Gerardi v. Christie

• Decision Date: 19 April 1910
• Citation: 148 Mo. App. 75,127 S.W. 635
• Parties: GERARDI et al. v. CHRISTIE et al.
• Court: Missouri Court of Appeals

127 S.W. 635

148 Mo. App. 75

GERARDI et al. v. CHRISTIE et al.

St. Louis Court of Appeals. Missouri.

April 19, 1910.

1. MORTGAGES (§ 319) — PAYMENT — EVIDENCE.

In a suit to enjoin a sale under a deed of trust, evidence held to sustain a finding that a note secured thereby had not been paid prior to its acquisition by the holder.

2. DEEDS (§ 194) — TIME OF DELIVERY — PRESUMPTION.

A deed is presumed to have been delivered on the day it was acknowledged, though dated before.

3. MORTGAGES (§ 282) — TRANSFER OF PROPERTY — ASSUMPTION OF INCUMBRANCE BY PURCHASER.

A purchaser of land subject to a deed of trust, who agreed to pay a note secured thereby, became primarily responsible for the debt instead of the maker, and any holder of the note could sue him thereon, and, the stipulation being for his vendor's benefit, the latter would be entitled to redress against him if damaged by his failure to pay.

4. MORTGAGES (§ 268) — ASSIGNMENT OF MORTGAGE OR DEBT — MERGER.

When the owner of the fee acquires an incumbrance for which he is primarily responsible, it is merged in the fee.

5. MORTGAGES (§ 268) — ASSIGNMENT OF MORTGAGE OR DEBT — MERGER.

Equity follows the rule of the common law as to merger, where the owner of a fee acquires an incumbrance for which he is primarily responsible, and the rule properly applies to a grantee who assumes an incumbrance created by his grantor and subsequently buys it in.

6. MORTGAGES (§ 268) — ASSIGNMENT OF DEBT TO OWNER OF FEE — MERGER.

An outstanding title in a trustee will prevent a merger of a deed of trust in the fee when the holder of the latter buys the secured debt, for the acquires no interest as regards the land, except to have it sold by the trustee in event of a default.

7. TRUSTS (§ 231) — INCUMBRANCES ON TRUST PROPERTY — RIGHTS AND LIABILITIES OF TRUSTEE.

Though one who held title to a lot in trust for himself and associates and a corporation which they meant to form, and who was not bound to pay for it out of his own funds, but with money furnished by his associates, or to be raised on bonds of the corporation secured by a deed of trust on the lot, was bound, as against other parties in interest by his contract with his vendor to discharge a note secured by a trust deed of the lot, he was not bound to do so as against his associates or a subsequent purchaser at a sale of the lot under another trust deed, but, while he stood in a fiduciary capacity to his associates or to the corporation, he could not lawfully hold the note which he acquired, and dispose of it to the prejudice of the corporation, or so as to deprive it of the right to pay it and discharge the lien.

8. TRUSTS (§ 231) — INCUMBRANCES ON TRUST PROPERTY — RIGHTS AND LIABILITIES OF TRUSTEE.

One holding title to a lot in trust for himself and others had an interest therein which warranted him to acquire a note secured by a trust deed of the lot, if necessary to prevent a sale under the deed, and, if he purchased the note, he was not a mere volunteer in the transaction.

9. MORTGAGES (§ 258) — ASSIGNMENT OF MORTGAGE OR DEBT — DEFENSES AGAINST PURCHASER OF MORTGAGE NOTE.

Where one holding title to a lot in trust for himself and associates and a corporation which they meant to form bought a note secured by a trust deed of the lot, defenses in favor of his associates or the corporation as against him on the score that he acquired the note contrary to the trust, and other defenses growing out of their relation with him, except that of payment with their money, were collateral, unconnected with the note, and not available against a purchaser of the note in good faith after maturity.

10. MORTGAGES (§ 268) — ASSIGNMENT OF MORTGAGE OR DEBT — MERGER.

A note secured by a trust deed of a lot was not paid by its purchase by one holding title to the lot in trust, if he bought it with his own money without intending to pay it, and so he could sell it as the one from whom he bought could have done.

11. MORTGAGES (§ 268) — ASSIGNMENT OF MORTGAGE OR DEBT — MERGER.

Where the owner of the fee acquires title to an outstanding mortgage for which he is not individually responsible, no merger of the mortgage in the fee will be permitted if he intended there should be no merger when he acquired

it, but, instead, that it should be kept alive for his benefit.

Appeal from St. Louis Circuit Court; Hugo Muench, Judge.

Suit by Joseph Gerardi, Jr., and others against Harvey L. Christie, trustee, and others. From a judgment for defendants, plaintiffs appeal. Affirmed.

R. M. Nichols, for appellants. Bryan & Christie, for respondents.

GOODE, J.

This action is in the nature of a suit in chancery, and was filed to have defendant Christie enjoined from selling a parcel of ground situate in city block No. 3881 in the city of St. Louis, fronting 225 feet on the east line of Kingshighway, and extending eastwardly 150 feet along the north line of Maryland avenue; the depth eastwardly being 180 feet on the north boundary of the lot. The threatened sale was pursuant to a power conferred on Christie as trustee and party of the second part in a deed of trust executed by Louis I. Finegan, September 29, 1905, to secure Thomas P. Plumridge of the third part as payee of a note for $2,500. When the present action was commenced, defendant Leonidas S. Mitchell was the holder and owner of said note, claiming to have acquired it by purchase from Gardner Bros. & Co., a firm composed of Harry B. Gardner and James P. Gardner, to whom it had been transferred by John S. Carter, assignee of the payee, Plumridge. Mitchell paid Gardner Bros. & Co. $2,300 for the note on November 12, 1906, and after it had fallen due on September 29, 1906, it having been given to run one year. When this action commenced the Rookery Realty, Loan, Investment & Building Company was the owner of the property on which the note was secured, and plaintiff Joseph Gerardi, Jr., was a stockholder in said company, a contributor to the money paid for the lot, and, according to the testimony for plaintiffs, to the fund used to take up the note in suit. The questions on which depended the right of plaintiffs to the relief they asked were whether the note secured by the deed of trust had been paid prior to its acquisition by Mitchell, and, if it had been paid, whether Mitchell was an innocent purchaser for value and entitled, as against these plaintiffs, to enforce the collection of it by sale under the deed of trust. Prior to 1906 Joseph Gerardi, St., his wife, Annie Gerardi, and their son Joseph Gerardi, Jr., had been engaged in the hotel business in the city of St. Louis. Their business was transacted partly in the name of the son and partly in the name of a corporation known as the "Jos. Gerardi Hotel Company." They desired to conduct a larger establishment than the one or more they had been conducting, and this wish led them into transactions with Harry R. Gardner, who was a real estate broker in the city of St. Louis, and represented himself to be an architect. The Gerardis became acquainted with Gardner in September, 1906, and he undertook, with their approval, to acquire the title to the property on Kingshighway and Maryland avenue above described, with a view to the erection of a hotel building on it. The title was in the Euking Realty Company, subject to a first deed of trust for $47,500, executed by Thomas P. Plumridge to B. F. Mathias, as trustee for the Collier estate, and by a second deed of trust to secure a note for $2,500, executed by L. I. Finegan, to whom Plumridge sold the property; that is to say, the note and deed of trust in controversy in this case. Finegan had conveyed to the Euking Realty Company from whom Harry B. Gardner acquired the property pursuant to his arrangement with the Gerardis. The Euking Realty Company conveyed to Gardner October 8, 1906, by a warranty deed, which recited it was subject to the two prior deeds of trust we have mentioned, and that Gardner assumed and agreed to pay them. Gardner paid $20,000 in cash on the purchase price of the property in two installments, of which the last was paid October 8th, and executed a third deed of trust to Henry R. Weisels, as trustee for the Euking Realty Company for $45,000, which conveyance recited it was subject to the two prior deeds of trust. Those three incumbrances and the cash payment made up the price — $115,000. By a deed dated October 19th, but acknowledged October 30th, and recorded November 5th, Gardner conveyed the property to the Monarch Realty Company, a corporation which had been formed to take over the title, the stockholders being the Gerardis, Gardner, and a man named Beal. This deed to said company recited it was subject to the first two deeds of trust, the second of them being the one the foreclosure of which is sought to be enjoined. On October 23, 1906. Gardner took up the note for $2,500, secured by said second deed of trust, which note, as said, was then owned by John S. Carter. Gardner paid Carter for the note by the following check drawn on the Commonwealth Trust Company: "St. Louis, Oct. 23, 1906. Commonwealth Trust Company. $2,513.34. Pay to the order of John S. Carter twenty-five hundred and thirteen and 34/100 dollars. In payment in full for D. T. on Maryland and Kingshighway property. [Signed] H. B. Gardner."

On September 27, 1906, the Gerardis had turned over to Gardner a certificate of deposit on the National Bank of Commerce for $18,702.79 to pay on the purchase price of the lot. The Gerardis testified Gardner represented he had paid $20,000 out of money of his own deposited in the Commonwealth Trust Company, and they gave him the certificate to reimburse him. Gardner used $5,000 of the proceeds of the certificate of deposit to pay on the price of the lot that day, and placed the remainder to his credit in the Commonwealth Trust Company, where at the time he had a deposit of $6.47. Later he drew various checks on the account for his own purposes, so that on ...