Hartog v. Siegler

• Court: Missouri Court of Appeals
• Writing for the Court: KELLY
• Citation: Hartog v. Siegler, 615 S.W.2d 632 (Mo. App. 1981)
• Decision Date: 14 April 1981
• Docket Number: No. 40956,40956
• Parties: Owen W. HARTOG and Eleanor J. Hartog, his wife, Plaintiffs-Respondents, v. Paul SIEGLER et al., Defendants-Appellants.

Page 632

615 S.W.2d 632

Owen W. HARTOG and Eleanor J. Hartog, his wife, Plaintiffs-Respondents, v. Paul SIEGLER et al., Defendants-Appellants.

No. 40956.

Missouri Court of Appeals, Eastern District, Division One.

April 14, 1981.

Michael O'N. Barron, St. Louis, for defendants-appellants.

John B. Berkemeyer, Hermann, for plaintiffs-respondents.

KELLY, Chief Judge.

Respondents Owen and Eleanor Hartog brought an action in the Circuit Court of Gasconade County for partition of a 126 acre tract of land situated in Gasconade County and asserted an equitable lien against the property for reimbursement of improvement, maintenance and repair expenditures. The Hartogs and appellant, Paul Siegler, each held an undivided half-interest in the property, and all co-tenants stipulated to the partition sale. Owen Hartog and his sister, Harriett Siegler, had acquired the property from respondent, Haroco Corporation in 1967. At the sister's death in 1968, her son, appellant Paul Siegler, had inherited her half-interest in the property in trust, and Hartog had been appointed trustee. Respondent Haroco Corporation intervened in this action to assert a lien against the property for Haroco's payment of a promissory note on behalf of the co-tenants. The Circuit Court of Gasconade County awarded the Hartogs $15,243.62, plus reasonable attorney's fees from the proceeds of the sale of the tract, and also awarded Haroco $15,128 from said proceeds.

Appellants claim that Hartog incurred expenses as a volunteer, breached his fiduciary duty as trustee to render accurate accounting of his trusteeship, and therefore was not entitled to reimbursement. They also contest particular expenses claimed by Hartog. Appellants assert that Haroco's claim was based on insufficient evidence as to Harriett Siegler's intent to pledge the property as security with respect to payment of the note.

Haroco Corporation is a closed Missouri corporation whose principal dealings are in real estate. In 1967 Owen Hartog, his sister, Harriett Siegler, and their mother held all of Haroco's common stock. Hartog held 40% of the stock and was president of the corporation; his sister held 30% and was secretary. In April, 1967, Haroco acquired by warranty deed the 1261/2 acre farm which is the subject of this suit, subject to a first deed of trust in the amount of $12,500.00 in favor of one Val Schmidt due in 1969 with annual interest. Haroco also spent $753.00 in earnest money, closing costs and recording fees.

At that time the house on the tract had been "uninhabitable," and the barn had "required a lot of work." Hartog and his sister orally agreed to modernize the farm for use as a weekend residence, and they began to make repairs and improvements. They continued an arrangement by the previous owner with a local farmer who sharecropped the ground and paid rent for pasture land. On October 5, 1967, Hartog and Mrs. Siegler borrowed $7,000.00 from a bank to reimburse themselves for personal expenditures on the property. After Hartog personally had spent $5,899.33 on building materials, they initiated a separate checking account for all farm expenditures.

On or about October 30, 1967, Haroco conveyed the farm by warranty deed to the Hartogs and Harriett Siegler subject to the deed of trust. Hartog and Mrs. Siegler agreed to assume payment of the note and to cover Haroco's acquisition expenses as consideration for the property. There was no written closing statement, nor did any money change hands. Haroco, however, subsequently paid the periodic interest on the note and paid it off in 1969. Harriett Siegler's estate files and estate tax return noted an indebtedness due on one-half of a deed of trust on a piece of property. The Circuit Court found that the circumstances of the conveyance and the estate records evidenced an intent by the parties to the conveyance that the property stand good for the co-tenants' obligation to Haroco.

Harriett Siegler died testate on February 1, 1968. She left all of her real and personal property in trust for the benefit of her 12 year old son, appellant Paul Siegler. The boy thereafter lived with his father, Robert Siegler, who had been divorced from Harriett Siegler several years prior to her acquisition of her interest in the 126 acre tract of land in issue. Her will named Hartog as executor and trustee. Her estate was closed in November, 1971. Hartog claims to have resigned as trustee prior to this suit, and appellants have denied that there was an effective resignation. Hartog did not render any accounting to the probate court. The trust terminated at Paul's twenty-first birthday, sometime after initiation of this suit.

After his sister's death and until initiating this suit Hartog continued to make improvements and repairs to the property. He spent most of his weekends working there. Out of his farm checking account he paid for telephone and electric service, gasoline and fuel oil, insurance, taxes, building materials, and excavation costs, as well as for seed and fertilizer for the tenant farmer's use. The farming operation produced income of $11,263.15 between May, 1967, and December, 1975.

Hartog did not consult appellants with respect to any of the work being done on the property, nor did he expressly advise appellants that the property was included in the trust assets. He knew, however, that the trust's attorney had informed Robert Siegler of the existence of the trust. Robert Siegler claims he did not remember whether the attorney listed the farm among the trust assets. Appellants were aware of the farm's existence, however, and had visited it once in 1968. In 1974 Hartog told Robert Siegler that he had made improvements to the property and offered to purchase appellants' interest. His offer was refused. Appellants visited the farm for the second time in 1976. By that time the property had been considerably improved.

The Circuit Court found that the Hartogs had not been reimbursed for the following expenditures: fencing and materials ($1,227.84), gasoline ($1,075.65), excavating ($476.50), taxes ($2,273.34), insurance ($1,686.00), grain and seed ($2,999.94), fertilizer and lime ($1,413.25), building supplies ($12,847.31) and half the amounts expended for fuel oil ($1,022.35), electricity ($881.65), light, heat and power ($602.93). This total credit was offset against the property's income ($11,263.15) for a net credit of $15,243.62.

The court further found that the improvements materially enhanced the property's value by at least the same amount as the expenditures claimed by the Hartogs; that the expenditures were reasonable and necessary for the maintenance and repair of the property, and that the credit was an equitable lien against the property, expended by respondents in good faith that they would be reimbursed upon sale of the property. The court ordered the Hartogs' expenditures, as well as costs and reasonable attorney's fees to be paid from the partition sale proceeds.

In this court-tried case the scope of appellate review is circumscribed by Rule 73.01 and the Supreme Court's construction of that Rule in Murphy v. Carron, 536 S.W.2d 30, 32(1, 2) (Mo. banc 1976). We must uphold the judgment of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law or unless it erroneously applies the law. We are further charged with exercising the power to set aside a decree or judgment on the ground it is against the weight of the evidence with caution and only when we believe that the decree or judgment is wrong.

Bearing in mind these restrictions on our review of their partition decree, we undertake our review of this decree by taking cognizance of the rule of law that a tenant in common's right to contribution from his co-tenant may extend to payments made for repair and improvements, taxes and other expenses, depending upon the nature and circumstances of the particular expenditures. Hahn v. Hahn, 297 S.W.2d 559, 567(1, 2) (Mo. banc 1957). Upon partition, advances for repairs made in good faith for the substantial benefit of all co-tenants, may be allowed. 68 C.J.S. Partition § 136. Decisions of Missouri Appellate Courts hold that a co-tenant in possession may be compensated in equity for improvements to co-tenancy property where he has a good faith belief that he has full title to the property. Buschmeyer v. Eikerman, 378 S.W.2d 468 (Mo.1964); Henry v. Steward, 363 Mo. 213, 250 S.W.2d 527 (1952); or where the other co-tenants expressly or impliedly consent to the improvements. Hahn v. Hahn, supra; Goforth v. Ellis, 300 S.W.2d 379 (Mo.1957); Henry v. Steward, supra.

The right to compensation for improvements made without the consent of co-tenants is not a legal right, but may be enforced in equity for payment out of partition proceeds when said improvements are made in good faith, are of a necessary and substantial nature, materially enhance the value of the property, and the circumstances show that it would be equitable to do so. Beckham v. Eggleston, 341 S.W.2d 337, 341(6) (Mo.App.1960). 1 A.L.R. 1189; 68 C.J.S. Partition § 139; 122 A.L.R. 234.

We believe there is substantial evidence to support the trial court's finding that the expenditures made by the plaintiffs were necessary for the maintenance and repair of the real property ordered partitioned and that said expenditures were made in good faith by the plaintiffs.

Owen W. Hartog and Harriett H. Siegler, his sister, agreed to improve this property for use as a weekend home, made plans, took out a loan to reimburse themselves for expenses thereby incurred, and actually worked on the property. Clearly Mr. Hartog had his sister's consent for those expenditures made prior to Mrs. Siegler's death in 1966 for those improvements made to the property up to that time.

After Mrs. Siegler's death Mr. Hartog proceeded to carry out the plans they'd made for the...