Greenfield v. Petty

• Decision Date: 11 December 1940
• Docket Number: 36840
• Parties: Samuel L. Greenfield, Appellant, v. Benjamin A. Petty, Pearl Petty, Elisha T. Petty, Beverly B. Petty and A. Lee Kelsey, Curtis H. Hall and James C. Shelton, Judges of the County Court of Clay County, and Clay County
• Court: Missouri Supreme Court

145 S.W.2d 367

346 Mo. 1186

Samuel L. Greenfield, Appellant, v. Benjamin A. Petty, Pearl Petty, Elisha T. Petty, Beverly B. Petty and A. Lee Kelsey, Curtis H. Hall and James C. Shelton, Judges of the County Court of Clay County, and Clay County

No. 36840

Supreme Court of Missouri

December 11, 1940

Appeal from Lafayette Circuit Court; Hon. Charles Lyons Judge.

Affirmed.

Lawson & Hale and Blackwell & Sherman for appellant.

(1) While equity may cancel the release of a prior mortgage and restore the lien thereof, it will not do so to the prejudice of an intervening junior lienor who has acted in reliance on such release. Saline County v. Thorp, 337 Mo. 1140; Scott v. Hill, 330 Mo. 490; Blanford v Groff, 50 S.W.2d 739; Seiberling v. Tipton, 113 Mo. 373. (2) In the purchase of the $ 8300 note plaintiff had the right to and did rely on the public records showing full payment and release of the first school fund mortgage. His mistake about the fact of actual payment was no greater than the mistake of the county officials in making the release which misled plaintiff. Where equities are equal, the law will prevail. Sec. 3040, R. S. 1929; Friel v Alewel, 318 Mo. 1; Goodrich Rubber Co. v. Bennett, 281 S.W. 75; Lustenberger v. Hutchinson, 119 S.W.2d 921. (3) Statements made by and to plaintiff's agent in connection with and as a part of the purchase of the $ 8300 note, evidencing state of mind and intention, are part of the res gestae. They constitute verbal acts and are admissible in evidence. Edwards v. Ethyl Gasoline Corp., 112 S.W.2d 555; 10 R. C. L. 959; Mutual Life Ins. Co. v. Hillmon, 36 L.Ed. 706; Abbott's Civil Jury Trials (5 Ed.), pp. 598-9; Abbott on Facts (5 Ed.), p. 824. (4) Respondents county and county judges, by taking no action since 1908 to collect their indebtedness or enforce their security, have been guilty of gross laches which bar their recovery in this case. Sec. 865, R. S. 1929; Dexter v. MacDonald, 196 Mo. 403; Shradski v. Albright, 93 Mo. 42; Shelton v. Horrell, 232 Mo. 358; Rutler v. Carothers, 223 Mo. 640; Dunklin County v. Choteau, 120 Mo. 595; Hudler v. Guerdon, 113 S.W.2d 1043; Hammond v. Hopkins, 36 L.Ed. 134; Washington County v. Slaughter, 54 Iowa 265; Sullivan v. Railroad, 24 L.Ed. 324; Lansdale v. Smith, 27 L.Ed. 219; Willard v. Wood, 41 L.Ed. 531; Smalley v. Queen City Bank, 94 S.W.2d 954. (5) The failure of the county to make any attempt to collect the indebtedness secured by the school fund mortgage until after the death of practically all the witnesses who knew the facts constitutes laches and precludes a recovery by the county. Burdett v. May, 100 Mo. 13; State ex rel. v. West, 68 Mo. 229; Dexter v. MacDonald, 196 Mo. 400.

Conn Withers and William Aull, Jr., for County Court and Judges of the County Court of Clay County.

(1) Equity will not permit the plaintiff, who purchased a note secured by an intervening deed of trust with notice of these defendants' position both actual and constructive and after maturity, to profit at the expense of the school funds of Clay County in excess of $ 4300 in his efforts, by this action, to wipe out the prior lien of the school fund mortgage. Equity will protect these defendants in the continuation of the lien of the original school fund mortgage as to priority in the renewal papers of March, 1923, which renewal, when effected, worked no injury to the Kearney Commercial Bank, then owner of the indebtedness underlying the foreclosure under which plaintiff claims. 19 R. C. L., pp. 452, 469, secs. 235-6, 257; Sieberling v. Tipton, 113 Mo. 373; Breit v. Shain, 119 S.W.2d 758; Breit v. Bowland, 127 S.W.2d 71; 41 C. J. 814, sec. 970; Scott v. Hill, 50 S.W.2d 110; Saline County v. Thorp, 88 S.W.2d 183; McCraney v. Morris, 95 A. L. R. 622, Sullivan v. Williams, 33 A. L. R. 147; Christy v. Scott, 31 Mo.App. 331. (2) The doctrine which protects an innocent purchaser is not available to this plaintiff who purchased after maturity and with notice, both constructive and actual, of the equities of these defendants. 41 C. J., pp. 696, 697, secs. 716a, 718; Batson v. Peters, 89 S.W.2d 46; Secs. 3040, 9251, R. S. 1929; State of Mo. v. Bank of the State of Mo., 45 Mo. 528; State ex rel. v. Hays, 52 Mo. 580.

James S. Simrall, Alan F. Wherritt and Henry C. Chiles for Benjamin A. Petty, Beverly B. Petty and Elisha E. Petty.

(1) When appellant purchased the $ 8300 note he was a volunteer and he also knew the school fund mortgage of 1908 had been renewed. Appellant's agent was well acquainted with Beverly B. Petty, one of the directors of the assignor bank, but he did not consult Beverly B. Petty, a surety, about the school fund mortgage release. Where equities are equal the first in order of time shall prevail. Stratton v. Cole, 216 S.W. 976; State v. Netherton, 26 Mo.App. 414; 21 C. J. 209. (2) The respondents Pettys cannot be guilty of any laches because appellant has acquiesced for an unreasonable length of time in the assertion of a right adverse to his own. From acquiescence, the court may presume assent of appellant to the county court's rights, and the consequent abandonment or waiver of the right sought to be enforced. Blackford v. Heman Const. Co., 132 Mo.App. 164; Dexter v. McDonald, 196 Mo. 400; Bliss v. Prichard, 67 Mo. 181. (3) The failure of the county to attempt to collect its indebtedness until after the death of George Riley and Samuel C. Greenfield is not laches and does not come within that rule because the county did not have any actual knowledge of the second mortgage note purchased by appellant, whereas, appellant knew of all the facts and knew that George Riley and Samuel C. Greenfield knew of some of them. Hunter v. Moore, 202 S.W. 546; Stanton v. Thompson, 234 Mo. 15; Howell v. Jump, 140 Mo. 456. (4) Equity sometimes relieves one of the consequences of his unfortunate blunder, but it never aids another to take an unfair advantage of that blunder. Hayden v. Lauffenburger, 157 Mo. 95. (5) Appellant had constructive notice of the renewal of the school fund mortgage when he purchased the past-due paper of the Kearney Commercial Bank and he also had actual notice of the renewal of the school fund mortgage from his agent and he cannot be an innocent purchaser for value before maturity and without notice. Patterson v. Boothe, 103 Mo. 402; Orrick v. Durham, 79 Mo. 174; McDonald v. Quick, 139 Mo. 498; Case v. Goodman, 250 Mo. 115; West Plains Bank v. Edwards, 83 Mo.App. 470. (6) There was no fraud practiced on the appellant as he was a volunteer and had no conversation with any of the respondents prior to his purchase of the past-due $ 8300 note and since it was not the intention of any of respondents to extinguish the lien of the 1908 mortgage, appellant is not entitled to affirmative relief. State ex rel. Breit v. Shain, 119 S.W.2d 762.

OPINION

Douglas, J.

This is a suit to quiet title to land in Clay County. Plaintiff alleges that he owned a deed of trust on the land, which was the superior lien; that such deed of trust was foreclosed and he purchased the land; and that the County Court of Clay County asserts that his deed of trust was a junior lien and claims a superior interest.

The County of Clay is a party defendant giving this court jurisdiction. [Constitution, Art. VI, Sec. 12.]

The county and the judges of the county court in their joint answer claim to have loaned school funds which were secured by a first mortgage on the land; that plaintiff's deed of trust was later placed on the same land; that thereafter the school fund mortgage was renewed by substituting a new mortgage and releasing the old one. They allege their prior lien was not extinguished by the substitution of the new mortgage and pray the court to decree that it remains superior to plaintiff's rights and that plaintiff holds the land subject to the lien of their mortgage. The trial court entered a decree holding that plaintiff held the land subject to defendants' school fund mortgage and ordered its foreclosure. Plaintiff has appealed.

The land is a sixty-eight acre tract and for years was owned by Benjamin A. Petty and Pearl Petty, his wife. On April 6, 1908, they borrowed school funds from the county court and gave back to the county a mortgage on the land to secure the loan. The loan aggregated $ 3,187.06 of which $ 1,911.35 belonged to the County School Fund and $ 1,275.71 belonged to the Aull School Fund of the county. They had as sureties on their loan defendants Beverly B. Petty and Elisha E. Petty.

On May 22, 1922, they borrowed additional funds of $ 8,300, this time from the Kearney Commercial Bank of Kearney, Missouri. They placed a second deed of trust on the same land to secure this loan which, by its terms, was subject to the school fund mortgage. The date of maturity of this loan was December 15, 1922.

In 1925 a new group of judges of the county court took office. They made an investigation of the outstanding school fund mortgages for the purpose of presenting any from being outlawed by the twenty-year statute. A number were revealed to be from fifteen to nineteen years old. They determined to renew all which were fifteen years old and more. They had the prosecuting attorney prepare new papers on the Petty loan. On April 9, 1923, the Petty mortgage was released on the margin of the record by the clerk of the county court in the following terms: "The notes or bonds described in the within School Fund Mortgage from Benjamin A. Petty and wife to Clay County having been fully paid and discharged, I hereby acknowledge satisfaction in full and release the property herein conveyed from the lien and incumbrance thereon, by authority of the County Court of Clay County as appears of record in my office this 9th day of April, 1923." The record also shows that the notes were...