Edwards v. Smith, 46931

• Citation: 322 S.W.2d 770
• Decision Date: 09 March 1959
• Docket Number: No. 1,No. 46931,46931,1
• Parties: John T. EDWARDS and Mary Jane Edwards, Appellants, v. Robert SMITH, III, Anna E. Smith and S. L. Sommers, Respondents
• Court: United States State Supreme Court of Missouri

Page 770

322 S.W.2d 770

John T. EDWARDS and Mary Jane Edwards, Appellants, v. Robert SMITH, III, Anna E. Smith and S. L. Sommers, Respondents.

No. 46931.

Supreme Court of Missouri, Division No. 1.

March 9, 1959.

Rehearing Denied April 13, 1959.

Stanley I. Dale, Whitney W. Potter, St. Joseph, for appellants.

F. V. Worden, Strop & Strop, St. Joseph, for respondents Robert Smith, III, and Anna E. Smith.

John C. Landis, III, St. Joseph, for respondent Sommers.

HOLMAN, Commissioner.

Action by plaintiffs, John T. and Mary Jane Edwards, husband and wife, for $25,000 actual and $25,000 punitive damages for the alleged wrongful foreclosure of a deed of trust. Plaintiffs were the mortgagors, defendants Robert Smith III and Anna E., his wife, the mortgagees, and defendant S. L. Sommers, the trustee. At the close of all of the evidence the plaintiffs filed a motion for a directed verdict on the issue of liability which was overruled, and the defendants also filed motions seeking a directed verdict in their favor which were likewise overuled. Thereafter, the court, apparently of its own motion, dismissed the cause, discharged the jury, and entered judgment for defendants. Plaintiffs have appealed.

Plaintiff John T. Edwards testified that he had been territory manager for D-X Sunray Oil Company at St. Joseph, Missouri, from January 1951 until April 1957 when he was transferred to Tupelo, Mississippi; that on May 6, 1955, he and his wife purchased from the Smiths a residence located at 3215 Neighbor Road in St. Joseph, for $16,000; that as a part of the consideration for the property plaintiffs assumed a first deed of trust to the Provident Savings and Loan Association, upon which was due something in excess of $12,000, and executed a note in the amount of $2,704.97, payable to the Smiths, and secured by a second deed of trust describing the property in question. The last-mentioned note and deed of trust are the instruments primarily involved in this case.

The note given by plaintiffs to the Smiths on May 6, 1955, was payable in installments at the rate of $15 on the first day of June 1955, and a like amount on the first day of each succeeding month thereafter. The note provided for interest at the rate of 5% and further provided that the payments of $15 per month were to be applied first to the payment of interest and the balance to the principal. The note also contained the following provision: 'Privilege is hereby given to the makers to pay $15 or any multiple thereof on the principal at any interest paying date.' It also contained an acceleration clause providing that 'in case of default in the payment of any installment when due, the whole amount remaining unpaid, at the option of the legal holder of this note, shall immediately become due and payable.'

Plaintiffs offered to prove by Mr. Edwards that just prior to the signing of the above-described note he stated to Mr. Smith that he received bonus checks at infrequent intervals from his employer and that he contemplated making the $15 monthly payments out of the proceeds of those bonus checks, and in order to make the deal that method of payment would have to be satisfactory with the defendants; that Mr. Smith said that such an arrangement would be satisfactory and he would not foreclose if there were late payments but would accept the multiple payments as the bonus checks were received. The court sustained an objection to that offer. Thereafter, plaintiffs offered to prove by Mr. Edwards that substantially the same conversation was had and the same agreement made shortly after the signing of the instant note, but objection was also sustained to that offer of proof.

It appears that on May 31, 1955, plaintiffs paid the sum of $500 upon the Smith note. None of the payments made by plaintiffs were actually credited upon the note but plaintiffs were given a passbook in which Mr. Smith entered each payment. The pages of this book contained columns showing the date of the payment, the amount of interest paid, the amount of principal paid, the amount of the total payment, and the balance due. The $500 payment heretofore mentioned was entered only in the total payment column but was obviously credited upon the principal, as the balance due on that date was shown to be $2,204.97. The remainder of the payments shown on this book were entered, for the most part, as of the date they were due and not the date of actual payment. However, plaintiffs offered in evidence checks showing the further payments made on the note, which payments were as follows: 8-18-55, $15; 11-30-55, $75; 2-26-56, $15; 3-23-56, $15; 6-1-56, $15; 7-13-56, $15; 9-28-56, $15; 10-4-56, $75; 1-25-57, $60; 3-8-57, $15.

After Mr. Edwards was transferred to Mississippi in the spring of 1957, Mrs. Edwards remained in the home in St. Joseph until about June 1 when the children finished the school year. Shortly after Mr. Edwards was transferred to Mississippi the property in question was placed on the market for sale and for a time was listed with a number of real estate men, including defendant Smith. However, before Mrs. Edwards left St. Joseph, an exclusive listing was given to Carl Walter. There is evidence that defendant Smith thereafter sought an exclusive listing but was advised that such a listing had been given to Mr. Walter.

Mr. Edwards testified that on July 5 (while in Mississippi) he received a letter from defendant Robert Smith, dated June 29, which reads as follows: 'Your letter of June 27th, postmarked Columbus, Miss., has just reached us. Sorry it is necessary for us to tell you that the note covering your loan is no longer under our control. First, our accountant when going over our books was inclined to be critical of us for allowing delinquent payments to accumulate to the extent of more than three months, making it necessary for us to explain that we had talked with you and had written to you in repeated efforts to get the payments. As a consequence, the trustee, Mr. S. L. Sommers, named in the deed of trust, took it out of our hands and started foreclosure proceedings, and the property at 3215 Neighbor Road is tied up now legally and advertised for sale on July 18, 1957, by the trustee, S. L. Sommers, unless, of course, you make other arrangements with him. The address of the trustee is S. L. Sommers, 513 1/2 Francis Street, St. Joseph, Mo., Telephone No. 4-0872.' A copy of the advertisement of the foreclosure proceedings was enclosed in the letter.

Following receipt of the foregoing letter Mr. Edwards took immediate action in an effort to obtain discontinuance of the foreclosure proceedings. He immediately made a telephone call to Mr. Smith and 'he told me I was in default and I told him I was not in default,' and was further advised by Smith that the matter had been turned over to Mr. Sommers, the trustee, and that 'I would have to contact Mr. Sommers and see if he would be able to drop the foreclosure.' Mr. Edwards then called Mr. Sommers who told him that as trustee he had been instructed by Mr. Smith to advertise the property for foreclosure sale; that he was only acting upon instructions, and that if he didn't hold the sale the sheriff would. Plaintiff stated that he next called Mr. Worden, attorney for the Smiths, who suggested that if he would send Mr. Smith a check for $75 it was possible that Mr. Smith would accept it and stop the foreclosure sale. Mr. Edwards testified that he also told Mr. Worden that he would be willing to pay all the costs involved in the proceedings. The witness testified that on that same date he mailed a check to Mr. Smith for $75 but that Smith refused to accept the check and mailed it back to him. Thereafter, Edwards mailed the check back to Smith and Smith again returned it. The efforts of Mr. Edwards were obviously unsuccessful and the property was sold, in accordance with the advertisement, on July 18, to Harlan C. and Ethel E. Dykes, for the sum of $2,200.

Mr. Edwards further testified that during the time he had occupied the premises he had spent between $600 and $700 in making permanent improvements. He also stated that upon the date of foreclosure the balance due on the first mortgage was $11,111.41, and the balance due on the note in question was $2,121.28; that after the sale he received a check from Mr. Sommers in the amount of $5.97 which was stated to be the balance due plaintiffs from the proceeds of the sale after payment of the note and expenses; that he had never cashed that check. On cross-examination Mr. Edwards admitted that when his deposition had been taken he had testified that he had desired that the $500 payment be credited on the principal of the note. The evidence indicated that plaintiffs had made all the payments on the first mortgage as they fell due.

Plaintiff called S. L. Sommers, the trustee, as a witness. He testified that he was engaged in the abstract business; that Mr. Smith had brought the note in question to him and directed that he foreclose; that he examined the note and no payments had been endorsed thereon; that he then asked Mr. Smith to take the note to his attorney and make sure that it was in default before starting foreclosure proceedings and that Mr. Smith reported back to him that his attorney had declared that the note was definitely in default. The trustee stated that he then began the advertisement of the notice of foreclosure sale. He stated that he did not notify the plaintiffs of the proceedings but requested that Mr. Smith give them notice and he agreed to write them.

Carl Walter testified for plaintiffs that he was in the real estate business in St. Joseph and that on April 15, 1957, plaintiffs gave him a 90-day listing for the sale of the property. He stated that he received an offer of $15,000 for the property and wrote Mr. Edwards to that effect on July 8, but that he did not hear from him until the day of the foreclosure sale when he received a letter in which Mr. Edwards...