Fitzpatrick v. Federer

• Decision Date: 08 September 1958
• Docket Number: No. 46585,No. 1,46585,1
• Citation: 315 S.W.2d 826
• Parties: James L. FITZPATRICK and Lena M. Fitzpatrick, Appellants, v. William FEDERER, Federer Realty Company, a Corporation, Peter Bouckaert, Elmer A. Sander, and Lester A. Liebmann, Respondents
• Court: Missouri Supreme Court

Page 826

315 S.W.2d 826

James L. FITZPATRICK and Lena M. Fitzpatrick, Appellants, v. William FEDERER, Federer Realty Company, a Corporation Peter Bouckaert, Elmer A. Sander, and Lester A Liebmann, Respondents.

No. 46585.

Supreme Court of Missouri, Division No. 1.

Sept. 8, 1958.

J. L. London, St. Louis, Louis L. Hicks, Clayton, for appellants.

James H. Zipf, St. Louis, for respondents William Federer, Federer Realty Co., Peter Bouckaert and Lester A. Liebmann.

Kappel & Neill, St. Louis, for respondent Elmer A. Sander.

COIL, Commissioner.

Respondents' separate motions to dismiss plaintiffs' petition were sustained on the ground that it failed to state a claim on which relief could be granted. Plaintiffs appealed from the ensuing judgment. Thus, the sole question here is whether the petition states facts which may invoke the application of principles of substantive law which would entitle plaintiffs to the relief sought. Gerber v. Schutte Investment Co., 354 Mo. 1246, 194 S.W.2d 25, 28[4-7]. The motions to dismiss admit the truth of facts well pleaded in the petition and the reasonable inferences deducible therefrom, and the petition should be construed favorably to plaintiffs, giving them the benefit of every fair intendment from the facts alleged. Jacobs v. Jacobs, Mo., 272 S.W.2d 185, 188[2, 3].

Plaintiffs, husband and wife, averred that they had executed a second deed of trust in which defendant Lester A. Liebmann was trustee and defendant Peter Bouckaert was beneficiary, dated February 15, 1956, on real estate owned by them in St. Louis County, securing promissory notes; that they defaulted in the payment of certain of those notes and that the trustee duly advertised the sale under the deed of trust for April 5, 1957, and on that date sold the property; that at the sale defendant Bouckaert bid $25,000 and defendant Sander bid $25,050 as the second and only other bid, and that the property was therefore sold to defendant Sander, and the trustee executed and delivered to him a trustee's deed; that although defendant Bouckaert was and is the apparent holder of the secured notes, defendants Federer and Federer Realty Company were and are the real owners of said notes and that Sander, in bidding at the sale, acted for federer or Federer Realty Company or for defendant Bouckaert; that on April 5, 1957, prior to the sale, plaintiffs gave written notice to the trustee of their intention to redeem as provided by common law and by Section 443.010 RSMo 1949, V.A.M.S.

Plaintiffs alleged further that, prior to the foreclosure sale, defendant Federer, individually and as the agent for defendant Federer Realty Company, a corporation, and defendants Sander and Bouchaert, fraudulently conspired and agreed not to bid against each other and not to compete with each other at said sale and to share and divide the profit which they intended to make by purchasing the real estate at a low price and reselling it at a higher price, and that said defendants further fraudulently conspired and agreed that defendant Bouckaert would refrain from making the highest bid so that defendant Sander could bid in the property for the purpose of cutting off plaintiff's right of redemption; that prior to the foreclosure sale, defendants Federer and Federer Realty Company purported to act as plaintiff's agents to obtain a buyer for the property but in truth and in fact made no effort to obtain a buyer but discouraged potential buyers, in furtherance of the above-mentioned fraudulent scheme and conspiracy. Plaintiffs also alleged that defendants had not been in possession and had not changed their position or status in such a way that redemption by plaintiffs would injure them; that plaintiffs had no adequate remedy at law; and that plaintiffs had been damaged in the amount of $5,000 actual and were entitled to $10,000 as punitive damages.

The prayer of the petition asked that the court set aside the sale, cancel the trustee's deed, and declare plaintiffs had a right to redeem the property upon giving 'such bond in such amount and within such time as the court shall require,' and that plaintiffs have monetary judgments in the amounts mentioned against all defendants other than defendant Liebmann, the trustee.

We hold that plaintiffs have stated a claim upon which relief can be granted. It is well settled that any arrangement or combination designed to prevent free and fair competition among bidders at a mortgage foreclosure sale for the purpose of chilling the sale and purchasing the property for less than its market value results in a voidable sale at the option of the mortgagor. 59 C.J.S. Mortgages Sec. 735, p. 1338; 7 C.J.S. Auctions and Auctioneers Sec. 7(7), p. 1255; Jones on Mortgages, 8th Ed., Vol. 3, Sec. 2458, p. 1007; Vannoy v. Duvall Trust Co., Mo., 29 S.W.2d 692, 695, 696; Hendricks v. Calloway, 211 Mo. 536, 111 S.W. 60, 68; Stewart v. Nelson, 25 Mo. 309, 312; Wooton v. Hinkle, 20 Mo. 290, 292.

Plaintiffs have alleged sufficient facts to constitute and actionable claim under the aforestated principle. They alleged that defendants, other than the trustee Liebmann, fraudulently conspired and agreed not to bid against each other and not to compete with each other, but to share and divide the profit to be made by purchasing the real estate at a low price and reselling at a higher price and to have one other than the ostensible holder of the notes bid so that plaintiffs could not exercise their statutory right of redemption under Sections 443.410-443.440 RSMo 1949, V.A.M.S., and that, as a part of said fraudulent scheme and conspiracy and as an overt act in the accomplishment thereof, defendants Federer and Federer Realty...