Jackson v. Klein, 46565

CourtUnited States State Supreme Court of Missouri
Writing for the CourtPER CURIAM
Citation320 S.W.2d 553
PartiesCleona JACKSON, Plaintiff-Respondent, v. Estella KLEIN and Estella Klein, Trustee for Bernice Veanes, Bernice Veanes, Leroy Robinson and Mamie Robinson, Defendants-Appellants
Docket NumberNo. 46565,No. 2,46565,2
Decision Date12 January 1959

Ziercher, Tzinberg, Human & Michenfelder, Herbert W. Ziercher, F. William Human, Jr., Clayton, for appellants.

N. Murry Edwards, Ninian M. Edwards, St. Louis, for respondent.

BARRETT, Commissioner.

This is a suit to set aside a trustee's deed, a contemporaneously executed quitclaim deed, and a subsequent warranty deed to property in Kinloch, lots 52 and 53, block 30 of South Kinloch Park 4th Subdivision. Originally the two lots, on which there is a concrete block house, belonged to Lillian J. Smith. On March 23, 1948, Lillian executed a deed of trust on the property to secure a note in the sum of $600, payable in 44 monthly installments of $15 a month for forty-three months and $12.78 for the last month, together with interest at 5% annually on the unpaid balance. In the deed of trust Estella Klein was the trustee and Bernice Veanes was the mortgagee. In 1950 the deed of trust was foreclosed by Estella Klein, the trustee, and a trustee's deed executed conveying the property to Bernice Veanes upon a recited bid of $494.86. On the same date, March 4, 1950, Bernice, by quitclaim deed, transferred the property to Estella Klein and the two instruments were recorded on the same day by a title company. On April 1, 1952, through a real estate agency, Mamie and Leroy Robinson purchased the property from Miss Klein for the sum of $2,500 and executed a deed of trust to secure $2,050 of the purchase price. This suit to set aside these transfers was instituted on September 24, 1952. The defendants are Miss Klein, Bernice Veanes and the Robinsons. The plaintiff is Cleona Jackson who when the suit was instituted was a minor, then twenty years of age. During the pendency of the suit Cleona attained his majority and prosecuted the suit in his own name and right; he was twenty-four when the case was tried. Cleona is Lillian Smith's son and upon her death, August 26, 1948, was her sole heir and by reason of that fact is the plaintiff in this suit and entitled to whatever right or interest she may have had in the property at the time of the foreclosure. The property was inventoried as an asset in her estate and it is by reason of his being her sole heir that Cleona now claims to be the rightful owner of the property in fee simple, subject to the original deed of trust executed by Lillian.

It is obvious from this meager outline of the facts that Estella Klein, the trustee in the deed of trust, became the purchaser of the property consequent to the foreclosure sale. In his petition the plaintiff alleged, as was the fact, that Bernice Veanes in buying the property at the foreclosure sale and in subsequently transferring it by quitclaim deed was the agent of and acted for Miss Klein and paid no consideration for the trustee's deed and received none for her quitclaim deed. As to Miss Klein it was and is the plaintiff's theory, she being the trustee in the deed of trust, that the foreclosure of the deed of trust, the trustee's deed, and the quitclaim deed to her were invalid. As to the Robinsons it was and is the plaintiff's theory that they were charged with constructive notice of these facts and of the fact that a transfer of the property for a recited inadequate consideration of $494.86, the property being of the alleged value of $3,000, they, therefore, were not bona fide purchasers without notice and their title to the property was likewise subject to being divested in favor of the plaintiff. The trial court found for the plaintiff, found that the trustee's deed was voidable, that the Robinsons were charged with notice of the contents of the trustee's deed and of the quitclaim deed from Bernice Veanes to Miss Klein, all on the same day, that had they inquired they would have learned these facts and therefore that they were not bona fide purchasers without notice. Accordingly the trial court set aside these three transfers, the trustee's deed, the quitclaim deed and Miss Klein's warranty deed to the Robinsons, and decreed the plaintiff, Cleona Jackson, to be the fee simple owner of the property subject to the balance due, with interest, on his mother's original note. This latter sum was $433 due on the principal, and the court added 6% interest from March 4, 1950, to June 15, 1957, $277.86, a total due Miss Klein from the plaintiff $710.86. To this sum the court added $75.60 Miss Klein had paid in taxes, and for the sums due on the note and the taxes the court declared that to be a lien on the property. The court awarded the plaintiff, Cleona, a judgment against the Robinsons for $1,529.50, the sum the court found due for the rents and profits from August 29, 1953, to June 15, 1957, the latter date being the date of the judgment. Against this, however, the court allowed the Robinsons judgment against Cleona for 'improvements made by said defendants in good faith' $708.05 and $297.76 for sums paid out for taxes and insurance, a total of $1,005.81. The appellant Robinsons contend that, at most, the trustee's sale was voidable, not void, that they were bona fide purchasers for value without notice of the plaintiff's right to redeem and, therefore, the court erred in setting aside the transfer to them and in ordering them to deliver possession of the property to the plaintiff and in entering judgment against them for the rental of the property. The court's decree and judgment is based upon plaintiff's basic theory that, Miss Klein being the purchaser at her own trustee's sale, the transfers were voidable and the Robinsons, being charged with notice of the facts, were not bona fide purchasers. It is to these points that the parties have briefed and argued the case here and, it might be added, if this meager outline comprised all the facts and circumstances no fault could be found with the plaintiff's position or with the court's decree, perhaps. But upon this record this bare outline of the facts and the briefs of the parties as to these particular matters only bring one to the crux of a very complex and difficult problem.

Unquestionably a trustee in a deed of trust may not, either directly or indirectly, without the consent of the person owning the beneficial interest, purchase the property at his own foreclosure sale. And if he does in fact become the purchaser he takes the chance that in some circumstances the transfer may be set aside even though made in good faith. Smith v. Haley, Mo., 314 S.W.2d 909. But in that case, it should be noted, the trustee had no personal interest in either the property or the debt, his only interest or duty in connection with the transaction was his capacity as trustee. Furthermore he was aware of the debtors' rights and relationship to the mortgagee, the father of one of the mortgagors, but made no inquiry of them and they in fact had no notice of the sale. Note also that the action to set aside the conveyances was timely filed and it was instituted directly against the trustee-purchaser who then held the legal title. The relief granted, however, 'varies according to circumstances' (Thornton v. Irwin, 43 Mo. 153, 167); a purchase by the trustee is voidable, not void (3 Jones, Mortgages, Sec. 2422, p. 952), it may be affirmed or ratified by the acquiescence of the beneficial owner and the trustee may convey the property to a bona fide purchaser without notice. Holman v. Ryon, 61 App.D.C. 10, 56 F.2d 307. This court has not set aside every purchase by a trustee for that reason alone and regardless of the attending circumstances. Jodd v. Lee, 256 Mo. 536, 165 S.W. 991; Boehlert v. McBride, 48 Mo. 505. This is not to minimize the hazards of a trustee's becoming the purchaser at his own foreclosure sale, even Miss Klein now concedes that it is 'imprudent,' but it does point up in some degree the knowledge a subsequent purchaser may necessarily have from constructive notice.

Purchasers of property, here the Robinsons, are charged with constructive notice of everything contained or recited in the recorded deeds comprising their chain of title. V.A.M.S. Sec. 442.390; Mahen v. Tavern Rock, 327 Mo. 391, 396, 37 S.W.2d 562, 564. It has been held, for example, that a subsequent purchaser through a conveyance comparable to a quitclaim deed was charged with notice of the fact, even though an appeal had been dismissed, that the case might nevertheless be subsequently reviewed on writ of error thus denying to him the right and status of a bona fide purchaser without notice. McAboy v. Packer, 353 Mo. 1219, 187 S.W.2d 207. Subsequent purchasers are also charged with notice that a default judgment for taxes might be attacked and set aside within three years. Johnson v. Stull, Mo., 303 S.W.2d 110, 118. These two illustrative cases put upon inquiry and impute considerable diligence and knowledge to 'a reasonably prudent person,' not to mention exceedingly prudent lawyers. And the obiter dictum in Johnson v. Stull to the contrary notwithstanding, the fact that purchasers, as here the Robinsons, receive a warranty deed rather than a quitclaim deed is a significant circumstance in considering constructive notice and whether they are bona fide purchasers without notice. Schaeffer v. Moore, Mo., 262 S.W.2d 854; McAboy v. Packer, supra; annotation 162 A.L.R. 556, 560; 16 Am.Jur., Sec. 334, p. 627.

As noted, this property was foreclosed and the trustee's deed and the quitclaim deed were executed on March 4, 1950. More than two years later, in April 1952, the Robinsons purchased the property. The Robinsons had not known Lillian Smith and when they purchased they did not know the plaintiff, Cleona Jackson, and they did not meet Miss Klein until this lawsuit...

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  • Hrovat v. Bingham, 7833
    • United States
    • Court of Appeal of Missouri (US)
    • December 13, 1960
    ...540, 546; Harlin v. Nation, 126 Mo. 97, 27 S.W. 330, 331; Trotter v. Carter, 353 Mo. 708, 183 S.W.2d 898, 902. 24 Jackson v. Klein, Mo., 320 S.W.2d 553; see 42 A.L.R.2d 1088, annotation. 25 Section 524.010 and Section 524.080 RSMo 1949, V.A.M.S.; Towers v. Lusby, Mo.App., 175 S.W.2d 721, 72......
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    ...sale had notice of the defects of the sale. See, e.g., Fountain v. Pateman, 189 Ala. 153, 66 So. 75, 78 (1914); Jackson v. Klein, 320 S.W.2d 553, 556 (Mo.1959); Swindell v. Overton, 310 N.C. 707, 314 S.E.2d 512, 517 (1984); Pender v. Dowse, 1 Utah 2d 283, 265 P.2d 644, 648 (1954); Miebach v......
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    ...V.A.M.S., Secs. 443.410, 443.420; Euclid Terrace Corp. v. Golterman Enterprises, Inc., Mo.App., 327 S.W.2d 542; Jackson v. Klein, Mo., 320 S.W.2d 553; Starr v. Mitchell, 361 Mo. 908, 237 S.W.2d 123. And it should be further noted by way of discrimination that it is not the theory of the par......
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    ...lying within his chain of title, a deed or instrument lying outside his chain of title imparts no notice to him. Jackson v. Klein, 320 S.W.2d 553, 556 (Mo. 1959); Gross v. Watts, 206 Mo. 373, 104 S.W. 30, 32 (1907); Knutson v. Christeson, 684 S.W.2d 549, 551 (Mo.App.1984). Further a purchas......
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