Judah v. Pitts

• Decision Date: 03 August 1933
• Docket Number: 31104
• Citation: 62 S.W.2d 715,333 Mo. 301
• Parties: William Judah and Liza Judah, His Wife, Appellants, v. Beverly L. Pitts, Henry C. Redman, Martha J. Redman, His Wife; William N. Bartlett and Company, a Corporation; James H. Duncan and Charles H. Bromley
• Court: Missouri Supreme Court

62 S.W.2d 715

333 Mo. 301

William Judah and Liza Judah, His Wife, Appellants, v. Beverly L. Pitts, Henry C. Redman, Martha J. Redman, His Wife; William N. Bartlett and Company, a Corporation; James H. Duncan and Charles H. Bromley

No. 31104

Supreme Court of Missouri

August 3, 1933

Appeal from Buchanan Circuit Court; Hon. Sam Wilcox, Judge.

Affirmed.

Utz & Utz for appellants.

(1) Notice of sale was published in St. Joseph Daily Courier -- publishes legal news, orders of sale, of publications trustee's notice of sale, and the filings of various instruments in the recorder's office. Does not publish general news. R. S. 1929, sec. 3077; Kellogg v Carnico, 47 Mo. 157; Kingman v. Waugh, 139 Mo 360. The above cases hold a paper publishing legal news sufficient under statute. Appellants admit that if two trustees are named in a deed of trust that authorizes either or both to act, that ordinarily either one called upon if disinterested may act. The fact that the one called upon to act was a servant and employee of the corporation that was either owner of the note or acting as agent for the owner in the conduct of the sale, is a circumstance to be taken into consideration, and conduct closely scrutinized. Vannoy v. Duvall Trust Co., 29 S.W.2d 692; 41 C. J. p. 940; Northcutt v. Fine, 44 S.W.2d 125. (2) "Trustees are considered as the agents of both parties -- debtor and creditor -- and their action in performing the duties of their trust should be conducted with the strictest impartiality and integrity." Goode v. Comfort, 39 Mo. 325; Chesley v. Chesley, 49 Mo. 540; Tatum v. Holliday, 59 Mo. 442; Cassady v. Wallace, 102 Mo. 575; Axman v. Smith, 156 Mo. 286; Krug v. Bremer, 316 Mo. 891; Guels v. Stark, 264 S.W. 693; Dwyer v. Rohan, 99 Mo.App. 120; West v. Axtell, 17 S.W.2d 328. The last named case reviews many of the earlier authorities and is a leading case. See authorities therein cited -- Vannoy v. Duvall Trust Co., 29 S.W.2d 692. A trustee may be unaware of any intention to act unfairly, yet, if his conduct was actually unfair, and operated to the injury of complaining party, the transaction will be tainted with unfairness. Krug v. Bremer, 316 Mo. 900; West v. Axtell, 17 S.W.2d 335; Vannoy v. Duvall Trust Co., 29 S.W.2d 692. "Sales under powers in deeds of trust are a harsh mode of foreclosing the rights of the mortgagor. . . . must be conducted with all fairness and integrity . . . will be set aside upon very slight proof of fraud or unfair conduct." Polliman v. Reveley, 181 Mo. 634; 2 Perry on Trusts (5 Ed.) p. 602; West v. Axtell, 17 S.W.2d 328. (3) As a rule courts of equity do not grant relief upon the ground of inadequacy alone, yet if the inadequacy is such as to shock the conscience of the chancellor, it is granted on that ground alone. Railroad Co. v. Brown, 43 Mo. 294; 21 C. J. p. 111, secs. 87, 88; Nelson v. Betts, 21 Mo.App. 230. "When the conscience is shocked '(on ground of inadequacy)' the ear of the chancellor opens." Hanson v. Neal, 215 Mo. 275; West v. Axtell, 17 S.W.2d 328. Great inadequacy of price is a circumstance tending to show fraud. Inadequacy taken in connection with other inequitable conduct (although slight) will justify the granting of relief on the ground of fraud. West v. Axtell, 17 S.W.2d 328.

Brown, Douglas & Brown for respondents.

(1) Plaintiffs concede at the outset of their argument that our courts have already held that no one of the matters complained of would justify the action prayed for, but then seek to reverse the natural law and show the whole to be greater than the sum of all its parts. In the case of Schwarz v. Kellogg, 243 S.W. 179, l. c. 183, the Supreme Court of this State has very fittingly said: "Equity will intervene in a proper case to relieve against fraud or mistake in a trustee's sale; but fraud cannot be presumed but must be proved by clear, convincing and cogent evidence or circumstances in such cases." The individual contentions made by plaintiffs are then grouped under five main headings. The case of Vannoy v. Duvall Trust Co. (Mo.), 29 S.W.2d 692, cited by appellants, merely held that where a trustee refused to impartially conduct a sale, refused to describe the property and refused to state the amount of the encumbrance upon the land, such sale, if not in fact fair, was voidable. The fact that the trustee was connected with the trust company interested in the sale, was not mentioned as a ground for the decision. The case of Northcutt v. Fine, 44 S.W.2d 125, likewise referred to by appellants, merely held that a presumption of fraud arose where, without obligor's knowledge, the owner of the note was made trustee under the deed of trust. The identical question has been discussed, however, and it has been held that an officer of the corporation which was the agent for the creditor, was not thereby disqualified by interest to act as trustee under the trust deed in selling the property. Schwarz v. Kellogg, 243 S.W. 179. (2) Inadequacy of Consideration. As frequently as the question has been raised, our Supreme Court and Courts of Appeal have held that mere inadequacy of price at a sale under a mortgage or a trust deed, will not affect the validity of the sale, nor afford grounds for setting it aside, in the absence of fraud, unfairness or irregularity. Charles Green R. E. Co. v. St. Louis, etc., Co., 93 S.W. 1111, 196 Mo. 358; McDaniel v. Sprick, 249 S.W. 611, 297 Mo. 424. Where property has been sold at prices ranging from five per cent to twenty-five per cent of its market value, it has repeatedly been held that no sufficient ground thereby existed for setting aside the sale. Carter v. Abshire, 48 Mo. 200; Vail v. Jacobs, 62 Mo. 130; Betzler v. James, 227 Mo. 375, 126 S.W. 1007; Meyer v. Kuehler, 10 Mo.App. 371.

Ferguson, C. Sturgis and Hyde, CC., concur.

OPINION

FERGUSON

Suit in equity to set aside a foreclosure sale of land made by a trustee, in a deed of trust, pursuant to a power of sale given by said deed of trust. The decree of the trial court was for defendants and plaintiffs appealed.

Except as to one item, to which reference will later be made, the entire evidence in the case was adduced by and on the part of plaintiffs and the following statement is compiled therefrom. The plaintiffs are husband and wife. The wife, Liza Judah owned and had title to a tract of farm land in Buchanan County near the town of DeKalb. The land involved is described by metes and bounds and contained approximately thirty-three acres. Defendant Bromley was an officer of the DeKalb State Bank, at the town of DeKalb and had been connected with that institution since 1917. Plaintiffs, from time to time, over a period of twelve or fourteen years transacted business with this bank, having small deposit accounts there and the bank at times loaning them money. Early in 1927, the plaintiffs desirous of negotiating a loan of $ 1000, with the farm near DeKalb as security, approached Bromley about the matter, seeking a loan at the bank. It appears such loans as they had theretofore obtained at the bank had been upon their personal note and in sums not exceeding perhaps $ 100. Bromley advised them the bank could not undertake the loan of $ 1000 which they were seeking but that he would endeavor to get the loan for them through defendant, Bartlett Company of St. Joseph. This company, a corporation, was engaged in a general real estate loan and brokerage business in St. Joseph and it appears that Bromley had an arrangement with it to recommend loans on real estate in the vicinity of DeKalb. Application was made by the Judahs, through Bromley, to the Bartlett Company, and the loan of $ 1000 was made. The Judahs joined in the execution of a negotiable, promissory note dated March 11, 1927, for $ 1000, payable to the order of the Bartlett Company, on April 1, 1932, with interest at the rate of six per cent per annum payable on the first day of April in each year, evidenced by interest coupons attached. At the same time and of the same date the Judahs jointly executed a deed of trust "to secure the faithful performance of the covenants and agreements" therein "contained and the payment" of the indebtedness evidenced by said note which is then described. Dale C. Bermond and James H. Duncan are named as trustees and the Bartlett Company, cestui que trust. By the terms of the deed of trust, the grantors, the Judahs, "covenant and agree to pay all taxes, assessments . . . or governmental rates, charges, or impositions which may be levied or have been levied on said premises . . . before the same or any part thereof shall become delinquent . . . and to keep the buildings therein . . . insured for not less than $ 1000 in insurance companies acceptable to the party of the third part, its successors or assigns with loss payable to the party of the third part," etc. Said deed of trust then provides: "In case of default in payment of any installment of principal or interest, in the payment of the taxes or assessments, in furnishing required insurance, or in the performance of any other covenant or agreement herein contained, then . . . either of the said parties of the second part, the survivor or his or their successor, or successors in trust may at any time during the continuance of any such default at the request of the legal holder of any note hereby secured proceed to sell said premises at the east front door of the Court House in the city of St. Joseph, in the County of Buchanan, at public vendue, to the highest bidder for cash, first giving not less than twenty days' notice of such sale by advertisement as now required by law; and upon such sale and the receipt of the purchase money, shall convey said premises to the purchaser or purchasers thereof, in fee simple; and out of the proceeds of such sale,...