Davis v. Hauschild

• Decision Date: 10 December 1951
• Docket Number: No. 1,No. 42629,42629,1
• Citation: 243 S.W.2d 956
• Parties: DAVIS et al. v. HAUSCHILD et al
• Court: Missouri Supreme Court

Page 956

243 S.W.2d 956

DAVIS et al. v. HAUSCHILD et al.

No. 42629.

Supreme Court of Missouri, Division No. 1.

Dec. 10, 1951.

Wm. J. Becker, Clayton, for appellants.

Frank Coffman, Edward H. Schwarzenbach, St. Louis, Frank W. Jenny, Union, for respondents.

CONKLING, Presiding Judge.

This court having jurisdiction of the appeal in this case because the amount here in dispute embraces also and must be determined by the $20,000 prayed in defendants' instant counterclaim, the case was transferred here by the St. Louis Court of Appeals. See Davis v. Hauschild, 238 S.W.2d 920, 921.

That opinion makes the following statement of this case: 'This is an action for a deficiency judgment, on a note after foreclosure of the deed of trust securing the note, brought by plaintiffs, Joseph R. Davis and Katherine V. Davis, the payees of said note, against the defendants, Lina Hauschild and Arthur Hauschild (husband and wife), makers of said note. The prayer of the petition was for judgment in the sum of four thousand eight hundred sixty-two dollars and eighty cents ($4,862.80), with interest thereon at the rate of five per cent per annum from March 6, 1943, together with costs. To said petition, defendants filed their answer and counterclaim.

'In defendants' counterclaim it was alleged that the execution of the note sued upon by plaintiffs was part of a transaction whereby defendants purchased of plaintiffs a tract of land in Franklin County, Missouri, which was improved by a gasoline filling station (and a restaurant). It was alleged that for said property defendants executed said note, which was for $10,000 and secured by a deed of trust (executed by defendants) on said filling station property, and conveyed to plaintiffs a tract of land in Morgan County consisting of one hundred five acres on which were certain improvements. Also as a part of the consideration for said purchase, defendants transferred to plaintiffs a note secured by a deed of trust on a certain building, or flat, in the City of St. Louis. It was then averred that defendants were induced to enter into said trade by reason of false and fraudulent representations made by plaintiffs concerning the amount of business done at said filling station and at the restaurant which was operated in connection therewith. It was then alleged that the plaintiffs had secured possession of the filling station property under a foreclosure sale, and were still in possession of the Morgan County property, which had a value of $15,000, and of the deed of trust which was worth $5,000; that, as a result of the fraudulent acts of the plaintiffs, said plaintiffs were indebted to defendants in the sum of $20,000--the total value of the Morgan County property and said deed of trust. The prayer of said counterclaim was for judgment against plaintiffs in the sum of $20,000, together with interest from September 10, 1942, and for their costs.

'The trial below resulted in a directed verdict in favor of the plaintiffs and against the defendants on plaintiffs' cause of action in the total sum of $6,425, and in favor of plaintiffs and against defendants on defendants' counterclaim. Judgment was entered accordingly, and from this judgment defendants have appealed. 'Appellants in their brief complain not only of the action of the trial court in directing a verdict against them on plaintiffs' cause of action, but also complain of the action of the court in holding, as a matter of law, that no recovery could be had on their counterclaim.'

In a former action in Morgan County the instant defendant, Lina Hauschild, as sole plaintiff in such former action sued the instant plaintiffs, Joseph R. Davis and his wife Katherine V. Davis, who were defendants in the former suit, to cancel on the ground of fraudulent representations the deed which conveyed the above mentioned Morgan County land to Davis and wife, and to recover other consideration which passed to Davis simultaneously with the deed in that exchange of lands. In such former action the there defendants, Davis and wife (who are plaintiffs here), alleged in their counterclaim there filed that the payments on the installment note of $10,000 payable to Davis and wife, which was secured by deed of trust on the Franklin County property were defaulted; that that Franklin County property was purchased by Davis upon subsequent foreclosure of the deed of trust; that by the above deed of trust Hauschild and wife covenanted to keep the improvements thereon insured, but failed to do so; and that a portion of such improvements (the restaurant) was destroyed by fire to Davis' damage in the sum of $6,000. Upon the trial of such former case the trial court found against the there plaintiff, Lina Hauschild, and dismissed her petition, and also found against Davis and wife on their counterclaim. Upon appeal here, the judgment in such former Morgan County action was affirmed. See Hauschild v. Davis, Mo.Sup., 183 S.W.2d 66. (That case is sometimes hereinafter referred to as the Morgan County case.)

In the instant case Davis and wife filed their reply to the counterclaim of defendants and therein alleged that the subject matter of the defendants' instant counterclaim, i. e., the question of whether in the original exchange of properties Davis made 'false and fraudulent representations * * * concerning the amount of business done at said filling station and at the restaurant,' See 238 S.W.2d loc. cit. 921 (including identity of 'subject matter of the suit, identity of cause of action and identity of the quality of persons') was fully adjudicated and decided adversely to defendants in the former Morgan County case.

Hauschild and wife, the instant defendants and appellants, do not contend upon this appeal that the record facts before us as to the deficiency upon the note in question do not support and warrant a judgment for such deficiency.

But defendant appellants do here now contend that Davis and wife 'made their election before (by) filing their counterclaim' in the former Morgan County action, and by omitting from their counterclaim in such former action any claim for a deficiency judgment on the note. Defendants' brief states: '* * * that under these circumstances the claim for deficiency asserted by the respondents in this case is barred on the theory of election of remedies which took place (by Davis and wife) in the Morgan County suit.' Defendants' entire position here, and their sole contention in this case upon this is that by Davis' counterclaim in the Morgan County case, wherein Davis alleged he sustained damages of $6,000 because of breach of a covenant in the deed of trust in that Hauschild failed to keep the restaurant insured, Davis elected a remedy inconsistent with the deficiency judgment now sought. And that, under the principles of election of remedy, and because of the foregoing, Davis may not now have a judgment for the deficiency on the note. As to the defendants' further claim that the trial court erred in ruling defendants' instant counterclaim, defendants further argue that the former Morgan County action to cancel the deed 'on the ground of fraudulent representations alleged to have been made by defendant (Davis) concerning the business done at the filling station,' see, 183 S.W.2d loc. cit. 67, was but an attempt 'to mitigate * * * damage by offering to rescind the sale'; and, that by attempting to do so they did 'not exhaust his (their) right to pursue another remedy', and that the former Morgan County case was therefore not res adjudicata upon such issue of fraudulent representations.

We first consider defendants' contention that the instant plainti...