Phillips v. Jackson

• Decision Date: 29 November 1911
• Parties: PHILLIPS et al. v. JACKSON et al.
• Court: Missouri Supreme Court

144 S.W. 112

240 Mo. 310

PHILLIPS et al. v. JACKSON et al.

Supreme Court of Missouri, Division No. 1.

November 29, 1911.

Rehearing Denied December 23, 1911.

Motion to Transfer to Court in Banc Denied February 29, 1912.

1. ESTATES (§ 10)—MERGER OF TITLES—INTENTION.

The doctrine of merger of titles is upheld in equity when it accords with the intention of the parties, but has no application unless two titles, a greater and a less, have coalesced in the same person.

2. MORTGAGES (§ 32)—CONDITIONAL SALE— NATURE OF TRANSACTION.

Whether there was a conditional sale of land vesting the title in the buyer subject to a right in the seller to repurchase within a specified time depends on the intent of the parties, and the extinguishment of all indebtedness between the parties, since if any indebtedness survives the transaction, or if it is intended to secure a present loan, or to provide against future liability, then the transaction is ipso facto an equitable mortgage, however absolute may be the form of the conveyance.

3. MORTGAGES (§ 6)—EQUITABLE MORTGAGE —CONSTRUCTION.

A conveyance with a right to repurchase will be declared an equitable mortgage, rather than a conditional sale, if the facts and circumstances leave any doubt as to which was intended.

4. MORTGAGES (§ 6)—NATURE OF TRANSACTION —EQUITABLE MORTGAGE—CONDITIONAL SALE.

J.'s wife held plaintiff's note for $6,700 covered by a deed of trust on their farm, and their equity having been levied on under an execution, which also covered certain town lots, J. agreed before the sale to buy in the property for $1,000, and give plaintiffs two years to redeem. He bought for the price fixed at one bid, took possession, never surrendered plaintiffs' note nor canceled the deed of trust, and stated to his agent in charge of the farm and to tenants that the land must be worked as economically as possible, because the rents must be used to pay the interest, taxes, and principal debt due him, and that he must then deed the property back. In letters written during a year after his purchase, he consulted plaintiff as to the steps to be taken in the cultivation and improvement of the land and the collection of the rents. Held, that the transaction amounted to an equitable mortgage, and not a conditional sale of the property.

5. TRUSTS (§ 95)—CONSTRUCTIVE TRUSTS— SALE OF LAND.

Where an equitable mortgagee of certain land conveyed the property to his wife and certain of his children who took with notice, they were constructive trustees of the title for the benefit of the equitable mortgagors.

6. TRUSTS (§ 365)—CONSTRUCTIVE TRUSTS— ENFORCEMENT—LACHES.

Where an equitable mortgagee and his grantees held possession under an agreement authorizing them to collect rents and profits and apply the same to the discharge of the indebtedness, and complainant sued to enforce a constructive trust as against such grantees before the indebtedness had been fully paid, they were not barred by laches.

Appeal from Circuit Court, Bollinger County; Chas. A. Killina, Judge.

Suit by Henry N. Phillips and another against Mary A. Jackson and others. Judgment for defendants, and plaintiffs appeal. Reversed and remanded, with directions.

This suit was begun by H. N. Phillips and wife, Susan A. Phillips, in the circuit court of Dunklin county, Mo., on the 25th day of May, 1904, against Robert J. Jackson and wife, Mary A. Jackson. Robert J. Jackson having died, the case was revived against his heirs, and, after change of venue to Bollinger county, plaintiffs filed an amended petition, setting forth, in substance: That on the 12th day of February, 1896, they were the owners of a section of land situated in Dunklin county, Mo. (describing it), of the net rental value of about $1,500. That, being indebted to defendant Mary A. Jackson for various loans made by her and debts assumed by her amounting to $6,700, they on the 12th of February, 1896, executed and delivered to said Mary A. Jackson their promissory note for $6,700, payable on January 1, 1897, with interest at 8 per cent. per annum, and at the same time delivered to her a deed of trust conveying all of the said section of land to R. P. O. Montgomery as trustee for the benefit of said Mary A. Jackson, and which deed of trust in addition to the usual provisions containing the following: "And it is hereby further stipulated and agreed by and between the parties herein that the proceeds arising from the renting of the said land shall, from year to year, and as long as the debt herein mentioned remains unpaid, be collected by the party of the third part, your wife, or her agent, you, and shall be applied as fast as collected as follows: 1st, in payment of the interest of the debt; and, 2nd, in payment of the annual taxes of said land; 3rd, the remainder to be paid on the principal of this debt and so on from year to year until this debt is fully paid." And that on the 1st of January, 1897, they turn over the possession of said land to Robert J. Jackson as the husband and agent of Mary A. Jackson to have and to hold in pursuance of the uses and trusts contained in said deed of trust. That on the 1st day of October, 1896, plaintiffs were the owners of 21 town lots situated in the city of Malden, Dunklin county, Mo. That on the 2d day of October plaintiffs suffered judgment in the circuit court of Dunklin county in favor of the Dunklin County Bank and others for the sum of $345.65 and costs. That an execution upon said judgment was duly issued, and was levied by the sheriff of Dunklin county upon the section of land described in the aforesaid mortgage, and also upon the aforesaid town lots, and sale thereunder advertised for the 17th of March, 1897. That on that day, and before said lands were offered for sale under said execution, the said Mary A. Jackson, by the said Robert J. Jackson, her husband, as her agent and in her behalf, procured plaintiffs to agree to exclude all other purchasers from the sale of said lands, and to permit the sheriff to sell the same in bulk to the said Robert J. Jackson as agent of his wife, Mary A. Jackson, for the nominal price of $1,000, although said land was worth the sum of $35,000. That, to induce such transaction, the said Mary A. Jackson by her husband and agent, Robert J. Jackson, agreed that he as agent for his wife would take a sheriff's deed to the whole of said lands for the said sum of $1,000, and hold them subject to the same trusts that were set forth in the aforesaid deed of trust, and that plaintiffs should have the right to procure buyers for all or any part of said land at any time, and that necessary deeds to convey the same would be made by Mary A. Jackson and Robert J. Jackson, her husband, and that the proceeds of all or any such sales should be applied to the payment of the debt owing by these plaintiffs in full or in part.

Plaintiffs allege that they relied wholly upon these promises and agreements, and permitted the sheriff to execute a deed to the said Robert J. Jackson as agent to his wife, conveying all the lands for the said sum of $1,000. Although there were many prospective bidders present at the time of said sale, the said lands were never offered by separate lots or tracts, and the sum of $1,000 was a grossly inadequate price; that upon the day following said sale plaintiffs surrendered possession of the town lots to the defendants; that the defendants continued to "recognize the trust aforesaid" until the 2d of February, 1898, when they attempted to repudiate the same and to cheat and defraud the plaintiffs by fraudulently conveying by general warranty deed of Robert J. Jackson to his wife, Mary A. Jackson, all the lands described in this petition for the nominal sum of $2,000; that Mary A. Jackson had full knowledge of all the facts alleged when said deed was taken by her; that since the 3d day of February, 1898, the said Robert J. Jackson and Mary A. Jackson refused to account for the whole or any part of the rents received by them on said lands or to apply the same as had been agreed upon to the extinguishment of the indebtedness from plaintiffs to them, but have wrongfully and fraudulently claimed to be the owners in fee of all the lands conveyed by the sheriff's deed aforesaid. The petition then sets out the name of the heirs and children of Robert J. Jackson to whom they have made conveyances of certain interests in said lands, alleging such conveyances were with full knowledge on the part of the grantees of the trusts to which said lands were subject and were taken without valuable considerations. The petition prays the court to set aside the sheriff's deed, and to adjudge the defendants to be trustees of the land thereunder conveyed as shown by the terms of the deed of trust to them and as was agreed between the parties before the sheriff's sale of all of said lands; that all conveyances between Robert J. Jackson and his wife and between them and any of their children be set aside and held for naught; that an account be taken and plaintiffs be permitted to pay any sum that may be due from them to the defendants, and for general relief.

Some of the defendant heirs filed general denials. Two of them and the mother, Mary A. Jackson, in addition to general denials set up that the plaintiffs had forborne to take any action to assert any right or claim since the 1st day of January, 1897, at which date they well knew that Mary A. Jackson was in actual possession of said property, asserting ownership thereto, and had made valuable and lasting improvements thereon; that the property in question had increased greatly in value since that time by reason of the improvements put on by the said Mary A. Jackson and the general enhancement of values in that vicinity.

Issues were joined by replication. The execution of the trust deeds and the other deeds referred to in the petition was not disputed. The contrariety of evidence relates as to what was the agreement between H. N....