McKenzie v. Donnell

• Citation: 52 S.W. 222,151 Mo. 461
• Decision Date: 12 July 1899
• Docket Number: 8322
• Parties: McKenzie et al. v. Donnell et al., Appellants
• Court: Missouri Supreme Court

52 S.W. 222

151 Mo. 461

McKenzie et al. v. Donnell et al., Appellants

No. 8322

Supreme Court of Missouri, First Division

July 12, 1899

Appeal from Jackson Circuit Court. -- Hon. John W. Henry, Judge.

Affirmed (with modification).

William C. Forsee for appellants.

(1) Conceding, for argument, that McKenzie was non compos at the date of the deed in question, yet it does not follow that the deed is therefore voidable, even against his immediate grantee. (a) "The mere fact that a party to an agreement was a lunatic, will not operate as a defense to its enforcement, or as ground for its cancellation." 2 Pomeroy, Eq. Jur., sec. 946; Bishop on Cont., secs. 956, 967, 970; Thorpe v. Hanscom, 64 Minn. 201; Bank v Neely, 97 Tenn. 120; Arthurs v. Bridgewater Gas Co., 171 Pa. 532; Crawford v. Thompson, 161 Ill. 161; Cockrill v. Cockrill, 79 F. 143; Jackson v. King, 15 Am. Dec. 366. (b) But "a contract, executed or executory, made with a lunatic in good faith, without any advantage taken of his position, and for his own benefit, is valid both in equity and at law." 2 Pomeroy Eq. Jur., sec. 946; Bishop on Cont., secs. 969, 233; Ex parte Hall, 7 Vesey, 264; Selby v. Jackson, 6 Beavan, 204; Snook v. Watts, 11 Beavan 105 Steadman v. Hart, Kay 607; Fitzgerald v. Reed, 9 Sm. & Marsh 94; 1 Story Eq. Jur. (13 Ed.), p. 242. (c) "And where a conveyance or contract is made in ignorance of the insanity, with no advantage taken and with perfect good faith, a court of equity will not set it aside if the parties can not be restored to their original position and injustice would be done." This is the rule as between the immediate parties to the deed or contract. 2 Pomeroy Eq Jur., sec. 946; Bishop on Cont., sec. 970; Blount v. Spratt, 113 Mo. 48; Wells v. Mutual B. Ass'n, 126 Mo. 630; Kiehne v. Wessell, 53 Mo.App. 671; Niell v. Morley, 9 Vesey 482; Sergeson v. Sealey, 2 Atk. 412; Molton v. Camroux, 2 Ex. 487; Shaolters v. Allen, 51 Mich. 529; Fecel v. Guinalt, 32 La. Ann. 91; Fay v. Burdett, 81 Ind. 433; Behrens v. McKenzie, 23 Ia. 33; Smith's Succession, 12 La. Ann. 24; Carr v. Holliday, 5 Ired. Eq. 167; Crawford v. Scovill, 13 Norris (Pa.) 48; Young v. Stephens, 48 N.H. 133; Wilder v. Weakley, 34 Ind. 184; Eaton v. Eaton, 37 N. J. L. 108; Matthieson v. McMahon, 38 N. J. L. 536; Scanlon v. Cobb, 85 Ill. 296; Beals v. Sea, 10 Pa. St. 56. (2) Mrs. Donnell was a bona fide purchaser. Conceding further, for argument, that McKenzie was non compos at the date of the deed of trust to Stewart, and that, as against Stewart, he or his heirs were entitled to avoid it, and that the facts and circumstances were such that an equitable rescission could be decreed and effected, yet, as the lands were sold under the provisions of that trust deed to an innocent purchaser, for full value, there can be no rescission as against such purchaser. Bishop on Contracts, sec. 970; 2 Pomeroy, Eq. Jur., sec. 946; Ashcraft v. DeArmond, 44 Ia. 229; Crawford v. Thompson, 161 Ill. 161; Riggoss v. Green, 80 N.C. 236; Niell v. Morley, 9 Vesey 478. That she is an innocent purchaser is clearly shown by the record. The facts bring her status as such squarely within the strictest definition. She was a purchaser, first, in good faith; second, without notice; third, for a valuable consideration. Ins. Co. v. Smith, 117 Mo. 293; Young v. Schofield, 132 Mo. 660. If Mrs. Donnell is an innocent purchaser, she is entitled to retain the land. A decree awarding her merely the amounts paid by her, with interest, etc., does not restore her to her original position in the sense used by the authorities. Nor does it obviate that injustice which, the authorities declare, is a bar to any avoidance. If A innocently purchases land from B, who holds the record title, he is entitled to retain the land as against an unrecorded deed from B; it would not be contended, in such case, that he must surrender the land to the holder of the unrecorded deed upon repayment of the purchase price, with interest and outlay. He is entitled to retain the land. He is entitled to his bargain.

Geo. F. Ballingal and Wm. Warner also for appellants.

(1) Was the original transaction between McKenzie and Stewart valid? If this question is answered in the affirmative, then the subsequent transactions of all the defendants are necessarily valid and binding, and it becomes immaterial as to the subsequent mental capacity of McKenzie. First. Although a person may be of unsound mind, as a matter of fact, yet if not under guardianship, apparently sane, and has sufficient capacity to understand the nature and effect of the transaction at the time of its execution, the contract is valid. Wills v. Covenant Mut. Ben. Ass'n, 126 Mo. 630; Eaton v. Perry, 29 Mo. 96; Davren v. White, 42 N.J.Eq. 569; Lozear v. Shields, 23 N.J.Eq. 509; Wright v. Jackson, 59 Wis. 569; McCormick v. Litter, 85 Ill. 62; Alexander v. Haskins, 68 Ia. 73; Riggan v. Green, 80 N.C. 237; Cutler v. Zollinger, 117 Mo. 92; Lancaster B. K. v. Moore, 78 Pa. St. 407; Ins. Co. v. Hunt, 79 N.Y. 541; Hovey v. Hobson, 55 Me. 256; Dennett v. Dennett, 44 N.H. 531; Hedrick v. Bailey, 132 N.Y. 87; Searle v. Galbreath, 73 Ill. 269; Water Supply Co. v. Root, 56 Kan. 187; Thorpe v. Hanson, 64 Minn. 201; Elston v. Jasper, 45 Tex. 409. Second. Where a transaction is fair, in good faith, without notice, and no fraud practiced, the contract is binding. Scanlon v. Call, 85 Ill. 296; Bank v. Moore, 78 Pa. St. 407; Odom v. Riddick, 104 N.C. 515; Crawford v. Thompson, 161 Ill. 161; Ins. Co. v. Wiswell, 56 Kan. 751; Wells v. Ass'n Co., 126 Mo. 630; Rhoades v. Fuller, 139 Mo. 179; Cutler v. Zollinger, 117 Mo. 92; Blount v. Spratt, 113 Mo. 48. (2) The defendant bank is an innocent party without notice. There is no evidence in the case at bar and none claimed by plaintiffs that Mason who made the loan to Donnell in July, 1886, for $ 15,000 or Mr. Dean, his trustee, had any notice, or that either had any knowledge or information upon the subject-matter of insanity of Mr. McKenzie, at the time of the Stewart transaction, nor at any other time before the institution of this suit had they or either of them any information that Mr. McKenzie, at the time of the Stewart transaction, had not sufficient capacity to know and to understand what he was doing, or the nature and effect of that contract. Vansickle v. Bean, 110 Mo. 589; Hume v. Hopkins, 140 Mo. 65; Bray v. Campbell, 28 Mo.App. 516; Anderson v. McPike, 86 Mo. 293; Funkhouser v. Lay, 78 Mo. 78; Whitfield v. Riddle, 78 Ala. 99; Fertilizer Co. v. L. G. and Fer. Co., 82 N.Y. 484. (3) If the Stewart transaction and the sources of derivative title of defendant bank, are not valid and binding on plaintiffs, but are to be considered voidable, can they be avoided, unless defendants are put in statu quo? But the trial court did not carry that doctrine far enough to restore the defendants to their original position, and carried the doctrine too far in holding that the bank's title was subject to impeachment and voidable, and in extending to plaintiffs the right to redeem as to defendant's mortgage, unless that mortgage was paid in full. Rhoades v. Fuller, 139 Mo. 179; Wells v. Mutual Ben. Ass'n, 126 Mo. 630; Blount v. Spratt, 113 Mo. 48; Scanlan v. Cobb, 85 Ill. 296; Crawford v. Thompson, 161 Ill. 161; Odom v. Riddick, 104 N.C. 515; Greenslade v. Dare, 20 Beav. 234; Hazard v. Smith, 6 Irish Rep. Eq. 429; Campbell v. Hopper, 24 L. J. Ch. 644; Morris v. Budlong, 78 N.Y. 543; Phillips v. Huslier, 20 N. J. Eq.; Eline v. Vogle, 90 Mo. 239; Henry v. McKerkle, 78 Mo. 428; Michles v. Dillage, 17 N.Y. 80; Martin v. Radcliffe, 75 Mo. 258.

Wash. Adams and N. F. Heitman for respondents.

(1) The doctrine of innocent purchaser for value and without notice has no application to this case. Dan'l Negot. Inst. (4 Ed.), sec. 210; Hovey v. Hobson, 89 Am. Dec. 705; Redden v. Baker, 86 Ind. 191; Jenkins v Jenkins, 12 Ia. 195; Rannells v. Garner, 80 Mo. 474; Keihne v. Wessell, 53 Mo.App. 667; Hughes v. Jones, 116 N.Y. 67; Cochran v. Van Surley, 32 Am. Dec. 574; Phillips v. Moore, 100 U.S. 212; Wadsworth v. Sharpstein, 4 Selder 388; Pearl v. McDowell, 20 Am. Dec. 199; L'Amoureaux v. Curby, 22 Am. Dec. 655; Leonard v. Leonard, 14 Pick. 280; 1 Greenleaf Evi., sec. 550; Imholp v. Witmer, 31 Pa. St. 245; Foster v. Means, 42 Am. Dec. 332; Wright v. Fisher, 8 Am. St. Rep. 574; Corbit v. Smith, 71 Am. Dec. 431; Breckenridge v. Ormsby, 19 Am. Dec. 71. Nor is there any estoppel. Weiland v. Kobick, 51 Am. Rep. 676; McMorris v. Webb, 17 S.C. 558; Tucker v. Moreland, 10 Peters 57; Hurd v. Sack, 81 Mo. 615; Bishop v. Hunt, 24 Mo.App. 376; Collins v. Trotter, 81 Mo. 276. Where there is no benefit there is no liability. Hostler v. Beard, 54 Oh. St. 398; Dickerson v. Davis, 111 Ind. 433; McClain v. Davis, 77 Ind. 419; Davis v. Tarver, 65 Ala. 98; Howard v. Simpkins, 70 Ga. 322; Tiedeman on Com. Paper, sec. 280; Mustard v. Wohlford's Heirs, 15 Grat. 229; Harrod v. Myers, 21 Ark. 592; Jenkins v. Jenkins, 12 Ia. 195; Miles v. Lingeran, 24 Ind. 385; Sims v. Smith, 86 Ind. 577. The doctrine of innocent purchaser does not apply to such cases. Moore v. Hershes, 90 Pa. 196; Wirebach v. Bank, 97 Pa. 543; Van Patton v. Beals, 46 Ia. 62. Nor is there any bona fide purchaser here. Anglo Cla. & Bk. v. Ames, 27 F. 727; 1 Daniel Neg. Inst. (4 Ed.), sec. 210; Burke v. Allen, 29 N.H. 106. On restitution, see In re DeSilver, 5 Rawle, 111; Gibson v. Soper, 6 Gray 279; Vanchusen v. Sweet, 51 N.Y. 378; Dexter v. Hall, 15 Wall. 9; McClain v. Davis, 77 Ind. 419; Wadsworth v. Sharpstein, 4 Seldon 388; Hovey v. Hobson, 53 Me. 451. One is bound to inquire as to the capacity of another with whom he deals. As to Dean and Mason, and the bank, and the records, see Hill v. Anderson, 5 Smedes & M. 216; Howard v. Simpkins, 70 Ga. 322; Tiedeman on...