Curry v. La Fon

• Decision Date: 20 October 1908
• Citation: 133 Mo. App. 163,113 S.W. 246
• Parties: CURRY v. LA FON.
• Court: Missouri Court of Appeals

113 S.W. 246

133 Mo. App. 163

CURRY v. LA FON.

St. Louis Court of Appeals. Missouri.

October 20, 1908.

1. JOINT ADVENTURES (§ 4) — MUTUAL DUTIES OF PARTIES — TAKING OF SECRET PROFIT BY ONE PARTY.

Where co-adventurers bargain for the purchase of land, to part of which the vendor's title is found to be faulty, the consummation of a deal by one of them with the vendor, without the knowledge of the other, whereby such one receives a profit in consideration of carrying out the purchase of the portion to which a good title was furnished, is contrary to the policy of the law.

2. MORTGAGES (§ 282) — TRANSFER OF PROPERTY — ASSUMPTION OF MORTGAGE DEBT BY GRANTEE.

A covenant in a deed, by which the grantee assumes the payment of a mortgage on the land, creates an obligation, on which the mortgagee may sue the grantee covenantor for the indebtedness assumed.

3. MORTGAGES (§ 275) — TRANSFER OF PROPERTY — ASSUMPTION OF MORTGAGE DEBT BY GRANTEE — ESTOPPEL.

Where a grantee for a valuable consideration assumes a mortgage indebtedness on the land, he is estopped from disputing the validity of the indebtedness.

4. ESTATES (§ 10) — MERGER.

A merger, which takes place when a greater and lesser estate coincide in the same person, in the same right, without the intervention of any other right or title, by the lesser estate merging in the greater can be effected only when the same person possesses both the equitable and legal title; and hence, where one is a tenant in common in an equity of redemption, and the legal title to the property is in a trustee under a trust deed, the mere fact that the tenant of the equity reacquires the notes and mortgage given by him and his co-tenant does not effect a merger in him of the equitable and legal estates so as to extinguish the indebtedness under the notes.

5. BILLS AND NOTES (§ 440) — PAYMENT — REISSUE BY MAKER.

The maker of a note may reissue it before maturity, for a valid consideration, so as to bind himself as effectually as in the first instance; and hence, though mortgage notes are paid by a joint maker, so as to extinguish their

original obligation against the other maker, the latter can reissue them before maturity for a new consideration, as by assuming their payment by covenant in a deed as part consideration for his co-maker's interest in the equity of redemption in the mortgaged land.

6. CONTRACTS (§ 140) — VALIDITY — SUBSEQUENT CONTRACT BASED ON ORIGINAL CONSIDERATION.

The rule that, if the original consideration for a note is illegal or immoral, subsequent contracts based on that consideration are unenforceable does not apply where the original consideration for notes was land purchased by two joint adventurers, and free from immorality or illegality, though the notes might be void as against the policy of the law because of a connivance between the vendor and one of the adventurers whereby such adventurer received a secret profit.

Appeal from Circuit Court, Audrain County; J. D. Barnett, Judge.

Action by W. B. Curry against A. M. La Fon. Judgment for plaintiff, and defendant appeals. Affirmed.

P. H. Cullen and S. D. Stocks, for appellant. A. E. Rieger and Geo. Robertson, for respondent.

NORTONI, J.

This is a suit by the holder of a note against the grantee in a deed, on a stipulation in the deed by which the defendant covenanted to assume and pay the note mentioned, which was secured by a mortgage on the land conveyed by the deed. The plaintiff recovered, and defendant appeals.

The facts out of which the controversy arose are somewhat complicated, and will be stated in extenso. The plaintiff, Curry, and the defendant, La Fon, had formerly been partners in the real estate business. This partnership was dissolved, however, recently before their association in the present instance. Having decided to purchase some lands jointly in the state of Arkansas, they visited one Louis Sachs, who was engaged in the real estate business, and together examined and agreed to purchase 2,080 acres of land in Arkansas owned by Sachs. This was in July. They entered into a written contract with Sachs, whereby they agreed to purchase the 2,080 acres of Arkansas land at the stipulated price of $17,000, to be paid as follows: Curry and La Fon were to assume the payment of a $2,500 mortgage on the land. They were to pay Sachs $3,000 in cash, deed him certain property in Missouri owned by them jointly, at the agreed price of $4,000, and to execute their joint promissory notes, payable to Sachs, for the sum of $7,500, which notes were to be secured by a second mortgage on the lands acquired from Sachs. Sachs agreed to furnish good and sufficient title to the Arkansas lands, and execute a warranty deed therefor, subject only to the $2,500 mortgage thereon, heretofore mentioned. The deal was to be finally consummated on the 1st of the following January. During the interim between the time this contract was entered into and the date at which it was finally consummated, it was discovered that Mr. Sachs was unable to furnish satisfactory title to 240 acres of the land mentioned. It seems the present plaintiff, Curry, took advantage of this fact, and, without the knowledge of his associate, the present defendant, La Fon, interviewed Mr. Sachs, and informed him that, inasmuch as their contract for the purchase of the Arkansas land was an entire obligation, he considered himself no longer obligated to complete the deal, as Sachs would be unable to furnish sufficient title to all the lands mentioned. He suggested, however, that if, upon a final consummation of the deal, Sachs would agree to take from him an equity which he owned in several brick buildings in Green City, Mo., at an agreed price of $3,500, and exchange therefor notes to that amount, which were to be executed by the defendant, La Fon, and himself to Sachs, he might waive his objection and consummate the trade, provided Sachs agreed to drop out of the deal the 240 acres of land to which the title had proved insufficient, at an agreed valuation of $2,000. Mr. Sachs investigated the Green City equity owned by Curry, and entered into a collateral agreement with him to the effect suggested. The purport of this agreement was that, upon Curry and La Fon consummating the deal for the Arkansas lands, Sachs would assign to Curry certain of the notes, to be jointly executed by Curry and La Fon, and purchase the Green City equity at $3,500. This collateral agreement, however, was not revealed to the defendant La Fon, and in fact it was the purpose of both Curry and Sachs to keep La Fon in ignorance thereof. For some reason the deal for the Arkansas property was not finally consummated until the 14th of the following February, on which date the several parties met at Kirksville, Mo., and exchanged deeds. The 240 acres of Arkansas land, to which Sachs had found himself unable to perfect title, was dropped from consideration at an agreed valuation of $2,000. As thus modified Curry and La Fon purchased from Sachs 1,840 acres of land at a valuation of $15,000, to be paid for as above indicated except, instead of giving to Sachs a second mortgage for $7,500, they were to execute notes and a mortgage to him for $5,500. On that date, February 14, 1904, Sachs executed and delivered to Curry and La Fon a warranty deed conveying the 1,840 acres of Arkansas land, subject to the $2,500 mortgage, then outstanding against the same, which mortgage Curry and La Fon assumed. Curry and La Fon at the same time each paid to Sachs $1,500 in cash a total of $3,000, and conveyed to him equities in certain real properties, at an agreed valuation of $4,000, and executed to him their two series of joint and several promissory notes, aggregating $5,500. These notes were all antedated, in accordance with the original agreement as of January 1, 1904. As stated, instead of this $5,500 indebtedness being included in one note, it was divided into six notes, all of which were dated January 1, 1904, signed by both Curry and La Fon, and payable to Louis Sachs or order, in the following manner: Two notes for $1,000 each, due January 1, 1906; two notes for $1,000 each, due January 1, 1907; two notes for $750 each, due January 1, 1908 — all of the notes to bear interest at the rate of 6 per cent. etc. While Curry and La Fon both signed each of the notes mentioned, it appears they were divided in the manner indicated, and ran concurrently in two series, in order to enable Sachs and Curry to carry out and consummate their collateral bargain concerning the Green City equity. Although this is true, La Fon insists that, at and before the execution of the notes, he was not informed as to this purpose, nor as to the details of the collateral trade between Sachs and Curry respecting the Green City property. Immediately upon the execution and delivery of the several notes to Sachs, or during the same day at least, Sachs indorsed in blank and delivered to Curry one-half of the notes mentioned, amounting to $2,750 — that is, one of the entire series of notes — and returned to Curry $750 in money, making a total of $3,500 notes and cash, and in consideration thereof accepted from Curry a deed to his equity in the Green City property at an agreed valuation of $3,500. Mr. La Fon admits in his testimony that he learned these facts during that day, and immediately upon the execution and delivery of the notes.

Although Curry and his wife, before the delivery of the notes to Sachs, executed a mortgage deed of trust to Sachs securing the same, Mr. La Fon failed to sign the same at that time, for the reason his wife was not in Kirksville. But with full knowledge of the fact that Curry had received an assignment of the notes for the Green City property, La Fon conveyed the mortgage to his home at Mexico, Mo., where he and his wife executed the same before a proper officer two days thereafter, and delivered it to Mr. Sachs. In April thereafter Sachs informed Mr. La Fon fully as to the details...