Hathaway v. Helmkamp, 53048
| Decision Date | 13 May 1968 |
| Docket Number | No. 53048,No. 2,53048,2 |
| Citation | 427 S.W.2d 455 |
| Parties | Vernon P. HATHAWAY, Jr., and Mary B. Hathaway, his wife, Respondents, v. Martha E. HELMKAMP and James R. Bernhoester, Defendants-Appellants, and First National Bank of Wellston, a corporation, Intervenor Defendant-Appellant |
| Court | Missouri Supreme Court |
Shaw, Hanks & Bornschein, by Charles M. Shaw, Clayton, for respondents.
Smith, Smith & Smith, Earl G. Smith, St. Louis, for appellants.
This is an appeal from the Circuit Court, County of St. Louis, wherein Plaintiffs sought to enjoin the foreclosure of real property under a second deed of trust on the ground that a certain promissory note was invalid for failure of consideration, that, therefore, the second deed of trust to secure the note was invalid and for such other relief as Plaintiffs may in equity be entitled to. The Court found for the Plaintiffs in that the note was unenforceable for lack of consideration and permanently enjoined the Defendants from selling or advertising for sale the real estate described in the second deed of trust.
In order to establish jurisdiction in the Supreme Court a question of title must be directly involved, must be in issue, and the judgment should be one affecting the title in some way. Suits to enforce or enjoin the enforcement of liens, valid in their inception or to adjudicate liens, do not involve title to real estate and do not confer appellate jurisdiction in the Supreme Court. If the validity of the lien, ab initio, is in issue, jurisdiction is on that theory accepted in the Supreme Court. Shiner v. Polk, Mo.Sup. (1963), 366 S.W.2d 449, 451; Castorina v. Herrmann (1937), 340 Mo. 1026, 104 S.W.2d 297 (lack of consideration); Hendrix v. Goldman, Mo.Sup., 92 S.W.2d 733 (lack of consideration).
There is a distinction (affecting appellate jurisdiction) made in the decisions between a suit to set aside a deed of trust on the ground it is void ab initio and a suit in which it is sought to prevent enforcement on the ground the right to enforce has been lost by something happening after execution. Peters v. Kirkwood Federal Savings & Loan Ass'n (1939), 344 Mo. 1067, 130 S.W.2d 507, 508, 509.
Under the authorities above, jurisdiction is in this Court under Article V, Section 3 of the 1945 Constitution of the State of Missouri, V.A.M.S., for the reason title to real estate is involved.
Plaintiffs question the sufficiency of the motion for new trial to preserve the issues presented on appeal, but we have concluded the motion was sufficient, especially in view of Supreme Court Rule 79.03, V.A.M.R.
Plaintiff Vernon P. Hathaway, Jr., a used car dealer doing business as Graham Motor Mart since 1963, sold and assigned chattel mortgages and notes to the Defendant, First National Bank of Wellston, and endorsed notes 'with recourse'. He also borrowed money from this bank on a 'floor plan'. A few days prior to December 30, 1965, the bank and Hathaway discussed the fact that cars were missing from the 'floor plan' inventory. In this respect, the bank, according to testimony of its president, Melvin H. Klingler, made a $40,000.00 charge-off to allow Hathaway to continue in business. Hathaway testified the shortage in cars was uncovered in a February, 1966 inventory, although he also testified he and Klingler had a conversation and that Klingler wanted to 'reduce those cars for tax reasons' before the end of the year (presumably, 1965). Klingler also testified he told Hathaway on or about December 26, 1965, there was approximately $10,000.00 worth of cars missing.
In need of current operating funds on December 30, 1965, Plaintiff Hathaway and his wife executed a $5,000.00 note payable to the defendant bank on demand and pledged to the bank two assigned life insurance policies and a second deed of trust on the Plaintiffs' home dated December 30, 1965, which secured a ten-thousand-dollar promissory note executed by the Plaintiffs on December 30, 1965. The $10,000.00 note was due June 30, 1966, and was made payable to Martha E. Helmkamp, an employee of the defendant bank. James R. Bernhoester, also an employee of defendant bank, was party of the second part and Helmkamp was party of the third part in the aforementioned deed of trust. Helmkamp endorsed the $10,000.00 note to defendant bank and it was held by the bank in its collateral file. The $10,000.00 note was described in the deed of trust, and, further, said deed stated Plaintiffs being justly indebted to party of third part for borrowed money in the principal sum of $10,000.00 secured said sum with the $10,000.00 promissory note and with the deed of trust. On December 30, 1965, the bank credited Plaintiffs' checking account with $2,300.00 and also issued a cashier's check in the sum of $2,700.00 payable to the Graham Motor Mart, which was deposited to that account on January 11, 1966.
On January 10, 1966, Plaintiffs executed a note payable to the defendant bank on demand in the sum of $2,000.00 and the same collateral, to-wit, the $10,000.00 promissory note and the deed of trust, was pledged as security for payment of this note. On January 11, 1966, the bank credited the Plaintiffs' checking account with $2,000.00 which was deposited along with the aforesaid cashier's check of $2,700.00.
The defendant bank's loan ledger for Plaintiffs' account shows credit to their account of $5,000.00 on December 30, 1965, being the $2,300.00 deposit and the cashier's check issued to Hathaway for $2,700.00 and a credit on January 11, 1966, of $2,000.00, making a total of $7,000.00, which Plaintiffs received for the $5,000.00 note and the $2,000.00 note executed when the Plaintiffs pledged the two life insurance policies and the second deed of trust and the $10,000.00 note it secured.
By the terms of the $5,000.00 note dated December 30, 1965, the Plaintiffs, as collateral security, pledged 'assigned life insurance policies, $10,000.00 D/T' and also warranted ownership of same. The $2,000.00 note dated January 10, 1966, with respect to collateral security recited 'see collateral with other note'.
On July 21, 1966, defendant bank, after the five-thousand-dollar and the two-thousand-dollar notes became due and after written demand for payment and none being received sent the insurance policies to the insurance company for redemption, received checks for $255.32 and $2,676.07 which were credited against the $5,000.00 note, reducing it to $2,068.61 and leaving the $2,000.00 note past due and unpaid. The pledged second deed of trust was subject to a first deed of trust, the latter having a principal balance due of approximately $17,500.00 held by the Community Federal Savings and Loan Association, which association started foreclosure because the note it secured was in default. The defendant bank took over the second deed of trust and $10,000.00 note and started foreclosure proceedings which proceedings were enjoined by the trial court. The foreclosure on the first deed of trust was commenced after defendant bank started foreclosure on the second deed of trust, and to protect its interest, the defendant bank purchased from Community Federal Savings and Loan Association the first deed of trust, which the bank now owns.
There is a conflict in testimony with respect to circumstances leading up to the Plaintiffs signing the $10,000.00 note and second deed of trust. Plaintiff Hathaway admits he received money as credit to his account in the amount of $4,700.00 and denies ever having seen the cashier's check deposited by defendant bank in the Graham Motor Mart account. Hathaway testified he was to receive from defendant bank $5,000.00 in cash and the defendant bank was to retain $5,000.00 to place in his account at his request. He also testified Klingler told him the defendant bank would give him ten thousand dollars on his house and twenty-three hundred dollars on his insurance policies. Klingler, for defendant bank, testified the bank loaned Plaintiff Hathaway on December 30, 1965, the sum of $5,000.00 to stay in business and the bank would loan him this sum on the collateral; that the balance of the collateral would be used to repay any loss the bank might sustain in the event Hathaway was not successful in carrying on his business. Klingler testified in a discussion with Hathaway on or about December 26 or 27, 1965, the bank charged off $40,000.00 on cars missing from inventory and demanded Hathaway put up additional collateral and it was agreed between the bank and Hathaway that Hathaway would put up the second deed of trust and insurance policies as collateral.
Appellants urge that the trial court erred in finding no consideration for the $10,000.00...
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Gibson v. Harl
...as the debt that the pledge secures remains unpaid, unless changed by subsequent contract or conduct of the parties. Hathaway v. Helmkamp, 427 S.W.2d 455, 460 (Mo.1968). The trial court did not consider, nor do we determine, whether the conduct of the Bank as to the debt that the pledge was......