Hellweg v. Bush

• Decision Date: 24 August 1934
• Citation: 74 S.W.2d 89,228 Mo.App. 876
• Parties: C. F. HELLWEG, APPELLANT, v. HARRY BUSH ET AL. and THE STATE LIFE INSURANCE COMPANY (INTERVENOR)
• Court: Missouri Court of Appeals

74 S.W.2d 89

228 Mo.App. 876

C. F. HELLWEG, APPELLANT, v. HARRY BUSH ET AL. and THE STATE LIFE INSURANCE COMPANY (INTERVENOR)

Court of Appeals of Missouri, Springfield

August 24, 1934

Appeal from Stone County Circuit Court.--Hon. Robert L. Gideon Judge.

REVERSED AND REMANDED (with directions).

McNatt & McPherson and Herman Pufahl for appellant.

J. S Davis and Royle Ellis for Harry and Alta Bush, respondents.

George H. Bachelor and James E. Sater for The State Life Insurance Company, respondent.

BAILEY J. Allen, P. J., and Smith, J., concur.

OPINION

BAILEY, J.

This action was instituted in the Circuit Court of Barry County to cancel the record of a certain marginal release of a deed of trust held by plaintiff upon the lands of defendants Harry Bush and Alta Bush. The State Life Insurance Company, as the holder of a subsequent deed of trust upon the same lands, was permitted by the court to intervene and be made party defendant. The cause was sent on a change of venue to the Circuit Court of Stone County, where the case was tried before the court and resulted in a decree dismissing plaintiff's bill and cancelling plaintiff's said deed of trust as well as a prior deed of trust, and adjudging the deed of trust held by The State Life Insurance Company to be a valid and subsisting first lien against said lands owned by defendant Harry Bush and Alta Bush. Plaintiff has appealed.

This is a suit in equity and will be tried in this court de novo upon the record. It appears that defendants Harry Bush and Alta Bush, his wife, were the owners of a certain eighty acres of land in Barry County, Missouri, and on the 5th day of July, 1924, made and executed a deed of trust on said land securing to one John E. Groh their one promissory note in the sum of $ 1400, due July 5, 1929, and hereinafter referred to as the "Groh Mortgage." This deed of trust was recorded in the office of the recorder of deeds of Barry County, July 18, 1924. Thereafter, on June 9, 1928, defendants Bush executed to the Emery Hill Investment Company their promissory note for $ 1800, and secured same by a deed of trust on said land of even date therewith, and recorded same in said County of Barry June 23, 1928. This note was afterward purchased for full value by Sophia Hellweg and later assigned by her to plaintiff C. F. Hellweg and will hereinafter be referred to as the "Hellweg Mortgage." This Hellweg mortgage purported to be a first lien against the property, although the Groh mortgage had not been released at the time Sophia Hellweg purchased the $ 1800 note. The circumstances under which the Hellwegs acquired their note and mortgage are substantially as follows: A corporation known as The Emery Hill Investment Company, managed and dominated by its president, Emery Hill, was located at Stotts City, Missouri, and was engaged in the business of making farm loans and selling them to investors. Plaintiff O. F. Hellweg, in behalf of himself and his mother Sophia Hellweg, had purchased several loans from said company at various times prior to the purchase of the Hellweg mortgage herein, and at the time of the latter purchase, owned the secured note of one Hugo Schmelling, in the amount of $ 2000. On the 31st of October, 1928, Emery Hill wrote C. F. Hellweg, then living at Blackwell, Oklahoma, informing him that the Schmelling note would not be renewed and submitting to him the proposition of re-investing in a "corking good loan" of Harry Bush, which was for $ 1800 and enclosing the loan papers and a check for the difference between that loan and the Schmelling loan. No abstract of title was furnished at the time, but C. F. Hellweg, on behalf of Sophia Hellweg, accepted the loan without any further investigation, and the note was assigned to Sophia Hellweg. This Hellweg loan, according to defendant Bush, was given to take up the Groh loan; however, this was not done and the Groh loan remained a first lien upon the land at the time plaintiff purchased the $ 1800 note. Thereafter the interest on the Hellweg mortgage was paid regularly through The Emery Hill Investment Company, to July 1, 1931, but no further payments either of principal or interest were made after that time. These two deeds of trust remained subsisting liens against the land until in August, 1929, and during all that time both plaintiff and defendants Bush were in ignorance of the fact that the Groh mortgage was unreleased. Sometime in July, 1929, or before, Emery Hill falsely stated to Harry Bush that the $ 1800 note and deed of trust held by Sophia Hellweg had been lost or destroyed. The Bushes did not know this note had been assigned to the Hellwegs but evidently supposed it to be owned by Emery Hill. After these representations had been made, Emery Hill, on July 26, 1929, made a statutory affidavit to the effect that he was the assignee of the Hellweg note and that the note had been paid and delivered to the makers thereof, and on the same day the defendant Bush, relying on said representations, made a statutory affidavit that said note had been lost or destroyed and could not therefore be produced and that it was not in the possession of any person having a lawful claim to same. At about the same time, and as a part of the same transaction, the Bushes made and executed to the Emery Hill Investment Company, their seven promissory notes aggregating $ 1600 which notes were secured by what purported to be a first trust deed on their said lands. On the same date defendants Bush executed their promissory note for $ 200 to the Emery Hill Investment Company, due in one year and secured by what purported to be a second deed of trust on said land. These notes, aggregating $ 1800, were given in lieu of the $ 1800 Hellweg mortgage which the Bush defendants apparently believed to have been lost or destroyed, and they thereafter paid no interest on the Hellweg mortgage. On August 9, 1929, based on the affidavits above referred to, the release of the Hellweg mortgage was effected and on the same day, P. J. Hill, as assignee of the beneficiary, executed a marginal release of the Groh mortgage, the original first mortgage, in words and figures as follows: "'I hereby certify that the within described note was produced, fully assigned and I marked it cancelled on the face.'

"Witness my hand and seal this 9th day of August, 1929. Calvin E. Henderson, Recorder of Deeds.

"Beneath the foregoing release and certificate of the recorder appears the following: 'As to loss of notes, see affidavits hereto attached. Attest, Calvin E. Henderson, Recorder of Deeds.'"

The recorder testified that there were no affidavits attached to the record of the deed of trust and that there had been none since he had been in office; that the pages did not indicate that there had ever been any affidavits attached thereto; that the writing referring to the affidavits was not as clear as the other words appearing on the margin of the record relative to the release and that from the dimness of it there might have been an attempt to erase it. These releases were made, apparently, to clear the way for the $ 1600 mortgage which at that time had been executed and was in the hands of the Emery Hill Investment Company. The latter company submitted the $ 1600 mortgage for sale to the defendant, The State Life Insurance Company. After the abstract of title had been examined by the Insurance Company's attorneys and an opinion had been rendered to the effect that the $ 1600 mortgage was a valid and subsisting first lien against the lands, the Insurance Company approved the purchase of the $ 1600 mortgage, took a written assignment thereof, dated August 6, 1929, and filed same for record September 10, 1929, after remitting the required amount in payment of the loan, about September 6, 1929.

It further appears that neither plaintiff nor his mother had any knowledge that there had been an attempt to release the Hellweg mortgage until the latter part of December, 1931, or the first part of January, 1932, at which time plaintiff heard rumors of irregularities with regard to the Hill Investment Company's loans. On January 5, 1932, plaintiff went to Cassville in Barry County and upon investigation learned of said attempted release. After acquiring such knowledge he returned to...