Hornsby v. Knorpp
| Decision Date | 07 June 1921 |
| Citation | 232 S.W. 776,207 Mo.App. 302 |
| Parties | J. L. HORNSBY and ROBERT L. MUNROE, Administrators of the Estate of OTIS M. MUNROE, Deceased, Respondents, v. EMMA KNORPP ET AL., Appellants |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of the City of St. Louis.--Hon. J Hugo Grimm, Judge.
AFFIRMED.
Judgment affirmed.
Wilfley McIntyre, Hensley & Nelson, Wendell Berry and Clyde Williams for defendants.
(1) Under the collateral agreement attached to the notes given by O. M. Munroe to the Broadway Bank, the defendants, as the successors and assigns of the Broadway Bank, had a perfect right to apply the proceeds, in excess of the amount due on said notes upon the other indebtedness of O. M. Munroe to said defendants. 31 Cyc, pages 822, 848-9; Belden v Perkins, 78 Ill. 449; Jarvis v. Rogers, 15 Mass. 389; Goss v. Emerson, 28 N.H. 38; Elliott on Contracts, par. 3045; Jones on Collateral Securities, sec. 605; Cross v. Brown, 33 A. 371; 7 Words & Phrases, page 6748. (2) Upon the theory of this case as set up in plaintiff's petition, it was necessary for him to tender the amount due on the two $ 5,000 notes before he could ask for the collateral deposited with said notes under the collateral pledge attached to same. There was no valid tender of payment by plaintiff to defendants for the following reasons: (a) The so-called tender consisted of "chips and whetstones," including certain notes signed by Wm. Knorpp, in which the other defendants were in no way interested. Schaaf v. Fries, 90 Mo.App. 111; Talty v. Friedman's Savings & Trust Co., 93 U.S. 321; Landis v. Saxton, 89 Mo. 375. (b) Included in the so-called tender was a note of W. E. Crow to Wm. Knorpp for $ 333, which had long since been paid, without which note and about ten years interest thereon, the amount was wholly inadequate. Deweiler v. Breckenkamp, 83 Mo. 45; Smith v. Pilcher, 130 Ga. 350; 38 Cyc, page 136. (c) The tender was not kept up or continued, but was practically withdrawn, and for that reason, under the law could avail plaintiff nothing. Sanders v. Mosbarger, 159 Mo.App. 488. (3) Under no construction of the pleadings can plaintiff recover the excess received from sale of collateral above amount due on the notes for the payment of which said collateral was pledged. This is a suit for conversion in which plaintiff seeks to recover the full value of all the collateral pledged on the theory as set forth in the petition that the same was converted by defendants in pledging same with a Kansas City bank. The court found against plaintiff on this theory in refusing plaintiff's declarations of law numbered C and D. Having found against plaintiff on the theory of his petition, it was error for the court to find for him on altogether different cause of action. A party cannot sue on one cause of action and recover upon another. Bank v. Lumber Co., 121 Mo. 324; Reed v. Bott, 100 Mo. 62; Roden v. Helm, 192 Mo. 71; Spindle v. Hyde, 247 Mo. 32.
E. M. Grossman for respondents.
(1) Appellants (defendants below) were guilty of conversion in the following respects: (1) The refusal and rejection of administrator's tender constituted conversion, such rejection having been made on grounds other than insufficiency in amount. 38 Cyc. 134 and cases there cited. (2) The sale of this said collateral in Saint Louis instead of in Jefferson County constituted a conversion. (3) The length of time of publication of notice of sale was insufficient and that fact constituted conversion. (4) The collateral advertised for sale was not described with full particularity and certainty and fullness. (5) The notice of sale fails to describe separately the property securing each of the notes. Laclede National Bank v. Richardson, 156 Mo. 280; Perry on Trusts (4 Ed.), sec. 602. (6) The collateral was sold, as appears from the notice of sale, for the payment of debts other than the two five thousand dollar notes to secure which it had been given. 31 Cyc. 823, note 88. (7) The appellants, though holders of the two five-thousand-dollar notes, undertook to sell the collateral given to secure those notes, though they were not then the owners of the collateral, having wrongfully transferred and rehypothecated the collateral separate and apart from the notes secured by it. Richardson v. Ashby, 132 Mo. 238; Schaaf v. Fries, 90 Mo.App. 111; 31 Cyc. 836. (2) Respondent was entitled to recovery only the excess value of the collateral over and above the amount due on the debt for which the collateral was pledged. A suit in conversion is the proper remedy and the trial court had the right to set off against the claim the unpaid balance due on the two five-thousand-dollar notes. 31 Cyc. 845-847; 23 Cyc. 799; McGrew v. Railroad Company, 87 Mo.App. 250; Grinnell v. Emerson, 80 Mo.App. 322; President v. Harris, 26 A. 523; Hathaway v. Fall River National Bank, 131 Mass. 14. (3) Neither under the provisions of the collateral agreement nor under the law have appellants the right, as against the administrator of an insolvent estate, to apply the excess proceeds from the sale of the collateral pledged with secured notes to the payment of unsecured demands against deceased's estate. Gillet v. Bank of America, 160 N.Y. 549, 55 N.E. 292; Hathaway v. Fall River Bank, 131 Mass. 14; Loyd v. Lynchburg National Bank, 86 Va. 690; R. S. 1909, sec. 1868.
Daues, J., not sitting.
This is an action brought by the administrators of the estate of Otis M. Munroe, to recover for the alleged conversion by defendants of certain collateral pledged by Munroe to secure the payment of two promissory notes in the sum of $ 5000 each.
The petition, after alleging the death of Otis M. Munroe on April 9, 1915, and the appointment and qualification of plaintiffs as administrators of his estate, avers that at the time of Munroe's death he was indebted to the Broadway Bank of St. Louis in the sum of $ 10,000 upon two promissory notes, each for the sum of $ 5000, one dated February 5, 1915, due sixty days after date, and the other of date May 19, 1913, due on demand; that to secure the payment of the note of date February 5, 1915, Munroe had pledged to the bank, as collateral, nine notes of third persons payable to him, described in the petition, and a certain special tax bill, said collateral being in all of the face value of $ 7966.65; and that to secure the payment of the other note for $ 5000, Munroe pledged as collateral thirteen bonds, described in the petition, of $ 500 each, the total being of the face value of $ 6500. It is alleged that after the death of Munroe, to-wit, on April 12, 1915, the bank assigned both of the notes for $ 5000 each, together with the collateral securing the same, to the defendants, who, in the transaction, were all represented by defendant Wm. J. Knorpp; that on August 7, 1915, plaintiffs made a good and lawful tender to defendant Wm. J. Knorpp of the full amount due on the two notes of $ 5000 each, and demanded the surrender to them of said notes and all of said collateral, but that the tender was refused on the ground that said defendant held the collateral as security not only for the payment of the two notes of $ 5000 each, but for the payment also of certain indebtedness by Munroe to defendants herein. And it is alleged that on or about August 21, 1915, plaintiffs demanded that defendants collect such of the notes held by them as collateral as were then due, and that the collateral be not sold; but that defendants refused to surrender the collateral and refused to collect said notes that were due and apply the proceeds to the payment of the principal debt.
The petition then alleges that "notwithstanding said tender and said notice, and against the wishes and over the protest of plaintiffs, and without any lawful right, and without having given fair and legal public notice, and in violation of the written agreement under which said collateral security was pledged by said Otis M. Munroe, defendant proceeded to see all of said collateral and did, on October 29, 1915, sell all of said collateral at public auction, at the east front door of the court house in the City of St. Louis, Missouri, at which sale all of said collateral was purchased by defendant William J. Knorpp for and as the agent of the defendants herein; that at said sale and before said collateral was sold plaintiffs protested and gave public notice that they would on behalf of the estate of Otis M. Munroe, deceased, hold the parties making said sale responsible for any loss which said estate might suffer by reason thereof."
It is alleged that the sale of said collateral was void and without authority in law for a number of reasons, of which we need notice only the following:
"(1) That tender was made by plaintiffs to William J. Knorpp of the full amount of the debt secured by said pledged property before the sale of said pledged property was made by defendant;
. . . .
"(4) That under the written agreement pledging said property as security for the payment of said two $ 5,000 notes, said collateral could not be held or sold for the payment of any debt save the two $ 5,000 notes hereinabove mentioned."
Averring that defendants "wrongfully, without authority at law, and in violation of their duty as pledgees, have converted said property held as collateral for the payment of said two $ 5000 notes to the damage of these plaintiffs in the sum of $ 14,466.65, the value of said property so held as collateral," judgment is prayed for said sum.
The answer contains first a general denial. It is then alleged that the two notes executed by Munroe, for $ 5000 each, were secured by the collateral described in the petition under a certain collateral agreement which provided,...
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