved land, and its value did not exceed the amount of the Rollins debt, but the forty-acre tract was well improved, and the court found its value to be $1,500. These two tracts constituted all of the real estate owned by the plaintiff, and in fact substantially all of his property of any description. The forty-acre tract was incumbered by a first deed of trust in favor of the Lombard Investment Company, for some $350, by a second deed of trust in favor of Dr. A. Wallace for some $200, and by a mechanic's lien for some $30 or $35. In addition to these, the plaintiff owed between $105 and $110 as the balance of the purchase price on the twenty-acre tract, and an unsecured debt of about $200 to the defendant W. W. Jennings. The holders of the two deeds of trust were pressing the plaintiff for payment, and, shortly before the conveyance in controversy was made, had caused the trustee to advertise the forty-acre tract for sale. After making several attempts to raise the money, the plaintiff applied to W. W. Jennings, who, in order to get his own debt secured, agreed to take up all the lien debts against the two tracts. These four debts and interest, together with the debt to Jennings, amounted to $937. To carry out the arrangement, the plaintiff, on the 16th day of February, 1894, executed and delivered to the defendant his promissory note for that amount, due...