F. B. Collins Inv. Co. v. Waide

• Decision Date: 25 June 1918
• Docket Number: Case Number: 8756
• Citation: 1918 OK 370,70 Okla. 191,173 P. 835
• Parties: F. B. COLLINS INV. CO. et al. v. WAIDE et al.
• Court: Oklahoma Supreme Court

1918 OK 370

173 P. 835

70 Okla. 191

F. B. COLLINS INV. CO. et al. v. WAIDE et al.

Case Number: 8756

Supreme Court of Oklahoma

Decided: June 25, 1918

Syllabus

¶0 1. Mortgages--Fraud.

A guardian entered into and carried out a conspiracy resulting in a fraudulent sale of his ward's land. Such sale was made under order of the county court, and the proceedings in regard thereto, on their face, were regular, including a deed to a bogus purchaser, who subsequently, in furtherance of the conspiracy executed, without consideration, a deed to another conspirator for said lands, who secured a loan from an investment company, and executed a mortgage upon said land to secure the payment of the loan, which mortgage was by the trial court ordered to be canceled upon the ground of fraud, but the court found that no actual knowledge of such fraud came to such investment company. Held that, in the absence of proof that such investment company had knowledge of facts which, if followed, would have disclosed the fraud practiced in the sale of said lands, it was reversible error to order said mortgage canceled.

2. Vendor and Purchaser--Bona Fide Purchaser--Knowledge.

Knowledge by a purchaser of land that the grantor under whom the vendor claims is in possession thereof is not such knowledge as to put the purchaser upon inquiry as to the title of such grantor.

3. Mortgages--Bona Fide Purchaser--Knowledge--Evidence.

The evidence in this case carefully examined, and found that the weight thereof is against the conclusion of the court that: "The F. B. Collins Investment Company making the loan, had such knowledge of facts as should have put it upon inquiry, which inquiry, followed up, would have given it notice of the fraud perpetrated in the sale of the property by W. M. Waide, as guardian of Harold L. Waide, to Roy E. Burks."

4. Holder In Due Course--Statute.

When it is shown that the title of any person who has negotiated a negotiable instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course.

Error from District Court, Murray County; F. B. Swank, Judge.

Cases consolidated and tried together and judgment against Thomas N. Jenkins in favor of the F. B. Collins Investment Company, canceling proceedings in county court in regard to the sale of the land in controversy, the guardian's deed to the purchaser, and the purchaser's deed to Thomas N. Jenkins, and the mortgage by Thomas N. Jenkins to the Investment Company. The Investment Company's motion for a new trial was overruled, and the Company and Henry C. Block, trustee, bring error. Reversed and remanded, with instructions to modify the judgment, and, except as to such modification, affirmed.

A. E. Pearson and W. R. Withington, for plaintiffs in error.

Pyeatt & Butts and Blanton & Andrews, for defendants in error.

COLLIER, C.

¶1 The F. B. Collins Investment Company, a corporation, hereinafter styled plaintiff, filed its action against Thomas N. Jenkins and Leore L. Jenkins, hereinafter styled defendants, to recover upon notes aggregating the sum of $ 457.26, and interest thereon, and $ 50 attorney fee, and for a foreclosure of a mortgage given by Thomas N. Jenkins to the said F. B. Collins Investment Comany, to secure payment of said notes, the foreclosure of said mortgage to be foreclosed subject to a prior mortgage given by the said Jenkins to the F. B. Collins Investment Company, and by said Investment Company assigned to Henry C. Block, trustee, the said mortgage being to secure the payment of $ 1,900. Thereafter Harold L. Waide, a minor by his next friend, filed an action against W. M. Waide, Roy E. Burks, Lenoir L. Burks, Thomas N. Jenkins, the F. B. Collins Investment Company, and Henry C. Block trustee, asking for the cancellation of the guardian's deed from W. M. Waide to Roy E. Burks and cancellation of deed from Roy E. Burks and Lenoir L. Burks to Thomas N. Jenkins, to the F. B. Collins Investment Company, said deeds and mortgage being upon the lands involved in this litigation. By agreement the said two cases were consolidated and tried together. The case was tried to the court, and the following findings made:

"That the guardian's deed executed by W. M. Waide as guardian of Harold L. Waide, and approved by the county court of Garvin county, covering the lands in controversy situated in Murray county, Okla., was without consideration, and there was collusion between Roy E. Burks and the guardian, W. M. Waide, for the purpose of defrauding plaintiff out of said property.

"The court further finds that the deed from Roy E. Burks and wife, Lenoir Burks, to Thomas N. Jenkins, covering the lands in litigation, is also void and without force and effect, because Thomas N. Jenkins was a party to said collusion and knew of the same, and said deed to Thomas N. Jenkins is hereby declared void and vacated from the records, and the same is hereby ordered canceled as fully as though it had never been executed.

"The court further finds that the mortgage sued on by the F. B. Collins Investment Company, in case 1039, which case was consolidated with the one on trial, should be canceled, held for naught, and is hereby canceled and held for naught, and the same is declared invalid and without force and effect.

"The court further finds that the mortgage of $ 1,900, executed by Thomas N. Jenkins on the land in litigation, in favor of the F. P. Collins Investment Company, was assigned by the F. B. Collins Investment Company to the defendant Henry C. Block, trustee, should be canceled, held for naught, and be held invalid, and the property revested in the plaintiff, clear of all incumbrances of any kind whatsoever so far as the interest of the defendants is concerned.

"The court further finds from the evidence in this case that O. W. Jones was never, during the negotiations of said loan by the F. B. Collins Investment Company and Thomas N. Jenkins and Roy E. Burks, the agent of the F. B. Collins Company; that the F. B. Collins Investment Company actually paid out $ 1,900, the amount of the loan which is represented by the mortgage assigned to Henry C. Block, trustee herein, and that said money paid out on said loan, supposed to be paid to Thomas N. Jenkins was finally transferred and turned over to W. M. Waide, guardian of the plaintiff.

"The court further finds that no part of the mortgage of the F. B. Collins Investment Company, or any part of the mortgage held by Henry C. Block, trustee, has ever been paid.

"The court further finds that said mortgage was made in good faith by the F. B. Collins Investment Comany, without actual notice of fraud, but it is the judgment of the court from the testimony that the F. B. Collins Investment Company had knowledge of such facts as should have put them on inquiry, followed up, would have given them notice of the fraud perpetrated in the sale of the property by W. M. Waide, as guardian of Harold L. Waide, to Roy E. Burks.

"The court further finds that the probate proceedings had in the county court of Garvin county, Okla., in which W. M. Waide sold the property of Harold L. Waide, plaintiff herein, were regular on their face, and in every respect complied with the law, but finds that the said proceedings do not recite the truth as to the transactions that actually occurred."

"The court further finds that the plaintiff, through his guardian, is suing in the district court of Garvin county, Okla., W. M. Waide and Western Indemnity Company, a corporation, to recover under said bond a reasonable value of the land sold by said guardian.

"To all of said findings as to the F. B. Collins Investment Company and Henry C. Block, trustee, the F. B. Collins Investment Company and Henry C. Block except."

¶2 The court rendered judgment against Thomas N. Jenkins in favor of the F. B. Collin's Investment Company for the amount of $ 543.95, and $ 50 attorney fee, and interest at 8 per cent. per annum, payable annually from date, and canceled and held for naught the proceedings in the county court in regard to the sale of the land in controversy, the deed of the guardian to the purchaser at said sale, and the deed of the purchaser at said sale to Thomas N. Jenkins and the mortgage executed by Thomas N. Jenkins to the F. B. Collins Investment Company. Thereafter the F. B. Collins Investment Company within the time provided by law, made a motion for a new trial, which was overruled and excepted to, and error brought to this court.

¶3 The evidence in this case clearly sustains the finding of the court as to the fraud that was practiced upon the minor, whose lands were ostensibly sold by the guardian, who was his father; that there was collusion between Roy E. Burks and the guardian in regard to the sale of said lands; that Thomas N. Jenkins was a party to said collusion, and knew of the same; that the mortgage executed to the F. B. Collins Investment Company by Thomas N. Jenkins was without actual notice on the part of said company as to any fraud; that O. W. Jones was never, during the negotiations of said loan by the F. B. Collins Investment Company, Thomas N. Jenkins, and Roy E. Burks, the agent of the F. B. Collins Investment Company; that the F. B. Collins Investment Company actually paid out $ 1,900, the amount of the loan represented by the mortgage and assigned to Henry C. Block, trustee; that said money paid out was finally transferred and turned over to W. M. Waide, guardian of the minor, and that no part of said mortgage, of the F. B. Collins Investment Company, or any part of the mortgage held by Henry C. Block, trustee, has ever been paid; that the proceedings had in the county court of Garvin county, Okla., in which W. M. Waide sold the property of Harold L. Waide, were regular on their face, and in every respect complied with the law; but that the said proceedings do not recite the truth as to the transactions that actually occurred; "that the said minor is suing in the district...