Meredith v. Pound

• Decision Date: 04 January 1936
• Docket Number: No. 33040.,33040.
• Parties: MEREDITH v. POUND et al.
• Court: Missouri Supreme Court

92 S.W.2d 698

MEREDITH v. POUND et al.

No. 33040.

Supreme Court of Missouri, Division No. 2.

January 4, 1936.

Rehearing Overruled March 21, 1936.

Appeal from Circuit Court, Jackson County; Allen C. Southern, Judge.

Action in equity by Frank Meredith against James R. Pound and others. Judgment for plaintiff, and defendants appeal.

Reversed and remanded, with directions.

F. D. Glore, of Kansas City, for appellants.

S. P. Forsee, Preston Forsee, and James McGuire, all of Kansas City, for respondent.

COOLEY, Commissioner.

This is an action in equity to enjoin a threatened sale of real estate under a deed of trust and to cancel the deed of trust and the note secured thereby. The judgment below was for the plaintiff, adjudging void and canceling the deed of trust and note, and permanently enjoining defendants "from bringing any action upon said note or attempting to foreclose said deed of trust." Defendants appealed.

The appeal was granted to the Kansas City Court of Appeals. That court transferred the cause to this court on the ground that it involves title to real estate. The note in question is for $300; the amount involved being therefore insufficient to vest this court with appellate jurisdiction. But plaintiff pleads that the deed of trust and note never had validity; that they were never executed by the purported maker; and that the deed of trust constitutes a cloud on plaintiff's title which he asks the court to remove. There is also an attempt to plead that if the maker did sign the instruments her signatures were obtained by coercion and fraud of defendant Erickson, and that Huston, the payee named in the note, gave no consideration therefor, and that, for all the reasons above mentioned, the deed of trust and note were void ab initio. The circuit court so adjudged, thus destroying the mortgagee's muniment of title. Title to real estate is therefore involved, giving this court appellate jurisdiction. Hanna v. South St. Joseph Land Co., 126 Mo. 1, 10, 28 S.W. 652; Nettleton Bank v. McGauhey's Estate, 318 Mo. 948, 953, 954, 2 S.W.(2d) 771, 775; Linneman v. Henry, 316 Mo. 674, 291 S.W. 109.

The deed of trust and note were executed by one Sarah Furber under date of June 29, 1929. The note, by its terms, is due "one day after date," is payable to the order of John Huston, and draws interest at the rate of 6 per cent. per annum. It is negotiable in form. The deed of trust is described in the abstract as a "short form" deed of trust, describing and securing the $300 note, and giving the trustee power of sale in the event of default. It is not copied in the abstract. In it Erickson is named as second party, or trustee, and Huston as third party. It was acknowledged on said June 29th before Jacob H. Baker, notary public, and was filed for record in the proper office on July 8, 1929. It conveys lot 20 in block 5, Washington, "a subdivision of land in Jackson County," or, as stated elsewhere in the record, Washington addition to Kansas City, Mo. The exact description is not clear from the record, but this is not here important.

Sarah Furber died July 10, 1929. Plaintiff is her surviving brother and sole heir, and claims title in that capacity. At the time of the institution of this suit, defendant Pound was the holder of said $300 note, having acquired it from defendant Erickson, and was threatening foreclosure of the deed of trust for nonpayment of the note. Upon the filing of plaintiff's petition herein, a temporary injunction was issued, preventing the threatened advertisement and sale.

To maintain his action, plaintiff relies wholly upon the testimony of two of the defendants, Erickson and Pound. Their depositions had been taken. Plaintiff introduced Erickson's deposition and a portion at least of Pound's. Erickson, called as a witness by plaintiff, also gave some oral testimony.

From Pound's testimony it appears that he bought the note from Erickson, whom he had known for some 18 years, and whom he trusted. Erickson was operating a store and needed some money. Pound was a "sub-jobber" in the tobacco business, and for several years had sold tobacco to Erickson. He paid face value for the note, except a 5 per cent. "discount" which Erickson allowed. He did not know John Huston or Sarah Furber. Erickson told him the note was secured by a "first mortgage" on a 4 or 5 room house; did not tell him what the note and mortgage had been given for, nor when he, Erickson, had obtained them. He did not see the property. Erickson indorsed the note. "What I went on was simply Mr. Erickson indorsed the note and I always felt that he was a good square man in all his business dealings." (The indorsement, as appears from the note, was not limited or restricted.)

From Erickson's testimony the following facts appear:

Defendant Huston is a brother of Erickson's wife, and in 1929 lived in Iowa. He knew nothing of the note and deed of trust in question. Erickson had verbal authority to use Huston's name in the manner in which it was used in this instance; that is, to have notes intended for himself made payable to Huston and to indorse Huston's name thereon. He did not notify Huston of the execution of the note and deed of trust in question. He had known Mrs. Furber about ten years when this note and deed of trust were executed. He was not present when they were signed. There had been, however, two prior notes; first, one for $100, and, when her indebtedness to him exceeded that sum, one for $200, which it appears was given in payment of the $100 note and for further advances of money and merchandise. When the $300 note and deed of trust here involved were given, the $200 note was "canceled." The $200 note, also, had been made payable on its face to Huston, and had been secured by a deed of trust. Erickson was present when that note and deed of trust were executed by Mrs. Furber, and saw her sign them. Mr. Baker made out those papers. "I suppose he made them at Mrs. Furber's request. I can't remember if I heard Mrs. Furber ask Baker to make that $200 note and deed of trust. That was quite a ways back. I don't remember if I told Baker how to make it out. She just requested him to make out a note for $200. Mrs. Furber and Baker made out a note for $200 payable to John Huston. I don't remember if I asked them to make it that way or not. There was also a deed of trust. It covered her property. She did not owe me $200 when she made that note. I think it was $125 or $135. That was for money, insurance and paper hanging which I paid for her. * * * I let her have that money and one thing and another in money or check."

When the $300 note and deed of trust were given, Mrs. Furber had "used up" the $200 note and had "overdrawn" $25 or $35. Before the execution of said $300 note and deed of trust, Erickson had a talk with Mrs. Furber and "told her that if I am going to advance any more money I'll have to have more security. Then she said she'll make me out another note. Then she called for Mr. Baker. I believe she sent word to me to have Mr. Baker come down to see her."

The $300 note and deed of trust were delivered to Erickson immediately or very shortly after their execution, and before Mrs. Furber's death, by Mr. Baker, who had prepared them for her, and at her request. They had been signed and the deed of trust had been acknowledged when Erickson received them from Baker. Erickson filed the deed of trust for record and retained the note till he sold it to Pound. He could not remember how long he kept it. He had made no demand of payment before transferring the note to Pound. He did not tell Pound for what the note had been given. "I did not explain anything to Mr. Pound." Pound paid him "in cash and by check" the full amount of the note, less 5 per cent.

At the time the $300 note was given, Mrs. Furber owed Erickson only $225 or $235. He was to give her the remainder of the $300 from time to time as she needed it. She did receive from him the remainder in merchandise or in cash or cash items paid by him for her prior to her death, except $32.15, which he charged for nursing services rendered by his wife to Mrs. Furber during the last two months or so of her life. He testified that the nursing service was worth more. "My wife draws $35.00 a week if she goes out."

Plaintiff introduced in evidence an itemized statement, identified by Erickson as a statement of the items he had furnished Mrs. Furber, "which represent the $300 note." It covers the period from September 1, 1928, to July 10, 1929, the date of Mrs. Furber's death. About half of the items are cash advanced from time to time in sums ranging from $2.60 to $10; one cash advance being $25. The remainder of the items are for groceries or other merchandise furnished and money paid out for Mrs. Furber. Such items of cash, merchandise, etc., plus the $32.15 nursing charge, make up the full sum of $300.

Plaintiff testified that Mrs. Ferber was 71 years old when she died, and that, prior to her death, she had been "in feeble health for a number of weeks," confined to her bed, "not all the time, not constant, but off and on," but neither he nor any other witness testified that her mind was weak or in any way affected. The evidence on both sides is to the effect that her mind was sound.

On behalf of defendants, Baker testified that in response to a message from Mrs. Furber, and at her request, he prepared for her the $300 note and deed of trust, took them to her house, saw her sign them, took her acknowledgment to the deed of trust, and at her request delivered the instruments to Erickson; that he wrote the $300 note and deed of trust at his store without talking to Mrs. Furber about how they were to be made, but that he read them to her before she signed them, and that he had made out the prior $200 note and deed of trust for her and had at that time talked with her before preparing the papers; that when she signed the $300 note and deed of trust, she said, "if it...