Martin v. Turnbaugh

• Decision Date: 22 December 1899
• Citation: 153 Mo. 172,54 S.W. 515
• Parties: MARTIN et al. v. TURNBAUGH et al.
• Court: Missouri Supreme Court

54 S.W. 515

153 Mo. 172

MARTIN et al. v. TURNBAUGH et al.

Supreme Court of Missouri, Division No. 1.

December 22, 1899.

ACTIONS — EJECTMENT — EQUITY — SATISFACTION OF MORTGAGE — CANCELLATION — MERGER.

1. Where, in ejectment, defendant, by cross action, asked to have the entry of satisfaction of his mortgage on the land canceled, and that he be given a lien on the land for taxes and improvements, the court properly treated the case as one in equity.

2. Where, in ejectment, defendant asked to have the entry of satisfaction of his mortgage on the land canceled, and, in reply, plaintiff pleaded extinguishment of the mortgage by defendant's fraudulent acceptance of a deed and releasing the mortgage, and by merger of the qualified title into the absolute, and by payment of the debt secured, such issues were proper matters of defense to defendant's claim for equitable relief, and plaintiff should not be forced to bring a separate bill to redeem from the mortgage, he being a purchaser at execution on a judgment junior to the mortgage.

3. Where a mortgagee took a deed in place of his debt, and canceled the mortgage, given for a bona fide indebtedness, of record, on the theory that the mortgage merged in the deed, but the deed was afterwards set aside as in fraud of creditors, he was entitled to have the satisfaction canceled.

4. Where a debt was secured by a mortgage on two parcels of land, and the mortgagee purchased the equity of redemption as to one, such purchase constituted an extinguishment of the debt only to the extent that the value of that parcel bore to the total value of the land, and hence the mortgagee was entitled to enforce the mortgage against the other parcel as to the part of the debt unpaid.

5. Where a mortgagee purchased at sheriff's sale land of the mortgagor not included in the mortgage, and agreed to pay to him or his heirs the difference between the price paid and the value of the land, one entitled to redeem from the mortgage could not compel the mortgagee to apply such difference to the mortgage debt.

Appeal from circuit court, Lincoln county; E. M. Hughes, Judge.

Action by Charles Martin and others against Stephen Turnbaugh and others. From a judgment for defendants, plaintiffs appeal. Reversed.

Ejectment to recover 56 acres of land in Lincoln county. In 1869, Lemuel M. Wells purchased from Edward Coles a tract of land aggregating 3,001.25 acres, of which 2,346.25 acres lay in Pike county and 655 acres lay in Lincoln county. It was all one contiguous body of land, and the dividing line between Pike and Lincoln counties placed the parts specified in those counties respectively. On September 20, 1872, Wells borrowed $22,500 from Hudson E. Bridge, giving his note therefor, payable five years after date, and secured the note by a deed of trust covering the whole tract to George E. Leighton, as trustee for Bridge. Thereafter, on the 17th of March, 1879, Wells borrowed $9,719.97 from Fielden Estes, and gave him his note therefor, payable one day after date, and secured it by giving a second deed of trust on the entire tract to N. B. Griffith, as trustee for Fielden Estes. Estes afterwards purchased the Bridge note and deed of trust, and on May 18, 1887, the total debt, principal and interest, of the two notes, amounted to $48,880.03, and on that date Wells conveyed the whole property to Estes, by a warranty deed, for an expressed consideration of $48,880.03, and thereupon Estes released the two deeds of trust on the margin of the records, and was put into possession of the land by Wells. Prior to and on the 18th of May, 1887, when Wells conveyed to Estes, there was a suit pending against Wells by James G. Reeds, administrator of C. C. Wells, in the circuit court of Pike county, which ripened into a judgment, on April 17, 1888, against Wells, for $31,390.45. An execution issued thereon, and the sheriff sold the whole property. Estes became the purchaser at this sale of the 2,346.25 acres that lay in Pike county, and the plaintiffs became the purchasers of 56 acres of the 655 acres that lay in Lincoln county for $505, and other persons, whose names are not disclosed by this record, became the purchasers of the remainder of the 655 acres. Thereupon these plaintiffs began an action to set aside the deed of May 18, 1887, from Wells to Estes, on the ground that it was a fraudulent conveyance, made to hinder, defraud, and delay the creditors of Wells; and this action resulted in a decree as prayed. Martin v. Estes, 132 Mo. 402, 28 S. W. 65, and 34 S. W. 53. Then this action of ejectment was instituted. The petition is in the usual form. The answer of defendant Estes is a general denial and an equitable defense and cross action, in which he sets out the Bridge and his own deeds of trust, the fact of the execution and subsequent setting aside of the warranty deed from Wells to him, the entry of satisfaction of the deeds of trust, that he is and has been in possession of the land ever since the execution of the warranty deed, that neither the plaintiffs nor any one for them have offered to pay the debts secured by the deed of trust, the payment of the taxes on the land, and then asks that the entry of satisfaction of the deeds of trust on the margin of the records be set aside and canceled, and that he be given a lien on the land for the taxes and improvements. The plaintiffs say that the reply contains: "(1) A general denial of all allegations in the answer except those specially admitted to be true. (2) An admission that L. M. Wells, deceased, is the common source of title. (3) An admission of the giving of the first and second deeds of trust on the Coles lands to Leighton and Griffith, as trustees for Bridge and Estes, respectively. (4) An admission that Wells and wife conveyed the Coles lands to Estes by their deed of May 18, 1887, and the giving of a written agreement by Estes to reconvey to him on certain terms. (5) An admission of the marginal acknowledgment of satisfaction of the debts described in the two deeds of trust on the Coles lands by Estes, as recorded in Pike and Lincoln counties, and the release of the land from lien of same, and the cancellation of the mortgage notes. (6) Allegations of the recovery of a judgment by Reeds, administrator of C. C. Wells, against L. M. Wells, the issuance of an alias execution thereon to Lincoln county, and the purchase by plaintiffs of the Lincoln county portion of said Coles lands at sheriff's sale, and the reception of a sheriff's deed therefor. (7) Allegation of the rendition of a decree in their favor setting aside said warranty deed of May 18, 1887, for fraud, etc., and its affirmance by the supreme court. (8) Allegations that, even if L. M. Wells was bona fide indebted to said Estes to an amount on the notes secured by the two deeds of trust on the Coles lands, aggregating $48,880.03 on May 18, 1887, the marginal entries of satisfaction of said recorded deeds of trust and the cancellation of said notes were but part and parcel of a fraudulent scheme and conspiracy between him and said Wells to defeat the latter's creditors, in which said Estes actively assisted and participated; and by using his debts to and in such a fraudulent attempt he is estopped in equity and good conscience from now setting up said deeds, or having them restored as liens on the lands in controversy. (9) Allegations that Estes' said debts were fully paid off, and the Coles lands discharged from the liens thereof, or from the right to have them reinstated as liens, for the reason that the Pike county portion of said Coles lands alone was reasonably worth $60,000, a sum largely in excess of the aggregate of the two mortgage debts; and that in September, 1888, Estes acquired by sheriff's deed at a sale under execution Wells' equity of redemption in said Pike county portion of the Coles lands, together with the Ashley lands, and that the union of titles which Estes then claimed to have, as mortgagee with Wells' equity of redemption acquired at such sheriff's sale, was a merger, and operated as an extinguishment of all his rights as a creditor or mortgagee, and vested him with absolute ownership of the Pike county portion of the Coles lands, and destroyed the relation of debtor and creditor between Wells and himself; and that neither of the parties thereafter regarded their status to be other than stated above; and that Estes elected to thus define his status by ceasing to regard the written agreement to redeem between him and Wells as longer remaining in force, and by failing thereafter to keep any account of the rents and profits and taxes originally designed to be used on a settlement between him and Wells in case the latter should redeem, and by taking full and absolute control of the land, and in the suit instituted by these plaintiffs to set aside the deeds of May 18, 1887, pleading in his answer absolute ownership in fee of the Coles lands, and by canceling his mortgage notes and making marginal entries of satisfaction of the recorded deeds of trust, and by returning to Wells the $2,000 previously paid by the latter on the redemption agreement. (10) An allegation that the effect of the decree setting aside the warranty deed from Wells and wife to Estes, dated May 18, 1887, at the instance of these plaintiffs, was only to annul the same as to the Lincoln county portion of the Coles lands, leaving the said deed in full force so far as the Pike county portion thereof was concerned; thus creating clearly a merger of estates, and an extinguishment of his debts and liens on the land therefor. (11) An allegation of an agreement between Estes and Wells as to the Ashley lands, whereby the excess of its value over the sum expended by Estes thereon, amounting to about $10,000, should be repaid to said Wells, and that such surplus, together with the $2,000 previously paid by Wells on the redemption agreement, should be credited on Estes' debts, even if he should be...