Mackey v. Sec. Bank of Sw. Mo.
| Decision Date | 07 October 2011 |
| Docket Number | No. SD 30901.,SD 30901. |
| Citation | 350 S.W.3d 49 |
| Parties | Gail MACKEY, and 7 Valleys Equipment Company, Inc., Respondents,v.SECURITY BANK OF SOUTHWEST MISSOURI, and Jon Horner, As Trustee, Appellants. |
| Court | Missouri Court of Appeals |
OPINION TEXT STARTS HERE
Mark C. Fels, Yates, Mauck, Bohrer, Elliff & Fels, P.C., Springfield, MO, for Appellants.J. Michael Riehn, Cassville, MO, for Respondents.ROBERT S. BARNEY, Judge.
Security Bank of Southwest Missouri (“the Bank”) and John Horner as Trustee (“Mr. Horner”) (collectively “Appellants”) appeal the trial court's judgment that found in favor of Gail Mackey (“Gail”) and 7 Valleys Equipment Company, Inc. (“7 Valleys”) (collectively “Respondents”) in its determination that a certain promissory note and deed of trust were invalid and that the Bank and its trustee were permanently enjoined from foreclosing on the aforementioned deed of trust. Appellants assert three points relied on. We reverse the judgment of the trial court.
Viewing the evidence in the light most favorable to the trial court's judgment, Blackburn v. Habitat Devel. Co., 57 S.W.3d 378, 385 (Mo.App.2001), the record reveals that 7 Valleys was incorporated by Gail and her husband, Daniel Mackey (“Daniel”), in 1991 and the couple were the sole shareholders. 1
In August of 1998, 7 Valleys purchased a tract of residential real estate located on Vine Street in Cassville, Missouri (“the Property”), where the Mackeys resided until their separation in 2002 when Daniel left the home and Gail continued to reside there.2 7 Valleys financed this purchase with the Bank giving its promissory note in the amount of $190,000.00 and a deed of trust securing it (“the 1998 loan”). As best we discern the record, both Gail and Daniel signed as personal guarantors as well. This transaction closed on August 28, 1998, and the documentation was signed by Daniel as “president” and Gail as “secretary”.3
In preparation for the aforementioned transaction, certain corporate formalities were undertaken by 7 Valleys. On July 31, 1998, 7 Valleys executed a “CORPORATE RESOLUTION,” which stated the following under the heading “BORROWING AND SIGNING AUTHORIZATION:”
[b]e it resolved ... that any 2 of the persons listed on Schedule D[are] authorized to sign any promissory notes, drafts, instruments or agreements ... of this corporation[;] and [are] further authorized to borrow from time to time on behalf of this corporation from the said bank such sums of money for such times and upon such terms as may to them or any of them, seem advisable....
Schedule D attached to this resolution included the signatures of Daniel as president and Gail as secretary. This document also stated that it was to “continue in force until express written notice of its rescission or modification has been received by the said bank....”
A second document, entitled “CORPORATE AUTHORIZATION RESOLUTION” was executed on that same date. This document indicated that “any person listed below ... [is] authorized to ...,” among other things, “[b]orrow money on behalf and in the name of this corporation, sign, execute and deliver promissory notes or other evidences of indebtedness ...” and to “mortgage ... real estate or other property now owned or hereafter owned or acquired by this corporation as security for sums borrowed....” Both Daniel and Gail's signatures appear on this document as having the power to take the aforementioned actions. This document also provided that it would remain in effect “until express written notice of its rescission or modification has been received and recorded by this Financial Institution.” Thereafter, the mortgage agreement with the Bank was extended on several occasions. On December 28, 2001, the Mackeys signed a “TERM LOAN EXTENSION AGREEMENT” as well as an additional extension agreement on November 6, 2002. The 1998 loan with the Bank was then extended again on October 29, 2003; October 19, 2004; and November 3, 2005. These latter three extensions were not signed by Gail and, instead, were signed solely by Daniel.
In the latter part of 2005, while the Mackeys' divorce was still pending, Daniel contacted the Bank about refinancing the 1998 loan to borrow an additional $65,000.00 to “settle up with the Attorney General's Office on a Workers' Compensation insurance claim.” Ultimately, the Bank discovered that 7 Valleys had been administratively dissolved by the Secretary of State in 2001 for failing to file its annual report, but was reinstated after Daniel filed annual registration reports for the years 2001 through 2006 on March 1, 2006. 4
In preparing the refinancing documentation, the Bank requested that Daniel provide it with a copy of the minutes of the 7 Valleys' board of directors meeting at which the mortgage of the Property was approved.5 Daniel then provided the Bank with minutes from a meeting purportedly held on January 12, 2006, at the Rib Restaurant in Cassville where Daniel and Mr. White were shown as present. The minutes from this meeting reflect that the corporation resolved to “authorize current President/Secretary, [Daniel] to accept and sign on behalf of the corporation the new deed and mortgage of $225,000 at [the Bank]....” The minutes also authorized Daniel to correct the original loan documentation which incorrectly stated the full legal name of 7 Valleys.
On March 13, 2006, the refinancing of the 1998 loan closed with Daniel executing a promissory note and deed of trust and other documents as both president and secretary (“the 2006 loan”).6 Incident to the refinancing, the outstanding balance on the 1998 loan, the amount of $123,698.05, was paid in full. Gail's signature does not appear on any of the 2006 loan documentation and there were no documents showing she guaranteed the 2006 promissory note.
At trial, Gail denied having knowledge of this transaction as it was taking place and related she further was not informed of the transaction by the Bank. Later, in the summer of 2006, Gail apparently learned of the 2006 loan; however, it was not until the Bank began foreclosure proceedings against the Property over a year later that she took any action.
In December of 2007, both Gail and 7 Valleys eventually filed their “SECOND AMENDED PETITION FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION AND PERMANENT INJUNCTION AND PETITION FOR DECLARATORY JUDGMENT” in which they sought to enjoin the Bank from proceeding forward with its foreclosure of the Property scheduled for December 28, 2007. Gail and 7 Valleys each generally averred Daniel had forged and presented fraudulent documents to the Bank to obtain funds necessary to purge himself from contempt of court on the worker's compensation issue by obtaining the 2006 loan; that Daniel forged documents and the corporate resolution to indicate that the shareholders had approved said documents and pledged the Property as collateral without “authority to execute the note and deed of trust dated March 13, 2006[,] on behalf of [7 Valleys];” and that as a result of the fraud and misrepresentation of Daniel he obtained an additional $65,000.00 from the Bank after pledging the Property as collateral, thereby increasing Gail and 7 Valleys' liability on the original note without their knowledge and consent. Saliently, Respondents do not assert the Bank conspired with Daniel to defraud them. Rather, Respondents maintain the Bank “knew or with the exercise of reasonable diligence should have known” of Daniel's fraud or misrepresentation. Specifically, in the petition Respondents sought in Count I a temporary restraining order, preliminary injunction and permanent injunction to prevent foreclosure on the Property; in Count II Gail sought a declaratory judgment declaring the deed of trust dated March 13, 2006, to be invalid and unenforceable; and in Count III 7 Valleys sought a declaratory judgment declaring the deed of trust dated March 13, 2006, to be invalid and unenforceable.
In their answer Appellants admitted Gail had executed an individual guaranty of the 1998 loan; denied all pertinent allegations against them; and asserted affirmative defenses that Gail and 7 Valleys each lacked standing to seek to enjoin the foreclosure of the March 13, 2006, deed of trust. Then, in their Counterclaim against Respondents, Appellants set out that if the trial court ruled in favor of either or both Respondents and declared the March 13, 2006, deed of trust securing the loan made by the Bank in the amount of $225,000.00 to be invalid and enforceable, Respondents would be unjustly enriched if the trial court
did not also exercise its equitable jurisdiction to declare revived the lien of the 1998 [d]eed of [t]rust to the use and benefit of [the Bank], at least to the extent of securing an amount equal to the balance of $126,099.97 on the 1998 [n]ote as of March 13, 2006, when the 2006 [d]eed of [t]rust was executed.
Appellants set out that there was no adequate remedy at law to seek re-imposition of the lien of the 1998 deed of trust and pled that equitable relief was both necessary and appropriate. Further, Appellants asked the trial court “for a declaratory judgment ordering, adjudging and declaring the revival of the lien of the 1998 [d]eed of [t]rust” securing the payment of a sum not less than $126,099.97.
Two hearings were subsequently held. At a December 18, 2007, hearing, the trial court considered Respondents' motion for a temporary restraining order. At that hearing, Mr. White testified that although he was friends with Daniel, he had never heard of 7 Valleys; had no knowledge he was listed as a director of 7 Valleys; and knew nothing about “any of this.” He also testified that he did not attend a board of directors meeting at the Rib Restaurant in January of 2006.
Thereafter, at a March 10, 2010, hearing, Mr. Horner testified he was aware Mr. White and Daniel were friends and he had even seen them dining together at the Rib Restaurant on occasion; however, he did not...
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