Johnson v. Baker

• Decision Date: 16 December 1932
• Citation: 246 Ky. 604,55 S.W.2d 404
• Parties: JOHNSON v. BAKER et al.
• Court: Kentucky Court of Appeals

55 S.W.2d 404

246 Ky. 604

JOHNSON v. BAKER et al.

Court of Appeals of Kentucky

December 16, 1932

Appeal from Circuit Court, Perry County.

Suit by Barney W. Baker and another against Kate F. Johnson. From a judgment for plaintiffs, defendant appeals.

Affirmed.

Faulkner & Faulkner, of Hazard, and Stephen D. Jones and Reginald B Williams, both of New York City, for appellant.

Jesse Morgan and J. W. Craft, both of Hazard, and C. C. Turner, of Frankfort, for appellee.

WILLIS J.

Barney W. Baker and T. D. Draughn sued Mrs. Kate F. Johnson to recover upon the following contract:

"This agreement made and entered into this the 13th day of April 1928, by and between B. W. Baker and T. D. Draughn, as parties of the first part and Kate F. Johnson, party of the second part, witnesseth:

Whereas on the 11th day of November, 1924, one Billie Baker, together with his wife, Nancy Ann Baker, signed, executed and delivered unto T. D. Draughn, one of the parties of the first part hereto, their promissory note whereby they agreed and promised to pay to the said Draughn and to the Hazard Plumbing & Supply Company, of which the said Draughn is the sole owner and proprietor the sum of $3,000, together with interest thereon at the rate of 6 per cent per annum from the date thereof until paid, and simultaneously with the execution of said note, and in order to secure the payment thereof, signed, acknowledged, executed and delivered to the said T. D. Draughn and Hazard Plumbing & Supply Company their mortgage upon what is known as the 'Billie Baker Building' on the corner of Court and High Streets in the City of Hazard, Perry County, Kentucky, which said property is specifically described in said mortgage, and in the petition and action of T. D. Draughn &c v. Billie Baker, &c now pending in the Perry Circuit Court, to which reference is here made for a more particular description of the property mentioned and referred to, and Whereas on the 19th day of February, 1925, B. W. Baker, one of the parties of the first part hereto, executed as surety for the said Billie Baker and Nancy Baker, his wife, a note in the sum of $5,000, to the First National Bank of Hazard, Kentucky to secure the payment of which the said Billie Baker and Nancy Ann Baker executed and delivered to the said B. W. Baker for the purpose of indemnifying him by reason of having signed said note as surety, their mortgage on the property hereinabove mentioned, which said mortgage is duly of record in Mortgage Book II, page 583, Perry County Court Clerk's Office, and

Whereas, in the aforesaid action of T. D. Draughn, &c v. Billie Baker, &c pending in the Perry Circuit Court, an order of sale was entered, and in pursuance thereto, Lena Roberts Lovelace, on the 9th day of April, 1928, exposed said property, above mentioned, for sale to the highest and best bidder in conformity to said order of sale, and at said sale the parties of the first part hereto became the purchasers of said property at the sum of $61,000, and said property was knocked off to them by said Commissioner of said sum.

Now the premises considered and for the further consideration of the party of the second part assuming and agreeing to pay to the parties of the first part the respective sums hereinabove named, together with the interest thereon, in event said property is not redeemed by the owner thereof, the said Billie Baker and wife, within twelve months following April 9, 1928, as hereinafter more fully set out, said parties of the first part hereby transfer, set over and assign unto the party of the second part their aforesaid bid of $61,000.00 on said property, and likewise set over, transfer and assign unto the party of the second part the respective mortgages, and the liens against said property secured by said mortgages above mentioned.

It is distinctly stipulated, understood and agreed by and between the parties hereto, that in event the said Billie Baker and Nancy Ann Baker, or either of them redeem said property, they having such equity of redemption because of the fact that the bid as aforesaid is less than two-thirds of the appraised value of said property, and by such redemption pay the said $61,000 together with 10 per cent interest provided by law, then and in that event the assignment herein made and provided for, shall be null and void and of no force and effect, and the said B. W. Baker, and the said T. D. Draughn shall participate in the moneys representing such redemption, in accordance with the priorities of their respective mortgages as shown by the pleading and record in the above mentioned action of T. D. Draughn &c v. Billie Baker &c, but if the said Billie Baker fails or refuses to redeem said property within the time allowed by law, then the party of the second part shall pay the amount of the aforesaid bid represented by way of sale bond of date April 9, 1928, and the interest thereon, and thereupon pay to the said B. W. Baker said $5,000 and interest, and to the said T. D. Draughn said $3,000 and interest."

Defense was interposed upon the grounds that the contract was entered into under a mutual mistake, that the obligation was conditional on the present possession of the property, and that a failure of the consideration subsequently resulted. The circuit court rendered judgment in favor of the plaintiffs, and Mrs. Johnson has prosecuted an appeal.

Some additional facts should be stated. Billie Baker owned the property involved in the equity proceeding in which the judicial sale was decreed. The Louisville Title Company had a first mortgage against the property amounting to about $57,000. The Hazard Lumber & Supply Company had a second mortgage for $6,000. T. D. Draughn had a third mortgage for $3,000. Barney W. Baker had a fourth mortgage for $5,000. Several other claims were asserted. The court, on motion, had placed the property in the hands of its receiver to conserve the property and to collect the rents. In this condition of things, on March 2, 1928, a sale of the property was ordered. The judgment contained this provision:

"The said purchaser of said property upon the execution of the bonds hereinbefore described, shall be entitled to take immediate possession of said property, and the receiver, J. T. Bowling, heretofore appointed upon the execution of said bonds is hereby discharged, and the purchaser may take immediate possession of said property as though he has paid the purchase price therefor, and the purchaser upon demand may have a writ of possession executed to him for the complete and full possession of all of said property and the improvements thereon.

All of the liens and claims and demands of the parties to this action not being yet fully developed this cause is now continued for the purpose of a final decree and judgment on each of the demands in this record asserted, and for final determination of the priority of said claims asserted in the pleadings in this case."

Billie Baker was living in an apartment in the building with his family, and by a subsequent order he was permitted to retain possession of this apartment. The sale was made on April 9. Barney W. Baker and T. D. Draughn were the purchasers, but the bid was made and accepted by the commissioner in the name of Barney W. Baker. Baker and Draughn on that day signed the sale bonds and gave them to the master commissioner. But before she had filed her report a question was raised as to the surety on the bond, and she asked for additional surety before she made her report. She testified that Billie Baker and Roy Helm, who was attorney for the first mortgagee, objected to the sufficiency of the bond. The proof for the defendant shows that, while things were in this condition, J. L. Johnson, the husband of Mrs. Kate Johnson, who was a friend of Baker and Draughn, proposed that his wife would sign the sale bonds as surety, but the officer declined to take her because she was a married woman. The defendant Baker testified that none of this occurred. But, however this may be, the fact is that on April 13 Baker's bid was assigned to Mrs. Johnson pursuant to the contract of that date. Some of the parties concerned took the precaution to have a lawyer examine the record and verify the fact that the judgment provided that the purchaser should be entitled to the possession from the execution of the sale bonds. The lawyer so reported, and the contract was then made. Baker testified that...