Federal Land Bank of St. Louis v. Bross

• Decision Date: 06 December 1938
• Docket Number: No. 24983.,24983.
• Parties: FEDERAL LAND BANK OF ST. LOUIS v. BROSS et al.
• Court: Missouri Court of Appeals

122 S.W.2d 35

FEDERAL LAND BANK OF ST. LOUIS v. BROSS et al.

No. 24983.

St. Louis Court of Appeals. Missouri.

December 6, 1938.

Appeal from Circuit Court, Audrain County; William C. Hughes, Judge.

"Not to be published in State Reports."

Action in ejectment by the Federal Land Bank of St. Louis against Phillip A. Bross and another for possession, damages and monthly rents and profits, and for the appointment of a receiver, wherein defendants filed a counterclaim for damages. Judgment for plaintiff, and defendants appealed to the Supreme Court, 116 S.W. 2d 6, which transferred the cause to the Court of Appeals, where the defendants filed a motion to strike out and not consider the plaintiff's additional abstract of record.

Motion overruled and judgment reversed and cause remanded.

Roy Hamlin, of Hannibal, and J. Frank Culler, of Palmyra, for appellants.

C. S. Hale, Walter R. Brown, and Guy V. Head, all of St. Louis, and W. Wallace Fry, of Mexico, for respondent.

BENNICK, Commissioner.

This is an action in two counts, the first in ejectment, in which plaintiff, The Federal Land Bank of St. Louis, prayed judgment for the recovery of certain premises located in Marion County, Missouri, the original venue of the action, together with damages from defendants for allegedly withholding the land and an allowance for monthly rents and profits until possession was delivered to plaintiff; and the second, for the appointment of a receiver to take and hold possession of the premises and to hold the rents and profits derived therefrom pending the final determination of the case.

Thereafter plaintiff filed a verified application for the appointment of a receiver as prayed for in the second count of its petition, whereupon the judge of the Circuit Court of Marion County, in vacation, sustained the application "after hearing and considering statements and arguments of counsel", and appointed a receiver invested with authority to "take possession of said land and rent same and collect and hold the rents and profits therefrom pending the termination of this cause and further order of this court".

Some months later (upon defendants' application) a change of venue was granted to the Circuit Court of Audrain County, wherein defendants filed their motion asking the court to vacate the order theretofore entered for the appointment of the receiver upon the ground that such order had been made without right or authority and had exceeded the jurisdiction of the court.

The motion to vacate was taken up by the court and overruled, whereupon defendants filed their answer, denying that plaintiff was entitled to the possession of the property, and alleging (upon the issue of plaintiff's right to possession) that a purported mortgage sale of the land to the Marion County National Farm Loan Association, and the latter's subsequent conveyance of the same to plaintiff, were null and void and of no effect for reasons which will presently appear in connection with points presented for decision.

Coupled with the answer was a counterclaim (subsequently stricken out in its entirety on plaintiff's motion) wherein defendants alleged that by reason of the unlawful and improper conduct of plaintiff in taking their property, in depriving them of the use, enjoyment, and occupation of the same and of the rents and profits therefrom, in permitting the land to be wasted and the products thereof to be removed and carried away without defendants being given credit therefor, and in converting the property so taken and carried away to plaintiff's own use and benefit, they had been damaged in the sum of $5,000, for which sum they prayed judgment against plaintiff.

The reply was, in substance, a denial of the new matter set up in the answer, with a prayer for judgment in plaintiff's favor in conformity with the ejectment count of the petition.

Tried to a jury, a verdict was returned in favor of plaintiff for the possession of the property, with damages of 1 cent for the wrongful withholding of possession, and fixing the monthly value of the rents and profits at 1 cent. Judgment was rendered accordingly, and defendants' appeal therefrom allowed to the Supreme Court, which found, however, that it was without jurisdiction over the appeal, and ordered the cause to be transferred here. Federal Land Bank of St. Louis v. Bross, Mo.Sup., 116 S.W.2d 6.

So far as the material facts of the case are concerned, it appears that on March 1, 1920, plaintiff, the Federal Land Bank of St. Louis, made a loan of $7,000 to defendants Phillip A. Bross and Minnie Lee Bross, his wife, the original owners of the land in question, which debt was evidenced by defendants' promissory note made payable as to both principal and interest upon a semiannual amortization plan in equal installments of $227.50, beginning September 1, 1920, and payable thereafter on the first days of March and September of each year until the maturity of the note on September 1, 1954.

Actually defendants received only $6,650 in cash, the sum of $350, representing five per cent of the face amount of the loan, being applied towards the purchase on defendants' account of stock in the Marion County National Farm Loan Association. This for the reason that under the terms of the Federal Farm Loan Act, 12 U.S.C.A. § 641 et seq., each prospective borrower through a national farm loan association is required to make application for membership and to subscribe for stock in such association equal to five per cent of the face of the loan desired, which stock is thereafter held by the association as collateral security for the payment of the loan obtained.

The payment of the note thus executed by defendants was secured by a farm land mortgage conveying to plaintiff the land involved in this proceeding, and containing a provision that in the case of default in the payment of the note or any installment of the same, or in the event any interest, taxes, insurance costs or the like should be allowed to remain due and unpaid, then the mortgage might be foreclosed by the holder thereof, either by a decree of foreclosure entered in a court of competent jurisdiction, or else by the mortgagee's exercise of the power of sale provided for therein.

All installments due on the note were paid by defendants until September 1 1931, when default was made in the payment in full of the installment falling due on that date. Subsequently defendants defaulted in the payment of the installment due on March 1, 1932, and on August 8, 1932, defendant Phillip A. Bross (his wife not being a party to it) gave plaintiff a chattel mortgage on his 1932 crops securing the payment of the balance due on the installment of September 1, 1931; the delinquent installment of March 1, 1932; the then unmatured installment of September 1, 1932; and the delinquent taxes for 1931.

Thereafter, in February and March of 1933, plaintiff took over and sold a part of the crops covered by its chattel mortgage and applied the proceeds derived from the sale to the payment of defendants' delinquent indebtedness. Plaintiff's evidence was to the effect that the amount derived from the sale was insufficient to satisfy defendants' delinquencies, while defendants sought to show that the actual value of the crops taken had been such as not only to have taken care of the payments for which they were then in default, but also to have left a balance to their credit in the hands of plaintiff.

On March 15, 1933, both defendants executed and delivered to plaintiff an agreement for plaintiff's entry upon the land for the purpose of renting the same and collecting the lessor's portion or share of the rents which were then to be applied upon defendants' delinquent indebtedness. Thereafter, on April 11, 1933, plaintiff leased one-half of the farm to defendant Phillip A. Bross and the other half to one Johnson for terms expiring January 1, 1934, at which time plaintiff took over the lessor's portion of the crops, and, after disposing of the same, applied the proceeds upon the items or installments of the loan as to which defendants were then in default. Again there was an issue of fact as to whether the actual value of the crops thus appropriated by plaintiff was sufficient to liquidate defendants' matured indebtedness, plaintiff claiming that it was insufficient, and defendants (as in the case of the appropriation of the year before) that it was not only sufficient, but that there should have been a balance due them which they might have recovered from plaintiff in this action if the court had not stricken out their counterclaim on plaintiff's motion that such should be done.

At this juncture in the controversy plaintiff took its first step towards foreclosure under the mortgage by giving notice of the sale of the property, the notice...