Cohn v. Souders

• Decision Date: 09 June 1903
• Parties: COHN et al. v. SOUDERS et al.
• Court: Missouri Supreme Court

75 S.W. 413

175 Mo. 455

COHN et al. v. SOUDERS et al.

Supreme Court of Missouri, Division No. 2.

June 9, 1903.

MORTGAGES — FORECLOSURE — SALE — INJUNCTION — CONVEYANCE BY MORTGAGOR — RIGHTS OF GRANTEE — PLEADING — AMENDMENT — NEW MATTER.

1. Plaintiff sought to perpetually enjoin a sale of lot 63 under a deed of trust on lots 62 and 63, held by defendants; plaintiff's claim being that there was an agreement with the mortgagor that lot 63 should be released from the deed and that he had thereafter purchased it from the mortgagor. Defendants, being temporarily enjoined from selling said lot, sold lot 62. Held that, under Rev. St. 1899, §§ 663, 666, permitting amended or supplemental petitions, and requiring them to set forth all matters necessary to determine the action, plaintiff was entitled to amend by pleading as new matter that by said sale defendants' debt had been fully satisfied, and thus add another ground for perpetual injunction, though the matter arose after the filing of the original bill.

2. Defendant's act in selling lot 62 without waiting for the final action of the court was an election to exercise its right to first resort to that lot, eliminating the question whether it could be compelled to first sell said lot.

3. Error in permitting an amended petition was waived by defendants by pleading over after their motion to strike out was overruled.

4. The mortgagor of lots 62 and 63 sold lot 63 to plaintiff, who sought to enjoin a sale of said lot under the mortgage, on the ground that the mortgagee had agreed to release it. Pending a temporary injunction, the mortgagee sold lot 62, together with a hotel thereon. The hotel and personal property therein were also subject to the mortgage. The mortgagee agreed with the mortgagor that, if he would dismiss certain suits, the mortgagee's attorney would buy in the personal property for mortgagor, and this was done; the attorney purchasing $1,200 worth of such property for $10, by stating that he was buying it for the mortgagor. Held, that this was in equity a release of $1,200 worth of property to the mortgagor, and plaintiff was entitled to have this amount applied to the mortgage before the mortgagee could resort to lot 63.

Appeal from Circuit Court, Butler County; John G. Wear, Judge.

Bill by Peter Cohn and others against John H. Souders and others. From a decree for plaintiffs, defendants appeal. Affirmed.

Henry B. Davis, for appellants. E. R. Lentz, for respondents.

GANTT, P. J.

This suit was instituted in the circuit court of Butler county, Mo., in February, 1897. The object of the bill was to procure a perpetual injunction against the Nelson Distilling Company and John H. Souders, sheriff of said county, to restrain them from selling the south part of lot No. 63 in the city of Poplar Bluff, in Butler county, Mo., under a deed of trust. A temporary writ of injunction was granted on February 25, 1897. Thereafter, on the next day, the sheriff, as substituted trustee, sold all the remaining property described in the deed of trust, and the Nelson Distilling Company became the purchaser thereof, through its attorney, Mr. H. B. Davis. On May 3, 1897, defendants filed their answer, which was a general denial. On November 2, 1897, defendants filed their motion to dissolve the injunction, and on the same day plaintiffs filed an amended petition, which in substance alleged that in 1888 Henry H. Miles was the owner of a part of lot 62 in the original town (now city) of Poplar Bluff, on which was located a hotel known as the "Morris House," and also the lot in controversy in this suit, designated as part of lot 63 in said city; that Miles borrowed $6,000 from Judge J. W. Emerson, and gave three notes — two for $1,000 each, and the third for $4,000; that Miles paid off one of the $1,000 notes; that, while Emerson still held said notes and a deed of trust given by Miles and wife to secure the same, Miles sold the part of lot 63 now in suit to one Turner, and that Emerson agreed to release and did release said lot 63 from the incumbrance of said deed of trust; that said deed of trust conveyed, not only the part of lot 62 on which the Morris House was situated and said part of lot 63, but all of the furniture and hotel fixtures, to secure said notes; that afterwards the title of Turner to the south part of lot 63 passed by mesne conveyances to the plaintiffs Cohn & Pelz; that afterwards said Morris House property was sold under execution in favor of the Nelson Distilling Company, and purchased by said company, and an action of ejectment brought, under which possession was obtained by said company; that afterwards, and when said notes were past due, the Nelson Distilling Company bought and said Emerson sold and transferred said notes to said distilling company; that thereafter Ferguson, the trustee in said deed of trust, declined to act, and the sheriff the defendant Souders, at the request of said distilling company, proceeded to advertise all of said property for sale to satisfy said notes; the granting of the injunction as to lot 63, and the sale by the sheriff as trustee of the lot 62, or Morris House property, and all of the hotel furniture; that the hotel property was of the value of $10,000, and the furniture of the value of $1,200; that at the date of the sale the debt on said notes amounted to $5,500; that at said sale the Nelson Distilling Company bid in all of said Morris House property and furniture for $4,591.25; that it was represented, at and before said sale, by the attorney of the said distilling company, that said sale was being made for the purpose simply of perfecting its title to the Morris House property and clearing it of judgment liens held by others; that the said Nelson Distilling Company voluntarily released from said deed of trust all of the personal property therein conveyed to H. H. Miles and Laura Miles, his wife; that bidders were deterred from bidding at said sale by the assurances of said distilling company, and the amount bid was a mere sham, and no test of the value of said Morris House property, and the same was fraudulent in law; that said Morris House property was of far greater value than the said mortgage debt, and justice and equity required a fair, open, and bona fide sale thereof before said lot 63, owned by plaintiff, should be subject to any part of said mortgage. The prayer is in the alternative, either to set aside said sale and order a new sale, at which plaintiff offers and agrees to bid the whole amount of said mortgage debt and costs for said Morris House property, or to adjudge that in no event shall plaintiff's lot 63 be subjected to more than its pro rata share of said debt, in the proportion of its value to the remainder of said property, excluding plaintiff's improvements on said lot 63, which amount to $6,000, and a prayer for general relief. The answer admits the deed of trust to Emerson, denies that Emerson released or agreed to release said lot 63, alleges laches on plaintiff's part, and charges that plaintiff has a complete remedy at law.

The evidence tended to establish the following state of facts: On or about the 1st day of June, 1888, one Henry H. Miles was the owner of a part of lot 62 in the original town (now city) of Poplar Bluff, Mo., on which was located a large hotel building, known as the "Morris House," and worth about $10,000. He was also the owner of the lot in controversy in this cause, and known as "a part of lot 63, in the said original town of Poplar Bluff." This lot was situated on a steep hillside, was unimproved at the time, and of little value, worth in its then condition from $150 to $300. He also owned all the hotel, kitchen, and dining room furniture then in and used by the said Morris House. On the said 1st day of June, 1888, Miles borrowed from Judge Emerson $6,000, and executed therefor his three promissory notes, as follows: One note for $1,000, due one year after date; one note for $1,000, due two years after date; and one note for $4,000, due five years after date — all drawing interest at the rate of ten per cent. On the same day, to secure the payment of the said notes, the said Miles and his wife conveyed to William Ferguson, as trustee, the property known as the "Morris House Property," the lot in controversy in this cause, known and described as "a part of lot 63 in the said original town of Poplar Bluff," and also all of the hotel, kitchen, and dining room furniture then in the said Morris House. On the 10th day of December, 1888, Miles paid to the said Emerson the first of the said above-described notes. Some time after that Miles sold that part of lot 63 which was conveyed by the said deed of trust to Henry Turner. There was evidence to the effect that, at or prior to the time of this sale, Emerson had agreed to release the part of lot 63 now in controversy from the lien of the said deed of trust which he held. Emerson denies that he made this agreement. Thereafter by mesne conveyances the said Turner conveyed the lot in question to plaintiffs in this cause. Plaintiffs took possession, and have ever since been in...