Lustenberger v. Hutchinson
| Decision Date | 17 September 1938 |
| Docket Number | 35169 |
| Citation | 119 S.W.2d 921,343 Mo. 51 |
| Parties | Frank Lustenberger and W. F. Lustenberger v. Margaret G. Hutchinson, Administratrix of the Estate of Harry H. Hutchinson; Margaret G. Hutchinson; Harry H. Hutchinson, Jr.; Marion F. Hutchinson; Harriet J. Hutchinson; W. C. Gow; R. E. Gardner; Charles W. Purdy; Olive Edith Purdy; Haruten Sarkesian; Seroon Sarkesian; Harry Wright; Esther Godfrey and Leroy Mead, Trustee for H. S. Smith Investment Company, a Corporation, Defendants, Haruten Sarkesian and Seroon Sarkesian, Appellants |
| Court | Missouri Supreme Court |
Reported at 343 Mo. 51 at 63.
Original Opinion of September 17, 1938, Reported at 343 Mo. 51.
Bradley C. Ferguson and Hyde, CC., concur.
OPINIONBRADLEY
On Motion for Rehearing.
It is contended in the motion that we overlooked certain raised points and propositions. It is said that we overlooked the proposition "that there was no evidence that W. F Lustenberger did not directly or through H. S. Smith Investment Company request the trustee to foreclose the deed of trust." Section 3094, Revised Statutes 1929 (Mo. Stat. Ann., sec. 3094, p. 1918), makes prima facie true the recital, in the trustee's deed to the Purdys, that the legal holder of the Gardner note had requested foreclosure. Hence it is argued that the burden being on plaintiffs the prima facie situation must remain in the absence of evidence to the contrary. The opinion shows that Gow, trustee, made no claim that W. F. Lustenberger requested the foreclosure. Gow testified, as appears in the opinion, that some one of the Smith Investment Company requested the foreclosure, and that he would not have foreclosed had not some one of this company requested him "to do so."
It is said in the motion that trustee Gow was the agent of plaintiffs and that his acts were their acts. Supporting this contention defendants cite Butler Bldg. & Inv. Co. v. Dunsworth, 146 Mo. 361, 48 S.W. 449. In that case the deed of trust did not condition foreclosure upon the request of the legal holder of the note, but the reverse is true in the present case. Also, it appears in the cited case that one who had the right to demand foreclosure made the request to foreclose. No case, so far as we find, holds that, where the deed of trust conditions foreclosure upon the request of the legal holder of the note secured, the trustee can lawfully foreclose without such request. And where the deed of trust requires such request, a foreclosure without it is void. [St. Louis Mut. Life Ins. Co. v. Walter et al., 329 Mo. 715, 46 S.W.2d 166, l. c. 170; Magee v. Burch, 108 Mo. 336, 18 S.W. 1078; Williams v. Mackey, 227 Mo.App. 1016, 61 S.W.2d 968, l. c. 971; Plummer v. Knight, 156 Mo.App. 321, 137 S.W. 1019; 41 C. J. 945.]
It is stated in the motion that our opinion "overlooks" the proposition that the deed of trust vested in the legal title to the real estate in the trustee and that the trustee's deed passed that title to the grantees therein, which title vested in the Sarkesians "two and one half years later." In the first place we might say that the legal title, as that term is generally understood, does not vest in the trustee immediately upon the execution of a deed of trust, "because a mortgage is but a security for the payment of the debt or the discharge of the engagement for which it was originally given, and until the mortgagee enters for breach of condition, and in any respect until final foreclosure, the mortgagor continues the owner of the estate." [Reynolds v. Stepanek, 339 Mo. 804, 99 S.W.2d 65, l. c. 68, and cases there cited.] And in the second place, trustee Gow foreclosed without request from either of plaintiffs and the foreclosure was void and passed no title to the grantees named in the trustee's deed.
In the principal opinion we said that "where one of two innocent parties must lose because of a third party's fraud, if the equitites are equal, the established rule is that the one who has the first lien or claim in point of time will be protected." It is stated in the motion that we overlooked the more important rule that "where one of two innocent persons must suffer by the fraudulent act of a third party, the burden must be borne by him who enabled such third person to occasion the loss." We do not think that the latter rule is applicable here. By buying the Gardner note through the Smith Investment Company, plaintiffs made it possible of course for that company to perpetrate the fraud, the loss from which finally fell in the laps of the unfortunate Sarkesians. But the only thing charged against plaintiffs is that they did not give proper attention to their investment. That question was the chief one, and on the evidence the trial court found for the plaintiffs, and we approved that finding for the reasons set out in the principal opinion.
The motion says that "if the opinion stands as the law of this State, no title examiner will be able to safely pass any title in which there has been a foreclosure proceeding within the statutory period of limitation." In the principal opinion we cited Stratton v. Cole et al., 203 Mo.App. 257, 216 S.W. 976, but did not analyze the case. That case was in equity to cancel a wrongful satisfaction of the record of a deed of trust. Some two years after the wrongful satisfaction, the defendants, by mesne conveyances, became the record owners. One Elmore wrongfully satisfied the record by producing to the recorder what...
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