Kelsay v. Farmers' & Traders' Bank

• Decision Date: 17 December 1901
• Court: Missouri Supreme Court
• Parties: KELSAY v. FARMERS' & TRADERS' BANK et al.

65 S.W. 1007

166 Mo. 157

KELSAY v. FARMERS' & TRADERS' BANK et al.

Supreme Court of Missouri, Division No. 2.

December 17, 1901.

DEEDS OF TRUST — POWER OF SALE — PERSONS ENTITLED TO EXECUTE POWER — TRUSTEE — SUBSTITUTE TRUSTEE — EVIDENCE — SETTING ASIDE SALE — CONDUCT OF TRUSTEE — ESTOPPEL — DISPOSITION OF PROCEEDS — GRANTOR'S LACHES.

1. Where a creditor, secured by a deed of trust providing that the trustee therein should sell the real estate, in case of default by the debtor, when requested by the creditor, requests the trustee to sell the real estate for the debtor's default, the question of the refusal of the trustee to act must be determined from his conduct after such request, in the light of the surrounding circumstances.

2. Where a deed of trust to secure a debt provided that the trustee should sell the real estate conveyed thereby, in case of default by the debtor, when requested by the creditor, and, upon the refusal of such trustee to act, the sheriff should execute the trust, the trial court properly found that the sheriff could not act as alternative trustee, in a case where the evidence showed that the creditor requested the trustee to advertise the sale of the land for default by the debtor, the creditor, upon his failure so to do, to insert the advertisement, and that the trustee failed to proceed, though

not refusing to act, but properly understanding that the creditor would commence the proceedings in the trustee's name.

3. Where a deed of trust conferred upon a trustee a power to sell the property conveyed, on default of the debtor, at the request of the creditor, and provided for a substitute upon the refusal of the trustee to act, the creditor must show that the trustee refused to act, before the substitute has the right to proceed.

4. Where one of two joint purchasers of real estate at a sale under a deed of trust by a substitute trustee received notice, before making payments on account of the purchase, from the trustee named in the deed, that the sale was illegal, the grantees took the property with notice, subject to defects in the sale, for notice to one was notice to both.

5. Where, at a sale of real estate under a deed of trust by a substitute trustee, the purchasers received notice that the sale was illegal, the grantor in the trust deed is not estopped from showing the invalidity of the substitute trustee's deed by failing to enjoin the sale; the purchasers not being misled by such failure.

6. A court's order, which directs that a part of the purchase price obtained from a sale of real estate under a deed of trust for default of the payment of certain notes secured thereby shall be applied to the payment of certain judgments against the grantor in such deed of trust, does not estop such grantor from attacking the validity of the sale, when he had no notice of the court's order.

7. Where an alternative trustee in two deeds of trust executed to secure the payment of two notes sold the property thereby conveyed, under each deed of trust, upon default of the debtor, the first sale bringing a sum in excess of the amount due on the notes, the sale under both deeds bringing a sum nearly double the amount due, and the latter sale being made at the request of the creditor in the deed of trust, who was also a judgment creditor for other sums, the grantor in the deeds of trust has the right to have the sales set aside, if promptly applying therefor, where the purchasers at the sales had knowledge of the facts.

8. A grantor in a deed of trust, who in February brings an action to set aside a sale of real estate under the deed of trust in the latter part of December preceding, is not guilty of such laches as will defeat such action.

Appeal from circuit court, Moniteau county; D. W. Shackelford, Judge.

Suit by James R. Kelsay against the Farmers' & Traders' Bank and others. From a decree for plaintiff, defendants appeal. Affirmed.

The petition alleges and the evidence shows the following facts: On the 7th day of December, 1886, the plaintiff and his wife executed and delivered their certain deed of trust conveying the N. W. ¼ of the S. W. ¼ of section 2, and N. E. ¼ of S. E. ¼ of section 3, all in township 43, range 16, in Moniteau county, to Allen James, as trustee, to secure the payment of a promissory note executed by plaintiff to Dr. J. M. Powers for $400, and bearing 8 per cent. interest from its date, December 6, 1886. On March 23, 1892, plaintiff and wife executed another deed of trust whereby they conveyed the S. ½ of the W. ½ of lot No. 1 of the N. W. ¼ of section No. 2, and the N. W. ¼ of the S. W. ¼ of section 2, township 43, range 16, containing 60 acres, more or less, in Moniteau county, in this state, to secure a certain other note executed by plaintiff to said Dr. J. M. Powers, dated March 17, 1892, for $300, and bearing interest from date at 8 per cent. per annum. In each of said deeds of trust it was stipulated and provided that, if plaintiff made default in the payment of the note therein described when it became due, the said Allen James, as trustee, at the request of the legal holder of said note, should proceed to sell the real estate in said deed of trust described, and in the event of the death of the said Allen James, his absence from the state of Missouri, or refusal to act, then the sheriff of Moniteau county should proceed to execute as provided in said deeds of trust. On the ____ day of September, 1897, the Farmers' & Traders' Bank of California, Mo., had become holders of both of said notes by purchase from Warren T. Miller, who had owned them since 1895. Dr. Powers indorsed the notes to Miller "without recourse." On March 13, 1895, the said bank recovered a judgment in the Moniteau circuit court against plaintiff, Allen James, and William Jobe for $221, and $6.85 costs, bearing 8 per cent. compound interest. On September 7, 1893, J. E. Bayne, administrator of S. D. Bayne, deceased, recovered judgment against plaintiff for $146.45. On November 12, 1897, the Farmers' & Traders' Bank wrote the following letter to Allen James, the trustee: "Farmers' & Traders' Bank. California, Mo., Nov. 12, 1897. Mr. Allen James, High Point, Mo. — Dear Sir: The ten (10) days' extension granted in the matter of selling the land of J. R. Kelsay has expired. You will please proceed and advertise the land in next week's edition of one of our papers. If you fail to come, we will have the advertisement inserted. Yours, very truly, C. A. Burkhardt, Cashier." James, the trustee, was a witness in the case, and testified he understood by this letter that the bank would advertise the sale in his name; but the bank caused the sheriff, C. G. Inglish, to advertise the sale in his own name, as alternative trustee, to be made on December 28, 1897. On that day the unpaid balance of principal and interest on the two notes and the costs of advertising amounted to $786, and the two judgments and interest amounted to $550. On the day prior to the day set for the sale, plaintiff induced his son to go to Versailles, Mo., in the adjoining county, and make arrangements to stop the sale. Accordingly, on the morning of the 28th of December, 1897, the cashier of the Bank of Morgan County sent the following telegram: "Versailles, Mo., Dec. 28th, 1897. To Farmers' and Traders' Bank, California, Mo.: Stop sale of J. R. Kelsay's land. Wire us amount of mortgage and costs, and we will remit. W. W. Moore, Cashier." To which the Farmers' & Traders' Bank replied: "California, Mo., Dec. 28th, 1897. To Bank of Morgan County, Versailles, Mo.: J. R. Kelsay mortgage and costs seven hundred and eighty-six dollars. Other judgments on land about five hundred and fifty dollars. Will you pay all? If not, sale will proceed. Answer. C. A. Burkhardt, Cashier." As no arrangement had been made to pay the judgments, the Morgan County Bank declined to pay them; and on the afternoon of December 28, 1897, the sheriff, Inglish, proceeded to offer the land for sale in separate parcels. While he was crying the sale, the trustee, Allen James, appeared on the scene, and said the sale was illegal; that he had never refused to make the sale. His statement was heard by the senior Mr. Burkhardt, the president of the bank, and by Miller, who became one of the purchasers, before he paid his money or the land was knocked down to him, and by others standing in the crowd. The land was sold under each deed of trust. The first sale brought about $1,000, or about $300 more than the two notes and interest amounted to on that date. When asked by counsel why he sold under both deeds of trust after the first sale had realized several hundred dollars more than enough to satisfy the mortgage debts, the sheriff answered he did it because directed to do so by Mr. Williams, who was the bank's attorney, and who, it appears, was a director in the bank. The sheriff made a deed to Charles P. and Warren T. Miller. This 100 acres of land constituted the homestead of J. R. Kelsay, the plaintiff herein. His dwelling house was situated on the N. W. ¼ of the S. W. ¼ of section 2, township 43, range 16, and was occupied by himself and family as their homestead at the time, and for a number of years prior to the sale. This is a suit in equity by plaintiff, praying to have said sale set aside because said Inglish had no authority to sell the same, and because the homestead was sacrificed by the way in which the sale was conducted, and because in this way plaintiff was deprived of his homestead by subjecting it to judgments from which it was exempt; and he prays to be allowed to redeem, and for other and further relief. This suit was commenced on the 21st day of February, 1898, after the sale on the 28th day of December, 1897. Other facts will be noted in the opinion. The defendants filed separate answers. The bank admitted its incorporation, and that plaintiff was the owner of the land, and that he and his wife executed the notes and deeds of trust described...