Donovan v. Frick

• Decision Date: 14 September 1970
• Docket Number: No. 54643,No. 1,54643,1
• Citation: 458 S.W.2d 282
• Parties: John P. DONOVAN, Appellant, v. John FRICK et al., Respondents
• Court: Missouri Supreme Court

Page 282

458 S.W.2d 282

John P. DONOVAN, Appellant, v. John FRICK et al., Respondents.

No. 54643.

Supreme Court of Missouri, Division No. 1.

Sept. 14, 1970.

Motion for Rehearing or to Transfer to Court En Banc Denied

Oct. 12, 1970.

John G. Brannon, R. Brian Hall, North Kansas City, for appellant.

William B. Waters, Robert E. Coleberd, Arthur R. Kincaid, Liberty, for respondents Kincaid and Frick, Hale, Coleberd, Kincaid & Waters, Liberty, of counsel.

C. David Whipple, Kansas City, Conn Withers, Liberty, for respondents H. T. Walpole and Myra Walpole, Krings, Stewart, Whipple, Mauer & Eisler, Kansas City, of counsel.

WELBORN, Commissioner.

This is an appeal by a mortgagor from an adverse decree in his action to set aside a trustee's sale under a deed of trust. The trial court dismissed the petition and entered judgment for the purchaser at the trustee's sale on the purchaser's counterclaim for possession of the premises and for damages for the wrongful withholding of possession. Plaintiff-mortgagor appeals.

On December 5, 1962, John P. Donovan purchased a tract of land in Clay County described as 'The East One-Half (E 1/2) of the Northwest Quarter (NW 1/4) of Section Ten (10), Township Fifty-two (52) of Range Thirty-two (32),' from F. L. Thompson and his wife. The property was, at the time of purchase, encumbered with a mortgage to secure a loan from John Frick. Donovan entered into an arrangement with Frick whereby Donovan executed a new note and deed of trust, dated December 5, 1962. The note, in the principal sum of $12,000, due one year from date, was payable to John Frick, Robert Frick, James Frick and Nannie Frick as joint tenants. The finding of the trial court that John Frick acted as the agent of the other payees in all dealings with Donovan is not controverted. A deed of trust to the property involved was executed by Donovan to secure the indebtedness, with Arthur R. Kincaid as trustee.

Donovan took possession of the tract. When the principal fell due on December 5, 1963, Donovan was prepared to pay the principal. However, according to Donovan, John Frick had told him sometime previously that he was more interested in collecting the interest on the loan than the principal. Consequently, on December 9, 1963, Donovan took Frick a cashier's check for the interest then due, plus $15 which Frick had paid on closing costs, and Frick accepted the sum without question.

In April, 1964, Donovan sought an FHA home improvement loan to build a barn on the farm. When John Frick learned of this, he told Donovan that he would lend the $3,600 Donovan needed. Donovan asked whether he should sign a note and Frick told him that it would not be necessary, that he would make a notation on the check and that when the interest on the $12,000 loan came due in December, Donovan should also pay the interest on the $3,600 and after that make it part of the principal. Donovan received the $3,600 from Frick under the arrangement.

On December 8, 1964, Donovan paid Frick a year's interest on the $12,000 loan and interest on the $3,600 at 5% from the date of the loan to December 5, 1964. Donovan had not paid either the 1963 or 1964 taxes at that time and Frick reminded him to be sure and pay them, otherwise he would have to do so. Donovan paid the 1963 taxes in June, 1965.

In December, 1965, Donovan took Frick a check for $780, in payment of interest on the $15,600 indebtedness, due December 5, 1965. Frick accepted the check without reference to the principal, inquiring only about the payment of taxes. Donovan paid the 1964 taxes in August, 1966.

By December, 1966, Donovan had become involved in divorce proceedings which had resulted in a judgment for alimony in favor of his former wife. Donovan went to see Frick in December and told him of his difficulties. Donovan told Frick that he didn't have the money to pay the interest then due, but that he had some calves which he could sell. According to Donovan, Frick told him that he didn't think it would be a good time to sell the calves, that they had a satisfactory arrangement and that he felt that Donovan would stand behind his word and that the interest would also draw interest and that Donovan should go ahead and see how it all turned out. Donovan told Frick that he was in the process of selling his interest in a corporation and that when he either did that or got his divorce straightened out, he would pay Frick. Frick was agreeable to this arrangement.

An execution was issued on the judgment against Donovan in the divorce case for $3,100 alimony in gross, $750 attorney's fees and $100 monthly alimony. The sheriff levied the execution on the farm and, on January 6, 1967, sold the farm at auction under the execution to one Walter J. Meiners for $7,700. Meiners is Donovan's brother-in-law and Donovan furnished the funds for Meiners' purchase. John Frick was present at the sheriff's sale and Donovan told him that Meiners was his brother-in-law and was buying it for Donovan with money Donovan got from the sale of calves the day before. Frick asked Donovan how he stood on the taxes and Donovan told him that he'd paid the 1964 taxes and that the 1965 taxes were unpaid. Frick said nothing about either the interest or principal on the loan.

In April, 1967, Donovan saw Frick at the 'Coop' in Liberty. Donovan testified that, at that time, 'Mr. Frick asked me if I had ever gotten my divorce straigntened out, and I said that it was still pending on appeal, that the appeal that I had, was about to settle the business, I thought, transferring the stock, selling the stock in the corporation I owned, and I told him that the seventy-seven hundred dollars was still tied up in the sheriff's escrow account from the sheriff's execution sale. * * * He said, 'Are they still holding your money over there?' And I said, 'Yes,' and he said, 'Well, it's I don't suppose they're paying you interest on it, are they?' And I said, 'No, I doubt it,' and he says, 'Well, the interest that you owe will draw interest too, you understand that, don't you?' And I said, 'Yes, that I would have to pay you five per cent interest on the interest that had been due for approximately four months.''

Glen Frick, the brother of John, was with his brother at the Coop on this occasion. He testified that he was with John while he talked to Donovan and that he heard no conversation about the indebtedness.

On June 30, 1967, Donovan mailed a check to the Clay County Collector in payment of the 1965 taxes on the farm. By letter of that same date, the collector returned the check to Donovan, informing him that Mr. Frick had paid the 1965 and 1966 taxes on June 23.

Donovan testified that he did not receive the letter from the collector until July 24, 1967. When he did get the letter, he went over to see Frick and Frick said: "Well, they sold that place today. Didn't you know about it? ' And I said, 'No. What do you mean, they sold it?' And he said, 'Well,' he said, 'didn't Kincaid write you a letter or call you or anything?' And I said, 'No, I don't--what you mean, Kincaid or what?' And he said, 'Well, they had a sale and they sold it on the court-house steps,' and he said, 'Didn't you know anything about it?' And I said, 'I didn't know one thing about it, John.' * * * I asked him who bought it, and he told me, Mr. and Mrs. Walpole, and the price of twenty thousand dollars; and I said, 'Well, how come they didn't say anything about it?' And he said, 'Well, I don't know. You'll have to talk to, have to talk to Kincaid.' * * * I said that I had just got my money out of that business, and I said, 'If I would have known you wanted your money in that type of situation in regard to collecting on the note or foreclosing on it, I would have paid you. I can pay you now.' * * * He said, 'I don't know, you'll have to talk to Kincaid.'' On July 12, 1967, Donovan had received $21,000 in cash from the sale of his interest in a business and the settlement of a lawsuit involving that business.

By authorization of John Frick, Trustee Kincaid, who was also Mr. Frick's attorney, had begun advertisement of the trustee's sale under the deed of trust in the Liberty Tribune on June 29, 1967, and the notice appeared weekly for four issues of that publication. Donovan did not read the Tribune. Kincaid did not notify Donovan of the sale.

The sale was held on July 24 and H. T. Walpole was the only bidder. His bid of $20,000 was accepted and the property sold to him and a trustee's deed executed that date and filed for record July 28.

Following his conversation with Mr. Frick on July 24, Donovan went to see his attorney, Mr. John Brannon. He arrived at Brannon's residence at around 7:00 P.M. The next day, Brannon called Mr. Kincaid and told him that he planned to file suit to set aside the trustee's deed. Brannon and Kincaid did not agree on the details of their conversation. Brannon's recollection was that Kincaid said that the trustee's deed had not been delivered and that he was leaving for a vacation and would do nothing further until his return. Kincaid's recollection was that he did tell Brannon that he was leaving on a vacation, but that he told Brannon only that nothing would be done about the 'overage' on the sale until he got back and that he would not be in a position to discuss the matter further until that time.

On August 4, the Walpoles filed an action in ejectment against Donovan. On August 7, Donovan filed his action to set aside the sale. The causes were consolidated and the Walpoles also filed a counterclaim in Donovan's action, seeking the relief they had previously sought in the ejectment action.

The trial court, upon a trial, dismissed Donovan's petition, evtered judgment in ejectment in favor of the Walpoles and against Donovan, together with a judgment for rents and profits of $3,060, and judgment in favor of the Walpoles for $2,200 damages on account of a temporary injunction in favor of Donovan. Donovan has...