Lunsford v. Davis
| Decision Date | 21 September 1923 |
| Citation | 254 S.W. 878,300 Mo. 508 |
| Parties | NORA L. S. LUNSFORD et al., Appellants, v. WILLIAM H. DAVIS et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. Allen C. Southern, Judge.
Affirmed (with modifications).
Scarritt Jones, Seddon & North for plaintiffs.
(1) There was a positive and affirmative duty devolving upon Shook as trustee to have advised Lunsford of the amount of taxes claimed to be in default before making the sale and to afford him an opportunity of paying the amount, and not to connive with Davis and Cobb and by trickery and withholding information exact forfeiture. Hanson v. Neal, 215 Mo. 274; Borth v. Proctor, 219 S.W. 72; Meyer v Ins. Co., 5 Mo.App. 245; Holdsworth v. Shannon, 113 Mo. 508; Stoffel v. Schroeder, 62 Mo. 147; Vail v. Jacobs, 62 Mo. 130; Stephenson v Kilpatrick, 166 Mo. 262; Middleton v. Bacon, 262 Mo. 398; Daggett Hardware Co. v. Brownlee, 186 Mo. 621. (2) There was a fixed purpose by hook or crook indwelling in the minds and hearts of Shook, trustee, and Davis and Cobb to despoil the Lunsfords of their equity in the Coates House properties, and unless equity intervenes Shook as trustee will accomplish that purpose for them. (3) Shook, the trustee, was unlawfully subservient to Davis and Cobb, and the program for getting the property for Davis and Cobb was cut-and-dried and only equity can prevent the great iniquity sought to be perpetrated. (4) The trustee's sale was held at an unusual hour contrary to and in defiance of the long and well established custom of holding such sales at two o'clock in the afternoon. This circumstance was of itself a badge of fraud and the whole transaction will be closely scrutinized in the conscience of chancery, and such sale set aside for good faith and fair dealing did not prevail. Borth v. Proctor, 219 S.W. 72; Holdsworth v. Shannon, 113 Mo. 508; Hanson v. Neal, 215 Mo. 250; Stephenson v. Kilpatrick, 116 Mo. 262. (5) The price was wholly inadequate. The bid was perfunctory. It was framed up in advance. Everything was so arranged by Shook that there should be one bid, and only one, and that the property should go to Davis and Cobb, and so an equity of not less than $ 200,000 was wholly confiscated. Equity will avoid such a sale. Stoffel v. Schroeder, 62 Mo. 147; Stephenson v. Kilpatrick, 166 Mo. 262; Middleton v. Baker, 262 Mo. 398. (6) The Lunsfords honestly endeavored to pay all the taxes which it was their duty to pay and they honestly believed they had done so, and they so advised Davis and Cobb, who knew that the Lunsfords believed they were not in default. Shook, the trustee, knew this and his act in playing into the hands of Davis and Cobb in exacting a forfeiture under the circumstances was extortionate, contrary to equity and involved moral turpitude. (7) Under the terms of the deed of trust involved here as construed by the courts of this State the mortgagors have the legal right to pay or tender defaulted interest at any time before the foreclosure is consummated and so avoid a forfeiture. State ex rel. Merriam v. Ross, 136 Mo. 259; Philips v. Bailey, 82 Mo. 639; Walz v. Parker, 134 Mo. 458; Whelan v. Reilly, 61 Mo. 565. (8) The terms of the deed of trust fairly construed do not empower the trustee to make a foreclosure sale until the mortgagee shall have paid the defaulted taxes and demanded payment thereof from the mortgagor, or at least until the trustee shall have notified the mortgagor specifically as to the nature and amount of the defaulted items and shall have given an opportunity to make the required payment. No such course was pursued here and so the trustee was without power to foreclose and his deed is void. 2 Jones on Mortgages (7 Ed.) p. 799, sec. 1175a; Williams v. Townsend, 31 N.Y. 411; Heller v. Neeves, 93 Wis. 637; Union Trust Co. v. Grant, 148 Mich. 501.
Stone, McDermott, Webb & Johnson and Gamble, Trusty & Pugh for defendants.
(1) Plaintiffs' mistake as to whether the taxes were in default, if they were mistaken, affords no ground for setting aside the foreclosure. (2) There is no evidence that defendants induced plaintiffs to believe there was no default in taxes. (3) That plaintiffs are non-residents did not absolve them from keeping the taxes paid up; nor was the alleged physical disability of one of them an excuse for such failure, even had such disability been proven; mortgagee's misfortune is no defense against express covenants. Lipscomb v. Life Ins. Co., 138 Mo. 17. (4) No duty on part of trustee to give personal notice of intended foreclosure sale to defendants' attorney; moreover both he and defendants knew it was advertised, hence express notice by trustee would have been superfluous. Million v. McRee, 9 Mo.App. 344; Harlin v. Nation, 126 Mo. 97. (5) Non-payment of taxes alone was sufficient to warrant foreclosure. Truchon v. Mackey, 171 Mo.App. 42. (6) No duty rested upon mortgagee to himself pay delinquent taxes as condition of right to foreclose. (7) Trustee not disqualified because: (a) Confidant of mortgagee. (b) Plaintiffs knew trustee's relationship to mortgagee when they accepted him as trustee. Cassady v. Wallace, 102 Mo. 575; Harlin v. Nation, 126 Mo. 97; Lipscomb v. Life Ins. Co., 138 Mo. 17. (c) That trustee held sale at eleven o'clock instead of two o'clock was under advice of competent counsel. (d) Not trustee's duty to drum up bidders. Million v. McRee, 9 Mo.App. 344; Hardwicke v. Hamilton, 121 Mo. 465. (8) Inadequacy of price obtained at trustee's sale not ground for setting it aside, but such inadequacy was not proven in this case. Hammond v. Scott, 12 Mo. 8; Phillips v. Stewart, 59 Mo. 491; Harlin v. Nation, 126 Mo. 97; N. Y. Store Co. v. Thurmond, 186 Mo. 410; Betzler v. Clark, 227 Mo. 388. (9) The sale held at eleven o'clock instead of at two o'clock does not justify setting it aside: (a) Because the sale was advertised to occur between nine a. m. and five p. m. and the evidence shows there was no universal custom to sell at two o'clock. Anderson v. Taylor, 227 S.W. 84; Groff v. Langsdon, 239 S.W. 1087. (b) Plaintiffs wanted to discourage outside bidders, and did not themselves intend to bid -- hence cannot complain that sale was at unusual hour. Weir Lumber Co. v. Cordz-Fisher, 186 Mo. 388; Stoffel v. Schroeder, 62 Mo. 147; Holsworth v. Shannon, 113 Mo. 508; Montgomery v. Miller, 131 Mo. 595; Hanson v. Neal, 215 Mo. 256. (c) The requirement that the sale shall be at the usual hour is that all possible bidders may attend, but here the rule avails plaintiffs nothing, as they did not want the property bid in by anyone except the defendants. Goode v. Comfort, 39 Mo. 313; Phillips v. Stewart, 59 Mo. 491. (10) Fraud by defendants is not presumed, and is not proven. Hardwick v. Hamilton, 121 Mo. 465; Gerhardt v. Tucker, 187 Mo. 46, 57. (11) The petition makes no offer to redeem, contains no excuse for not making such offer, does not even ask for a re-sale, and hence does not entitle plaintiffs to relief. Schanewerk v. Holberecht, 117 Mo. 22; Biffle v. Pullam, 125 Mo. 108; Hume v. Hopkins, 140 Mo. 65; Long v. Long, 141 Mo. 352; Lipscomb v. Life Ins. Co., 138 Mo. 17; Axman v. Smith, 156 Mo. 286; Daggett Hdw. Co. v. Brownlee, 186 Mo. 621; Gerhardt v. Tucker, 187 Mo. 46; Adams v. Carpenter, 187 Mo. 613. (12) Courts cannot make contracts for parties, and the decree by reinstating the mortgage violates its express covenants. 13 C. J. 525; Truchon v. Mackey, 171 Mo.App. 42.
OPINION
The plaintiffs, Nora L. S. Lunsford, and William G. Lunsford her husband, brought suit against defendants Davis and Cobb, and their wives, and against one John M. Shook, to annul a certain deed made to Davis and Cobb by Shook as trustee, under a deed of trust covering the Coates House hotel property in Kansas City, Missouri. Plaintiff Nora Lunsford acquired title to said property by warranty deed from defendant Davis, about October 1, 1918, in a trade, under the terms of which the plaintiffs concurrently paid to Davis $ 35,000 in money, conveyed to Davis 7000 acres of land in Alabama, and executed to him their note in the sum of $ 115,000, secured by a second deed of trust upon the hotel property. The deed sought to be annulled is the deed made by Shook as trustee under this second deed of trust. In the consummation of the trade mentioned the plaintiffs also, about October 1, 1918, executed a first deed of trust upon the property to secure the sum of $ 75,000 borrowed by them from Groves Brothers Real Estate & Mortgage Company. Upon this loan the sum of $ 5000 was payable at the end of each of the first, second, third and fourth years from its date, and the remainder at the end of five years. The note secured by the second deed of trust is dated October, 1918, and due five years after date, bears interest at five per cent and the semiannual interest coupons were due April 1st and October 1st in each year. The note and coupons are to bear eight per cent after their maturity.
The deed of trust securing this note contains certain agreements as to payments and maturity not expressed in the note itself. After describing the terms of the note the deed continues "Privilege given to pay one thousand dollars or any multiple thereof on any interest-paying date by giving sixty days written notice." And the deed also contains the further important provision or privilege: "If the maker of this note owns the property securing same this note when due may be extended for five years provided fifteen thousand dollars of the principal sum has been paid at that time." Shortly after the execution of this note the sum of $ 10,000 was paid and credited upon it, reducing the principal to $ 105,000. Davis retained this note for a time, and sold it to...
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