Dwyer v. Rohan

• Decision Date: 17 March 1903
• Citation: 73 S.W. 384,99 Mo.App. 120
• Parties: WALTER P. DWYER, Appellant, v. JAMES J. ROHAN, Respondent
• Court: Missouri Court of Appeals

73 S.W. 384

99 Mo.App. 120

WALTER P. DWYER, Appellant, v. JAMES J. ROHAN, Respondent

Court of Appeals of Missouri, St. Louis

March 17, 1903

Appeal from St. Louis City Circuit Court.--Hon. W. B. Douglas Judge.

AFFIRMED.

Judgment affirmed.

R. M Nichols for appellant.

(1) The new matter pleaded as a defense in the first count in the answer is not, within the meaning of section 2050, Revised Statutes 1889, "a cause of action arising out of a contract or transaction set forth in the petition as the foundation of plaintiff's claim." And the court erred in not sustaining motion to strike it out. Owen v McKinsey, 133 Mo. 334; Allen v. Dermott, 80 Mo. 65; Barnes v. McMullins, 78 Mo. 260; Wilkinson v. Farnham, 82 Mo. 672; Gnatt v. Duff, 71 Mo.App. 93. (2) After such conveyance defendant had no right to redeem from the mortgage, and had no interest in the subject-matter of the mortgage which would require that he be made a party to a foreclosure suit. 2 Jones on Mortg. (4 Ed.), sec. 1056; Phillips v. Leavitte, 54 Me. 405; Lapsley v. Howard, 119 Mo. 489; Veerland v. Loubat, 2 N.J.Eq. 104; Andrews v. Steele, 22 N.J.Eq. 478; Johns v. Outwater, 36 A. 448; Murray v. Catlett, 4 Greene 109; Johnson v. Monell, 13 Iowa 300. (3) If the selling of the property by the trustee, who is not a party to the suit, to a member of the co-partnership which owned the note, and of which said trustee was the other partner, amounts to a conversion as against the person who had no right to redeem, certainly the person who was guilty of the conversion should be allowed to show the real value of the thing converted. Richardson v. Ashley, 132 Mo. 249; Menkens v. Menkens, 23 Mo. 252; Bredow v. Ins. Co., 28 Mo. 181; Becker v. Matthews, 12 N.Y. 313.

Everett W. Pattison and Alfred P. Hebard for respondent.

(1) By filing a reply to defendant's answer, plaintiff, appellant, waived his exceptions to the action of the trial court in overruling his motion to strike out parts of that answer; and the action of the court below in that regard can not be reviewed here. Walser v. Wear, 141 Mo. 443; Barkley v. Barkley Cemetery Ass'n., 153 Mo. 300; Williams v. Railroad, 112 Mo. 463; Wilson v. Scott, 50 Mo.App. 329. (2) When the creditor, the appellant here, destroyed or converted the security which he held for the debt, he thereby released the surety, the respondent here; and this, too, whether or not he afterwards sold the security for less or more than the amount of the debt, his own evidence conclusively showing that the property was worth much more than the face of the note with interest. 24 Am. and Eng. Ency. of Law (1 Ed.), p. 856 (d), and cases cited; Wood v. Matthews, 73 Mo. 477; Bensieck v. Cook, 110 Mo. 173, 185; Bank v. Gifford, 79 Iowa 300; Priest v. Watson, 75 Mo. 310; English v. Seibert, 49 Mo.App. 563; Life Ins. Co., v. Landis, 50 Mo.App. 116; Bank v. Battle, 114 Mo. 276; Bank v. Leyser, 116 Mo. 51, 80. (3) Even if defendant had remained the owner of the equity of redemption, and no question of suretyship were involved in the case, it would still be true that plaintiff, by converting the security, lost the right to enforce the note against defendant. Wood v. Matthews, 73 Mo. 477; Bank v. Ross, 9 Mo.App. 399; Moore v. Thompson, 40 Mo.App. 195; Tobener v. Hassinbusch, 56 Mo.App. 591.

GOODE, J. Bland, P. J., and Reyburn, J., concur.

OPINION

GOODE, J.

--James J. Rohan, respondent, borrowed $ 1,250 from the Rice-Dwyer Real Estate Company, September 14, 1899, giving a note therefor secured by a deed of trust on two lots in the city of St. Louis, one in Brantner place, the other on Grand avenue opposite the fair grounds.

Said real estate company was a co-partnership composed of James and Thomas Rice and Walter P. Dwyer.

These lots had been owned by the respondent's father who had given a deed of trust on them, and default being made in the payment of the debt secured thereby, the deed of trust was foreclosed and respondent became the purchaser of the lots at the foreclosure sale. He applied to the Rice-Dwyer company to borrow money to pay the purchase price of the lots and in the course of the negotiation the parties had the title examined by August Gehner. Gehner said the title was good and that if the Rice-Dwyer Company would not make the loan he would. Certain defects in the record title were detected at that time and shown in the certificate of title given by Gehner. One was an alleged imperfection in the acknowledgment by a married woman, Artlissa Begley, who joined with Bernard Begley in a conveyance of the property in 1868, twenty-six years before the deed of trust in question was executed. This conveyance was of the Brantner place lot. The other alleged defect related to the Grand avenue lot, the title to which, it seems, was derived through a tax sale in 1873, twenty-one years prior to the execution of the deed of trust, in which suit one John Walton, a one-time owner of the land, was defendant, and evidence was offered to show that said Walton died before the judgment in the tax suit was rendered.

These defects became known to both the Rice-Dwyer company and Rohan in the investigation of the title preliminary to the loan, but were disregarded as of no consequence on account of the long time the property had been in the possession of respondent and those under whom he claimed. In the deed of trust executed by the respondent, said Thomas Rice was trustee, the note secured being made payable to the order of James Rice. After the execution of the deed of trust Rohan conveyed the property to W. H. Denham, who assumed and agreed to pay the incumbrance. Denham defaulted and respondent Rohan refused to pay, contending that the debt was Denham's; so the property was advertised for sale and sold under the deed of trust by Thomas Rice in August, 1897, at public vendue at the east door of the courthouse in the city of St. Louis for $ 25, appellant Dwyer being the purchaser.

The note secured by the deed of trust was, as stated, originally the property of the Rice-Dwyer Real Estate Company, though James Rice was named as the payee. At the time of the foreclosure sale, the note was owned by said partnership, but was subsequently assigned to the appellant who instituted this action to recover the balance due on it for the benefit of the firm.

The answer, besides a general denial, contains a count setting up a defense of new matter and another count pleading the same new matter by way of counterclaim. Those two counts consist of a recital of the partnership of the Rices and Dwyer; the facts in regard to the loan and the execution of the deed of trust; that the deed of trust provided for a sale by the trustee, Thomas Rice, at public vendue, to the highest bidder for cash in the event of default, but that the said trustee, being at the time of the foreclosure sale appellant Dwyer's partner, and joint owner and holder of the note secured by the deed of trust, advertised the lots for sale and struck them off for the nominal sum of $ 25 to his partner and co-owner of the note, the appellant, who was the only person who attended the sale and bid.

The answer further states that though the lots were of the value of $ 2,000, the trustee, professing to have lawfully executed the trust vested in him, conveyed the same to Dwyer by a deed, legal in form, for said consideration of $ 25; that appellant Dwyer having thus procured the title to said property was able to hold himself out as its owner and sold and conveyed it in 1898, by a properly executed deed, to an innocent third party for the sum of one thousand dollars.

After reciting the above facts the answer proceeded as follows:

"Defendant says that the conduct aforesaid of said trustee and of the plaintiff in the premises was wrongful and fraudulent, and was not a due and lawful exercise of said power of sale vested by the said deed of trust in the said trustee, and did not, in contemplation of law foreclose said deed of trust or take away the right of the said defendant to redeem said lands, or to cause the same to be duly applied to the payment of said note; because the defendant says that the said trustee, being a joint owner and holder of said note, had no power, without the consent of the defendant, which was not obtained, to become the purchaser of said property, at his own sale, which he did by fraudulently conspiring with the plaintiff, his partner, and other joint holders and owners of said note, to buy in the said property for their joint benefit and interest, and that, too, for the trivial sum aforesaid; and because the conduct of said trustee, in striking off said property to plaintiff herein at less than one-eightieth of its real value, instead of adjourning said sale for want of bidders, was wrongful and fraudulent and the result of a fraudulent understanding between the trustee and the plaintiff; and because the sum so bid for the said property was purely nominal and not substantial in contemplation of law; and because it was fraudulent on the part of the trustee to entertain such a bid, and on the part of the plaintiff to seek to acquire the property aforesaid for such an unconscionable pittance.

"Defendant says that by reason of the fraudulent and wrongful conduct aforesaid of the said trustee and of the plaintiff herein the defendant has been wrongfully deprived of the power to redeem the said property by paying off the said note, as well as of the power to cause said property to be applied to the payment of the said note; that said lands now are and always have been, ever since the date of the execution of said note and deed of trust, of a cash value more than sufficient to fully pay the said note and all interest thereon, together with all proper costs and commissions which could...