Petring v. Kuhs

• Decision Date: 04 May 1943
• Docket Number: 38128
• Parties: William Petring, Respondent, v. A. Jay Kuhs et al., Ludwig Hesse and Mississippi Valley Trust Company, a Corporation, Trustees, etc., Appellants
• Court: Missouri Supreme Court

171 S.W.2d 635

350 Mo. 1197

William Petring, Respondent, v. A. Jay Kuhs et al., Ludwig Hesse and Mississippi Valley Trust Company, a Corporation, Trustees, etc., Appellants

No. 38128

Supreme Court of Missouri

May 4, 1943

Appeal from Circuit Court of City of St. Louis; Hon. David J Murphy, Judge.

Reversed and remanded (with directions).

Charles P. Williams for appellants.

(1) There was no requirement of request by the holder of the notes secured by plaintiff's deed of trust, as a condition of sale. That deed of trust authorized and empowered the trustee to sell for failure promptly to pay the taxes assessed against the property. The acts of the trustee within the general scope of the powers conferred, bound the plaintiff, because the trustee was the agent of the plaintiff. cf. Butler Bldg. & Inv. Co. v. Dunsworth, 146 Mo. 361, 48 S.W. 449; Williams v. Mackey, 61 S.W.2d 968. (2) The failure to pay taxes for a number of years is a breach of condition authorizing foreclosure. Cockrell v. Taylor, 347 Mo. 1, 145 S.W.2d 416. (3) Where there exists a right to foreclose, the foreclosure sale passes the legal title, in spite of irregularity. Hoffman v. Bigham, 324 Mo. 516, 24 S.W.2d l. c. 132; Peterson v. K. C. Life Ins. Co., 339 Mo. 700, 98 S.W.2d 770. (4) There is no requirement generally, nor in Missouri, that the advertisement or the deed should specify the default. Jones on Mortgages (8 Ed.), sec. 2395; Drake v. Rhodes, 155 Ala. 498; Model Lodging House v Boston, 114 Mass. 133; Wood v. Augustine, 61 Mo. 46. (5) If the legal title passed, then a subsequent purchaser in good faith from a fraudulent grantee holds title against the world. Wineland v. Cooney, 5 Mo. 296; Craig v. Zimmerman, 87 Mo. 475; McDaniel v. Sprick, 297 Mo. 424, 249 S.W. 611; Williams v. Mackey, 61 S.W.2d 968. (6) Certain cases distinguished: Verdon v. Silvara, 308 Mo. 607, 274 S.W. 79; Long v. Long, 79 Mo. 644; Eitelgeorge v. Mutual House Building Assn., 69 Mo. 52; Schanawerk v. Hoberecht, 117 Mo. l. c. 31, 22 S.W. 49; Jackson v. Johnson, 248 Mo. 681, 154 S.W. 759; Magee v. Burch, 108 Mo. 336, 18 S.W. 1078; Williams v. Mackey, 61 S.W.2d 968; Lustenberger v. Hutchinson, 343 Mo. 51, 119 S.W.2d 921. As to the effect of mistaken recital in the trustee's deed, see Wood v. Augustine, 61 Mo. 46. (7) Hines' testimony unworthy of credence and insufficient to overturn his deed. (8) Little Missouri authority directly applicable to recitals in trustee's deeds of sale in foreclosure, apart from the statute making them prima facie evidence of their truth. There are analogous authorities: Comings v. Leedy, 114 Mo. 454, 21 S.W. 804; Elliott v. Sheppard, 179 Mo. 382, 78 S.W. 627; Bross v. Rogers, 187 S.W. 38; Southworth v. Southworth, 173 Mo. 59, 73 S.W. 129. (9) Not necessary that Hines should have personally cried the sale. Million v. McRee, 9 Mo.App. 344; Bates v. Perry, 51 Mo. l. c. 451; Lanier v. McIntosh, 117 Mo. l. c. 518, 23 S.W. 787.

Albert E. Hausman for respondent.

(1) The trustee's sale of May 12, 1933, was and is utterly void, because Arthur Hines, trustee, did not make the sale, and did not authorize any person to make the same in his presence. Unless the trustee named in the deed of trust personally makes the sale, or personally directs someone in his presence to make it, the sale is utterly void. Pollibaum v. Reveley, 181 Mo. 622. (2) If the trustee is absent from the place of sale at any time during the sale, the sale is void. He must be present when the sale begins, while it proceeds and when it ends. As the trustee, Hines, was not present at the sale, it is void. Brickenkamp v. Rees, 69 Mo. 426; 3 Jones on Mortgages (8 Ed.), sec. 2099. (3) The trustee must personally decide all matters in connection with the sale which require any judgment or discretion. That is, he must decide when and where to advertise; and whether or not a bid is to be accepted; whether or not the best interests of the parties require a postponement. If not personally present he cannot exercise such discretion. Hines was not present and therefore the sale is void. Bales v. Perry, 51 Mo. 449; Graham v. King, 50 Mo. 22; Vail v. Jacobs, 62 Mo. 130; Landrum v. Bank, 63 Mo. 48. (4) A sale made when no default exists is utterly void. There was no default in payment of interest or principal on May 12, 1933, because principal note had been regularly extended to June 15, 1934, and all interest was paid. Lustenberger v. Sarkesian, 343 Mo. 51; Petersen v. K. C. Life Ins Co., 339 Mo. 700; Verdon v. Silvara, 308 Mo. 607; Long v. Long, 79 Mo. 644; Eitelgeorge v. Mutual House Bldg. Assn., 69 Mo. 52; Jackson v. Johnson, 248 Mo. 691; Long v. Long, 79 Mo. 644. (5) The renewal agreement of June 15, 1932, gave William Petring, respondent, as holder of the note, the sole option to enforce payment under the terms of the deed of trust. It modified the terms of the deed of trust to the same extent that it would have done had it been incorporated in the deed of trust. Hence no foreclosure could take place after June 15, 1932, without the exercise of the option by respondent William Petring. He never exercised that option and the sale was void. 41 C. J., p. 854, sec. 1041. (6) The renewal agreement of June 15, 1932, was made when taxes for the years 1928, '29, '30, '31, '32 and 1933 were assessed and a lien on the property. Hence no sale for taxes could take place after June 15, 1932, until taxes in addition to the above had been assessed, namely on June 1, 1933; and as the sale was had May 12, 1933, it could not be had for nonpayment of taxes. For this additional reason the sale was and is void. (7) The sale of May 12, 1932, was and is void because Arthur Hines did not sign the advertisement of sale, and did not authorize any one to sign his name to it. The trustee must advertise the sale. 41 C. J., p. 955, sec. 1395. (8) The sale of May 12, 1932, is void because it was ordered by A. Jay Kuhs, the president and only bona fide stockholder of Opportunity Realty & Investment Company, the debtor. The debtor has no power to order a sale to cancel its own debt. The power of sale can be executed only by a duly authorized and competent trustee. 41 C. J., p. 940, sec. 1373. (9) The sale of May 12, 1932, is void because no money was paid or tendered by the purchaser or anyone for it, either to the trustee or to the holder of the secured note. The debtor corporation and the alleged purchaser corporation were each "one man" corporations under the complete ownership and domination of A. Jay Kuhs; and A. Jay Kuhs ordered the sale, and purported to buy the property at the sale for the A. Jay Kuhs Company. (10) When one of two innocent parties must suffer because of the fraud of a third party, if the equities are equal, the established rule is that the one whose lien or claim is first in point of time will be protected. Hence, as respondent Petring's lien dates back to 1927, and appellant's lien cannot date prior to 1938, respondent should be protected, as his lien is first in point of time, and his equities are at least equal to, if not superior to, the equities of appellant. Lustenberger v. Sarkesian, 343 Mo. 51. (11) Under the deed of trust of June 15, 1927, as modified by the renewal agreement of June 15, 1932, no foreclosure sale could be had without the request or order of respondent Petring; and as such order or request was never given or made, the sale is void. Until respondent Petring exercised his option the renewal agreement remained in force. Lustenberger v. Sarkesian, 343 Mo. 51.

Douglas, P. J. All concur except Gantt, J., not sitting.

OPINION

DOUGLAS

This is a suit to set aside a trustee's deed under foreclosure; to reinstate the deed of trust foreclosed; and to declare a present deed of trust to be inferior to the one reinstated.

Plaintiff is the owner of the deed of trust which he seeks to reinstate on the ground it had been fraudulently foreclosed. Hesse and the Mississippi Valley Trust Company, Trustees, the principal appellants, are the holders of the present deed of trust which plaintiff seeks to subordinate to his deed of trust.

Plaintiff, a retired butcher 67 years of age, and A. Jay Kuhs, a real estate man, had known each other for 28 years. Plaintiff had done business with Kuhs for years and had bought a number of deeds of trust from him and had traded various deeds of trust with him. In the course of these dealings, plaintiff, by a trade, acquired from Kuhs a deed of trust for $ 30,000 dated June 15, 1927, executed by the Opportunity Realty & Investment Company, of which Kuhs was president, and secured by property in one of Kuhs' subdivisions described as 1005 Hi-Pointe Place in St. Louis.

The principal note of $ 30,000 secured by the deed of trust was payable to plaintiff and was due five years after date. There were ten semi-annual interest notes of $ 900 each. Kuhs would usually deliver or mail to plaintiff his check for the interest as it fell due and obtain the interest note.

The trustee named in the deed of trust was Arthur Hines who was for thirty years a close friend of Kuhs, and acted at Kuhs' request as trustee in deeds of trust which Kuhs negotiated.

The condition of the deed of trust is as follows: "But if either one of said notes, or any part thereof, be not so paid at maturity, according to the tenor of the same, or if said taxes, general and special, be not promptly paid when due, or if default be made in due fulfillment of said covenants and agreements, or either of them, then this conveyance shall remain in force, and said party of the Second Part, whether acting in person or by attorney in fact appointed by instrument in writing, or, in case of death or absence from the city, or any other disability, or refusal to act, his successor in trust may proceed to sell the property...