Kelly v. Staed
| Decision Date | 15 December 1896 |
| Citation | 37 S.W. 1110,136 Mo. 430 |
| Parties | Kelly et al., Appellants, v. Staed |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. James E. Withrow Judge.
Affirmed.
Stone & Slevin and T. P. Bashaw for appellants.
(1) Spear purchased the Wellington note after its maturity and with notice of its dishonor, hence he took it subject to all equities. Tiedeman on Commercial Paper, secs. 295-305; Kellogg v. Schnaake, 56 Mo. 136; Chappel v Allen, 38 Mo. 213; Livermore v. Blood, 40 Mo 48; Brownlee v. Arnold, 60 Mo. 79; Turner v. Hoyle, 95 Mo. 337, and authorities there cited. (2) No consideration passed from Florida to Mrs. Wellington for the execution of the note, therefore it could not have been enforced by Florida against her, nor can it be enforced by anyone claiming under Florida who took it after its maturity. Brooks v. Owen, 112 Mo. 251. (3) Florida by the terms of the warranty deed from Mrs. Wellington to him, assumed and agreed to pay the note, and thereby he became the principal obligor in the note; he did pay the note after its maturity, whereupon both the note and deed of trust became dead for all purposes. Kellogg v. Schnaake, 56 Mo. 136. And more especially as the note was made for accommodation. Tiedeman on Commercial Paper, sec. 376. And after being so paid by Florida, the note could not be reissued. Murphy v. Simpson, 42 Mo. 654; Thiesen v. Dayton, 82 Iowa 74. (4) A sale under a deed of trust will be enjoined where the note, to secure which the deed was given, was without consideration. Ryan v. Gilham, 75 Mo. 132. (5) The sheriff can act as trustee only upon the happening of the contingencies recited in the deed of trust. Hindman v. Piper, 50 Mo. 292. And whenever a question arises as to who is the proper person to exercise the power, resort should be had to a court of equity for foreclosure of a mortgage. Martindale on Conveyances, p. 510. (6) George, the trustee in the deed of trust, by joining Florida in making the deed of release to Branconier, divested himself of all the rights and powers conferred on him by the deed of trust, and thereafter he could make no sale of the property securing the debt, by virtue of the power of sale contained in the deed. Schanewerk v. Hoberecht, 117 Mo. 22; Lanier v. McIntosh, 117 Mo. 512. And the sheriff could have no greater power than was possessed by the trustees named in the deed of trust. Hindman v. Piper, 50 Mo. 292.
Judson & Taussig for respondent.
(1) The release by Florida of the deed of trust, after his assignment of the note and deed of trust to Spear without consent of the assignee and holder, was ineffectual to remove the lien of the deed of trust, and wholly void. Lee v. Clark, 89 Mo. 553; Hagerman v. Sutton, 91 Mo. 533; State Bank v. Frame, 112 Mo. 514; Field v. Investment Co., 123 Mo. 603; Lord v. Schamloeffel, 50 Mo.App. 365. (2) The joinder by George, the trustee in the deed of release, added nothing to its effect, and was wholly futile. 1 R. S. Mo., sec. 7094. (3) The attempted release being void, the right of the holder to enforce the execution of the power of sale by the trustee, or the sheriff as trustee, is not impaired thereby. Joerdens v. Shrimpf, 77 Mo. 383; Lanier v. McIntosh, 117 Mo. 518. (4) It is immaterial to the issues of this case that Spear acquired the note from Florida after its maturity; or that as to her it was accommodation paper, and not enforcible against her by, or under, Florida. Upon taking up the note, Florida had the right to reissue it as against himself, and he did reissue it for value to Spear, and in his hands it was enforcible against Florida, though as to Mrs. Wellington it was subject to the equities between her and Florida. 2 Daniel on Negotiable Instruments [3 Ed.], secs. 1238-1242; Light v. Kingsbury, 50 Mo. 331; Barnes v. McMullen, 78 Mo. 260; Knaus v. Givens, 110 Mo. 66; Cutler v. Cook, 77 Mo. 388. (5) Florida, owning the fee and acquiring the lien of the deed of trust upon the property, there was no resulting merger without the intention of merger on his part, and his reissuance of the note for value is conclusive of his intention to keep the lien of the deed of trust alive for his own benefit. Hospes v. Almstedt, 13 Mo.App. 270; Hospes v. Almstedt, 83 Mo. 473; Wilson v. Vanstone, 112 Mo. 315.
This action was begun in the circuit court of the city of St. Louis to enjoin the defendant, who was then sheriff of said city, from selling, under a deed of trust, certain real estate in that city.
On the twenty-second day of April, 1891, one Alonzo K. Florida, was the owner in fee of the real estate in question. On that day he conveyed it by general warranty deed to Josephine L. Wellington, of said city for a stated consideration, but which in fact was never paid. On the same day Josephine L. Wellington executed and delivered to said Florida her promissory note for $ 3,000, due one year after date, with two interest notes; and to secure the payment of said notes she at the same time executed a deed of trust on said property to secure their payment in which one Gilbert J. George was named as trustee.
Thereafter, on the same day, she, without any consideration, reconveyed all of the property to Florida, by deed of general warranty, subject to said deed of trust, Florida assuming and agreeing to pay the debt secured by it. The notes secured by the deed of trust were accommodation paper only. Florida afterward sold the principal note to Sallie M. and F. C. Sharp, which was not paid when it became due and went to protest. Thereafter and before the twenty-eighth day of April, 1892, Florida paid the note, took it up and on that day sold it for value and delivered it to William Spear, but did not release the deed of trust. Spear agreed to take the security with the indorsement of Florida and Gilbert J. George (the trustee), indorsing on the note an extension for six months at eight per cent interest (the note calling for ten per cent after maturity), and paid Florida therefor $ 3,000 in cash.
On the seventh day of July following, Florida, representing to George, the trustee, that the note had been paid induced him to join him in the execution of a deed of release reciting therein that the Wellington note had been paid. This deed was recorded on the thirteenth day of July, 1892.
On the sixth day of July, 1892, Florida and wife by warranty deed of that date, acknowledged July 15, and recorded July 19, 1892, sold and conveyed the property to Mrs. Branconier, who thereafter, to wit, on the twenty-fifth day of October, 1892, sold and conveyed by deed of general warranty, her husband, David Branconier, joining with her, said property to the plaintiff, Catharine Kelly.
When the six months extension matured in October, 1892, Florida asked Spear to carry the note awhile; that he, Florida, had sold the property and had made an arrangement to carry it (the note) for the purchaser. Subsequently Florida paid the interest to Spear and asked him to hold the note until the end of the year, that is, for six months longer.
After the expiration of the time of the last extension, Spear called upon George, the trustee, to sell the property under the deed of trust, but he was absent from the city, and refused to act. The deed of trust provided that in the event of the "absence of the trustee from the city of St. Louis, sickness, disease, or other disability, or refusal to act, the acting sheriff for the time being of the city of St. Louis, upon the request of the legal holder of the notes," etc., should act. Thereupon Spear called upon defendant Staed, the sheriff, to act as trustee, who in accordance with said request made publication of notice of sale under the power in the deed of trust.
Mrs. Branconier and husband, and Mrs. Kelly and her husband instituted this suit to enjoin the sale, setting up the deed of release, and also that the note had been "conveyed" in the fee, and thereby annulled.
A temporary injunction being granted, an answer and motion to dissolve were filed by respondent alleging that "the note was outstanding, due, and unpaid, the property of Spear, and that the deed of release was void."
The filing of this suit was the first notice to Spear of this deed of release.
Upon the trial the injunction was dissolved and the petition dismissed. At the same term $ 295 damages were assessed under the injunction bond. Appeal was first taken by plaintiffs to the court of appeals, and was thence transferred to this court.
It is contended by plaintiffs that, as Spear took the note after maturity, with notice of its dishonor, he took it subject to the defenses: that it was without consideration; that after its maturity it was paid by Florida, who had contracted and agreed to assume and pay it; and that the fact that Florida may have attempted to reissue it after he came in possession of it the second time was of no avail to Spear, the holder.
It is a rule of universal application that where a negotiable note is transferred after it becomes due the assignee takes it subject to all equities and defenses as between the maker and payee. Chappell v. Allen, 38 Mo. 213; Livermore v. Blood, 40 Mo. 48; Kellogg v. Schnaake, 56 Mo. 136; 1 Daniel on Negotiable Instruments [4 Ed.], sec. 724a. But in such case it is only subject in the hands of the indorsee to such equities and defenses as are connected with the note itself, and not such as grow out of transactions disconnected with the note. Cutler v. Cook, 77 Mo. 388; Barnes v. McMullins, 78 Mo. 260; Knaus v. Givens, 110 Mo. 58. It follows that as between Mrs. Wellington and Spear she could avail herself of any defense that she had against the note in the hands of...
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