Morris v. Hanssen

• Decision Date: 21 December 1934
• Citation: 78 S.W.2d 87,336 Mo. 169
• Parties: Neva J. Morris, Appellant, v. Henry Hanssen, Trustee, Samuel Mayer, Florence Dean and Frank Yeoman
• Court: Missouri Supreme Court

78 S.W.2d 87

336 Mo. 169

Neva J. Morris, Appellant, v. Henry Hanssen, Trustee, Samuel Mayer, Florence Dean and Frank Yeoman

Supreme Court of Missouri

December 21, 1934

Motion for Rehearing Overruled December 21, 1934.

Appeal from Jackson Circuit Court; Hon. Darius A. Brown Judge.

Reversed and remanded (with directions).

Marley & Marley for appellant.

(1) The pleadings and the relief prayed for clearly show the court had equitable jurisdiction. Hudler v. Mullen, 55 S.W.2d 420; Gibson v. Schull, 158 S.W. 326; Lime & Cement Co. v. Bank, 158 Mo. 280; Van Rensslaer v Van Rensslaer, 113 N.Y. 213; Hanson v. Neal, 215 Mo. 280; Babcock v. Rieger, 58 S.W.2d 725; First Natl. Bank v. Salmon, 63 F.2d 901; Ebbs v. Neff, 30 S.W.2d 620. (a) A court of equity having jurisdiction will grant full relief even to determining strictly legal matters and granting legal remedies. Rockhill Tennis Club v. Volker, 56 S.W.2d 30; Hagan v. Bank, 182 Mo. 345; Schwartzmann v. Ins. Co., 2 S.W.2d 595; Woolum v. Tarpley, 196 S.W. 1129; Hanson v. Neal, 215 Mo. 279; Potter v. Whitten, 161 Mo.App. 129; Neuman v. Friedman, 156 Mo.App. 151; Swan v. Talbot, 152 Cal. 146; Dolliver v. Dolliver, 94 Cal. 649; Hinkley v. Wynkook, 305 Ill. 122; Johnson v. Carter, 143 Iowa 101; Campbell v. Moorhouse, 141 Iowa 571; Palmer v. Palmer, 84 N.J.Eq. 550; Earle v. Refrg. Co., 74 N. J. Eq., 761; McLure v. Natl. Bank of Commerce, 160 S.W. 30; Munford v. Sheldon, 320 Mo. 1077, 9 S.W.2d 907; Marston v. Catterlin, 290 Mo. 185, 234 S.W. 816; Seested v. Dickey, 318 Mo. 192, 300 S.W. 1088. (2) The relation of attorney and client between Yeoman and appellant was one of trust and confidence. Davis v. Kline, 96 Mo. 406; Eoff v. Irvine, 108 Mo. 383; Guinan v. Donnell, 201 Mo. 204; Addison v. Cope, 234 S.W. 214; Linneman v. Henry, 291 S.W. 112; Bybee v. S'renco, 291 S.W. 462; Barrett v. Ball, 101 Mo.App. 310; Yeoman v. Morris, 11 P.2d 683; Beedle v. Crane, 91 Mich. 431. (3) The relation of husband and wife is one of trust and confidence, and appellant had a right to rely upon his statements. Ilgenfritz v. Ilgenfritz, 116 Mo. 429. Stumpf v. Stumpf, 7 Mo.App. 276; Harbour v. Harbour, 103 Ark. 273; Meldrum v. Meldrum, 15 Colo. 478; Evans v. Evans, 118 Ga. 890; Hussen v. Hussen, 212 Ill. 377; Stone v. Wood, 85 Ill. 603; Basye v. Basye, 152 Ind. 172; Judd v. Judd, 192 Mich. 198; Thomas v. Thomas, 27 Okla. 784; Yeoman v. Morris, 11 P.2d 683; Black on Rescission and Cancellation, sec. 34; Patterson v. Blackburn, 47 Cal.App. 365; Jones v. Jones, 140 Cal. 590; Dolliver v. Dolliver, 94 Cal. 642; Pardus v. Reed, 121 Iowa 227; Jones v. Marble, 37 Mich. 322; Wittbeck v. Wittbeck, 25 Mich. 442; Farmer v. Farmer, 39 N.J.Eq. 211. (4) That misrepresentations as to encumbrances constitute fraud. Devero v. Sparks, 189 Mo.App. 500, 176 S.W. 1056. (5) The appellant had a right to rely upon the representations of defendant Yeoman. Farwell v. Company, 289 Ill. 157; Brinkerhoff v. Roosevelt, 143 F. 478. (6) Any antagonistic transactions between appellant and Yeoman, her husband and attorney, are prima facie fraudulent. Linneman v. Henry, 291 S.W. 109; Morton v. Forsell, 249 Mo. 409, 155 S.W. 765; Davis v. Kline, 96 Mo. 408; Barrett v. Ball, 101 Mo.App. 288; Beagles v. Robertson, 137 Mo.App. 306; Yeaman v. James, 27 Kan. 195; Matthew v. Robinson, 7 Kan.App. 118; Brennan v. Coakley, 243 Mass. 348; Brooks v. Pratt, 118 F. 725, 55 C.C.A. 515. (a) Concealment of an existing fact by Yeoman amounts to a fraud the same as a misrepresentation of a fact. Wann v. Scullin, 210 Mo. 487; Metropolitan Paving Co. v. Inv. Co., 274 S.W. 823; Morley v. Harrah, 167 Mo. 80; McAdams v. Gates, 24 Mo. 223; Cecil v. Spurger, 32 Mo. 462; Hayes v. Dalzell, 21 Mo.App. 679. (b) Misrepresentations by Yeoman are not confined to words or positive assertions, but may well consist of deeds, acts or artifices to mislead. Bank of North America v. Crandall, 87 Mo. 208. (7) It was not necessary for appellant in the exercise of due diligence on her part to examine the records in the recorder's office and acquaint herself with contents of the deeds. McGhee v. Bell, 170 Mo. 120; Judd v. Walker, 114 Mo.App. 135; Baker v. Maxwell, 99 Ala. 565; Evatt v. Hudson, 97 Ark. 269; Hartley v. Frederick, 191 Ala. 180; Epps v. Thompson, 79 So. 612; Severson v. Kock, 159 Iowa 350; Hammel v. Benton, 162 S.W. 38; Warford Land Co. v. Marcum, 180 Ky. 358; Labbe v. Corbet, 69 Tex. 509; Coolidge v. Rhodes, 199 Ill. 33; Parish v. Casner, 282 S.W. 411; Richards v. Lee, 71 Mo.App. 230; Pomeroy v. Benton, 57 Mo. 351; Wannell v. Kem, 57 Mo. 478; Cottrill v. Krum, 100 Mo. 404; Bailey v. Smock, 61 Mo. 213. (8) It was reasonable for appellant to rely upon Yeoman's assurance that the title to property in question was free and clear. Ilgenfritz v. Ilgenfritz, 116 Mo. 435; Stevens v. Stevens, 273 S.W. 1069; Gillespie v. Gillespie, 289 S.W. 582; Viers v. Viers, 175 Mo. 453. (9) As to claim of estoppel, estoppel is unavailable to Yeoman to sustain a fraud. Curtis v. Browne, 63 Mo.App. 446; Wafemen v. Bank, 288 S.W. 364; McGhee v. Bell, 170 Mo. 132; Garesche v. Invest. Co., 146 Mo. 451; Gjerstadengen v. Hartzell, 9 N.D. 276. (a) Hanssen as trustee did not plead an estoppel. Conway v. Flaugh, 231 S.W. 1046. (10) Appellant is not seeking to cancel the notes. She asks that her property shall not be taken to pay another's obligations, without her consent, and that the legal titles of Hanssen as trustee be vested in her. Coerver v. Crescent L. & F. Co., 286 S.W. 6; Rumsey v. Ry. Co., 154 Mo. 215; Miles v. Davis, 92 Mo. 408; Kennerby v. Shepley, 15 Mo. 648; Cotton Co. v. Smith, 144 Mo.App. 169. (11) The devious methods of Yeoman will not deprive appellant of her equitable relief. Paquin v. Milliken, 163 Mo. 108; McClure v. Bank, 160 S.W. 1007; Phillips v. Jackson, 240 Mo. 338; McQuitty v. Steckdaub, 190 S.W. 592; Hubbard v. Slavens, 218 Mo. 619; Nelson v. Betts, 21 Mo.App. 232; Parish v. Casner, 282 S.W. 409.

John B. Gage and Carson E. Cowherd for Hanssen, as Trustee.

(1) Respondent Hanssen, as trustee, can make the defense in this case for Produce Exchange Bank, holder of the Beard and Mayer notes. Coerver v. Crescent Lead & Zinc Corp., 315 Mo. 276, 286 S.W. 6; Green Real Estate Co. v. St. Louis Mut. Home Bldg. Co., 93 S.W. 1114; Hanson v. Neal, 114 S.W. 1079. (2) One who acquires a note before maturity thereof in pledge to secure presently-loaned money or even a pre-existing debt, is a holder in due course under the law in this State. Sec. 2656, R. S. 1929; State Bank v. Railroad, 172 Mo.App. 662, 155 S.W. 1115; Farmers State Bank v. Miller, 300 S.W. 837; Aab v. French, 279 S.W. 435; Natl. Bank v. Morris, 156 Mo.App. 667, 135 S.W. 1009; Central Bank v. Lyda, 191 S.W. 249. (3) Since the bank had no notice or knowledge of any alleged defects in the notes and since the evidence shows it acted in entire good faith, nothing occurred to alter its status as a holder in due course. Secs. 2680, 2684, R. S. 1929; First State Bank v. Hammond, 104 Mo.App. 403, 79 S.W. 493; Borgess Inv. Co. v. Vette, 142 Mo. 560, 44 S.W. 754; Miller v. Peoples' Savings Bank, 196 Mo.App. 498, 186 S.W. 551; Cass Avenue Bank v. Greenwald, 29 S.W.2d 211; Reeves v. Letts, 143 Mo.App. 196, 128 S.W. 246; Peoples Bank v. Bullock, 216 Mo.App. 492, 270 S.W. 120. (4) Since the bank is a holder in due course of both Beard and Mayer notes, its rights under the Mayer deed of trust should be fully protected. mayes v. Robinson, 93 Mo. 114, 5 S.W. 611; Paxton v. Marshall, 18 F. 361; Pacific Juana Co. v. Anglor, 82 Ala. 492, 1 So. 852; Continental Trust Co. v. Cowart, 173 S.W. 588; Martin v. Thomas, 58 W.Va. 222, 49 S.E. 1118. (5) Endorsement and delivery of the notes to the bank as collateral security raised the presumption that the bank was holder in due course and this presumption was made conclusive by the evidence. Peoples Bank v. Bullock, 216 Mo.App. 1192, 270 S.W. 120; Swift & Co. v. McFarland, 231 S.W. 65; Miller v. Peoples' Savings Bank, 193 Mo.App. 498, 186 S.W. 551. (6) Holder of a note as collateral security has right to enforce collection thereof. Farmers State Bank v. Miller, 300 S.W. 838; Welker v. Hayes, 22 S.W.2d 1054, 49 C. J. 997, sec. 247.

Louis A. Laughlin and Frank Yeoman for respondents.

(1) Plaintiff has an adequate remedy at law. The substance of the complaint of plaintiff is that she purchased real estate at the request of her husband, who also acted as her attorney and adviser, and that her husband did not tell her that there was a second mortgage on the property and that by the foreclosure of the second mortgage without her knowledge, that she lost the property. (2) There is no ground of equitable jurisdiction shown in the record. Appellant has cited a great number of authorities but an examination of them will disclose that they do not apply to the facts shown by this record. Plaintiff by accepting the warranty deed subject to the second mortgage is estopped to deny the validity of the second mortgage.

Sturgis, C. Ferguson and Hyde, CC., concur.

OPINION

STURGIS

This is a suit in equity by which plaintiff asks the court to set aside and cancel for fraud certain conveyances and particularly certain deeds of trust as constituting a cloud on her title to a tract of improved real estate in Kansas City designated as Lots 75 and 100, Prospect Vista. The trial court, after hearing the evidence, concluded that plaintiff had misconceived her remedy and without deciding whether such conveyances should be set aside for fraud as prayed, entered judgment dismissing plaintiff's bill and awarding costs against her for the reason that she had an adequate remedy at law. Such is the judgment from which plaintiff has appealed.

The facts as disclosed by the pleadings and evidence are in substance these: The chief controversy is...