Dover v. Kennerly

• Decision Date: 31 October 1866
• Parties: JEROME B. DOVER, Respondent, v. THOMAS J. KENNERLY et al., Appellants.
• Court: Missouri Supreme Court

38 Mo. 469

JEROME B. DOVER, Respondent,

v.THOMAS J. KENNERLY et al., Appellants.

Supreme Court of Missouri.

October Term, 1866.

Appeal from Jefferson Circuit Court.

Abner Green and Cline & Jamieson, for appellants.

I. The re-sale of the property by the trustee, upon the ailure of O'Fallon to pay the amount of his bid at the first sale, was in conformity with the power vested in trustee, and with the universal practice where a power of sale is given either by a grantor to a trustee or mortgagee, or by a court to any of its officers--Stewart v. Garvin, 33 Mo. 105; Vannerson v. Cord, 1 S. & M. Ch. 345-6; Bicknell v. Byrnes, 23 How. Pr. 486; Lacey v. Giboney, 36 Mo. 320.

II. The agreement made by the Kennerlys with the trustee, that they would wait a few days for the amount bid by O'Fallon, was simply permission to the trustee, and being without consideration did not divest the trustee of the Kennerlys of any right as against O'Fallon, nor conld the transaction create an assumption of the bid of O'Fallon as a liability to themselves personally. In fact and in law, the trustee Burgess stood in relationship which constituted him the special agent of neither of the parties to the suit, but having duties to perform for both; it being his duty to sell the land, in case of a default of payment in any of the notes, to pay the amount due on the notes to the parties holding them, and to deliver the surplus, if any, to the grantor in the deed of trust. Hence no statement made to the trustee by the Kennerlys of a merely permissive character could derogate from the rights of the Kennerlys as against said property.

III. But even allowing the assumption to be correct, that the Kennerlys did assume the amount bid by O'Fallon as a personal indebtedness to themselves, then it must also be assumed that the first sale was a valid one, out of which alone such indebtedness could have sprung; and the plaintiffs have no ground for a revesting of the title in them, but simply an action at law in the name of the trustee against the Kennerlys for the surplus after satisfying the notes in their hands.

IV. The petition in this case--setting aside the allegations of fraud, of which there is no proof whatsoever, and no finding by the court--shows no ground for the relief asked for; and the ground upon which relief is granted by the court below is not named in the petition.

V. Even had it been proved, as it was not, that the notes for payment of which the property was sold were delivered to the defendants as collateral security for antecedent debts, yet if they were passed to the defendants before maturity without any notice of equities in favor of the plaintiff (even had such existed), then they are holders for a valuable consideration, and are unaffected by any equities between the original parties--Grant v. Kidwell, 30 Mo. 455; 3 Cush. 168; 16 Pet. 16-22; 20 How. 370; 14 Cal. 98.

VI. If the plaintiff has been injured by the failure of O'Fallon to take the property at the first sale at the price bid, his remedy is against O'Fallon to recover from him the amount of his bid in excess of what the property sold for at the last sale.--Gardner v. Armstrong, 31 Mo. 535.

VII. All the parties immediately interested in this suit were not before the court, viz, the holders of the unpaid notes, and hence the court could not proceed to make a decree unless all the parties were properly before the court, or some reason shown why they could not be. And this want of parties affords good ground for reversal; and especially hould the trustee in whom was vested the legal trust under the deed of trust have been made a party--2 Sto. Eq. Jur. § 1526; Sto. Eq. Pl. §§ 72, 75, 77.

J. A. Beal, for respondent.

I. The agreements between O'Fallon and Kennerly, for O'Fallon to refrain from bidding at the sale, renders the sale null and void and fraudlent--1 Sto. Eq. §§ 293, 322.

II. Collusion or contrivance to enable the purchaser at a judicial sale to obtain land at less than its real value, is cause for setting the sale aside-- Neal v. Stone, 20 Mo. 294; Stewart v. Nelson, 25 Mo. 309.

III. So when it was agreed at an auction sale in partition that one party should desist from bidding, and that the other should purchase the land and divide it, the sale was set aside--Worten v. Hinkle, 20 Mo. 290; Hook v. Turner, 22 Mo. 333.

IV. If all the acts of a cestui que trust show a fraud on the debtor, the deed will be set aside--Stine v. Wilkerson, 10 Mo. 75; 35 Mo. 90.

V. The deed under the second sale cannot stand in consequence of the combinations between Kennerly and O'Fallon for O'Fallon to refrain from bidding at the sale. Nor can the first sale to O'Fallon be in the way of recovery in this suit, for the reason that O'Fallon refused to accept a deed under the sale, and disclaims any right under that sale. And as he does not set up a claim to the land under any circumstances, the only question for this court to make is whether the sale by the trustee on the 9th of May to defendants was a proper sale, and conducted without any fraud or combinations. We think that the fact of the defendants agreeing with O'Fallon to wait on him and give him time for payment of the amount bid at the first sale, makes it an individual indebtedness of O'Fallon to Kennerly, and that the power of the trustee to sell again was exhausted.

The entry of defendants on the land under the second sale gives them no title; besides, they had received at the date of the trial rents enough to pay all the indebtedness due Kennerly and O'Fallon, except about ninety dollars; and since then they have remained in possession of the farm for one year, which is proven to be worth one hundred and fifty dollars per year: so at the present time the indebtedness of Dover is overpaid.

The title under which defendants entered into the farm being fraudulent, null and void, they must account to plaintiff for the rents which overpay them.

HOLMES, Judge, delivered the opinion of the court.

This was a petition in equity by the grantor in a deed of trust on real estate made to secure the payment of six negotiable promissory notes, and it was brought against the defendants Kennerly & Co., holders of two of the notes and purchasers at a sale under a deed of trust, praying to have the trustee's deed to them set aside and annulled for the reason that one sale had already been made under a previous notice, and on the ground of fraud in making a...