Palmer v. Welch
| Decision Date | 01 March 1913 |
| Parties | JOSEPH R. PALMER, Trustee, Appellant, v. BENJAMIN C. WELCH et al., Respondents |
| Court | Missouri Court of Appeals |
[Copyrighted Material Omitted] [Copyrighted Material Omitted]
Appeal from Lincoln Circuit Court.--Hon. James D. Barnett, Judge.
AFFIRMED AND REMANDED (with directions).
STATEMENT.--This is a suit by Joseph R. Palmer, trustee in bankruptcy of the estate of William W. Reid, a bankrupt, to foreclose a deed of trust upon certain lands in Lincoln county, and for judgment against the defendants for any deficiency that may remain due on the notes secured by the deed of trust, after applying to the payment thereof the proceeds of the sale of such land.
The petition alleges the adjudication of William W. Reid a bankrupt on October 2, 1908, the appointment of plaintiff as trustee in bankruptcy of said bankrupt's estate, the order of the referee in bankruptcy authorizing and directing the bringing of this suit, and avers that the defendant Benjamin C. Welch, for value received, executed to said William W. Reid three promissory notes; one for the sum of $ 1500, of date August 18, 1902, due one day after date bearing six per cent interest from date; another for the sum of $ 1500, of date August 28, 1902, due one day after date bearing interest at the rate of six per cent from date, upon which, on July 12, 1904, there was credited a payment of $ 207.96; and a third note for the sum of $ 500, of date November 3, 1902, due on or before May 1, 1903, bearing interest from maturity at eight per cent. It is alleged that the two notes for $ 1500 each were, on December 4, 1907, marked cancelled, but that this was done by mistake, and that neither of said notes had been paid
The petition further alleges that, subsequent to the execution of the three notes above mentioned, to-wit, on November 21, 1902, the said Benjamin C. Welch and Anabel Welch, his wife, executed a deed of trust to one W. H. Baskett as trustee, wherein they conveyed a certain tract of land in Lincoln county, consisting of one hundred acres to secure the payment of the $ 3500 evidenced by the three promissory notes above mentioned; which deed of trust was duly filed for record in the recorder's office of Lincoln county, Missouri, on January 11, 1903. And it is alleged that defendant Benjamin C. Welch failed and refused to pay said notes, and that they still remain a lien against the land.
It is further alleged that on the day of October, 1908, defendant Welch and wife conveyed the land described in said deed of trust to the defendants, Elsberry and Goodman, in consideration of one dollar and the assumption by said defendants of the incumbrances against the land; that at the time of said last mentioned conveyance the deed of trust above mentioned, securing the said notes, was a valid and existing incumbrance against the land, and that said defendants Elsberry and Goodman in accepting the deed conveying the land to them took the property subject to the incumbrances as a part of the consideration therefor and assumed and agreed to pay said notes whereby they became liable personally for the amount due thereon.
The petition prays judgment against defendants for the amount due on said notes, and that the same be adjudged and decreed a lien against the land, and that such lien be foreclosed, the land sold and the proceeds thereof applied to the payment of such judgment, and that defendants be adjudged to pay any deficiency that may be due on said judgment after applying thereto the proceeds of the sale of said land.
Defendants Elsberry and Goodman filed their separate answer, to which plaintiff replied, and the cause came on for trial before the court. Defendant Welch came not but made default. After hearing proof the court, not being sufficiently advised in the premises, continued the further hearing of the cause to the adjourned term of said court. Before the further hearing of the same, the defendants Elsberry and Goodman, by leave of court, filed their separate amended answer in said cause, wherein they denied the allegations in plaintiff's petition except such as were therein expressly admitted. These defendants then averred that the three notes in question were made without consideration therefor, admitted the execution and recording of the deed of trust as alleged by plaintiff, and averred that the same contained the following clause: "This conveyance is made subject to the incumbrance of a mortgage in favor of Lincoln county, Missouri, dated May 2, 1899, to secure a loan of school funds amounting to $ 700." The amended answer further alleged that, while the deed by which they acquired the land from defendant Welch contained a provision that the same was conveyed in consideration of one dollar and the assumption by Elsberry and Goodman of the incumbrances against said lands, nevertheless by contract and agreement with defendant Welch at the time of the purchase of said land, these defendants were to give in consideration therefor the sum of one dollar and were to assume the payment of only the following incumbrances thereon, namely: Levee taxes assessed against said land in favor of the Kings Lake Levee & Drainage District, amounting to $ 240, the back taxes and all taxes due the State, county and school fund, assessed against said land, together with the payment of the school fund mortgage above mentioned, of date May 22, 1909, which latter bore compound interest at the rate of six per cent, and on which there was due about the sum of $ 1200 at the time these defendants acquired said land; that the defendants had no knowledge or information of the existence of the three notes here sued upon, and that defendant Welch represented to them that there were no incumbrances on the land except the said school fund mortgage and the levee taxes and other taxes above mentioned.
The amended answer further alleged that defendants Elsberry and Goodman were sureties on the bonds secured by said school fund mortgage; that defendant Elsberry, prior to the purchase of the land by him and his codefendant Goodman, had a conversation with said W. W. Reid, who was at that time the presiding judge of the county court of Lincoln county, Missouri, at which time he asked Reid to take steps to have the said school fund mortgage foreclosed, or to sell the land in question, so that these defendants would be released from any obligation by reason of being sureties on said bonds; that Reid told him that he had been trying to sell the land to one Galloway, but that the latter had refused to offer sufficient therefor to pay the school mortgage and the levee and other taxes due thereon, and that Reid suggested to defendant Elsberry that the latter and defendant Goodman buy the land and that they would not then lose anything by reason of being sureties on the school mortgage; that in this conversation said Reid made no mention of the fact that he had any deed of trust or claim on the land; that, after defendants Elsberry and Goodman purchased said land, defendant Elsberry had a further conversation with Reid, in which he informed the latter that he and Goodman had purchased the land from Welch at a price sufficient only to pay the school fund mortgage and the levee and other taxes due thereon, and that in this conversation defendant Elsberry told Reid that he had been informed that Reid held the notes here sued upon, and that Reid had then informed this defendant that the indebtedness secured by said deed of trust had been fully paid and discharged and that said lien upon the land had been fully satisfied.
And by said amended answer these defendants Elsberry and Goodman say that plaintiff should not be permitted to enforce payment of said notes as against them, but that plaintiff should be estopped therefrom by reason of the said conduct of William W. Reid.
It is also averred that these defendants Elsberry and Goodman paid to the Kings Lake Levee & Drainage District the sum of $ 204, assessed against said lands, and paid the amount of the back taxes, interest and costs due on said land, and paid the county treasurer of Lincoln county all interest due on said school fund mortgage, amounting to about $ 500; said payments in all amounting to about the sum of $ 750.
The amended answer prays that the deed from Welch to defendants Elsberry and Goodman be reformed to conform to what is alleged to be the true contract and agreement between the parties respecting the consideration clause thereof so that the same would show that these defendants purchased the land in consideration of the sum of one dollar and the assumption by them only of the payment of the school fund mortgage, the levee and other taxes due against said land, and all interest due thereon; praying also, in substance, that if the court shall find that the notes sued on by plaintiff are a lien upon the land in question, then that these defendants, having paid said levee and other taxes and the interest on said school fund mortgage, be subrogated to the rights of the original payees of said indebtedness, and that the court adjudge that these defendants have a lien on the land for the amount so paid by them on account of said indebtedness, prior to any lien which plaintiff may be adjudged to have thereon.
The reply was a general denial of the new matter contained in this answer. After the filing of the amended answer and the reply thereto, further evidence was heard by the court, and thereupon the court made and entered its decree herein.
The evidence showed the adjudication of W. W. Reid, a bankrupt the appointment of Palmer as a trustee of the bankrupt's estate, and the order of the referee in bankruptcy authorizing the institution of the suit. The three notes in question were...
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