Guels v. Trust Co.

• Decision Date: 02 April 1932
• Docket Number: No. 30011.,30011.
• Citation: 49 S.W.2d 60
• Parties: WALTER C. GUELS, Administrator of the estate of ERASMUS McGINNIS, Appellant, v. MISSISSIPPI VALLEY TRUST COMPANY and MARGARET STARK, Co-executors under the will of CHARLES B. STARK, and MISSISSIPPI VALLEY TRUST COMPANY, Trustee, and MARGARET STARK, Beneficiary.
• Court: Missouri Supreme Court

49 S.W.2d 60

WALTER C. GUELS, Administrator of the estate of ERASMUS McGINNIS, Appellant, v. MISSISSIPPI VALLEY TRUST COMPANY and MARGARET STARK, Co-executors under the will of CHARLES B. STARK, and MISSISSIPPI VALLEY TRUST COMPANY, Trustee, and MARGARET STARK, Beneficiary.

No. 30011.

Supreme Court of Missouri, Division One.

April 2, 1932.

Appeal from Circuit Court of City of St. Louis. — Hon. Henry A. Hamilton, Judge.

AFFIRMED.

Hugh K. Wagner for appellant; Nagel & Kirby and Everett Paul Griffin of counsel.

(1) A court of equity acts in personam, and, when it has jurisdiction of the parties to the suit, can compel the defendant to make deeds and do other acts of restitution, though the subject-matter of the suit — real or personal property — is situated in another state or country 1 Pomeroy's Eq. Jur. (4 Ed.) 162-164, secs. 134, 135; 4 Pomeroy's Eq. Jur. (4 Ed.) 3165, 3166, sec. 1318. (2) The debt is the principal and the mortgage is the incident, and several mortgages for the same debt, on different properties, are, in legal effect, one mortgage. 1 Jones on Mortgages (7 Ed.) 494, sec. 356. (3) A mortgagee with a power of sale and the right to buy at his own sale is a trustee for the mortgagor and is required by law to act with the utmost good faith and fairness in making the sale, so as to protect the interests of the mortgagor. Stoffel v. Schroeder, 62 Mo. 149; 19 R.C.L. 612, sec. 428; O'Day v. Annex Realty Co. (Mo. Sup.), 191 S.W. 48. (4) If, at a sale by the mortgagee having a power of sale, the price obtained is grossly inadequate, the sale is presumptively fraudulent, and, if accompanied by even a slight irregularity, the sale should be set aside. McLure v. Bank of Commerce, 252 Mo. 519, 160 S.W. 1005; 27 Cyc. 1508; Graffam v. Burgess, 117 U.S. 192, 29 L. Ed. 839; 17 Cyc. 1278, 1280; 41 C.J. 919; 23 C.J. 678-680; Parker v. Railroad Co., 44 Mo. 422; Durfee v. Moran, 57 Mo. 379; Nelson v. Brown, 23 Mo. 21; Knoop v. Kelsey, 121 Mo. 648, 26 S.W. 683; Warder-Bushnell-Glesser Co. v. Allen, 63 Mo. App. 458; Beedle v. Mead, 81 Mo. 297; Bratton v. Graham, 111 So. 353; Drake v. Brickner, 163 N.W. 597, 180 Iowa, 1166; Selkirk v. Selkirk, 297 S.W. 578; Rogers and Baldwin Hardware Co. v. Cleveland Bldg. Co., 32 S.W. 5; Walker v. Mills, 210 Mo. 690; Guinan v. Donnell, 201 Mo. 202; Wertheimer-Swartz Shoe Co. v. Wyble, 261 Mo. 693. (5) If, by the act of the mortgagee, even but one bidder is prevented from bidding or from attending the sale, the sale should be set aside. The mortgagee must not do anything which would prevent competition at the sale. 3 Jones on Mortgages (7 Ed.) 636, 638, 639, secs. 1909, 1911; Jencks v. Alexander, 11 Paige (N.Y.) 623; Fenner v. Tucker, 6 R.I. 555; 16 R.C.L. 60, 61, sec. 43. (6) If there be, for the same debt, several mortgages on different properties, and the mortgagee with a power of sale, by his illegal or fraudulent sale, first acquires the most valuable of the properties at much less than its value, he cannot, while he withholds that property from the mortgagor and so deprives him of the opportunity to use it, by a private sale, or by a new mortgage of it, either separately or joined with other property, to obtain the money to pay the debt, have any legal right to sell for the same debt, by any mode of sale, any other property of the mortgagor. 41 C.J. 1026; Lalor v. McCarthy, 24 Minn. 417; Hendricks v. Calloway, 211 Mo. 565; 17 Cyc. 1096; 23 C.J. 622, sec. 565; 25 C.J. 35, p. 322, and authorities there cited; Baker v. Halligan, 75 Mo. 435; Ferriday v. Selcer, 1 Freeman Ch. (Miss.) 263; 13 Smedes & M. (Miss.) 698; Garrett v. Crawford, 119 Am. St. Rep. 401, 128 Ga. 519, 17 S.E. 792; Houston v. Natl. Loan Assn., 92 Am. St. 565, 80 Miss. 31, 31 So. 540; Howland v. Morris, L.R.A. 1917B, 513, 141 Ga. 687, 82 S.E. 32; Wells v. Estes, 154 Mo. 291; Kelsay v. Farmers & Traders Bank, 166 Mo. 157, 65 S.W. 1007; Montgomery v. Miller, 131 Mo. 595, 33 S.W. 165; Johnson v. Williams, 4 Minn. 260; Smith v. Woodward, 122 Va. 456, 94 S.E. 916; Michie v. Jeffries (Va.), 21 Gratt. 334; Curry v. Hill & Curry, 18 W. Va. 370; Drover v. Fox, 36 Mich. 461; Kirby v. Howie, 9 S.D. 471, 70 N.W. 640; Grapengether v. Fejervary, 9 Iowa, 163, 74 Am. Dec. 336; Morriss v. Va. State Ins. Co., 90 Va. 370, 18 S.E. 843.

Charles A. Houts for respondents.

(1) There was no charge of fraud or misconduct with respect to the sales of the Denver property or the Missouri property. Stark had a perfect legal right to foreclose the mortgage on the Denver property and to sell the Missouri property under execution, and when he did so a court of equity has no power to divest him of the titles thereby acquired. Guels v. Stark, 264 S.W. 693; McKinney v. Miller, 19 Mich. 142; Conklin v. Slackfleth, 65 Kan. 31; 1 Beach Modern Equity, sec. 10; Matthews v. Mobile Mut. Ins. Co., 75 Ala. 85; Magniac v. Thompson, 15 How. (U.S.) 281; Hedges v. Dixon County, 150 U.S. 182; Stone v. Gardner, 20 Ill. 324; Colonial Trust Co. v. Central Trust Co., 243 Pa. 268; Hayes v. Shawl, 229 Mo. 114. (2) The mortgage upon the Denver property given in 1910 and the mortgage upon the Arkansas property given on the 30th day of June, 1915, though both secured the same debt, cannot be construed as one instrument, so as to limit the right of the mortgagee to proceed under each one separately. McDonald v. Second Natl. Bank, 106 Iowa, 517; Tacoma Savings etc. Co. v. Safety Inv. Co., 123 Wash. 481. (3) The obsolete rule, that after levy of execution on personal property no further levy can be made under the same execution until the property first levied upon be restored to the judgment debtor, does not apply to levies upon real estate, nor does it apply at all to mortgages. Herrick v. Swartwont, 72 Ill. 340; Hogshead v. Carruth (Tenn.), 5 Yerg. 277; Lindley v. Kelley, 42 Ind. 294; 23 C.J. 450, sec. 250; Lillard v. Shannon, 60 Mo. 522.

STURGIS, C.

This is the second appearance of this case in this court, having been appealed the first time because of the trial court having sustained a demurrer to the petition, and is reported as Guels v. Stark, 264 S.W. 693. Having been reversed and remanded, the case was tried on the petition, which we held stated a good cause of action. The original plaintiff, Erasmus McGinnis, died while the case was pending here on the former appeal and by stipulation was revived in this court in the name of Walter C. Guels, Administrator. Before the case was retried, the defendant, Charles B. Stark, also died and the case was revived in the circuit court in the name of Mississippi Valley Trust Company and Margaret Stark, Co-trustees, and Margaret Stark, Beneficiary under Stark's will. In other words, the present plaintiff takes the place as successor in title of the original plaintiff, Erasmus McGinnis, and the present defendants are the successors in title of the original defendant, Charles B. Stark. The case is yet essentially that of McGinnis v. Stark and they will be referred to as plaintiff and defendant respectively.

As said on the former appeal of this case, the plaintiff, by his petition, "asks for an accounting to ascertain the balance due from him to defendant; that he be permitted to pay in cash to defendant the amount ascertained; and that defendant be required thereupon, simultaneously with such payment, to reconvey to plaintiff certain pieces of real estate theretofore mortgaged and bought in by and for defendant, and also certain other real estate and certain shares of stock in a mining company bought at sales under executions in favor of this defendant and against the plaintiff."

When this case came on for retrial, the rulings of this court on the former appeal became the law of the case to be followed on such retrial.

It will not be necessary to restate the entire case and we refer to the former opinion for a fuller statement of the issues involved. It will suffice at present to say that in July, 1918, the plaintiff, McGinnis, stood indebted to defendant, Stark, in the sum of $23,220 plus the interest thereon at seven per cent from December 6, 1917, and costs, as evidenced by a judgment of that date in the Circuit Court of St. Louis. This judgment was based on a note given May 12, 1910, by McGinnis to Stark for borrowed money. This indebtedness from McGinnis to Stark (the note reduced to judgment) was secured by deed of trust with power of sale duly executed by McGinnis, of date May 12, 1910, conveying as security a half interest in a certain business house and lot on Fifteenth Street in Denver, Colorado, and designated herein as the Denver property; also by a real estate mortgage with power of sale dated June 30, 1915, conveying as additional security an undivided nine-twentieths of a tract of wild land in Chicot County, Arkansas, known as Belle Island. This island was formed by the Mississippi River cutting through a narrow neck and leaving the island between the old and new channel. This debt, secured by these mortgages and reduced to judgment, was of long standing, was long past due, and Stark had been endeavoring to collect the same. The last extension of time given by Stark to McGinnis was from January 11th to May 1, 1918, which recites in writing that other creditors than Stark were pressing McGinnis to pay debts, and he agreed not to go into bankruptcy voluntarily, and if forced to do so, or his property be seized under some attachment or judgment, then Stark would be free to enforce his mortgages or his judgment. In connection with this extension agreement McGinnis executed and gave to Stark deeds of absolute conveyance to the Denver and Arkansas properties with the name of the grantee in blank, so that in case of the sale of either or both these properties under Stark's mortgages, the purchaser's name could be filled in and delivered, thus insuring the purchaser a good title.

The plaintiff, McGinnis, failed to pay by May 1st, and about July 1, 1918, Stark commenced proceedings to foreclose his mortgage...