Martin v. Turnbaugh
| Decision Date | 22 December 1899 |
| Citation | 54 S.W. 515,153 Mo. 172 |
| Parties | MARTIN et al., Appellants, v. TURNBAUGH et al |
| Court | Missouri Supreme Court |
Appeal from Lincoln Circuit Court. -- Hon. E. M. Hughes, Judge.
Reversed and remanded (with directions).
J. D Hostetter for appellants.
(1) After satisfaction entered by a mortgagee or the beneficiary in a deed of trust on margin of record the land becomes thereby discharged from the lien, and the legal title revests in the mortgagor. Sec. 7096, R. S. 1889; McNair v Picotle, 33 Mo. 57; Gale v. Mensing, 20 Mo 461; Jackson v. Cunningham, 28 Mo.App. 354; Blanchard v. Baker, 29 Mo. 441; Dickerson v. Bridges, 48 S.W. 825. In the light of this principle it is pertinent to inquire, where is the legal title? If it exists at all, it must be found either in L. M. Wells, Estes, Leighton and Griffith the trustees respectively in the first and second deeds of trust, or in the plaintiffs. It can not be in Wells, because he is dead, and prior to his death, all his interest of whatever character, was transferred by the sheriff's deed at execution sale to the plaintiffs. It can not be in Estes, because he was the assignee of the beneficiary in the first one, and beneficiary in the second and it is elementary law that the legal title passes in a deed of trust to the trustee and not to the beneficiary. Pickett v. Jones, 63 Mo. 195; Siemere v. Schrader, 88 Mo. 20; Bailey v. Winn, 101 Mo. 649; Hospes v. Almstedt, 13 Mo.App. 270; Johnson v. Houston, 43 Mo. 227. Neither is the legal title in Estes by reason of the conveyance by general warranty deed of the entire "Coles lands" to him by Wells on May 18, 1887, for two reasons: 1st, Wells did not then have the legal title to convey, and 2d, said deed has been set aside and annulled, hence no title can accrue from that source. The legal title is not in Leighton and Griffith, the trustees in the two deeds of trust, for the reason that said deeds of trust have been acknowledged satisfied, and the lands released from the liens thereof, and the notes secured thereby canceled, and marked paid on production to the recorder of deeds, in the manner pointed out by statute. Immediately upon the cancellation of the notes and the marginal entries of satisfaction being made, the legal title passed from said trustees back to Wells the mortgagor, and revested in him. It was April 3, 1890, when the notes were thus canceled and the records of the deeds of trust thus satisfied in Lincoln county, and on September 19, 1890, plaintiffs acquired all of L. M. Wells' interest in the 655 acres in Lincoln county, including his legal title thereto. Our position that the plaintiffs have the legal title to the Lincoln county portion of the "Coles lands" is in no manner shaken, because of some decisions, which hold that under certain circumstances a marginal entry of satisfaction made through mistake, and disconnected with fraud, may be set aside by a court of equity It suffices to say, that the marginal entries of satisfaction had never been set aside at the commencement of this action, and that Mr. Estes having made them in consummation of a fraudulent scheme, and one which he has been adjudicated to have actively participated in, by the courts, is not entitled to have them set aside because courts of equity will assist neither party detected in a fraud, but will leave each in the exact position where his own fraudulent conduct has placed him. Hancock v. Blackwell, 139 Mo. 440. (2) The second assignment of error is well taken because defendant Estes' marginal entries of satisfaction were part and parcel of the fraudulent design to conceal Wells' property from the reach of other creditors and to give to the public the impression that the transaction was bona fide. In other words Estes used his bona fide mortgage debts to aid Wells in the perpetration of a fraud, and a part of the scheme was, for him to cancel his mortgage notes, enter satisfaction of the deeds of trust on the margin of the record, and falsely claim full ownership of the land. Van Wyck v. Baker, 16 Hun. 168; Davis v. Leopold, 87 N.Y. 620; Ladd v. Wiggin, 35 N.H. 421. Where the grantee participates in the actual and intended fraud he will be granted no relief when his fraudulent deed has been set aside. The rule has been often announced in this State, that where a creditor uses his own bona fide debt or security to assist a debtor in placing his property beyond the reach of other creditors even though he only secures his own debt, the transaction as to the other creditors is void in toto and his debt will be postponed until other creditors are satisfied. Gutzwiller v. Lackman, 23 Mo. 168; Porter v. Stephens, 40 Mo. 229; Allen v. Berry, 50 Mo. 90; Shelley v. Boothe, 73 Mo. 74; State ex rel v. Hoke, 102 Mo. 410; Conn. M. L. Ins. Co. v. Smith, 117 Mo. 261; Tube Works Co. v. Machine Co., 118 Mo. 365; Bolan v. Ross, 120 Mo. 208; Cordes v. Staszer, 8 Mo.App. 61; McNichols v. Rubleman, 13 Mo.App. 515; Hanna v. Finley, 33 Mo.App. 645. And that no relief will be granted to parties participating in such fraudulent transaction, but the court will leave them just where it finds them. Brown v. Finlay, 18 Mo. 375; Hamilton v. Schull, 25 Mo. Mo. 166; Larimore v. Tyler, 88 Mo. 668. (3) Though an ejectment suit is in its inception purely a legal action, yet where the answer sets up an equitable defense, and prays for affirmative relief as in the case at bar, ipso facto, it is converted into a suit in equity, triable on the chancery side of the court, and must be disposed of on equitable principles, as to all parties in the suit. Kostuba v. Miller, 137 Mo. 172; Sutton v. Dameron, 100 Mo. 149; Swon v. Stevens, 143 Mo. 384; Allen v. Logan, 96 Mo. 598; O'Day v. Conn., 131 Mo. 321; Schuster v. Schuster, 93 Mo. 443. (4) If the holder of a mortgage purchases the equity of redemption, a merger takes place, the mortgage debt is satisfied and the estate discharged from the incumbrance. McLean v. Weise, 22 Ill.App. 272; Pringrey on Mortgages, 1036, 1037; Jones on Mortgages, 870; Baimis v. Brown, 71 N.C. 507; Weiner v. Henity, 17 Ill. 259. (5) Such purchase however may or may not create a merger according to the interest or benefit of the owner of the two estates, but he may elect, and in the absence of any evidence of election, the law presumes that he elected to adopt that status most beneficial to him, but when his intent and election are once made clear and manifest, his status becomes fixed, and he can not afterwards change it at will, particularly after the rights of third persons have intervened. Irish v. Clayton, 10 Vt. 81; Marshal v. Wood, 5 Vt. 250; Greenough v. Rolfe, 4 N.H. 363; Jeremy's Lessee v. Wood, 20 Ohio 261. (a) Where a mortgagee purchases at execution sale against the mortgagor, a part of the land covered by his mortgage, the mortgage becomes discharged and the mortgage debt extinguished. Bunch v. Graves, 12 N.E. 514; Drury v. Holden, 13 N.E. 547. (b) His bid is presumed to be the value of the land in excess of his entire mortgage debt. Blackley v. Branyan, 2 S.E. 319; Belleville Bank v. Reis, 26 N.E. 646. (c) And the portion so purchased becomes the primary fund for the payment of the debt, and by such purchase it is paid and extinguished. Biggins v. Brockman, 63 Ill. 316; Speer v. Whitfield, 10 N. J. 107; Murphy v. Elliott, 6 Blackf. 432; Russell v. Piston, 7 N.Y. 171; Gregory v. Savage, 32 Conn. 264; Coburn v. Stevens, 36 N.E. 132; Estate of Dull, 137 Pa. St. 116; Thomas v. Simmons, 103 Ind. 538; Lyman v. Gedney, 114 Ill. 388; Cook v. Bailey, 146 Pa. St. 328. (d) If holder of a first mortgage purchases the equity of redemption at a sale upon execution, the sale being made subject to the mortgage, the purchase operates as a payment of the mortgage debt, and he has no further remedy on the debt, and this on the principle that a party can not sue himself. Speer v. Whitfield, 10 N.J.Eq. 107; Biggins v. Brockman, 63 Ill. 316; Murphy v. Elliott, 6 Blackf. 482.
Pearson & Pearson for respondents.
(1) Defendant was entitled to have marginal entries of satisfaction set aside, because they were no part or parcel of the transaction of the fraudulent conveyance. That there was no consideration for the satisfaction, and that said notes have never been paid, nor have the deeds of trust ever been satisfied. St. Louis v. Priest, 103 Mo. 652. A court of equity has no power, nor disposition, to in any manner punish Mr. Estes for the part he took in the alleged fraudulent conveyance any further than force him to take nothing by reason of such fraudulent conveyance. It does not look at persons, but at transactions. Because the warranty deed from Wells to Estes was fraudulent, it will not hold that a deed of trust made years before should be held for naught. Bobb v. Woodward, 50 Mo. 95; Bank v Winn, 132 Mo. 80; White v. Catzhausen, 129 U.S. 329; Ladd v. Wiggin, 69 Am. Dec. 551; Haven v. Low, 9 Am. Dec. 25; Miller v. Zollison, 14 Am. Dec. 712; Bump on Fraud. Convey. (4 Ed.), sec. 484; Wait on Fraud. Convey., sec. 389. (2) Plaintiffs can not recover because there was an outstanding title at the time of the commencement of their suit. It has been held in this state by an unbroken line of decisions that "a plaintiff to recover in ejectment must show that he had the legal title at the time suit was commenced." Dunlap v. Henry, 76 Mo. 106; Gurno v. Admrs. of Janis, 6 Mo. 330; Norcum v. D'Oench & Ringling, 17 Mo. 99; Ford v. French, 72 Mo. 250. (a) It is sufficient for the defendant in an ejectment suit to defeat recovery by setting up and showing an equitable title in himself. Gooch v. Botts, 110 Mo. 419; Clyburn v. McLaughlin, 106 Mo. 521; Swope v. Weller, 119 Mo. 556; St. Louis v. Schulenberger, 98 Mo. 613; Seiberling & Co. v. Tipton, 113 Mo. 373; Allen v. Logan, 96 Mo....
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