First Nat. Bank v. Rohrer

• Decision Date: 23 March 1897
• Citation: 39 S.W. 1047,138 Mo. 369
• Parties: FIRST NAT. BANK OF MAUCH CHUNK, PA., et al. v. ROHRER et al.
• Court: Missouri Supreme Court

39 S.W. 1047

138 Mo. 369

FIRST NAT. BANK OF MAUCH CHUNK, PA., et al. v. ROHRER et al.

Supreme Court of Missouri, Division No. 2.

March 23, 1897.

FRAUDULENT CONVEYANCES — PLEADING AND PROOF — MORTGAGES — BILLS AND NOTES — BONA FIDE PURCHASER.

1. A judgment creditor could not attack a deed on the ground of fraud in withholding it from record under an allegation that the deed was made with intent to defraud creditors and to cover up the land.

2. A judgment creditor could not attack a deed as fraudulent, because not recorded, where it did not appear that the agreement to withhold from record was made for the purpose of deceiving, or that such creditor gave credit on the strength of the record and was deceived.

3. A bona fide purchaser before maturity of a note secured by mortgage of realty takes the security free from the equities or any private arrangement between the original parties.

Appeal from circuit court, Jackson county; John W. Henry, Judge.

Action by the First National Bank of Mauch Chunk, Pa., and another against George W. C. Rohrer and others. From a judgment in favor of plaintiffs, defendants Lamon V. Harkness, Walter F. Wyman, and Lamon D. H. Russell appeal. Affirmed.

Lathrop, Morrow, Fox & Moore, for appellants. Scammon, Crosby & Stubenrauch, Gage, Ladd & Small, and C. F. Mead, for respondents.

BURGESS, J.

This is an action to reform and foreclose a mortgage upon real estate in Callaway county. Suit was brought July 9, 1890, in the circuit court of Callaway county, but afterwards, by proper proceedings, removed for trial to the circuit court of Jackson county, where, upon trial, a decree was rendered as hereinafter stated. The mortgage was given to secure the payment of 15 negotiable promissory notes for the sum of $5,000 each, with interest after maturity at the rate of 7 per cent. per annum, executed by the defendants George W. C. Roberts and Nathan Blevins at Chicago on the 19th day of July, 1889, and made payable to the order of the defendants Conrad H. Lebold and John M. Fisher, by the firm name of Lebold & Fisher, at the banking house of Lebold, Fisher & Co., at Abilene, in the state of Kansas. Two of the notes were payable in 4 months, 2 in 5 months, 2 in 6 months, 2 in 7 months, 2 in 8 months, 2 in 9 months, 2 in 10 months, and 1 in 11 months, after their date. The consideration for the notes was the conveyance by said defendants Conrad H. Lebold and John M. Fisher to the said defendant George W. C. Rohrer of a large tract of land in Callaway county, Mo., described in the petition. The mortgage was upon this same land; was executed by George W. C. Rohrer and Maggie Rohrer, his wife; was dated July 19, 1889; acknowledged by George W. C. Rohrer, in Callaway county, Mo., on the 26th of July, 1889, and by his wife, in Dickinson county, Kan., on July 23, 1889. It was filed for record in the office of the recorder of Callaway county November 4, 1889. The mortgage conveyed the property to Lebold & Fisher, and recites upon its face that it was "intended as a mortgage to secure the payment of the sum of seventy-five thousand dollars according to the terms of one certain promissory note this day executed and delivered by the said George W. C. Rohrer and Maggie Rohrer to the said parties of the second part." There was no such promissory note as the one described in the mortgage, which was clearly intended and designed by all the parties to it to secure the payment of the 15 notes, aggregating $75,000, given for the purchase money of the land, but by mistake it purported to secure one note for $75,000. Lebold, Fisher & Co. was a firm of bankers doing business at Abilene, in the state of Kansas, composed of Conrad H. Lebold and John M. Fisher. The same persons were also partners in some other kinds of business, under the firm name of Lebold & Fisher. The 10 notes first maturing were all indorsed by Lebold & Fisher to the order of Lebold, Fisher & Co., and were afterwards, and before their maturity, sold by Lebold, Fisher & Co., 1 to each of 10 different parties to this suit, Lebold, Fisher & Co. indorsing each of them before such sale. One of the four-months notes became in this manner the property of the First National Bank of Mauch Chunk, Pa., one of the plaintiffs. The other 9 of the 10 in like manner became the property, respectively, of the plaintiff the First National Bank of Oxford, N. Y.; the defendants Hanover Savings Fund Society of Hanover, Pa.; B. R. Abbe; the People's Bank of Newport, Pa.; the Fidelity Trust Company; the Schuster-Hax National Bank of St. Joseph, Mo. (G. W. Clawson); the Hartford National Bank of Hartford, Conn.; the Lawrence National Bank of Lawrence, Kan.; and the American National Bank, of Hartford, Conn. The other 5 notes were not sold by Lebold, Fisher & Co., but were in their possession at the time of their failure. On October 31, 1889, Lebold, Fisher & Co. made a general assignment of all their property and effects for the equal benefit of their creditors, under the laws of the state of Kansas, to Clarence F. Mead. This assignment was recorded on the same day. On the 27th day of November, 1889, the defendant John Johntz was elected assignee of the estate of the insolvent firm, and qualified and assumed the performance of his duties. As such assignee, he came into possession of the last-maturing 5 of the 15 notes. The defendant George W. C. Rohrer acquired his title to the real estate covered by the mortgage by a deed from John M. Fisher and Conrad H. Lebold and their wives, dated November 13, 1888, acknowledged November 30, 1888, and filed for record in the office of the recorder of Callaway county November 4, 1889. The defendant George W. C. Rohrer and his wife executed to the defendant George W. Hurd a deed for the property, dated November 2, 1889, acknowledged by George W. C. Rohrer November 4, 1889, and by his wife November 2, 1889, and recorded November 4, 1889. The deed from Lebold & Fisher to Rohrer, and the mortgage from Rohrer to Lebold & Fisher, were recorded before the deed from Rohrer to Hurd. Although the conveyance to Hurd was absolute in form, it was taken by him as vice president and agent of the First National Bank of Abilene, Kan., as security for certain indebtedness owing by Rohrer to that bank. It was, by its terms, subject to the mortgage sought to be foreclosed. The appellants Lamon V. Harkness, Walter Wyman, and Lamon D. H. Russell constituted the firm of Harkness, Wyman & Russell. The defendant George W. C. Rohrer executed his note for $4,400, dated at Abilene, Kan., September 13, 1889, payable six months after date to the order of Lebold, Fisher & Co., which they afterwards sold and indorsed to Harkness, Wyman & Russell. They brought suit on it by attachment against George W. C. Rohrer, the maker, and Lebold & Fisher, the indorsers, in February, 1890, in the circuit court of Callaway county, and levied an attachment upon the land described in the mortgage. The defendants in that suit were brought into court by publication, and special judgment was rendered against them on May 9, 1890. The deed from Lebold & Fisher to Rohrer and the mortgage from Rohrer to Lebold & Fisher were withheld from record by an arrangement between John M. Fisher and Rohrer, the reason being that by recording them it might interfere with a sale of the property. The deed and mortgage, about the time of the assignment of Lebold, Fisher & Co., were found by C. F. Mead, who had been their attorney, and who became their assignee, among their papers, and at his direction they were at once sent for record by Fisher. None of the notes were due at the time the deed and mortgage were recorded. They were not only not due at that time, but they recited upon their face that they were given "for purchase money," and the parties who purchased the 10 notes were informed that they were secured by mortgage on the land purchased by Rohrer from Lebold & Fisher.

The answer of Harkness, Wyman & Russell admitted the recovery by them of the special judgment in attachment at the May term, 1890, of the Callaway circuit court; denied that at the time of bringing the attachment suit they had notice of the mistake in the mortgage, as alleged in the petition; averred that they acquired their judgment lien in good faith, for a valuable consideration, without any knowledge or notice of the equities claimed by plaintiffs in regard to the alleged mistake, and claimed therefore that plaintiffs could not have any priority over the attachment by reason of any mistake in the mortgage; denied that the mortgage was executed on the 19th of July, 1889, or that it was intended to secure the 15 notes; averred that the mortgage was defectively acknowledged, and was therefore recorded without authority of law, and that its record was insufficient to constitute constructive notice to them of the alleged mortgage sought to be corrected and foreclosed by the petition; averred that the plaintiffs, as national banks, were, by virtue of the act of their creation and incorporation, incapacitated to accept or take the mortgage mentioned...