Hetzler v. Millard

• Decision Date: 03 July 1941
• Docket Number: 36683
• Citation: 153 S.W.2d 355,348 Mo. 198
• Parties: J. P. Hetzler, W. J. Hetzler and Kirk Hays v. A. A. Millard, R. R. Walter and John A. Epple, Trustees; and Ray T. Dufford and Minnie Dufford, his wife; and Sam T. Bratton and Elizabeth T. Bratton, his wife; and Alice B. Millard, Appellants
• Court: Missouri Supreme Court

153 S.W.2d 355

348 Mo. 198

J. P. Hetzler, W. J. Hetzler and Kirk Hays v. A. A. Millard, R. R. Walter and John A. Epple, Trustees; and Ray T. Dufford and Minnie Dufford, his wife; and Sam T. Bratton and Elizabeth T. Bratton, his wife; and Alice B. Millard, Appellants

No. 36683

Supreme Court of Missouri

July 3, 1941

Appeal from Osage Circuit Court; Hon. Ransom A. Breuer Judge.

Reversed and remanded.

W H. Sapp, Wm. L. Nelson, Jr., Sullivan, Reeder, Finley & Gaines and Ralph T. Finley for appellants.

(1) The fifteen-acre park in controversy having been platted, laid out and made plainly visible on the ground, and lots sold with reference thereto, including an interest in such park prior to November 15, 1923, all to the knowledge of the holders of the trustee and note holders under the pledge agreement of November 15, 1923, the said deed of trust never became a prior lien on said park as against the defendants and their predecessors in title. (a) The rights of the purchasers of lots arose in the park even though no express grant of the park was made by deed, since the park was laid out on the ground and a reasonable convenience for use in connection with the lots, enhancing the selling price of the lots. Greisinger v. Klinhardt, 321 Mo. 186; Gertsley v. Globe Wernecke Co., 340 Ill. 270, 172 N.E. 829; Gray v. Loud & Sons Lbr. Co., 128 Mich 427, 87 N.E. 376; Smith v. Heath, 102 Ill. 130; 18 C. J. 63, 64, 65; 19 C. J. 935, sec. 138; Hawkins v Hendricks, 247 Ill. 517, 93 N.E. 428; Perkins v. Fielding, 119 Mo. 149; Missouri P. & L. Co. v. Thomas, 102 S.W.2d 564; 87 A. L. R. 1520. (b) The note holders under the deed of trust and pledge agreement of November 15, 1923, and their trustee, and all persons claiming under them, from the terms of the pledge agreement, the plan of development, and the plat attached to said pledge agreement, had actual notice of the setting aside of the park for the use of purchasers of lots, or had notice of such facts as put them on inquiry as to the rights of the defendants and their predecessors in title. Marshall v. Hill, 246 Mo. 1; Gross v. Watts, 206 Mo. 373; Sicher v. Rambousek, 193 Mo. 113; Beach v. Lynn, 299 Mo. 127; Caruthersville v. Huffman, 262 Mo. 367; St. Louis v. Koch, 335 Mo. 991; K.C. & Northern Railroad Co. v. Baker, 183 Mo. 312; Bacon v. Onset Bay Grove Assn., 241 Mass. 417, 136 N.E. 813. (2) Under all the evidence, the parties to the deed of trust and pledge agreement of November 15, 1923, and the plaintiffs were parties to the plan of development of the Park Hill additions according to the plat attached to said pledge agreement and used by John A. Stewart in the sale of lots, and the plaintiffs are estopped to claim that the park in controversy is not a permanent, private park for the benefit of the defendants as owners of lots in said additions. Smith v. Heath, 102 Ill. 130; Boone v. Clark, 129 Ill. 466, 21 N.E. 850; Ridley v. Mayer, 230 Ala. 517, 161 So. 526; Gertsley v. Globe Wernecke Co., 340 Ill. 270, 172 N.E. 829; Greisinger v. Klinhardt, 321 Mo. 186; Oney v. West Buena Vista Land Co., 104 Va. 580, 52 S.E. 343; Cihak v. Kleke, 117 Ill. 643, 7 N.E. 111; Bondy v. Samuels, 333 Ill. 535, 165 N.E. 181; 1 Wiltsie on Mortgage Foreclosure (4 Ed.), sec. 207. (3) The plaintiffs are estopped to claim title to the park in controversy because their trustee and the note holders, including the plaintiffs, received and accepted from time to time a part of the purchase price of lots sold, with knowledge that said lots had been sold at an enhanced price on account of agreement by Stewart to sell an interest in the park with each lot. Hector v. Mann, 225 Mo. 228; Austin v. Loring, 63 Mo. 19; Nanson v. Jacob, 93 Mo. 331; Clyburn v. McLaughlin, 106 Mo. 521; Proctor v. Vance, 220 Mo. 104; Milan Bank v. Richmond, 280 Mo. 30; Barnett v. Smart, 158 Mo. 167. (4) It is undisputed that the trustee and note holders under the deed of trust and pledge agreement of November 15, 1923, voluntarily released lots sold by Stewart and collateral representing lots sold, to the value in excess of $ 32,500, all of which was released without consideration, with full knowledge on the part of said trustee and note holders of the rights of parties who had purchased lots in Park Hill additions with an interest in the park, and by reason of said facts the $ 36,000 note and deed of trust were in equity paid in full long before the foreclosure under which the plaintiffs claim. (a) If the park in controversy was subject to the deed of trust of November 15, 1923, then as lots were sold equities arose in the purchasers which made their lots only secondarily liable, and lots thereafter released by the trustee and note holders could not be released without consideration. If so released, as to the lots secondarily liable, then the mortgage debt must be credited with the value of the property released. 41 C. J. 762-763, 769, secs. 842-843, 860; Cohn v. Souders, 175 Mo. 455; Davis v. Priggott, 56 N.J.Eq. 634, 39 A. 698; Beardsley v. Empire Trust Co., 96 N.J.Eq. 212, 124 A. 457; Boone v. Clark, 129 Ill. 466; 1 Wiltsie on Mortgages (4 Ed.), sec. 207; 2 Jones on Mortgages (8 Ed.), sec. 906. (b) Under the pledge agreement and plan of development, whereby payments were required to be made by Stewart upon securing the release of lots sold, the note holders had no right to release any of the security of the deed of trust without consideration. The provision for payment of part of the purchase price was likewise for the benefit of the purchasers of lots. 2 Jones on Mortgages (8 Ed.), sec. 895; Ventnor Realty Co. v. Development Co., 79 N.J.Eq. 103; Smith v. Heath, 102 Ill. 130; Consolidated Development Co. v. Ortega Co., 158 So. 94; Barley v. Inman, 105 Fla. 1; Houtz v. Beeman Inv. Corp., 44 P.2d 660. (5) The silence of the note holders and their trustee and their failure to deny the right of Stewart to sell lots with an interest in the park until long after practically all of the security was depleted constituted a fraud in equity and estops the plaintiffs from claiming said park as against the defendants. Hill v. Epley, 31 Pa. St. 331; Sumner v. Seaton, 19 A. 884; Perry v. Hall, 75 Mo. 503; State ex inf. v. Mo. Utilities Co., 339 Mo. 385. (6) The plaintiffs are not innocent or bona fide purchasers of the park in controversy. (a) The plaintiffs had actual and constructive notice of the equities of the defendants in the park and streets in controversy. Hickman v. Green, 123 Mo. 165; Simpson v. Van Laningham, 267 Mo. 286; Luker v. Moffett, 327 Mo. 929; Drey v. Doyle, 9 Mo. 459; Cooper v. Newell, 263 Mo. 190; Waddington v. Lane, 202 Mo. 387; Musick v. Barney, 49 Mo. 458. (b) The failure of the plaintiffs to take the stand and deny the charges in the defendants' answer and cross bill and to deny the knowledge which the facts and circumstances show they had was, in effect, a confession that they had all the knowledge charged. Cooper v. Newell, 263 Mo. 197; Barber v. Nunn, 275 Mo. 565; Baker v. C. B. & Q. Ry. Co., 327 Mo. 986; Schooler v. Schooler, 258 Mo. 83; Conn. Mut. Life Ins. Co. v. Smith, 117 Mo. 261. (c) The possession and use of the park by the lot owners was in itself sufficient to charge the plaintiffs with notice of the equities of the defendants. Jones v. Nichols, 280 Mo. 653; Martin v. Jones, 72 Mo. 23; Davis v. Wood, 161 Mo. 17; Sanford v. Kern, 223 Mo. 616; Toland v. Corey, 6 Utah, 392, 24 P. 190; Randolph v. Wheeler, 182 Mo. 145. (d) The plaintiffs were not only parties to the pledge agreement of November 15, 1923, and claim under it, but the $ 1000 notes held by them referred to the pledge agreement and by such reference made it a part of the notes, by which on purchase of the notes, the plaintiffs became charged with all the facts contained in the pledge agreement and the plat attached thereto. Neither were the note holders holders of the $ 36,000 note without notice. Reetz v. Pontiac Realty Co., 316 Mo. 1257; Globe Ind. Co. v. Trust Co., 226 Mo.App. 92. (e) Both the trustee's deed under which the plaintiffs claim and the deed from the Boone County Trust Company to the plaintiffs convey only the interest of the trustee and the Boone County Trust Company and are in effect only quitclaim deeds. The deed of trust of November 15, 1923, does not afford the plaintiffs a staff in the nature of a warranty deed, because whatever rights the plaintiffs acquired to such deed of trust was by virtue of the pledge agreement which gave them full knowledge of all the facts as to the plan of development. Ridings v. Hamilton Savs. Bank, 281 Mo. 288; 21 C. J. 1179-1183; Dee v. Nachbar, 207 Mo. 680; Brown v. Patterson, 224 Mo. 639; City of Hardin v. Cunningham, 285 Mo. 457. (7) A sale under a deed of trust where debt is paid is a nullity and the purchaser thereunder acquires no title. Verdon v. Silvara, 308 Mo. 607; Baker v. Halligan, 75 Mo. 435; Wells v. Estes, 154 Mo. 291. (8) The undisputed evidence shows that Stewart, the mortgagor, made the plat of Park Hill, showing the park, more than one year before the date of the deed of trust and pledge agreement of November 15, 1923, and sold lots thereby and established the park as a community park for the benefit of the lots owners; that the purchasers of lots both prior and subsequent to November 15, 1923, have paid for the park in connection with the purchase of their lots, and have been in continuous adverse possession thereof since the first sale of lots 1922, and the court erred in failing to decree title in the defendants on this ground alone. Martin v. Jones, 72 Mo. 23; Davis v. Wood, 161 Mo. 17; Sanford v. Kern, 223 Mo. 616; Allen v. Mansfield, 108 Mo. 343; Ridgeway v. Holliday, 59 Mo. 444; Miller v. Rosenberger, 144 Mo. 292; Parkey v. Veatch, 68 Mo.App. 67; 2 C. J. S. 650-651. (9) The plaintiffs are estopped by...