Montbriand v. Scruggs

• Decision Date: 01 February 1932
• Docket Number: No. 17424.,17424.
• Citation: 46 S.W.2d 211
• Parties: W.B. MONTBRIAND ET AL., APPELLANTS, v. ISABELLA SCRUGGS, ET AL. RESPONDENTS.
• Court: Missouri Court of Appeals

46 S.W.2d 211

W.B. MONTBRIAND ET AL., APPELLANTS, v. ISABELLA SCRUGGS, ET AL. RESPONDENTS.

No. 17424.

Kansas City Court of Appeals. Missouri.

February 1, 1932.

Appeal from Circuit Court of Jackson County. — Hon. Denton Dunn. Judge.

AFFIRMED.

E.C. Hamilton for appellants.

Raymond G. Barnett and J.P. Flournoy for respondents.

ARNOLD, J.

This is a suit by plaintiffs to cancel a note and deed of trust securing same, instituted in the circuit court of Jackson County, Missouri, at Independence, by filing a bill in equity.

No question is raised as to the sufficiency of the bill, or defendants' answer and cross-bill. The bill alleges the necessary formal matters and states that on August 1, 1922, plaintiffs purchased Lot 24, Resurvey of Lynhurst, a subdivision of Jackson County, Missouri, taking a warranty deed, subject to a first deed of trust for $600. The note and deed of trust are dated November 7, 1918; the note, signed by D.M. McIntyre and George A. Gould, was payable to W.S. Flournoy, due in three years. The deed of trust securing said note was executed by D.M. McIntyre and wife, and named A.M. Ott as trustee; that said note had been fully paid; that the purchase of said property and payment of the note were accomplished through the firm of George A. Gould & Company, in conjunction with John P. Flournoy as the duly authorized agent of the owner and holder of said note; that said note was indorsed by the payee to defendant Isabella Scruggs, and later, was indorsed by her to John P. Flournoy for collection; that no extension of time is indicated on the note; that plaintiffs continued to make payments of principal and interest to George A. Gould & Co., believing, in good faith, the owner and holder of said note knew of the acts of George Gould & Co., in receiving such payments and in granting extension of time; that the owner and holder ratified the same; that John P. Flournoy was, at all times complained of, the partner of William S. Flournoy, prior to the latter's death, which occurred in June, 1929, under the firm name of Flournoy & Flournoy, attorneys, with offices in Kansas City, Missouri; that John P. Flournoy has conducted the business of the firm since that date and was fully conversant with all matters pertaining to the note and deed of trust in issue, and was acting as joint agent with said Gould & Company for the owner and holder of said note, and for himself the owner thereof; that Annie F. Flournoy is made a party defendant because she is executor of the estate of William S. Flournoy, the original payee named in said note; that, while the note was more than eight years past due, at time of final payment, no demand was ever made for payment; that plaintiffs believe the holder or holders of said note received payment in full, or were looking to their agents aforesaid to make settlement out of funds received by them from plaintiffs; that the holder or holders of said note, by their acts and long continued course of dealing, have ratified the acts of said agents, and are thereby estopped from asserting any claim against defendants, on account of said note; that the final payment was made October 3, 1927; that plaintiffs requested of George A. Gould & Co., the surrender of said note and deed of trust and that said Gould & Co. informed plaintiffs the note and deed of trust would be turned over to them as soon as they could be gotten from the holder; that at intervals such request was renewed, but without success; that about the latter part of April, 1930, defendant John P. Flournoy, to whom the note had been specially indorsed, represented himself to plaintiffs to be the holder of said note, and demanded payment of the same; that plaintiffs have been informed that one of the officers and representatives of George A. Gould & Co. has failed to account for the money paid to said company as agent for the holder of said note, and that said officer has absconded; that said uncancelled note and deed of trust constitute a cloud upon plaintiffs' title, although the obligation has been fully paid; and that they are without plain, adequate and complete remedy at law. The prayer asks cancellation of the note and deed of trust, and for such other and further relief as to the court may seem just and proper.

The answer admits plaintiffs became the owners of the real estate involved, and that there was a deed of trust for $600, unsatisfied against the same, and generally denies all other allegations in plaintiffs' bill; alleges the assignment of the note to Isabella Scruggs was for value, she having loaned the money for which the note was executed, and that she is now and has been since the date of the transfer to her, the owner and holder thereof; that just prior to the filing of this suit, it was indorsed by her to defendant John P. Flournoy for collection; that said Flournoy was not and never had been the owner of said note nor of any interest therein; and that Annie F. Flournoy, executrix of the estate of William S. Flournoy, does not and never did own said note nor any interest therein; that the semi-annual interest has been paid to November 7, 1929, and that no part of the principal has been paid.

On September 11, 1930, defendant Scrubbs filed a cross-bill setting out the necessary facts relative to the parties, the execution of the note and deed of trust; the transfer of the same and the transfers of the property as detailed in plaintiffs' bill; asking the court to declare the principal and interest of said note to be in default; that the lien be enforced and that plaintiff's equity of redemption, and all persons claiming under them in said real estate be foreclosed and the property sold. Evidence was heard and the court held for defendants on plaintiffs' bill and on the cross-bill, decreeing as follows:

"Wherefore, it is decreed and ordered by the court that defendant, Isabella Scruggs have judgment against plaintiffs, W.B. Montbriand and Susan M. Montbriand, that said note in the sum of $654.93 with interest thereon at eight per cent per annum from date of this judgment together with costs of this suit is a first mortgage lien upon said real estate above described and that said deed of trust and all equity of redemption of plaintiffs in said real estate and all right and title and interest thereof belonging to them and each of them be foreclosed, and that the real estate above described be sold to satisfy said judgment and costs, and it is ordered that special execution issue for the sale of said real estate and that upon sale thereof the proceeds be applied first to payment of the costs incurred therein, and then to the satisfaction of said judgment and interest, and that the remainder, if any thereafter, be paid to plaintiffs, W.B. Montbriand and Susan M. Montbriand."

Motions for a new trial and in arrest were overruled and plaintiffs have appealed.

We have carefully read the record and find no conflict as to material facts. Therefore it will be unnecessary to refer to the evidence in detail. The following facts are established by undisputed evidence of record.

In 1922, plaintiffs, husband and wife, brought the house and lot referred to in the proceedings, subject to a deed of trust securing the $600 note in issue. The note, dated November 7, 1918, was payable to the order of William S. Flournoy, at the Chrisman-Sawyer Bank in Independence, Missouri, due three years after date. On the note ledger of William S. Flournoy (whose death occurred prior to the filing of this suit), and in his own handwriting, was noted an extension of payment to November 7, 1924, and again to November 7, 1927. The note was signed by George A. Gould and D.M. McIntyre. Said McIntyre and his wife executed the deed of trust securing the note, but Gould owned no interest in the real estate and did not sign the deed of trust. Immediately after its execution, the payee, William S. Flournoy, assigned, transferred and delivered said note to defendant Scruggs, she paying $600 for it. Mrs. Scruggs, who lived in Lees Summit, on receipt of the note, placed it for safe keeping in the Bank of Lees Summit, with the cashier thereof, Earl Cooper, where it remained until June, 1930, when it was withdrawn by Mrs. Scruggs, indorsed by her and mailed to defendant John P. Flournoy for collection.

The testimony shows George A. Gould & Company had been in the real estate business in Independence for many years. The firm was composed of George A. Gould and his son Jay M. Gould; that during that time they obtained various loans for their clients through William S. Flournoy, amounting to something over $50,000, on Independence real estate, on most of which the Goulds collected the interest which they remitted to Flournoy. On behalf of defendants, the testimony shows that in these instances. Flournoy inspected the property, prepared the papers in his own office and passed on the security when delivered to him. The testimony in plaintiffs' behalf shows the property (Lot 24, Lynhurst Resurvey, Jackson county, Missouri) was purchased by them with an existing incumbrance of $600; that, as part of the purchase price, they executed a second note and deed of trust for $500, on the same property, payable at the office of Gould & Co., in monthly installments; that shortly thereafter, they purchased the adjoining vacant lot No. 25, the purchase being made through Gould &...