McCauley v. Smith

• Decision Date: 02 December 1940
• Docket Number: No. 19802.,19802.
• Parties: McCAULEY et al. v. SMITH.
• Court: Missouri Court of Appeals

146 S.W.2d 639

McCAULEY et al. v. SMITH.

No. 19802.

Kansas City Court of Appeals. Missouri.

December 2, 1940.

Rehearing Denied January 6, 1941.

Appeal from Circuit Court, Buchanan County; Emmett J. Crouse, Judge.

"Not to be officially published in State Reports".

Action by Cordelia B. McCauley and another against E. L. Smith for fraud and deceit. From judgment on verdict for plaintiffs for $1,425, defendant appeals.

Reversed.

Strop & Strop, of St. Joseph, for appellant.

L. F. Randolph and H. Merritt, both of St. Joseph, for respondents.

BLAND, Judge.

This is an action for fraud and deceit. The case was originally brought against E. L. Smith and Mrs. Charles C. Lewis, but before the trial of the cause plaintiffs dismissed as to Mrs. Lewis. Plaintiffs recovered a verdict and judgment in the sum of $1,425 and defendant E. L. Smith (hereinafter referred to as defendant) has appealed.

Plaintiffs owned a certain lot with a house situated thereon, located in the City of St. Joseph. They lost the property by foreclosure of a deed of trust thereon. They claim in this suit that defendant was responsible for the foreclosure and was guilty of fraud in connection therewith.

The facts show that the husband of the plaintiff Cordelia B. McCauley acquired the property in 1922; that said plaintiff secured a divorce from her husband in that year and was awarded the property in question. The plaintiff Nettie M. Pontius, a sister of plaintiff Cordelia B. McCauley, acquired a half interest in the property in 1929 or 1930. On January 1, 1931, a note became due in the sum of $1,750, secured by a deed of trust upon the property in question and owned by the First Trust Company of St. Joseph. On the date last mentioned plaintiffs obtained a loan from the defendant, in the sum of $1,750, secured by a deed of trust on the property, with which to discharge the indebtedness to the First Trust Company. Said loan made by the defendant became due three years after its date, or on January 12, 1933.

A short time after the loan was made by the defendant he sold the note and mortgage to a Polish lady by the name of Mrs. Zbierski, who testified at the trial in broken English. She held the loan until the foreclosure which occurred on May 22, 1934. After he sold the loan to Mrs. Zbierski defendant continued to collect the interest on the note and remitted the amount thereof to Mrs. Zbierski. He did not inform plaintiffs, until October 28 1933, that he no longer continued to hold the note and mortgage. At the time the loan was procured, the plaintiff Mrs. McCauley lived in Kansas City and the plaintiff Miss Pontius in Detroit, Michigan. There was considerable correspondence had between plaintiffs and defendant relative to the renewal or the payment of the loan. Plaintiffs introduced letters written by defendant but stated that they retained no copies of the letters they wrote to him and, consequently, they were unable to produce any of them at the trial. However, the letters written by defendant, and introduced in evidence by the plaintiffs, tend to show that as early as October 28, 1933, plaintiffs had applied to the Home Owners' Loan Corporation (referred to in the evidence at times as the HOLC) for a loan on the property, with which to pay off the mortgage. Under the rules of the HOLC no loan could be made without the written consent of the mortgagee to take HOLC bonds in payment of the existing loan. The letter written by defendant to Mrs. McCauley on October 28, 1933 shows that she had written him asking if he would accept the bonds of the corporation in payment of the loan. He wrote that he would take the matter up with "the legal holder" of the note and would then advise them what "we can do in the matter for you", stating that the holder of the note had refused to accept bonds in settlement of the loans held by her.

On January 6, 1934, six days before the mortgage became due, defendant wrote Miss Pontius stating that the holder would consent to a three-year extension of the loan provided semiannual payments of $50 each would be made upon it. Apparently plaintiffs desired a reduction in the rate of interest on the loan, which Mrs. Zbierski refused to make. At any rate no extension of the loan was agreed upon or made. In the letter of January 6, 1934, defendant stated that if the extension was made that his commission would be $52.50. On February 17, 1934, defendant wrote Miss Pontius acknowledging receipt of a letter from her and stating that the "holder of your note declines to accept HOLC bonds in payment of the principal of the same," and further stating that the holder of the same demanded its payment.

On March 3, 1934, defendant wrote Mrs. McCauley stating again that the party who held the loan would not accept HOLC bonds. Sometime prior to April 26, 1934, Mrs. Zbierski and defendant caused the trustee in the deed of trust to start foreclosure proceedings and on that day defendant wrote Mrs. McCauley that the property had been advertised for sale on May 22, 1934, and giving her the name and address of Mrs. Zbierski, the holder of the note. This was the first time that either of the plaintiffs knew the name of the holder of the note. He stated that he had asked Mrs. Zbierski if she would accept HOLC bonds and that she had refused to do so. The letter concluded as follows:

"You, Mrs. McCauley, know that I am very sorry for you, and that I have done all I can do for you in this matter. I got Mrs. Zbierski to grant you an extension of time for payment of this note, which was due and payable January 12th, 1934, but it seems that you did not feel able to meet the payments she demanded of you, and the extension agreement was never completed. I think she would still be willing to grant an extension of time for the payment of this note as outlined in my letter to Miss Nettie Pontius under date of January 6th, 1934.

"I do not know of any further service I can be to you in this matter, but, if you think of some way in which you think I may be able to assist you further in it, you will please advise me."

On May 1, 1934, defendant wrote Mrs. McCauley as follows: "I have your letter of the 28th inst. and replying to same will say that I am in no way responsible for the foreclosure proceedings, and that I have no authority to stop it. Mrs. Zbierski is the legal holder of your note, and she ordered the foreclosure. She declines to stop it. I took your letter of the 28th inst. to Mrs. Zbierski last evening, and read it to her. She showed me the letter you wrote to her, and her daughter told me she would reply to same. Mrs. Zbierski still refused to accept the HOLC bonds. She said if the Home Owners' Loan Corporation will agree to make you a loan for a sufficient amount to meet your indebtedness to her, and some bond buyer will deposit the amount you will owe to her the date the bonds are delivered to her in the Tootle Lacy National Bank, St. Joseph, Missouri, she will turn the bonds over to the buyer at par and take the cash. With reference to the commission I would receive were you to accept the terms of the extension agreement offered to you by Mrs. Zbierski, I will say that is not worrying me in the least. I will, of course, not receive the commission if Mrs. Zbierski were to accept the HOLC bonds."

Mrs. McCauley, apparently realizing that Mrs. Zbierski would not accept the HOLC bonds, called upon Mr. Parker, an officer of the Commerce Trust Company in Kansas City, and procured a letter from him dated May 15, 1934, and addressed to her, stating that he would purchase the HOLC bonds in the sum of $1,750 and pay off the Zbierski loan; that, "You may advise the owner, Mrs. Zbierski, that she may send these bonds to me and I will promptly remit this amount. * * * If there is any question about this subject, you may have the owner of the mortgage call me on the long distance telephone from St. Joseph, at my expense, when I will verify the statement I have made in this letter."

Mrs. McCauley, on the day she secured Mr. Parker's letter, went to St. Joseph and found the defendant at the courthouse in that city attending a trial in which he was a witness. She testified that she showed him Mr. Parker's letter, which he read; that, "I asked him first, `Why on earth did you advertise this place', and he said it was not his fault. It was Mrs. Zbierski's fault and he told me was trying to help us in every way he could"; that defendant stated: "This letter from the Commerce Trust Company is as good as gold"; that it would be too late when he got through at the courthouse to see Mrs. Zbierski but he would call upon her the next day. The witness stated that her mother was ill and that she could not stay in St. Joseph over night, so she went home. She further testified that she did not attend the sale "because when I handed him (defendant) the letter he says, it is as good as gold, from the Commerce Trust Company. This foreclosure sale will be called off.

"Q. The foreclosure sale will be called off? A. The foreclosure will be called off.

"Q. Did he say anything about you going on back to Kansas City? A. He did. He would handle the matter for me, handle, it through Mr. Parker at the Commerce Trust Company.

"Q. And that the foreclosure sale would be called off? A. It would be called off."

The witness further testified that she then offered to pay the expenses of the foreclosure and told the defendant if there was any question about the matter for him to call Mr. Parker, as she had no phone. "He said I could go home. Everything would be all right. He would take those papers and then he would notify Mr. Parker so that they could deposit the bonds, you know, at the Tootle Lacy Bank the way he agreed in that letter. They were to draw a draft on the Commerce Trust. That was the way it was to be completed. * * * Everything was in shape and he said I could go on home, he would handle the affair for me and if there was any question he was to call...