O'Connell v. Reuter
| Decision Date | 07 March 1944 |
| Parties | Garrett J. O'Connell and Catherine D. O'Connell, his wife, Appellants, v. Adolph Reuter, Walter W. Klein and Erna Krenning, Respondents |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of the County of St. Louis; Hon Amandus Brackman, Judge.
Affirmed.
Joseph M. Walsh and J. E. Patton for appellants.
(1) Agency may be implied from prior course of dealings between the parties; agency may be established by conduct. Bennett v. Potashnick, 214 Mo.App. 507, 257 S.W 836; Wyse v. Miller, 2 S.W.2d 806; Cummings v Hurd, 49 Mo.App. 139. (2) Authority of agent to receive payment may be implied from facts and circumstances tending to establish principal had, in prior similar transactions in a general course of dealing, permitted him to collect principal and interest on other loans. Wheatley v. McRoberts, 157 S.W.2d 805; Sharp v. Knox, 48 Mo.App. 169; Bank v. Mut. Benefit Life Ins. Co., 145 Mo. 127, 46 S.W. 615; Pfeiffer v. Heyes, 6 P.2d 612; Thimmig v. General Talking Pictures Corp., 85 S.W.2d 208, 211. (3) Authority of agent to collect for principal may be established, (1st) by direct authority, (2nd) by estoppel, and (3rd) by implied agency, established by a course of dealing between the parties. Hefferman v. Boteler, 87 Mo.App. 316; Wheatley v. McRoberts, 157 S.W.2d 805. (4) One may be an agent for another though he violates his fiduciary duty to the other. One whose interests are adverse to those of another may act as the latter's agent, though it is a breach of duty so to act without revealing the adverse interest. 2 American Jurisprudence, sec. 19; Mechem on Agency, sec. 51. Agent has power to bind the principal as to persons who do not know that the agent is acting improperly. Footnote 5, 2 American Jurisprudence, sec. 19. (5) When an agency is shown to exist, the presumption is that the agent's authority is general, rather than limited. Sharp v. Knox, 48 Mo.App. 169. (6) Ratification of part of an act of an agent is a ratification of the entire transaction. Kelly v. Gay, 55 Mo.App. 39; 31 Cyc. 1258. (7) As between the principal and third persons, their rights and liabilities are governed by the apparent scope of the agent's authority; the authority which the principal holds the agent out as possessing or permits the agent to represent he possesses, and which the principal is estopped to deny. Carthage First Natl. Bank v. Mutual Life Ins., 145 Mo. 127; Koesering v. Greene Co. Bldg. & Loan Assn., 38 S.W.2d 40; May v. Jarvis-Conklin Mtg. Trust Co., 138 Mo. 275, 39 S.W. 782. (8) The court erred in finding that the earnest money contract was executed by a straw party for the Realty & Investment Company, because said contract shows same to have been executed by the company as agent for the owner. (9) The court erred in finding and holding that the Realty & Investment Company notified defendant Adolph Reuter that a sale of the property "was contemplated" and "that a refinancing of said property was necessary", for the reason that the evidence shows that said defendant was notified that the property had been sold. (10) The court erred in finding and holding that the Realty & Investment Company was not acting as agent at the time of all the transactions had by plaintiffs with it, for the reason that the court had previously found that said company collected principal and interest notes held by defendant Reuter over a period of years and made various investments for him and acted as agent for him in said matters. (11) A general agency once found to exist is presumed to continue until such time as the presumption of said continued existence is overturned by evidence of its termination. Eberle v. Koplar (Mo. App.), 85 S.W.2d 919; Graham v. St. Louis & S. F. Ry. Co., 273 S.W. 221. (12) The court erred in finding and holding that the $ 6,000 deed of trust was a valid first lien against plaintiffs' property, for the reason that said deed was executed by a straw party for the Realty & Investment Company, to an officer of said company as trustee for a straw party for said company. The deed was, therefore, invalid for want of proper contracting parties. 41 C. J. 375, sec. 166, and page 377, sec. 173; Lombard v. Bietan (Ore. Sup.), 174 P. 1165; Gorham v. Meadham, 63 Vt. 231, 22 A. 572.
Abeken & Bergmann for respondents, Adolph Reuter and Walter Klein.
(1) The fact that a broker negotiates a loan to a borrower for a lender does not show that such broker has authority to collect either principal or interest. And this is true even though the sum loaned is made payable at the broker's office. Nor does the fact that the broker is authorized to collect interest for the lender show that he has authority to collect the principal. Brant v. Runnels, 26 S.W.2d 1004. (2) Authority to receive payment as agent does not carry with it authority to mature immature paper. City Nat. Bank v. Commission Co., 93 Mo.App. 123. (3) The debtor pays at his peril if alleged agent does not have possession of the note. Cummings v. Hurd, 49 Mo.App. 139. (4) Authority to collect rents gives no authority to collect principal sums on deeds of trust. Hefferman v. Boteler, 87 Mo.App. 316. (5) Where one of two innocent parties must suffer, it must be the one who contributed to bring about the unfortunate result. Painter v. Oldham, 13 S.W.2d 722. (6) One paying another not in possession of negotiable instrument and failing to see that proper credit is placed thereon is negligent. Montbriand v. Scruggs, 46 S.W.2d 211.
This is a suit to enjoin a foreclosure sale under a deed of trust, and to cancel the deed on the theory that the note which the deed secured had been paid. The plaintiffs, husband and wife, were the owners of the property; the defendant Adolph Reuter was the assignee and owner of the deed in question; the defendant Walter W. Klein was the successor trustee of the deed of trust; and the defendant Erna Krenning was the owner of a deed of trust executed subsequent to the one involved herein. Erna Krenning filed a cross-bill in the case, in which she asked that the court declare her deed of trust to be a valid first lien against the property of plaintiffs, and that the injunction theretofore issued enjoining the sale under the Reuter deed of trust be made permanent. The trial court denied plaintiffs the relief asked, holding that defendant Reuter's notes and deed of trust were valid, and that the deed of trust was a first lien against plaintiffs' said real estate; it ordered defendant Erna Krenning to take nothing by her cross-bill, decreeing that her said deed of trust was a second deed of trust and subject to the one held by defendant Reuter; it dissolved the temporary restraining order theretofore issued; and it denied the plaintiffs' request for a permanent injunction. From this decree, the plaintiffs have appealed.
The deed of trust owned by defendant Reuter was dated February 15, 1939, and covered premises known as 8437 Glen Echo Drive in St. Louis County. It secured a principal note in the sum of $ 6,000, due in 36 months, together with six semi-annual interest notes bearing six per cent interest, each in the sum of $ 180, and payable on the 15th day of February and August of each year, at the office of the Knickmeyer-Fleer Realty & Investment Company. The said deed of trust gave prepayment privilege on interest due dates only. The deed was duly recorded on February 21, 1939.
At the time of the execution of the said deed of trust, the property which it covered was owned by the Knickmeyer-Fleer Realty & Investment Co., a corporation organized under the laws of Missouri. Title to the property was held by F. W. Busse, as "straw party" for said corporation, and said Busse executed the deed of trust as party of the first part. Arnold J. Fleer, Vice President of the Knickmeyer-Fleer Realty & Investment Co., was the original trustee in the deed of trust; and Mary Ann Maddock, straw party for the said real estate company, was the original beneficiary in the deed of trust.
On May 25, 1939, defendant Adolph Reuter purchased said notes and deed of trust, and at all times since has been the owner and holder of the same.
Plaintiffs became interested in the property in March, 1940, at which time they visited the premises and met Mr. Busse, a salesman for the Knickmeyer-Fleer Realty & Investment Co. Mr. Busse arranged for a meeting between plaintiffs and Mr. Schreimann, sales manager for the Knickmeyer-Fleer Realty & Investment Co. After some negotiations, an agreement was reached and an earnest money contract executed on March 19, 1940, whereby plaintiffs agreed to purchase the premises for a total purchase price of $ 7,500, and Knickmeyer-Fleer Realty & Investment Co. agreed to convey the property by general warranty deed free and clear from liens and encumbrances except those noted in the contract. Reuter's deed of trust was not listed in the said contract. At first plaintiffs contemplated securing $ 4,000 of the purchase price in the form of a loan from the F. H. A., but later they abandoned that idea and instead paid $ 3,500 cash and executed a $ 4,000 note and deed of trust under date of May 15, 1940, for the balance. This note provided for four per cent interest, represented by interest notes. All of said notes bore eight per cent interest from maturity. Arnold J. Fleer, Vice President of the realty company, was named trustee, and F. W. Busse, straw party and employee of the Knickmeyer-Fleer Realty & Investment Co., was designated as party of the third part, in the said deed of trust.
Before the deal was closed, Mr. Schreimann, the sales manager informed plaintiffs of the existence of the $ 6,000 deed of trust, but...
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