McNatt v. The Maxwell Investment Co.
| Decision Date | 10 June 1932 |
| Docket Number | No. 31003.,31003. |
| Parties | MARY E. McNATT, ORA McNATT and MINNIE McNATT, Appellants, v. THE MAXWELL INVESTMENT COMPANY, a Corporation, THE GUARANTY TRUST COMPANY, a Corporation as Trustee, THE PRESIDENT AND FELLOWS OF MIDDLEBURY COLLEGE OF ADDISON COUNTY, a Corporation, A.N. HENSLEY, Trustee, MATTIE M. WILLIAMS and FRANK WILLIAMS. |
| Court | Missouri Supreme Court |
Appeal from Lawrence Circuit Court. — Hon. Emery E. Smith, Judge.
AFFIRMED.
J.B. McGuffin and H.H. Bloss for appellants.
(1) While it is true, that one paying a negotiable instrument to an agent does this at his own risk, yet; if the principal has by repeated acts acquiesced in such payments so made to the agent, who did not have the paper, then the equitable maxim, that where one of two innocent persons must suffer on account of the default of a third person, the loss should fall upon him, who by his course of conduct caused the other to be misled." Sharp v. Knox, 48 Mo. App. 178; Bank v. Life Insurance Co., 148 Mo. 127; Thornhill v. Mascucci et al., 216 S.W. 819; Bennett et al. v. Potaschnic, 257 S.W. 838; Austin Machinery Co. v. Bank, 255 S.W. 585; McDonald v. Smith, 206 S.W. 591; Carthage First National Bank v. Loan Co., 145 Mo. 127; May v. Jarvis Conklin Mtg. Co., 138 Mo. 275; Mumford v. Knox, 50 Mo. App. 356. (2) The grantee under a quit claim deed gets only such rights as his grantor had at the time of the execution of the deed, if the grantor after the execution of the deed, acquired the title, this would not enure to the benefit of the grantee. In this case the Maxwell Investment Company certainly got no title under the foreclosure, if the debt had been paid, and The President and Fellows of Middlebury College got what the Maxwell Investment Co. secured, so the grantee Mattie Williams, secured nothing by reason of quit claim deed from the said President and Fellows of Middlebury College. Starr v. Barts, 219 Mo. 47, 117 S.W. 1125; Starr v. Kisner, 219 Mo. 64; Shelton v. Horrell, 232 Mo. 358, 134 S.W. 988. The courts will presume that the knowledge that the Maxwell Investment Company had of the payment of the mortgage debt is the knowledge of the last grantee under the quit claim deeds. Shelton v. Horrell, 134 S.W. 992. (4) The deeds made by the Maxwell Investment Co. to the President and Fellows of Middlebury College and the one from said College to the defendant Mattie Williams, were merely quit claim deeds. Miller v. Bayless, 92 S.W. 482; Bucher v. Rogers, 60 Mo. 130; Staid v. Rossier, 137 S.W. 901; Brawforde v. Wolfe, 103 Mo. 391.
James E. Sater and McNatt & McPherson for respondents.
(1) (a) If a debtor owing money on a written security pays or settles with another as his agent, it is his duty at his peril to see that the person thus paid is in possession of the security; and if not in possession of the security; and if not in possession thereof, the debtor must show that the person paid had special authority to receive payment, or that creditor has represented such person to have such authority. Cummings v. Hurd, 49 Mo. App. 139; White v. Kehlor, 85 Mo. App. 557; McDonald v. Smith, 206 S.W. 591; Sexton v. Gordon, 291 S.W. 512; Sewell v. Schooler, 4 S.W. (2d) 491; Brants v. Runnels, 26 S.W. (2d) 1004. (b) And the fact that a broker negotiates a loan to a borrower for a lender does not show that broker has authority to collect either principal or interest. Werth v. Ollis, 70 Mo. App. 321; Hefferman v. Boetler, 87 Mo. App. 320; Brants v. Runnels, supra. (c) To establish agency by estoppel the party relying thereon must act in good faith; and where agency is denied, the test is whether a person exercising ordinary prudence would be justified in assuming agency from the acts and conduct of the principal. Bank v. Insurance Co., 145 Mo. 138; Thornhill v. Mascucci, 216 Mo. App. 821. (d) Where the payor does not know the holder's ownership of his obligation there can be no estoppel against such holder to deny the agency of a third person, for in such case the payor could not be misled by such holder. Hefferman v. Boteler, 87 Mo. App. 321. (e) The rule of "holding out" applies only where the principal has knowledge of what his agent does. Alt v. Grosclose, 61 Mo. App. 412. (f) Where lender has given agent no authority to receive payment, and borrower pays agent, the debt is not satisfied until the money reaches lender, for the intermediary is in such case acting as agent for the borrower in receiving and transmitting money. 2 C.J. p. 448, sec. 45. (g) The law indulges no presumption that agency exists, and facts relied on to establish such agency must be given natural and reasonable, not forced, strained or distorted construction. Kaden v. Moon Mtr. Car Co., 26 S.W. (2d) 814. (h) Where the payor does not know of the holders' ownership of the obligation there can be no estoppel against the holders to deny the agency of a third person. Hefferman v. Boteler, 87 Mo. App. 321. (2) Where a person has title and stands by and either encourages or does not forbid the purchase by a person having no knowledge of such title, he and all claiming under him will be estopped to thereafter, assert such title, the rule being that, "when one stands by and sees another sell his property and says nothing when he might with propriety speak, he shall not thereafter be permitted to claim the property for himself." Guffey v. O'Reiley, 88 Mo. 429; Anderson v. Baumgartner, 27 Mo. 80; State ex rel. v. Staed, 65 Mo. App. 487; Blake v. Keiser, 267 S.W. 94; Bank v. Ferson, 208 S.W. 139; Manning v. Coal Co., 181 Mo. 376; Skinner v. Stouse, 4 Mo. 67; Hubbard v. Slavens, 218 Mo. 620. (3) Even though a person does not in fact have any interest in land, yet if such person mistakenly, but in good faith believes that he has an interest in such property, to protect which he discharges a lien, he is subrogated to the lien for his payment. 27 Cyc. 378, 379; Roberts v. Best, 172 Mo. 81; Jacobs v. Webster, 205 S.W. 532; Dickson v. Morgan, 285 S.W. 558; Cockrum v West, 23 N.E. 140; Fowler v. Parsons, 143 Mass. 401.
An action to set aside a sale made under the power in deed of trust, and cancel deeds made in pursuance of such sale.
The plaintiffs, the three McNatt sisters, unmarried, were owners of ninety-one and a fraction acres of land in Lawrence County. C.V. Wheat, a relative of the plaintiffs, was conducting business under the name of the Southwest Mortgage Company. March 1, 1923, the plaintiffs obtained through Wheat a loan of $3,300 from the Maxwell Investment Company of Kansas City, secured by deed of trust on the land with the Guaranty Trust Company as trustee. The principal note bore six per cent interest, payable annually, shown by coupons each for $198, running for the life of the loan which matured March 1, 1928.
A second mortgage was made to secure commission notes, five in number, of thirty-three dollars each, payable annually on the first of March of each year. The first mortgage was sold to the President and Fellows of Middlebury College of Addison County, Vermont, a corporation. It appears without dispute that the interest coupons on the first mortgage were paid for three years, and that the first three commission notes were paid at their maturity. The commission deed of trust was foreclosed under the power of sale for alleged default in the last two commission notes, April 6, 1929, and bought in for the sum of $75 by the Maxwell Investment Company. This was more than a year after the note secured by the first mortgage became due and after the maturity of the fifth and last commission note secured by the second mortgage. It is this sale which the plaintiffs seek to set aside, together with all conveyances made in pursuance of it.
The Maxwell Investment Company, April 8, 1929, conveyed the title acquired by the sale to the President and Fellows of Middlebury College of Addison County, Vermont. This deed contains an anti-merger clause to prevent the merger of the mortgage held by the grantee with the fee. The President and Fellows of Middlebury College, June 4, 1929, by special warranty, conveyed the property to Mattie M. Williams, defendant. The plaintiffs claimed that the last two commission notes had been paid before the foreclosure sale.
[1] I. Whether, as plaintiffs claimed, the last two commission notes had in fact been paid is determined by an interpretation of the evidence. When the first mortgage fell due March 1, 1928, there was due as follows:
First mortgage principal note, .... $3,300.00
Two interest coupons .............. 396.00
Eight per cent interest on interest
note due 1927 ................... 15.84
Two commission notes .............. 66.00
_________
$3,777.84
Several alleged payments to reduce that amount will be noted.
In 1927, exact date not given in abstract of the record, one Long, representing the Commerce Trust Company, took from the plaintiffs a note for $247, secured by a chattel mortgage on plaintiff's growing corn. It is not claimed that this mortgage paid any part of the principal or interest on the other debts but was merely additional security. The payments made by the plaintiffs and practically all correspondence had by plaintiffs in relation to indebtedness and extensions and payments thereon was with the Commerce Trust Company which handled the matter for the holders of the notes.
C.V. Wheat had received the money for previous payments for the plaintiffs and had remitted it to the Commerce Trust Company. After the default of interest in 1927, the Commerce Trust Company began to make demands for the payment of the interest due and the commission notes claimed to be in default. On that chattel mortgage Wheat, December 22, 1927, collected $37; February 16, 1928, he received $42 and gave plaintiffs his receipts. Plaintiffs claim that those payments discharged the last two commission notes and satisfied the...
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Fitzpatrick v. Federer
...in status quo, i. e., plaintiffs must have sought to do equity before being entitled to equitable relief. McNatt v. Maxwell Investment Co., 330 Mo. 675, 50 S.W.2d 1040, 1044[6-8]. A liberal and fair construction of the prayer of plaintiffs' petition results in the conclusion that plaintiffs......