Henry v. Sneed

• Decision Date: 21 December 1889
• Citation: 99 Mo. 407,12 S.W. 663
• Parties: HENRY et ux. v. SNEED et al.
• Court: Missouri Supreme Court

12 S.W. 663

99 Mo. 407

HENRY et ux. v. SNEED et al.

Supreme Court of Missouri.

December 21, 1889.

WITNESS — HUSBAND AND WIFE — NEGOTIABLE INSTRUMENTS — FRAUD — BONA FIDE HOLDERS — ESTOPPEL.

1. In an action to enjoin the enforcement of a deed of trust securing upon the wife's land certain notes given by the husband in a transaction induced by fraud, the husband and wife may testify as to conversations between themselves as to the transaction, as a part of the res gestæ, and also on the ground of fraud.

2. An answer alleging purchase in good faith supplies the omission of such issue in a petition to enjoin sale of securities.

3. It clearly appearing in such case that the notes were tainted with fraud, and the answer having alleged purchase in good faith, the burden is on defendant to show a bona fide transfer before maturity, which is not sustained by evidence from which the date of transfer does not appear except by inference.

4. Knowledge of an agent that "there was some trouble about the trade" in which certain notes were given, charges his principal for whom he purchases such notes with knowledge of the fraud.

5. Where notes of the husband, procured through fraud, are secured by a recorded deed of trust on the wife's land, knowledge by an indorsee that the husband had executed a compromise of his claim of fraud will not make him an innocent purchaser as to the wife.

6. Though the wife on whose land notes of her husband are secured is a surety for him, a compromise by the husband on account of the fraud through which the notes were procured will not estop her from setting up the fraud, especially where there is no evidence as to the nature of her estate in the land.

Appeal from circuit court, Pettis county; J. P. STROTHER, Judge.

Petition by Wilbur F. Henry and E. Josephine Henry, his wife, for an injunction restraining Robert C. Sneed, and one Montgomery, trustee under a deed of trust, from selling thereunder the property of Mrs. Henry. The injunction was granted, and defendants appeal.

John Montgomery, Jr., and Smith, Silver & Brown, for appellants. W. S. Shirk and E. J. Smith, for respondents.

SHERWOOD, J.

Robert C. Sneed, of Sedalia, owned a set of abstract books, worth, according to Money's statement, not over $2,000, for which he was willing to take $4,000, and offered them to H. D. Stringer for that sum, so Stringer says; but Stringer thought of something better than that, and so suggested it to Sneed. Thereupon they laid their heads together, and, by certain covinous contrivances, so managed matters that one Capt. Wilbur F. Henry, the nominal plaintiff here in, and whose powers of deglutition seem to rival those of the great fish off the coast of Tarshish, was induced by false memoranda, in the hands of Sneed, to believe that the abstract books had brought in to Sneed the previous year a revenue of $7,000; and, after considerable apparent efforts on the part of Stringer, Sneed was led, with much pretended reluctance, to fix a price on the books at $10,000, — Stringer in the mean while having so manipulated Henry, and inflamed his imagination as to the great profits to be gained thereby, as to have persuaded him to go in with him and buy the books; the terms stated to Henry being that Stringer would put in $5,000, "spot cash," for one-half interest, and Henry, who was impecunious, and known to be so, was to raise his half of the purchase money by giving five notes, of $1,000 each, having several years to run, and securing the same on the real property of his wife in Sedalia, as well as on his interest in the abstract books. The books were accordingly bought at the sum mentioned, ($10,000;) and "Bed Shobe," who assisted in bringing about the consummation of the affair, and was the notary who took the wife's acknowledgment to the deed of trust, was the partner of Stringer in the real-estate business, and was handsomely paid for his trouble in assisting Sneed and Stringer in their machinations against Henry. When the trade was about to be closed, Stringer left town, but, on going, placed in Shobe's hands a check for $5,000 on the First National Bank of Sedalia, of which Thompson, Sneed's brother-in-law, was cashier. This check was payable to Shobe's order, and he, on the trade being closed, indorsed and delivered it to Sneed, who went through the dumb show of examining the signatures, and then pronounced it "good," and also said that he had been to the bank to see, etc. Stringer had no funds in the bank, and he says in his deposition: "That check business was arranged by me to shut the Capt.'s eyes." Stringer was to get his half interest in the books "for nothing," in consideration of his services in effecting the sale of one-half interest in the books to Henry, or he was to receive $1,000, at his option, and it seems e took the latter. The check was never presented to the bank, nor was it ever intended to be. Sneed knew this, and Thompson knew it. The latter at the time, and for years previously, had been the financial agent of the Salmon Falls Bank, and so continued during the time covered by this litigation. The last four of the five notes executed by Henry, and secured as aforesaid, were transferred by Sneed to Thompson to negotiate; the first one of them being retained by Thompson in order to prevent its being negotiated, and Sneed still owns this note. Thompson transferred the other four notes, so he says, to the Salmon Falls Bank, and paid Sneed $3,700 as the proceeds of such transfer. Without Mrs. Henry's knowledge or consent, Sneed, after the deed of trust was given, released Henry's half interest in the abstract books from that deed. As soon as the $1,000 note which first fell due matured, Montgomery, the trustee, advertised the property for sale, and this proceeding was instituted with the purpose to perpetually enjoin and restrain the trustee and the defendant Sneed from selling Mrs. Henry's property under said deed; that said deed might be set aside and annulled, and all cloud cast by the same on the title be removed, etc. The Salmon Falls Bank, as the petition recites, was "made a party hereto on its own motion, claims to be owner of said notes, and claims some rights under said deed of trust; wherefore it is made a party hereto, that its rights, if any, in the premises may be litigated and determined." The petition did not charge any fraud, nor any notice thereof, on the bank; but in its separate answer the latter set up the purchase of the notes before maturity for full value, and without any notice of the equities alleged by plaintiffs, etc. A short time after Capt. Henry had purchased the one-half interest in the books, and had commenced to do business with them, he observed the smallness of the receipts from them; heard from friends that he had been swindled; began to suspect the honesty of the transaction; and so went around to the bank, and asked Thompson if the check for $5,000, given by Stringer, had ever been presented or paid, but was told by the latter that that was a "bank secret." Growing more dissatisfied, Henry instituted, in his own name and behalf, a proceeding similar to the present one, which, upon representations and assurances of Sneed and Stringer that the transaction was honest, and that the check for $5,000 had actually been paid, he was induced to compromise, and gave a writing to that effect, to Sneed, which the latter, it seems, lost no time in showing to Thompson, who thereupon asked Henry in regard to it, when he told him that the suit had been settled and dismissed, and that he knew no good reason why he should not negotiate the notes; and the notes were thereafter negotiated by Thompson as aforesaid. At this time, however, Henry did not know, though he strongly suspected, that the transaction was not a fair and honest one, — was not apprised, did not have the knowledge, that the "check business" was a mere sham, contrived for the very purpose of deceiving him, and through him his wife, into securing the notes; and Thompson evidently knew that Henry did not know the true character of the check, while he did.

Upon this state of facts, a mere outline of which has been given, the circuit court entered the following decree: "Now, at this time, come again the parties to this action, by themselves and their attorneys, and this cause having been tried, and the evidence heard, as well as the argument of counsel, at the last term of this court, and said cause having been taken under advisement by the court till now, and the court having fully considered the same, it doth now find all the issues herein for the plaintiffs, and doth find that on July 18, 1883, the plaintiff E. Josephine Henry, then and now wife of plaintiff Wilbur F. Henry, owned in her own right, as her general property, one hundred feet off of the north end of the west half of lot one, (1,) in block thirty-seven, (37,) in the original town (now city) of Sedalia, in Pettis county, Missouri; and that on said day the plaintiff Wilbur F. Henry executed to defendant R. C. Sneed his five promissory notes described in the petition, being for one thousand dollars each, and bearing seven per cent. per annum interest, and falling due in one, two, three, four, and five years, respectively from that date; that to secure said notes the plaintiffs executed and delivered to defendant John Montgomery, Jr., their deed of trust, which is recorded in Book 32 of deeds of trust and mortgage records in said county, on page 48, conveying to him the above-described real estate, and certain abstract books, and personal property described in it, — said books and personal property being the consideration of said notes, with power...