German American Bank v. Carondelet Real Estate Company
| Decision Date | 14 June 1899 |
| Citation | 51 S.W. 691,150 Mo. 570 |
| Parties | German American Bank, Appellant, v. Carondelet Real Estate Company et al |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. Pembrook R Flitcraft, Judge.
Affirmed.
Fred. Wislizenus for appellant.
(1) The only defense against a purchaser of negotiable paper before maturity is bad faith on his part. He is not bound by constructive notice or by knowledge of facts that might put him on inquiry. Hamilton v. Marks, 63 Mo. 167; Borgess v. Vetter, 142 Mo. 573; Bank v Schoen, 56 Mo.App. 167; Jennings v. Todd, 118 Mo. 304; Johnson v. McMurray, 72 Mo. 278; Meyer v. Robinson, 93 Mo. 115; Turner v. Hoyle, 95 Mo. 337. (2) Though the indebtedness for which collateral is given be renewed from time to time, by giving of fresh notes the pledge is to be dated from the time it was first made. Shrewsbury Savings Institutions Appeal, 94 Pa. St. 311; Bank v. Hull, 83 N.Y. 345; Pinney v. Kimpton, 46 Vt. 83; Bank v. McNeil, 10 Bush. (Ky.), 54; Fisher v. Fisher, 98 Mass. 303. (3) The presumption is that alterations in a deed of trust were made before delivery. McCormick v. Fitzmorris, 39 Mo. 24; Burnett v. McCluey, 78 Mo. 676; Givens v. Whiteside, 65 Mo.App. 3; Noah v. Insurance Co., 69 Mo.App. 335; Holton v. Kemp, 81 Mo. 561; Stillwell v. Patten, 108 Mo. 352. (4) After signing and sealing, the grantor may change the deed, which will be good on delivery without fresh execution. Bassett v. Bassett, 51 Me. 130; Prettyman v. Goodrich, 23 Ill. 330; Malarin v. U.S. 1 Wall. 288; Burnett v. McCluey, 78 Mo. 687. (5) A deed which is de facto on the records imparts full notice from one year after it was put of record, even though not entitled to record. R. S. 1889, sec. 4864; Allen v. Moss, 27 Mo. 354; Bishop v. Schneider, 46 Mo. 472; Gatewood v. Hart, 58 Mo. 261; Campbell v. Laclede Gas Light Co., 84 Mo. 352. (6) A deed releasing property from a deed of trust, when made without authority, is a nullity, and affords subsequent purchasers of the property no defense against the real holder of the secured debt. Borgess v. Vette, 142 Mo. 574; Lee v. Clark, 89 Mo. 553; Hagerman v. Sutton, 91 Mo. 533; Bank v. Frame, 112 Mo. 514; Feld v. Roanoke Ins. Co., 123 Mo. 603; Kelly v. Staed, 136 Mo. 430.
Fisse & Kortjohn for respondents.
(1) The statute has no application in any case except the two cases specifically mentioned; first, where a deed is not acknowledged at all; and, next, where the acknowledgment is defective in form. Its language is not fit to meet a case like this, where the acknowledgment is in good form but before an unauthorized person. Bishop v. Schneider, 46 Mo. 472; Gatewood v. Hart, 58 Mo. 263; Campbell v. Laclede Gas Light Co., 84 Mo. 362. (2) Valid acknowledgment is an essential prerequisite to a record, and without such acknowledgment no recorded deed can be held to impart notice. Hunt v. Selleck, 118 Mo. 588; Harrington v. Fortner, 58 Mo. 474; Musick v. Barney, 48 Mo. 458; Callaway v. Trask, 50 Mo. 420; Seeking v. Hebel, 1 Mo.App. 340. (3) The acknowledgment is insufficient because the person acting as the officer to take the acknowledgment was also party to the deed. A deed so insufficiently acknowledged can not properly be recorded, and is not constructive notice. See Stevens v. Hampton, 46 Mo. 406; Dail v. Moore, 51 Mo. 589; Black v. Gregg, 58 Mo. 565; Hainey v. Alberry, 73 Mo. 427; Williams v. Bank, 72 Mo. 292.
This is a suit in equity to set aside a release of, and to foreclose a deed of trust, in which the judgment was for the defendants, the bill dismissed, and the plaintiff appeals.
On the 19th day of May, 1892, one William B. Lange, being at the time attorney in fact of his mother Mathilda Lange and president of the Carondelet Real Estate Company, executed a deed of trust of that date, upon the real estate described in the petition, signed "Carondelet Real Estate Company by Wm. B. Lange, President" to secure the payment of five negotiable promissory notes, one principal for $ 4,000, and four interest notes for $ 120 each, of the same date, executed by him and signed in the same manner, payable to the said Mathilda Lange, the principal note payable two years after date, and the interest notes payable semi-annually during the period of the principal. On the next day, May 20th, 1892, William B. Lange as president of the real estate company acknowledged the deed before a notary public, and the same was on the same day filed for record. At the time the deed was acknowledged the name of Ernst Renner appeared in the deed as trustee, when filed for record that name had been erased and "Chas. F. Vogel" written in place of it, and the notes had been indorsed, "Without recourse on me, Mathilda Lange, per Wm. B. Lange, Atty in fact." In this condition the deed and notes were exhibited by William B. Lange at the recorder's office just before the filing of the deed for record to August Gehner, president of the plaintiff bank, of which the said Lange had been a customer since September, 1891, with the view of obtaining a loan upon the security from Mr. Gehner, and upon his consenting to consider the proposition, the deed was delivered to the officer for record, and the notes to Gehner in whose personal possession they remained until the sixth day of August, 1892, when Lange, having negotiated for a loan from the bank on his individual note of that date for the sum of $ 3,800, the five notes at his request were on that day delivered to the bank by Mr. Gehner as collateral security for the loan, and thereafter, except two of the interest notes which seem to have been taken up, continued in the possession of the bank as such collateral until this suit was brought on the 18th of January, 1895, Lange's note for the loan being renewed from time to time until his death, and the last renewal note being for the sum of $ 2,300, dated January 30th, 1894. The deed of trust was never delivered to the bank by Lange, he accounting for its absence at the time of the delivery of the notes secured thereby, by saying it had been lost, and that he would furnish a certified copy thereof which he afterwards did.
On the 20th day of April, 1893, while the bank was thus holding these notes, Lange executed a quitclaim deed to the Carondelet Real Estate Company, signed "Mathilda Lange, by Wm. B. Lange, Attorney in fact," in release and satisfaction of said deed of trust, which on the same day was duly acknowledged by him in that character, filed for record and duly recorded, which is the release sought to be set aside.
Afterward on the 20th of May, 1893, Lange executed and acknowledged a deed of trust signed "Carondelet Real Estate Company by Wm. B. Lange, President," conveying the premises to Mott, trustee, to secure a bond of that date, to the South End Building & Loan Association of St. Louis, for the sum of $ 5,400 executed by him and signed in the same manner, which deed of trust was on the 23d of May, 1893, filed for record and duly recorded. And afterward on the 7th of July, 1893, in like manner the premises were conveyed to Maggie Christie, subject to the deed of trust in favor of the building and loan association, who with her husband, Edward Christie, are in possession of the premises and who together with said association, the trustees, Mott and Vogel, Mrs. Lange, and William B. Lange's administrator, are made parties defendant in this action.
The evidence tends to prove that during the period of these transactions, the said William B. Lange was of good reputation. That he was in fact The Carondelet Real Estate Company, which existed as a corporation simply for the purposes of his business. That in all these dealings of the parties with him they acted in entire good faith, that Mrs. Lange had in fact no interest whatever in the property being dealt with, and knew nothing of these transactions. Thus it was that William B. Lange by means of the relations he sustained to his mother and this corporation, was enabled to perpetrate a fraud by which some one of the innocent parties to this action, in which no relief is sought or could be given against either of them, must be made to suffer. Who shall be the sufferer? can only be determined by the application of strict legal principles.
(1) The starting point of the inquiry is the power of attorney given by Mrs. Lange to her son, duly executed, acknowledged, and of record when all of these transactions were had. It was of the most plenary character, constituting him in fact her alter ego to transact any and all kinds of business for her, and in her name, including the power "to sign or accept all orders, promissory notes, drafts or bills of exchange, and to indorse such checks, notes or bills." His authority to draw the notes in the name of the real estate company is not questioned. His authority to accept the notes payable to his mother and to transfer them by indorsing her name thereon, is beyond question. When his name was indorsed thereon in the manner in which it was, the notes became negotiable by delivery. Thereafter the title to the paper was prima facie in the holder, whoever he might be, and passed to whomsoever he might deliver them. The title to the notes was thus in William B. Lange, when he delivered them to Mr. Gehner, and passed by that delivery to him, and passed by his subsequent delivery to the bank. The bank thus for value, before maturity in due course of business, acquired title to these notes from the holder who was the only apparent and in fact the real owner thereof, at the time, and it would seem that its title to the notes...
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