Employers' Indem. Corp. v. Garrett

• Citation: 38 S.W.2d 1049,327 Mo. 874
• Decision Date: 21 May 1931
• Docket Number: 29383
• Parties: Employers Indemnity Corporation, Appellant, v. W. L. Garrett et al
• Court: United States State Supreme Court of Missouri

38 S.W.2d 1049

327 Mo. 874

Employers Indemnity Corporation, Appellant, v. W. L. Garrett et al

No. 29383

Supreme Court of Missouri

May 21, 1931

Rehearing Overruled May 21, 1931.

Appeal from Jasper Circuit Court; Hon. Grant Emerson Judge.

Reversed and remanded (with directions).

Chas M. Howell, Daniel V. Howell, C. P. LeMire and Joshua Barbee for appellant.

(1) The covenant in the deed from Kaltenbach to Garrett whereby Garrett assumed the mortgages rendered Garrett liable for the unpaid amounts of the mortgage notes assumed. The action is on the covenant and lies in favor of endorsee of the note assumed by the covenant in the deed. Heim v. Vogel, 69 Mo. 529; Curry v. Lafoon, 133 Mo.App. 176; Crone v. Stinde, 156 Mo. 262 (overruling Hicks v. Hamilton, 144 Mo. 495, holding that action did not lie in favor of endorsee); Fitzgerald v. Barker, 70 Mo. 685. (2) The written contract of sale of said lands was merged into the deed, accepted and recorded by Garrett, and the covenants of that deed alone determine the liability of Garrett on said mortgage notes. The court should have accordingly rendered judgment for plaintiff. Barger v. Healy, 276 Mo. 145; Matheny v. Stewart, 108 Mo. 73; Minor v. Edwards, 12 Mo. 137; Griffin v. Miller, 188 Mo. 327. (a) The alleged contract of sale was not admissible in evidence and should, together with all testimony relative thereto, be disregarded upon appeal, since in equity appeals improperly admitted testimony is disregarded. Bank of Williamstown v. Hiller, 266 S.W. 1031; Bryant v. Shinnebarger, 285 Mo. 484; Koger v. Black, 220 S.W. 905; Rinkel v. Lubke, 246 Mo. 392. (b) Parol testimony as to the terms of the written contract was not admissible, because said written contract had become merged into the deed containing the assumption covenant sued upon, and was therefore functus officio. Barger v. Healy, 276 Mo. 145; Matheny v. Stewart, 108 Mo. 73; Minor v. Edwards, 12 Mo. 137; Griffin v. Miller, 188 Mo. 327. (3) There was no foundation laid for the introduction of secondary evidence of the terms of said contract, because no diligent search by defendant Garrett for the written contract at the place where it was likely to be found among his papers. There was no proof that Garrett had lost his duplicate original. 1 Greenleaf on Evidence (16 Ed.) 683, par. 563-b; 2 Jones Commentaries on Evidence (2 Ed.) 1493, 1496, 1498, 1499, 1502; Bartlett v. Wilbur, 53 Md. 485; Crowe v. Capwell, 47 Iowa 426; Rex v. Denio, 7 B. & C. 620; 22 C. J. 1057, par. 1356; Liles v. Liles, 183 Mo. 337; 10 R. C. L. 918, sec. 76; Brinkman v. Luhrs, 60 Mo.App. 515; Barton v. Murrain, 27 Mo. 240; Graton v. Land & Lumber Co., 189 Mo. 334; Studebaker Co. v. Dickinson, 70 Mo. 272; Bryant v. Shinnebarger, 285 Mo. 484. (4) Even if said contract and the parol evidence relative thereto was properly admitted into evidence plaintiff should prevail because defendant Garrett had the burden of proving by clear, unequivocal and convincing evidence that a mistake had been made in the drafting of the deed and that said mistake was mutual. Dougherty v. Dougherty, 204 Mo. 228; Sweet v. Owen, 109 Mo. 1; Benn v. Pritchett, 163 Mo. 560; Wilhite v. Wilhite, 284 Mo. 394; Crouch v. Thompson, 254 Mo. 487; Bartlett v. Brown, 121 Mo. 362; Miller v. Railroad, 162 Mo. 440; Brocking v. Straat, 17 Mo.App. 305; Griffin v. Miller, 188 Mo. 327. (5) The evidence, if competent, shows that defendant Garrett bought the farm and not the equity, the mortgage being deducted from the purchase price; hence Garrett is liable for the unpaid mortgage. Landau v. Cottrill, 159 Mo. 319.

W. D. Tatlow for respondents.

(1) The minds of the parties must meet in order to create a liability on an assumption clause, the same as any other contract. The burden of establishing this fact is upon the party asserting liability thereunder. McFarland v. Melson, 20 S.W.2d 63; Citizens Bank v. Thomas, 214 Mo.App. 581, 264 S.W. 86; Johnson v. Meier, 194 Mo.App. 169, 187 S.W. 143; LaRue v. Bloch, 215 Mo.App. 501, 255 S.W. 321; Elliott v. Sackett, 108 U.S. 132, 27 L.Ed. 678; Blass v. Terry, 156 N.Y. 122; Hickman v. Stewart, 88 Mich. 513; Thompson v. Dearborn, 107 Ill. 87; Knighten v. Chamberlin, 84 Ore. 153, 164 P. 703; Chaffee v. Hawkins, 89 Wash. 130. (2) The acceptance of the deed without knowledge of the assumption clause does not create an obligation to assume the mortgage indebtedness. Duvall, etc., Tr. Co. v. Corzine, 295 S.W. 854; Llewellyn v. Butler, 186 Mo.App. 525, 172 S.W. 415; Citizens Bank v. Thomas, 214 Mo.App. 581, 264 S.W. 88. (3) It is expressly held by this court, that where a clause is inserted in a deed that it is subject to a mortgage, it can be shown by parol that the actual agreement was that the grantee was to assume and pay the mortgage. McFarland v. Melson, 20 S.W.2d 63. If it can be shown by parol, in the face of an explicit recital, that the conveyance is subject to a mortgage, that the grantee in fact assumed and agreed to pay the mortgage, it of course can be shown by parol, notwithstanding a recital in the deed to the contrary, that no such agreement was in fact made. (4) The assumption clause is not an essential part of the deed, but is in fact a separate, distinct and independent covenant and agreement. It is upon this principle that it is held in this State that such agreement can be shown by parol outside of the deed, as such parol evidence does not contradict the deed. Bensieck v. Cook, 110 Mo. 186; Bernharm v. Dorr, 72 Me. 198; Heffernan v. Weir, 99 Mo.App. 301. (5) Even if the evidence shows that the amount of the mortgage was subtracted from the estimated value of the land in computing the value of the equity, it is no evidence that the grantee agreed to pay the mortgage. McFarland v. Melson, 20 S.W.2d 63. (6) It is not necessary to reform the deed on the ground of a mutual mistake. Appellant's petition does not plead an agreement, that is a meeting of minds between the parties. It does not even allege that Garrett accepted the deed with knowledge that such provision was in the deed. There is no allegation of the meeting of the minds, which is essential to constitute a valid assumption agreement. McFarland v. Melson, 20 S.W.2d 63; Raffell v. Clark, 89 A. 185; Drury v. Hayden, 111 U.S. 405. (7) Although it was not necessary that the respondent should reform the deed, he plead and proved facts sufficient to entitle him to a decree reforming the deed if it had been necessary for him to have done so. He proved by the undisputed evidence that there was no actual agreement (in other words, a meeting of minds) that he was to make the mortgage indebtedness his own. Citizens Bank v. Thomas, 214 Mo.App. 581, 246 S.W. 86; Duvall, etc., Tr. Co. v. Corzine, 295 S.W. 851; Elliott v. Sackett, 108 U.S. 132; Drury v. Hayden, 111 U.S. 223; Cushing v. Newborn, 183 P. 409; Solomon v. Ins. Co., 250 N.Y. 214, 109 N.E. 121; Rogers v. Castell, 53 N.E. 651. (8) The undisputed evidence shows a mutual and not a unilateral mistake. Sullivan v. Bank of Harrisonville, 293 S.W. 132; Brundridge v. McQuown, 293 S.W. 133; Bartlett v. White, 272 S.W. 944; Wolz v. Venard, 253 Mo. 82; Leitensdorfer v. Delphy, 15 Mo. 161.

OPINION

Ragland, J.

Under the petition, this in form is a suit to foreclose a mortgage: in substance an action of assumpsit brought by a mortgagee against the mortgagor's grantee, based on a clause in the deed of conveyance whereby the latter purported to assume and agree to pay the mortgage debt. Through subsequent pleadings it developed into a suit in equity to reform the deed. The pertinent facts will be stated.

On the first day of March, 1921, George Kaltenbach and Emma Kaltenbach, his wife, were the owners of a farm of 1,000 acres in Webster County, Missouri. The land was encumbered with two deeds of trust in the nature of mortgages, both of which had been executed by them. The first had been given on the 12th day of December, 1919, to secure their note of even date to the First Mortgage Trust Company of Kansas City, whereby they had promised to pay to that company $ 25,000 on December 1, 1926, with six per cent per annum interest thereon from date until maturity, payable on the first day of December in each year up to and including the due date of the principal sum. The second deed of trust, bearing the same date as the first, had been given to secure a commission note of $ 1750, payable in three annual installments.

On the date first mentioned, past due interest on the $ 25,000 note and the first installment of the commission note, which was also past due, together amounted to $ 2,069.35. Interest had accrued on the $ 25,000 note (from December 1, 1920, to March 1, 1921) and not then due in the sum of $ 375. The remaining installments of the commission note, not due, amounted to $ 1168.

On or about said first day of March, 1921, the Kaltenbachs delivered to the defendant Garrett, and Garrett accepted, their deed which for a named consideration of $ 40,000 conveyed to the latter the said 1,000 acres of land. The deed was one of general warranty; it had been prepared by filling in the blanks of a printed form, the form in common use in this State. Immediately following the description of the land conveyed, it contained this clause:

"This deed is made subject to a deed of trust to First Mortgage Trust Company for Twenty-five Thousand Dollars ($ 25,000) and a balance of a commission deed of trust to same parties, recorded in Book 119 at pages 175 and 258 respectively, which grantee assumes and agrees to pay. The balance on said Com. D. of T. is $ 1168, payable in two equal annual payments."

At the end of the instrument, following the covenants of warranty, this was written in:

"Subject to taxes for the year 1921 and after years and deeds of trust above...