Haake v. Union Bank & Trust Co.

• Decision Date: 03 October 1932
• Docket Number: No. 17541.,17541.
• Citation: 54 S.W.2d 459
• Court: Missouri Court of Appeals
• Parties: HAAKE v. UNION BANK & TRUST CO. et al.

54 S.W.2d 459

HAAKE v. UNION BANK & TRUST CO. et al.

No. 17541.

Kansas City Court of Appeals. Missouri.

October 3, 1932.

Rehearing Denied November 21, 1932.

Appeal from Circuit Court, Jackson County; Darius A. Brown, Judge.

"Not to be published in State Reports."

Suit by Charles G. Haake against the Union Bank & Trust Company and others. Judgment for defendants, and plaintiff appeals.

Affirmed.

Harzfeld, Beach & Steeper, of Kansas City, for appellant.

C. A. Leedy, Jr., and H. G. Leedy, both of Kansas City, for respondents Union Bank & Trust Co. and A. K. Simpson.

Edgar J. Keating, of Kansas City, for respondent E. F. Mulloy.

TRIMBLE, P. J.

Defendant Simpson is the president, and Mulloy the counsel, of the defendant bank; all three are sued in equity by plaintiff to recover the money paid for, and to rescind the sale of, a negotiable promissory note for $2,500, secured by a third deed of trust on 80 acres of land in Jackson county, Mo.; said sale being made by the bank in foreclosure of the $2,500 note held by the said defendant bank, with other securities, as collateral security for a note of J. A. Eames, Frances G. Eames, and Talitha C. Gregory to the bank, dated December 3, 1928, due May 1, 1929, for approximately $6,000.

The $2,500 note was executed by Talitha C. Gregory, dated December 3, 1928, due May 1, 1929, to said bank, and, as stated, was secured by a third deed of trust on said 80 acres, which was made to Clarence J. Gilliam as trustee for said bank, subject to two other deeds of trust, held by the A. P. Nichols Company and aggregating $6,000.

Plaintiff became interested in the 80 acres of land, on which said third $2,500 deed of trust was given, and desired to obtain possession of it. He learned from the defendant bank that the makers of the Eames et al. note for $6,000 would very likely default in payment thereof when it became due on May 1, 1929, and that the bank would probably be compelled to advertise and sell the pledges given to secure said $6,000 note.

Plaintiff requested defendant Simpson, president of said bank, to notify him of the place and date of the sale in foreclosure of the securities pledged for the payment of said $6,000 note. This was done; plaintiff was duly notified that the sale of the collateral security would take place at the place designated in the advertised notice of sale which was duly published in the Daily Record at Kansas City and at the time therein designated, to wit, May 29, 1929. Plaintiff was present at said sale, and purchased the $2,500 note above described, and the deed of trust securing it, paying defendant bank therefor the sum of $2,515.55, the amount of said note and accrued interest. The other securities put up as collateral for the $6,000 were purchased by Mr. Simpson.

Talitha C. Gregory, maker of the $2,500 note, having made default in the payment thereof when due, plaintiff began the foreclosure of the said deed of trust securing, and sold to plaintiff with, said note, by advertising the 80 acres for sale to satisfy said note, sale to be made on July 21, 1929. On that day plaintiff called on the defendant bank to obtain the services of the trustee in said deed of trust to conduct the foreclosure sale but learned that he, for some reason, was not available; whereupon plaintiff called off the foreclosure sale.

It was then that the plaintiff learned, for the first time, that the 80 acres had been sold at sheriff's sale under an execution in favor of Badger Lumber & Coal Company issued on a judgment in case No. 64763, Badger Lumber & Coal Company v. Talitha C. Gregory, for materials furnished by said company to said Talitha C. Gregory and used by her on said 80 acres. It seems that the Badger Company lien claim was filed before said third deed of trust was filed, and hence it was considered a lien prior to the lien of said third deed of trust, the one plaintiff purchased at the sale of the collateral securities hereinabove referred to, the sale of which security to plaintiff the latter now seeks to rescind.

Talitha C. Gregory is and was a resident of California, and in fact was never in Missouri or within the jurisdiction of the circuit court wherein the Badger Company lien suit was pending, and consequently personal service could not be obtained upon her in said lien suit. Constructive service, i. e., service by publication, was therefore attempted to be obtained, and, such as it was, was the only so-called service obtained.

The suit against her was filed May 18, 1928, summons was issued in ordinary form, returnable to January term, 1928, directed to the sheriff of Jackson county who made a non est return, and two days later plaintiff filed his affidavit in attachment stating, as the sole ground therefor, that affiant "has good reason to believe and does believe" that the defendant Talitha C. Gregory is a nonresident of the state of Missouri. Next day a writ of attachment was issued under which there was an attempted levy on the real estate belonging to defendant Talitha C. Gregory. Thereafter, on July 14, 1928, an order of publication was made by the court, which order recited that: "Now at this day comes the plaintiff, by its attorney and it appearing to the satisfaction of the court that the defendant, Talitha C. Gregory, cannot be summoned in this action, it is ordered by the court that publication be made, notifying her that an action has been commenced against her by petition and attachment, in the Circuit Court of Jackson County, Missouri, at Independence, founded on a note for the sum of $163.69; that her property has been attached, and unless she be and appear at the next term of this court, to be holden at the Court House in Independence, in the County of Jackson, on the 10th day of September, 1928, and on or before the third day thereof, judgment will be rendered against her, and her property sold to satisfy the same," etc. (Italics ours.)

The defendant never appeared, and judgment was rendered against her on September 24, 1928, execution issued February 5, 1929, notice of sale was published between March 29, 1929, and April 20, 1929, on which last named date the sheriff sold said premises to one Gross, and delivered a sheriff's deed to the purchaser, which was recorded in the recorder's office the day before the sale of the collateral aforesaid, one of which collateral securities plaintiff bought, the sale of which plaintiff now seeks to rescind and have canceled and set aside.

Upon learning of the sheriff's deed to Gross, plaintiff tendered defendant bank the note and deed of trust in question, claiming that they were worthless when sold to him, and demanded of the bank the return of the $2,515.55 he had paid therefor. Payment being refused, he brought this action in equity.

Basing his petition on the above facts, plaintiff alleges, as the ground for his cause of action, that:

"Previous to said sale, and at the time of sale, defendant A. K. Simpson stated and represented to this plaintiff that the said deed of trust was a valid and subsisting lien upon and against said premises; that at the time of said sale defendant Edward F. Mulloy stated and represented to plaintiff that said deed of trust was a valid and subsisting lien against said premises, and that said statements and representations were made for and on behalf of defendant Union Bank and Trust Company.

"That said statements and representations were false and fraudulent, and were well known to the said defendants, and each of them, to be false and fraudulent and wholly untrue, and made for the sole purpose of cheating, defrauding, misleading and deceiving this plaintiff; that this plaintiff relied upon said statements in purchasing the said note and said deed of trust in paying therefor, and by so doing has been damaged as hereinafter stated.

"That said deed of trust was not a valid and subsisting lien upon and against said premises at the time said statements were made, as above mentioned, and at the time of said sale, and at the time plaintiff paid his money for said note and deed of trust."

This last being because of the judgment against Talitha C. Gregory and the sheriff's sale and deed thereunder hereinbefore set out, all being prior to the lien of plaintiff's deed of trust.

After hearing the evidence, the court took the case under advisement on July 11, 1930, with the understanding, so the court stated, that either party might submit additional evidence, and with leave to both parties to file briefs. No briefs were filed, and, on November 8, 1930, while the case was still under advisement, the defendants asked to have the case reopened and that they be permitted to introduce documentary evidence consisting of the record in the Badger Lumber Company suit. Over the objection of plaintiff, leave was granted, and defendants offered the record in said suit with especial reference to the contents of the affidavit for attachment and the order of publication and notice thereof. On the 12th day of January, 1931, the court made a general finding for defendants, and rendered judgment in their favor, allowing them "to go hence without day." Plaintiff duly appealed.

Two issues were presented by the pleadings: First, that the defendants induced plaintiff to purchase the $2,500 note, by false and fraudulent representations, upon which plaintiff relied, that the deed of trust securing said note was a valid lien on said 80 acres; second, that said deed of trust was worthless by reason of a prior valid lien of the judgment in the Badger Lumber Company suit which eventuated into a sheriff's deed, conveying all of Talitha C. Gregory's interest in said land to one Gross.

Although plaintiff's petition is based on fraudulent statements and misrepresentations charged to have been made, he wholly failed to produce any evidence whatever of any false or fraudulent representations by the defendants or either of them. We have carefully examined...