First National Bank of Mauch Chunk v. Rohrer
| Decision Date | 23 March 1897 |
| Citation | 39 S.W. 1047,138 Mo. 369 |
| Parties | The First National Bank of Mauch Chunk et al. v. Rohrer, Lebold et al.; Harkness et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. John W. Henry, Judge.
Affirmed.
Lathrop Morrow, Fox & Moore for appellants.
(1) The withholding from record of the deed from Lebold & Fisher to Mr. Rohrer, and the mortgage back, was a fraud upon the appellants, Harkness, Wyman & Russell. Lebold & Fisher are in law conclusively presumed to have intended the legitimate effects of their own acts. Bank v. Doran, 109 Mo 42; Bank v. Frame, 112 Mo. 515; Bank v Buck, 123 Mo. 141; Hildeburn v. Brown, 17 B. Mon. 779; Hillard v. Cagle, 46 Miss. 309; 2 Bigelow on Fraud, p. 365; Seals v. Robinson, 75 Ala. 363; Bank of U. S. v. Houseman, 6 Page, 526; Blackman v. Preston, 123 Ill. 381; Sanger v. Guenther, 73 Wis. 354; Coates v. Gerlach, 44 Penn. St. 43; Blennerhassett v. Sherman, 105 U.S. 100; Hildreth v. Sands, 2 Johnson's Chan. 335; Gill v. Griffith, 2 Md. Chan. 270; Hungerford v. Earle, 2 Vern. 261; Bank v. Jaffray, 41 Kan. 711; Hoagland v. Wilson, 15 Neb. 320. (2) Neither the note holders in this suit nor Mr. Hurd can claim protection as innocent mortgagees or purchasers, so as to cut off the appellants' right to avoid the deed and mortgage. Carpenter v. Longan, 16 Wall. 271; Myer's Assignee v. Hazzard, 4 McCrary Rep. 94; Orrick v. Durham, 79 Mo. 178; Hagerman v. Sutton, 91 Mo. 533; Patterson v. Booth, 103 Mo. 414; Mason v. Black, 87 Mo. 341; Poage v. Railroad, 24 Mo.App. 199; Wade on Notes [2 Ed.], sec. 18; Griffin v. Griffin, 18 N.J.Eq. 104: Pierce v. Faunce, 47 Me. 514; Sergeant v. Ingersoll, 7 Pa. St. 340.
Gage, Ladd & Small for respondents.
(1) The contention which the appellants make here is not within their pleadings, and is evidently an afterthought. They assert now that the deed and mortgage were withheld from record, and that upon that ground the mortgage must be postponed to their claim. Hoester v. Sammelmann, 101 Mo. 619; Reed v. Bott, 100 Mo. 62; Bank v. Doran, 109 Mo. 40, loc. cit. 51, 52; Clough v. Holden, 115 Mo. 336; Smith v. Sims, 77 Mo. 269; Baldwin v. Whaley, 78 Mo. 186; Newham v. Kenton, 79 Mo. 382; Ross v. Ross, 81 Mo. 84; White v. Rush, 58 Mo. 105; Cox v. Esteb, 68 Mo. 110. (2) The doctrine of the cases cited by appellants can not avail them. In all the cases referred to in their brief, the parties, upon whose complaint conveyances withheld from record were postponed, had become creditors relying upon the apparent ownership of the grantors, and the indebtedness was incurred because the creditor believed that the apparent owner was the real owner, and extended credit upon the basis of such ownership -- credit which would have been denied had the true facts been known. (3) No creditor can invoke the doctrine of the cases referred to by the appellants, who did not become such during the period intervening between the making of the conveyance and its filing for record. (4) The purchaser, in good faith, for value, before maturity of negotiable paper secured by mortgage upon real estate, takes the security by the same title which he acquires to the paper.
C. F. Mead also for respondents.
(1) A careful examination of the cases cited in appellants' brief will disclose that in every instance where an unrecorded conveyance has been postponed to the claims of an attaching creditor, the following facts have existed: First. Either the conveyance was without consideration, or it was in pursuance of an agreement between the grantor and grantee withheld from the record and concealed with a view of sustaining the credit of the grantor. Second. The creditor seeking to set the conveyance aside knew of the record title, was misled by it and induced to extend credit to the grantor upon the faith of his ownership of the property. Bank v. Doran, 109 Mo. 42; Bank v. Buck, 123 Mo. 141; Bank v. Frame, 112 Mo. 515; Hildeburn v. Brown, 17 B. Mon. 779; Hilliard v. Cargle, 46 Miss. 309; Seals v. Robinson, 75 Ala. 363; Bank v. Houseman, 6 Page, 526; Hildreth v. Sands, 2 Johns. Ch. 355; Gill v. Griffin, 2 Md. 270; Hungerford v. Earle, 2 Vern. 261; Bank v. Jaffrey, 41 Kan. 711; Hoagland v. Wilson, 15 Neb. 320; Davis v. Ownsby, 14 Mo. 170; Valentine v. Havener, 20 Mo. 133; Stillwell v. McDonald, 39 Mo. 283; Foster v. Holbert, 55 Mo. 22; Sappington v. Oeschli, 49 Mo. 244; Banking Co. v. Duncan, 86 N.Y. 221; Fulsom v. Clemmons, 11 Mass. 277; Stewart v. Hopkins, 30 Ohio St. 29; Thompson v. Pearson, 29 N.J.Eq. 487; Curry v. Macaulay, 20 F. 583 (distinguishing Blennerhassett v. Sherman, 105 U.S. 100); Wait on Fraudulent Con. & Cred.'s Bills, 235. (2) The issue in this case is between the appellants and the innocent purchasers of these mortgage notes for value before maturity. Hagerman v. Sutton, 91 Mo. 519; Mayes v. Robinson, 93 Mo. 114; Patterson v. Booth, 103 Mo. 402; Carpenter v. Longam, 16 Wall. 271; Bigelow on Law of Frauds, page 388; Huff v. Morton, 83 Mo. 399; Koenig et al. v. Branson, 73 Mo. 634.
Scammon, Crosby & Stubenrauch also for respondents.
(1) It has become a rule of property in Missouri, and is the settled law of the State, that the title of a bona fide purchaser or mortgagee under a deed or mortgage not recorded is good against creditors at large, and against attachments and judgments, if the deed or mortgage is recorded before sale thereunder. Stillwell v. McDonald, 39 Mo. 282; Davis v. Ownsby, 14 Mo. 170; Sappington v. Oeschli et al., 49 Mo. 244; Potter v. McDowell, 43 Mo. 93; Reed v. Ownsby, 44 Mo. 204. (2) The withholding of a mortgage from record does not postpone it to lien of a subsequent attaching creditor, unless the withholding is fraudulent, actual or constructive. State Savings Bank v. Buck, 123 Mo. 141; State Bank v. Frame, 112 Mo. 502; Bank v. Doran, 109 Mo. 42; Walsh v. Chambers, 13 Mo.App. 303; Paper Co. v. Guenther, 67 Wis. 101; Sanger v. Guenther, 73 Wis. 356; Hildeburn v. Brown, 17 B. Muroe, 779. (3) The plaintiff bank, by the purchase of the note in suit, which was negotiable for value before maturity, took it free of all equities between the original parties thereto, and the questions raised by the appellants can not be raised as to such a purchaser. Mayes v. Robinson, 93 Mo. 115; Hagerman v. Sutton, 91 Mo. 519; Patterson v. Booth, 103 Mo. 402; 2 Jones on Mortgages, sec. 834.
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 afterward, 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 fifteen negotiable promissory notes for the sum of $ 5,000 each, with interest after maturity at the rate of seven per cent per annum, executed by the defendants, George W. C. Roberts and Nathan Blevins, at Chicago, on the nineteenth 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 four months, two in five months, two in six months, two in seven months, two in eight months, two in nine months, two in ten months, and one in eleven 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, Missouri, 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, Missouri, on the twenty-sixth of July, 1889, and by his wife in Dickinson county, Kansas, 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 and Fisher, and recites upon its face that it was "intended as a mortgage to secure the payment of the sum of $ 75,000 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 fifteen 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 & Company 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 ten notes first maturing were all indorsed by Lebold & Fisher to the order of Lebold, Fisher & Company, and were afterward, and before their maturity, sold by Lebold, Fisher & Company, one to each of ten different parties to this suit, Lebold, Fisher & Company 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, Pennsylvania, one of the plaintiffs. The other nine of the ten in like manner became the property respectively of the plaintiff, the First National Bank of Oxford, New York; the defendants, Hanover Savings Fund Society of Hanover, Pennsylvania; B. R. Abbe; the People's Bank of Newport, Pennsylvania; the Fidelity Trust Company; the Schuster-Hax National Bank of...
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