Ludwig v. Scott, 31530.

• Decision Date: 06 December 1933
• Docket Number: No. 31530.,31530.
• Citation: 65 S.W.2d 1034
• Parties: LUDWIG v. SCOTT et al.
• Court: Missouri Supreme Court

65 S.W.2d 1034

LUDWIG v. SCOTT et al.

No. 31530.

Supreme Court of Missouri, Division No. 1.

December 6, 1933.

Appeal from St. Louis Circuit Court; M. Hartmann, Judge.

Action in equity by Thekla Ludwig against Oreon E. Scott and another. From the decree, defendants appeal.

Decree reversed, and cause remanded, with directions.

Jeffries, Simpson & Plummer, of St. Louis, for appellants.

R. M. Nichols and Wm. H. Bleyer, both of St. Louis, for respondent.

HYDE, Commissioner.

This is an action in equity to cancel certain deeds and notes on the ground of fraud. The pleadings will be hereinafter considered. In 1919, plaintiff, then she was twenty years old, was employed by defendants, who were engaged in the real estate business in St. Louis. She worked for them four years. She was employed as a rent statement clerk, and her duties were making up the "statements of property owners and statements of rents taken in and money paid out." Plaintiff said that during the time she was employed by defendants, she was asked to, and did, sign a large number of deeds, notes, and other papers; that defendants asked her to sign the papers, but did not explain the nature of them, and "just said it was a form of paper signed — real estate paper signed with no obligation." She said that when she signed them she did not understand that there was any personal liability, and that she was never told by defendants that there was. She was not paid anything for thus acting as a straw party. She said that she had been through the eighth grade in school and started to work when she was sixteen, learned typewriting and worked for business firms, but never was employed before in a real estate office; that she had never had anything to do with the preparation of deeds and notes; but that she knew some of the papers she signed were deeds and notes because she "saw it printed on it."

Among other transactions, in connection with which plaintiff signed papers, was one concerning property at Twelfth and Market streets in St. Louis. It appears that defendant Oreon E. Scott, on November 8, 1922, obtained title to this property at a foreclosure sale. It seems that in doing so he was acting for the owners of the property with some kind of an understanding to furnish them money, with the property as security, for which he was to receive a substantial commission. Litigation grew out of this matter between these parties and Oreon E. Scott and, prior to the filing of this suit, a decree had been entered finding that he held title to the property as an equitable mortgagee in trust for these owners. By a deed dated the next day after Scott acquired the foreclosure title, he conveyed the property to plaintiff. He told her she would be the owner of valuable property for a few minutes. Thereafter, at his request, plaintiff executed 350 $500 notes, aggregating $175,000, secured by deed of trust on this property, and then a $50,000 note secured by a subsequent deed of trust on the property. It took her practically all morning to sign these papers and she knew they had some connection with the Market street property. Thereafter, plaintiff executed a warranty deed to defendant Oreon E. Scott. These deeds were recorded in March and April, 1923. The notes of the $175,000 issue were later sold to other people. All the notes matured in five years and were then renewed without plaintiff's consent.

Plaintiff, in 1927, several years after she had ceased to work for defendants, was called as a witness in connection with some of the litigation about the property. She said that she was told by one of the attorneys, at that time, that these notes created personal liability against her, and that this was her first information as to their effect. In 1930, she obtained a list from defendants of the deeds and notes she had signed for them as a straw party. She said that during the three years intervening she "had been thinking about it but put it off." In May, 1930, she brought this suit to have the notes, deeds of trust, and the warranty deed relating to the Market street property canceled. This property was purchased by the United States government as a site for the new St. Louis Federal building, and defendants executed a warranty deed conveying the property to the United States. A contract had been made between defendants and the government for this sale in 1929. There were also condemnation proceedings commenced in 1929 through which the government obtained the title of all parties interested. Defendants thereafter obtained all of the notes of the $175,000 issue and had them canceled and trust deeds released of record. There is no evidence as to the ownership of the $50,000 note, but they also had it canceled and the deed of trust securing it released. There releases were made by defendants and were completed about a month before the trial of this case. All of the canceled notes and the two deeds of trust were delivered by defendants to the clerk of the United States District Court and were held by him at the time of the trial, as vouchers for money paid out.

The court first entered a decree for plaintiff, finding that the notes and deeds of trust had been paid and satisfied, which ordered the warranty deed from plaintiff to defendants canceled. On plaintiff's motion, this decree was thereafter amended by striking from it the order canceling this warranty deed. About the only relief it granted in its final form was to award costs. Defendants have appealed.

Plaintiff failed to either state or prove a cause of action. Both parties agree that the statute of limitations applicable to this suit is the fifth subdivision of section 862, R. S. 1929 (Mo. St. Ann. § 862, 5th subd., p. 1143), which provides a five-year period for "an action for relief on the ground of fraud, the cause of action in such case to be deemed not to have accrued until the discovery by the aggrieved party, at any time within ten years, of the facts constituting the fraud." Our statutes of limitations apply alike to legal and equitable actions. The five-year statute making the provision above quoted covers an action such as this for cancellation of mortgage notes on the ground of fraud. It applies to all actions for relief on the ground of fraud except where the object of the suit is to recover real estate. Branner v. Klaber, 330 Mo. 306, 49 S.W.(2d) 169, and cases cited. Actions for cancellation or reformation of instruments on other grounds than fraud may come within the third subdivision of the ten-year statute, section 861, R. S. 1929 (Mo. St. Ann. § 861, 3rd subd., p. 1139). Hoester v. Sammelmann, 101 Mo. 619, 14 S. W. 728; Stark v. Zehnder, 204 Mo. 442, 102 S. W. 992; White v. Pendry, 25 Mo. App. 542; Lile v. Kincaid, 160 Mo. App. 297, 142 S. W. 434. It is well settled that, if a plaintiff's petition shows on its face that her action is barred by the statute of limitations, this point may be raised by demurrer. Garth v. Motter, 248 Mo. 477, 154 S. W. 733; American Radiator Co. v. Conner Plumbing & Heating Co., 277 Mo. 548, 211 S. W. 56; Herweck v....