Mutual Life Ins. Co. v. Walter

• Decision Date: 11 February 1932
• Docket Number: No. 29757.,29757.
• Parties: ST. LOUIS MUTUAL LIFE INSURANCE COMPANY, Appellant, v. ANNA K. WALTER, C.A. KIESLER, Trustee for J.H. KIESLER, J.H. KIESLER, JOHN E. WALTER, GILBERT J. WALTER, FRANK O. WALTER, JULIA WALTER, His Wife, LUCIUS P. WALTER, FRANCES WALTER, His Wife, RUSSELL C. WALTER, ELMER G. WALTER, NORA L. HUBER, GILBERT N. HUBER, Her Husband, DENZEL WALTER, a Minor, WILBURN W. WALTER, a Minor, MERIDITH WALTER, a Minor, BEULAH WALTER, a Minor, GEORGE J. MECKER, Trustee for MARTIN THIERET, MARTIN THIERET, JOSEPH F. FENWICK, Trustee for JOHN A. UNTERREINER, JOHN A. UNTERREINER, A.R. LUKEFAHR, HARRY W. LUKEFAHR, EDNA H. LUKEFAHR, His Wife, ANNA M. LUKEFAHR, JOHN DEPAUW, R. CLYDE FENWICK, C.A. KIESLER, Trustee for ANNA K. WALTER, and WILLIAM SCHAUPERT.
• Court: Missouri Supreme Court

46 S.W.2d 166

ST. LOUIS MUTUAL LIFE INSURANCE COMPANY, Appellant, v. ANNA K. WALTER, C.A. KIESLER, Trustee for J.H. KIESLER, J.H. KIESLER, JOHN E. WALTER, GILBERT J. WALTER, FRANK O. WALTER, JULIA WALTER, His Wife, LUCIUS P. WALTER, FRANCES WALTER, His Wife, RUSSELL C. WALTER, ELMER G. WALTER, NORA L. HUBER, GILBERT N. HUBER, Her Husband, DENZEL WALTER, a Minor, WILBURN W. WALTER, a Minor, MERIDITH WALTER, a Minor, BEULAH WALTER, a Minor, GEORGE J. MECKER, Trustee for MARTIN THIERET, MARTIN THIERET, JOSEPH F. FENWICK, Trustee for JOHN A. UNTERREINER, JOHN A. UNTERREINER, A.R. LUKEFAHR, HARRY W. LUKEFAHR, EDNA H. LUKEFAHR, His Wife, ANNA M. LUKEFAHR, JOHN DEPAUW, R. CLYDE FENWICK, C.A. KIESLER, Trustee for ANNA K. WALTER, and WILLIAM SCHAUPERT.

No. 29757.

Supreme Court of Missouri.

Division One, February 11, 1932.

Appeal from Perry Circuit Court. — Hon. Peter H. Huck, Judge.

AFFIRMED.

Leahy, Saunders & Walther for appellant.

(1) A foreclosure sale by a trustee without authority from the legal holder of the indebtedness secured thereby is void as between the owner of the note and the purchaser at the foreclosure sale. Magee v. Birch, 108 Mo. 236; Plummer v. Knight, 156 Mo. App. 321; Dolan v. Talle, 263 S.W. 246; Kelsay v. Bank, 166 Mo. 157; Pierce v. Grimley, 77 Mich. 273, 43 N.W. 932; Irion v. Yell, 62 Tex. 522, 132 S.W. 69; Bowman v. Oakley, 212 S.W. 549; Carter v. Reeves, 75 Mo. 104; Benton Co. v. Morgan, 163 Mo. 661; 27 Cyc. 1492, par. 8. (a) Where the deed of trust provides that the trustee may sell on non-payment of the note at maturity, at the request of the holder, it is the duty of the purchaser to see not only that the power to sell is granted, but that the facts which authorized its exercise existed. Cases, supra; Kenney v. Bank (Colo.), 54 Pac. 404; Bemis v. Williams, 52 Tex. Civ. App. 393, 74 S.W. 332; Boone v. Miller, 86 Tex. 74; Daniel v. Mason, 90 Tex. 240; 39 Cyc. 1892. (b) Foreclosure of the deed of trust in suit was conditioned upon request by the party of the third part in the deed of trust. This condition runs to the assignee of party of the third part. The deed secures payment of notes payable to party of the third part or his order. The covenants, among which is the one granting power of sale to the trustee upon request of party of the third part, are by party of the first part, with parties of the second and third parts, their heirs, successors and assigns. There having been no request for foreclosure by the holder of the secured notes — the assignee of party of the third part — the foreclosure sale by the trustee was invalid. Cases, supra. (2) There is no evidence in the case to support the plea that either J.H. Kiesler, party of the third part in the deed of trust, or C.A. Kiesler, the trustee, was the agent of plaintiff for the collection of the principal note. But even if there had been such agency for collection, it would not carry with it any implied authority to order a foreclosure. Plummer v. Knight, 156 Mo. App. 321; Burchard v. Hull (Minn.), 74 N.W. 163; Dexter v. Morrow (Minn.), 79 N.W. 394; White v. Madigan (Minn.), 80 N.W. 1125; Corey v. Hunter, 84 N.W. 570; 31 Cyc. 1083, 1132.

Samuel Bond, Davis & Damron, P.B. Hood and Jas. T. Greenwell for respondents.

(1) The sixth clause or covenant of the deed of trust under which sale was made, provided that the sale should be made at the request of the third party. The third party was J.H. Kiesler, the payee in the notes secured by said deed of trust. These provisions warned plaintiff that such a sale might and could be made at the request of the third party, and its duty was to be on the lookout. Hill v. Ballard, 178 S.W. 446; Goodfellow v. Stillwell, 73 Mo. 19. (a) The power of sale under a deed of trust is an important power granted by the maker, and he has the right to place upon it such limitation and conditions as he may deem proper for his own protection. When the exercise of power is made to depend upon the direction or request of a given person, then the direction or request of that person must be given in order to authorize the exercise of the power. Rawlings v. Lewis (Tex.), 191 S.W. 786; Boone v. Miller, 23 S.W. 574; 18 Am. & Eng. Enc. 977. (b) If there is no provision for the sale to be made at the request of the legal holder of the note, which is common in such instruments, the fact that such provision is omitted goes far to strengthen the conclusion that the purpose was to confide authority of making the sale in the person designated. It might be that the trusted person was chosen in the belief that he would not direct the sale under improvident or improper circumstances, but no matter what the reason may be, the maker of the instrument has the right to impose the limitation, and the court has no power to disregard it. Boone v. Miller, 23 S.W. 576. (c) The power to request the sale does not, by assignment of the secured notes, vest such power in the assignee or transferree of the notes. Dolbear v. Norduft, 84 Mo. 619. (d) The deed of trust was security for the coupon notes as much as for the principal notes, and was also security for the notes afterward given in renewal of the coupon notes. Butler Bldg. & Inv. Co. v. Dunsworth, 146 Mo. 361; Wing v. Ins. Co., 181 Mo. App. 381. (e) And the taking of a new note does not operate to discharge the lien of the deed of trust. Lippold v. Held, 58 Mo. 213; Glass v. Heller, 287 S.W. 871; Lynes v. Holt, 268 S.W. 702; Caldwell v. Sisson, 150 Mo. App. 547; 8 C.J. 443. (f) The deed of trust was a mere incident of the debt. J.H. Kiesler was an indorser of the coupons and when repaid by him, was entitled to its security. George v. Sommerville, 153 Mo. 7; First Nat. Bank v. Rohrer, 138 Mo. 139; German Am. Bank v. Carondelet R.E. Co., 150 Mo. 570. (g) The taking of the note of $1,200 by the bank in lieu of the interest coupon notes assigned to it by plaintiff, did not release the deed of trust as to that part of the debt. Nothing short of actual payment of the debt itself, or an express release, could have that effect. Donald v. Hulse, 16 Mo. 503; Christian v. Newberry, 61 Mo. 446; Lippold v. Held, 58 Mo. 213. (h) The purchaser of notes secured takes the security, although not delivered to him. First Nat. Bank v. Rohrer, 138 Mo. 139; German Am. Bank v. Carondelet R.E. Co., 150 Mo. 570. And passes back to indorser when he pays it. George v. Sommerville, 153 Mo. 7. (2) The trustee in a deed of trust is in no sense custodian of the security in which he is named as trustee, and he is not required to have it in his possession or sight, and he may foreclose without such possession. Doland v. Talle, 263 S.W. 246. The trustee is the agent of the maker and cestui que trust and is answerable to either who may suffer in consequence of his negligence of breach of trust. But neither the maker nor the cestui que trust is responsible to the other for the negligence or misconduct of the trustee. Hull v. Pace, 61 Mo. App. 117. To the same effect, i.e., that plaintiff in this case cannot recover from defendants. Butler Bldg. & Inv. Co. v. Dunsworth, 145 Mo. 369; Wenzel v. O'Neal, 222 S.W. 395; Adams v. Carpenter, 187 Mo. 635. (3) The agency may be created by the express words or acts of the principal, or it may be implied from his conduct and acquiescence, and so the nature and extent of the authority of an agent may be implied or inferred from circumstances. Where it appears the alleged agent has repeatedly performed acts in the way of collecting loans which the principal has ratified and adopted, his authority for the performance of the disputed act may be inferred. The presumption would be that the agent's authority was general rather than limited, and the agent's authority is held to result by inevitable implication from long continued and repeated acts of acquiescence. Sharp v. Knox, 48 Mo. App. 169; Vail v. Beavirs, 34 S.W. (2d) 548. (4) As there is no question but what the sale was made at the request of J.H. Kiesler, who, as holder of the two coupon notes, by reason of reindorsement to him, or to the Perry County Bank, whose cashier he was, and the bank by reason of holding the $1,200 note given in renewal of the two coupon notes, the demand that the trustee sell was by authority of and in compliance with the provisions of the deed of trust. Bldg. Co. v. Dunsworth, 146 Mo. 368. (5) The statement of a trustee in his deed to defendants that default had been made in payment of the indebtedness secured (notes), and that the legal holder of the notes had requested the land to be sold, is as to all persons, without notice to the contrary, a statement of the grantor and cestui que trust in the deed of trust; and such recital in his deed is by statute prima-facie evidence of its truth; and in this case the evidence of plaintiff does not rebut the prima-facie case. Bldg. & Inv. Co. v. Dunsworth, 146 Mo. 369. (6) When Kiesler, the trustee, conveyed the land to defendants he passed the legal title, notwithstanding the alleged irregularities in the sale. Adams v. Carpenter, 187 Mo. 613; Long v. Long, 141 Mo. 352; Bldg. & Inv. Co. v. Dunsworth, 146 Mo. 361; Munson v. Ensor, 94 Mo. 504; Schanewerk v. Hobericht, 117 Mo. 29; Kennedy v. Siemers, 120 Mo. 86; Snyder v. Railroad, 131 Mo. 580. (7) The defendants are not liable for the misapplication of the proceeds of the sale by the trustee. Sec. 3144, R.S. 1929; Wenzel v. O'Neal, 222 S.W. 395. (8) Ratification of a part of an act of an agent is a ratification of the entire transaction, and very slight circumstances will suffice to raise the presumption of ratification. Once made it cannot be repudiated and becomes irrevocable by the principal. Plummer v. Knight, 156 Mo. App. 321; Fritsch v. Bank, 24 S.W. (2d) 1066; State ex rel. v. Harrington, 100 Mo. 170; Porter v. Woods, 138 Mo. 539; Plummer v. Knight, 156 Mo. App. 137; Mitchel v. Bank, 200 Mo. 243.

FERGUSON, C.

This is a suit in equity to cancel and set aside a trustee's deed executed by the trustee...