Fried v. Marburger
| Decision Date | 05 March 1945 |
| Docket Number | 39315 |
| Parties | Meyer Fried v. Irene Marburger, Oreon E. Scott, as Trustee et al., Defendants, and Irene Marburger and Oreon E. Scott, as Trustee, Appellants |
| Court | Missouri Supreme Court |
Rehearing Denied April 2, 1945.
Appeal from the Circuit Court of City of St. Louis; Hon. William L. Mason, Judge.
Reversed.
Salkey & Jones and Wilbur B. Jones for appellants.
(1) The plaintiff wholly failed to state a cause of action. The cause of action must be presented in the petition and not in the reply. There are no allegations in the petition which could give rise to any right of action on behalf of the plaintiff. Willoughby v. Brandes, 317 Mo. 544, 297 S.W. 54; Regal Realty & Inv. Co. v. Gallagher, 188 S.W. 151; Menefee v. Scally, 247 S.W. 259; Carson v Long-Bell Lumber Corp., 73 F.2d 397. (2) There being no averments in plaintiff's petition as filed or as amended tending to avoid the operation of any conditions in the deed of trust, no evidence to this effect is competent or admissible. McKee v. Downing, 224 Mo. 115, 124 S.W 7; Bryant v. Shinnabarger, 285 Mo. 484, 227 S.W. 54; Jacks v. Link, 236 S.W. 10; Willoughby v. Brandes, 317 Mo. 544, 297 S.W. 54; Regal Realty & Inv. Co. v. Gallagher, 188 S.W. 151; Menefee v. Scally, 247 S.W. 259; Carson v. Long-Bell Lumber Corp., 73 F.2d 297. (3) A court of equity has power to appoint a receiver only when such appointment is ancillary to and in aid of an action pending for some other purpose and in which the plaintiff is entitled to some other relief. Plaintiff in this case is entitled to no equitable relief. Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W.2d 545; Laumeier v. Sun-Ray Products Co., 330 Mo. 542, 50 S.W.2d 640, 84 A.L.R. 1435; State ex rel. Kopke v. Mulloy, 329 Mo. 1, 43 S.W.2d 806; United Cemeteries Co. v. Strother, 342 Mo. 1155, 119 S.W.2d 762; Straus v. Tribout, 347 Mo. 149, 146 S.W.2d 617; 4 Pomeroy's Equity Jur. (5 Ed., 1941), sec. 1331, p. 924. (4) The provisions of the deed of trust permitting a sale of the mortgaged property only upon the request of a majority of the bondholders and vesting all rights of action exclusively in the trustee and prohibiting any suit by an individual bondholder under said deed of trust except under certain circumstances, are valid. Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W.2d 545; Muren v. Southern Coal & Mining Co., 177 Mo.App. 600, 160 S.W. 835; St. Louis-Carterville Coal Co. v. Southern Coal & Mining Co., 194 Mo.App. 598, 186 S.W. 1152; Central States Life Ins. Co. v. Koplar Co., 80 F.2d 754; Carson v. Long-Bell Lumber Corp., 73 F.2d 397; Annotation, 108 A.L.R. 88 and cases therein cited. (5) The trustee under a deed of trust may acquire an interest in the property and in the debt secured thereby, and may also receive commissions and discounts from the operation of the property where such interests and profits are entirely above board and known to all the parties and are specifically authorized by the deed of trust. Hadley Bros.-Uhl Co. v. Scott, 227 Mo.App. 354, 53 S.W.2d 1070; Brooker v. Thompson Trust Co., 254 Mo. 125, 162 S.W. 187. (6) Equity will not decree reformation of a written instrument except upon clear, cogent and convincing testimony which permits of no reasonable doubt of mutual mistake. There is no evidence in this case of any mistake as to the contents or effect of the deed of trust by any of the parties thereto. Peters v. Peters, 312 Mo. 609, 280 S.W. 424; Robinson v. Korns, 250 Mo. 663, 157 S.W. 790; Moran Bolt & Nut Mfg. Co. v. St. Louis Car Co., 210 Mo. 715, 109 S.W. 47; Dougherty v. Dougherty, 204 Mo. 228, 102 S.W. 1099; Tesson v. Atlantic Mut. Ins. Co., 40 Mo. 33; 3 Pomeroy's Equity Jur. (5 Ed., 1941), sec. 859a, p. 353. (7) The mistake must occur at the time the instrument was executed. 53 C.J., sec. 44, p. 929; 45 Am. Jur., sec. 57, p. 619. (8) Fraud, unaccompanied by mistake, is no ground for reformation. Long v. Greene County Abstract & Loan Co., 252 Mo. 158, 158 S.W. 305; Russell v. Shell Petroleum Corp., 66 F.2d 864. (9) The mistake must occur in reducing the contract to writing and not in the inducement. Parker v. Vanhoozer, 142 Mo. 621, 44 S.W. 728; Russell v. Shell Petroleum Corp., 66 F.2d 864. (10) Equity will not rewrite a contract merely because one of the parties thereto has become dissatisfied with his bargain. Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W.2d 545. (11) There is no basis for the appointment of a receiver in this case. There is no allegation or evidence of imminent danger of loss or of damage. Price v. Bankers Trust Co., 178 S.W. 745; 53 C.J., sec. 23, p. 39. (12) There is no allegation or evidence of the deterioration or waste of the property. Bushman v. Bushman, 311 Mo. 551, 279 S.W. 122; 53 C.J., sec. 24, p. 41. (13) There is no allegation or evidence that the defendants are insolvent. Bushman v. Bushman, 311 Mo. 551, 279 S.W. 122; 53 C.J., sec. 32, pp. 45, 46.
John C. Kappel, Jr., and James E. Higgins for respondent.
(1) An appeal from an order of the trial court in refusing to vacate the appointment of a receiver the appellate court can only review the power, discretion and jurisdiction of the chancellor in making the appointment. Tuttle v. Blow, 163 Mo. 625, 63 S.W. 839; Kansas City v. Markham, 339 Mo. 753, 99 S.W.2d 28; Ellenberg v. Edw. K. Love Realty Co., 332 Mo. 766, 59 S.W.2d 623; Robinson v. Nick, 235 Mo.App. 461, 136 S.W.2d 374. (2) A receiver should be appointed when a trustee under a deed of trust containing an assignment of rents for the benefit of the bondholders and the assignee-owner-trustee fails to pay the taxes on the mortgaged property, retaining the surplus of the rents for his own personal gain. High, Receivers, sec. 643, p. 795; 42 C.J., sec. 1688, p. 123; 45 Am. Jur., sec. 38, p. 37; Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W.2d 545; Winkler v. Madgeburg, 100 Wis. 421, 76 N.W. 332; Schreiber v. Carey, 48 Wis. 208. (3) A petition which is not attacked by motion or demurrer in the trial court, even though it defectively states a cause of action, will be held good after judgment. The petition may be aided by the pleadings of the adverse party. It may be amended to conform to the proof. Secs. 971, 1265, R.S. 1939; Loughlin v. Marr-Bridger Co., 10 S.W.2d 75; Ehrlich v. Mittelberg, 259 Mo. 284, 252 S.W. 671; Tucker v. Wadlow, 184 S.W. 69; Allison v. Cemetery Caretaking Co., 283 Mo. 424, 225 S.W. 41. (4) An owner of property who prepares a deed of trust, and who appoints himself as trustee, concealing his interest by means of a straw party, is guilty of fraud, and all restrictions upon the rights of bondholders to foreclosure upon default are inequitable, illegal and void. 41 C.J., sec. 11, p. 284, and sec. 571, p. 605; 17 C.J.S., sec. 149, p. 503; Hadley Bros.-Uhl Co. v. Scott, 227 Mo.App. 354, 55 S.W.2d 1070; Scott v. Cowen, 274 Mo. 398, 195 S.W. 732; Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W.2d 545. (5) A trustee under a deed of trust cannot own or acquire an interest in the mortgaged property or debt except upon a full disclosure to the bondholders of his interest, even though authorized to so do by the deed. Brooker v. Thompson Transit Co., 254 Mo. 125, 162 S.W. 127; Stitt v. Stitt, 205 Mo. 155, 103 S.W. 547; Tuggles v. Callison, 143 Mo. 536, 45 S.W. 291; Hadley Bros.-Uhl Co. v. Scott, 227 Mo.App. 354, 55 S.W.2d 1070.
Appeal by the two answering defendants from an order of the circuit court refusing to revoke the appointment of a receiver.
Respondent, as plaintiff, for himself and on behalf of all others similarly situated, sued to foreclose a deed of trust on real estate, for the appointment of a receiver and for other specific and general relief. Among other allegations the petition states: that defendant Irene Marburger, being the owner of described real estate, on June 2, 1927, conveyed the same to defendant Scott, as trustee, to secure the payment of 160 notes of $ 500.00 each; that plaintiff is the owner of one of the notes which is past due and unpaid after demand; that he has demanded that the trustee foreclose the lien of the deed of trust to satisfy his note and all the other unpaid notes according to provisions alleged to be contained in the deed of trust; that defendant Scott has refused to foreclose, etc.
All unknown noteholders were made defendants and served by publication, but failed to answer.
Defendants Irene Marburger and Scott filed a joint answer admitting the execution of the notes and deed of trust, but alleging that the latter vested in Scott as trustee the right to manage the real estate, collect and apply the rents, and that no foreclosure could be had except upon the written demand of a majority of the noteholders.
Plaintiff filed a reply admitting that the deed of trust contained the provisions mentioned in defendants' answer, but alleging that such provisions are void; also that Scott owns or controls a majority of the notes, dominates a majority of the noteholders so they will not request foreclosure, that defendant Marburger is an employee of Scott and under his control, that by virtue of his position Scott is not qualified to act as trustee and is managing the real estate for his own benefit.
The chancellor did not appoint a receiver until the conclusion of the trial on the merits. No demurrer was filed to the petition, but at the start of the trial defendants objected to the introduction of any evidence on the ground that the petition failed to state a cause of action.
In the evidence it developed that defendant Scott was the actual owner of the real estate at the time the deed of trust was executed and at all times since. During all that time defendant ...
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