Dowling v. Grand Avenue Bank of St. Louis, a Corp.

• Citation: 267 S.W. 1,216 Mo.App. 86
• Parties: JAMES S. DOWLING, Appellant, v. GRAND AVENUE BANK OF ST. LOUIS, a Corporation, Respondent.
• Decision Date: 02 December 1924
• Court: Missouri Court of Appeals

267 S.W. 1

216 Mo.App. 86

JAMES S. DOWLING, Appellant, v. GRAND AVENUE BANK OF ST. LOUIS, a Corporation, Respondent.

Court of Appeals of Missouri, St. Louis

December 2, 1924

Appeal from the Circuit Court of the city of St. Louis.--Hon. Robert W. Hall, Judge.

REVERSED AND REMANDED (with directions).

Cause reversed and remanded.

Rassieur Kammerer & Rassieur for appellant.

(1) The forgery and unauthorized endorsement of a memorandum of a purported extension on the Pearce note did not have the effect of extending the maturity of the note, even in the hands of a holder, for value, without actual knowledge of the fraud. Bacon v. Reichardt, 208 S.W. 24; German-American Bank v. Barnes, 185 S.W. 1194; Secs 810, 910, 911, R. S. 1919. (2) The Pearce note and deed of trust having been fully paid and discharged before they were delivered by appellant to Rodgers for release, and the Pearce note being then past due, respondent acquired no title to the note and deed of trust by the subsequent fraudulent acts of Rodgers. Bacon v. Reichardt, 208 S.W. 24; Hoeley v. South Side Bank, 280 Mo. 336; Kellog v Schnaake, 56 Mo. 136; Bishop v. Chase, 156 Mo 158; Ford v. Phillips, 83 Mo. 523; Turner v. Hoyle, 95 Mo. 337; Mayer v. Columbia Savings Bank, 86 Mo.App. 108. (3) Respondent having acquired the Peace note after its maturity, took the note subject to the defense of payment. 2 Daniel Neg. Inst. (6 Ed.), sec. 1233a; Bacon v. Reichardt, 208 S.W. 24; Hoeley v. South Side Bank, 280 Mo. 336; Kellogg v. Schnaake, 56 Mo. 136; Henley v. Holzer, 19 Mo.App. 245; Secs. 838, 844, R. S. 1919. (4) The Pearce deed of trust was a mere incident to the note; since the note was paid, its attempted reissue and transfer, after payment and maturity, could not revive the mortgage, as the mortgage ceased to exist when the note was discharged. Murphy v. Simpson, 42 Mo.App. 654, 658; Bacon v. Reichardt, 208 S.W. 24.

Sam B. Jeffries, Arthur E. Simpson and Paul F. Plummer for respondent.

Plaintiff delivered negotiable paper endorsed in blank to his trusted agent, Rodgers, thereby giving him apparent title to it and every indicia of ownership, and is now estopped to assert as against the defendant that Rodgers did not have title to the paper and the right to pledge it. The equitable doctrine that where one of two innocent persons must suffer by the fraud of a third, the one must suffer who placed it in the power of the third person to commit the wrong is applicable. Beade v. Cramer, 278 Mo. 515; Cannon v. Gibson, 162 Mo.App. 386; Lee v. Turner, 89 Mo. 489; International Bank v. German Bank, 71 Mo. 197; Neuhoff v. O'Reilly, 93 Mo. 164; Kein v. Vette, 167 Mo. 389; Priest v. Garnett, 191 S.W. 1048; Ricketts v. Finkelstein, 211 S.W. 391; Leonard v. Shale, 266 Mo. 123; McNeil v. Tenth Nat'l Bank, 46 N.Y. 329; Noble v. Moses Bros., 74 Ala. 604; Milwaukee Harvester Co. v. Glidden, 106 Ill.App. 319; National Safe Deposit Co. v. Hibbs, 229 U.S. 391, 33 S.Ct. 818, 57 L.Ed. 1241; Burson v. Huntington, 21 Mich. 415, 432; Gardner v. Beason Trust Co. (Mass.), 76 N.E. 455, 2 L. R. A. (N. S.) 767; White v. Dodge, 187 Mass. 449; Cochran v. Stewart, 21 Minn. 435; Moore v. Moore, 112 Ind. 149; Ethridge v. Gallagher, 55 Miss. 458; Connell v. Bluss, 52 Me. 476; Eversole v. Maull, 50 Md. 95.

BRUERE, C. Allen, P. J., and Becker and Daues, JJ., concur.

OPINION

BRUERE, C.--

This is an action in equity seeking the surrender and cancellation of a principal note and four semiannual interest notes, which were secured by deed of trust on the property described in the petition, on the ground that said notes were fraudulently reissued after they had been fully paid and satisfied. The trial court, upon hearing, dismissed the bill and plaintiff has appealed.

The facts are uncontradicted and are, in substance, as follows:

On June 28, 1909, Stanley D. Pearce was the owner of certain real estate situated in the city of St. Louis, Mo., and on said day executed his note for seven thousand dollars, payable to the order of George E. Harris and due three years after date, and secured the same by deed of trust on said real estate; that said note was thereafter endorsed and assigned, in blank without recourse, by said Harris to the plaintiff, who acquired said note for value and in due course before maturity; a payment of one thousand dollars was made on the principal of said note and was duly endorsed thereon prior to the time plaintiff acquired the note; the said deed of trust was duly recorded in the office of the recorder of deeds for the city of St. Louis, Mo.; at the maturity of said note, to-wit, on June 28, 1912, said note was extended for a period of three years, to-wit, to June 28, 1915; on said last date plaintiff was the owner and holder of said note, and the real estate, described in said deed of trust securing said note, was then owned by one Hugh MacKenzie; on the 28th day of June, 1915, said note was extended for an additional period of three years, to-wit, to June 28, 1918; an endorsement evidencing such extension was made, at said time, on the note and which reads as follows:

"Payment of the balance of $ 6000 on this note is hereby extended for three years from June 28, 1915, on condition that six semiannual interest notes each dated June 28, 1915, each for $ 180 executed by Hugh MacKenzie, payable to the order of Frank W. Rodgers, representing the accruing interest during said period be promptly paid as they mature. Any failure to pay said interest notes at maturity to leave this note due and payable. The intention being to extend same only so long as said interest is promptly paid."

Pursuant to said agreement of extension, Hugh MacKenzie made, executed, and delivered to plaintiff his six semiannual interest notes, dated June 28, 1915, each for the sum of $ 180, payable 6, 12, 18, 24, 30 and 36 months after date, respectively, and all payable to the order of Frank W. Rodgers, who on said 28th day of June, 1915, endorsed the same in blank without recourse.

On said 28th day of June, 1915, the real estate, described in said deed of trust securing said note, was also subject to a junior deed of trust, dated July 15, 1914, securing an indebtedness of twenty-five hundred dollars, evidenced by certain notes, payable to the order of plaintiff, which notes were held and owned by plaintiff at said time.

On the 28th day of January, 1916, Hugh MacKenzie paid to plaintiff the semiannual interest note for one hundred and eighty dollars, due December 28, 1915, executed by him; on August 30, 1918, the Pearce note for a balance of six thousand dollars, the remaining five semiannual interest notes and the notes secured by said junior deed of trust were all past due and unpaid; in liquidation of the amount due on said notes, said MacKenzie on August 30, 1918, transferred and conveyed his equity of redemption in the real estate, described in said deeds of trust securing said notes, to plaintiff, and plaintiff thereupon became the owner of said real estate.

Thereafter, on August 30, 1918, plaintiff conveyed said real estate to one Mary Bollinger by warranty deed and accepted in part payment of the purchase price her note for six thousand dollars, dated August 30, 1918, due four years after date and secured by deed of trust on the property sold, together with interest and installment notes aggregating twenty-five hundred dollars, secured by a second deed of trust, on said real estate; these notes were owned by the plaintiff at the time this cause was tried.

The sale to Mary Bollinger was closed in the office of Frank W. Rodgers, a real estate agent then located in the city of St. Louis, Mo.; thereafter, and on said 30th day of August, 1918, plaintiff directed said Rogers to release the Pearce deed of trust in the office of the recorder of deeds for the city of St. Louis, Mo., and thereupon delivered to Rodgers the principal note of said Stanley D. Pearce, dated June 28, 1909, originally for seven thousand dollars, as hereinbefore stated, and the deed of trust securing the same, and also the five semiannual interest notes, dated June 28, 1915, each for one hundred and eighty dollars, executed by said Hugh MacKenzie, hereinbefore described; the other interest note for one hundred and eighty dollars, executed by MacKenzie, due six months after date, and which had been paid by MacKenzie was also delivered to Rodgers for the purpose of releasing, on the record, said deed of trust.

At the time these notes were delivered to Rodgers for release they were all past due on their face and had been fully paid and satisfied. Rodgers did not release the Pearce deed of trust upon the records in the recorder's office of the city of St. Louis, Mo., as he had been directed to do by plaintiff but wrongfully and without the knowledge, consent or authority of the plaintiff, forged a spurious endorsement on the Pearce note, purporting to extend its maturity for three years from June 28, 1918; said forged endorsement recited that Hugh MacKenzie had executed six semiannual notes dated June 28, 1918, each for one hundred and eighty dollars, for interest to accrue during the period of said purported extension; said Rodgers also, wrongfully and without the knowledge, consent or authority of the plaintiff, changed and altered the dates on the said semiannual interest notes, due 12, 18, 24, 30 and 36 months after date for one hundred and eighty dollars each, by making the purported dates June 28, 1918, instead of June 28, 1915, and the same change was made in the date cancelling the revenue stamps on said interest notes; Rodgers also changed the maturity dates, written on the semiannual interest notes, so that the same corresponded with the purported dates on which said notes became due. The alterations made on...