Polliham v. Reveley

• Decision Date: 27 February 1906
• Citation: 116 Mo. App. 711,93 S.W. 829
• Parties: POLLIHAM v. REVELEY et al.
• Court: Missouri Court of Appeals

93 S.W. 829

116 Mo. App. 711

POLLIHAM v. REVELEY et al.

St. Louis Court of Appeals. Missouri.

February 27, 1906.

1. MORTGAGES—TRANSFER OF NOTES SECURED —EFFECT.

Where, after sale under a trust deed and the cancellation of the note secured, the note was purchased on a representation that the purchaser wished to use it as a set-off against the maker, the purchaser acquired no title to the deed of trust entitling him to participate in the proceeds of a subsequent sale thereunder, the first sale having been set aside.

2. LIS PENDENS—PURCHASER PENDING SUIT.

Where in ejectment by a purchaser at a sale under a deed of trust the decree set aside the sale, and adjudged that the purchaser was in equity the owner of the deed of trust as an unsatisfied incumbrance, that he was entitled to collect the amount of the note secured by it with interest and the costs of the sale, and that any surplus should be applied to the satisfaction of subsequent deeds of trust, a person who was not a party to the action, but who purchased the note secured before judgment but after the first sale, could not assert any rights superior to those decreed, except by a separate suit instituted in his own behalf.

3. APPEAL—PARTIES ENTITLED TO ALLEGE ERROR.

Where a judgment in ejectment set aside a trustee's sale, adjudged the purchaser the equitable owner of the deed of trust, and ordered a new sale, the proceeds of which were to be applied first to the repayment of the original purchaser, with interest, then to the satisfaction of subsequent deeds of trust, but on resale being made the proceeds were not sufficient to satisfy the second deed of trust, the holder of a third deed, who also held the notes secured by the first two deeds without having acquired title to the deeds, could not on appeal question the correctness of that portion of the order of distribution giving the original purchaser interest from the date of the decree setting aside the sale until the distribution took place.

Appeal from Circuit Court, St. Louis County; John W. McElhinney, Judge.

Action by George B. Polliham against Nannie Reveley and others, defendants, and John H. Bobb, interpleader. From an order for the distribution of the proceeds of a sale under a deed of trust, the interpleader appeals. Affirmed.

R. H. Stevens and T. J. Rowe, for appellant. Rassieur, Schnurmacher & Rassieur, for respondent.

GOODE, J.

This action is ejectment for 12½ acres of land in St. Louis county; but the proceeding involved in the appeal arose after final judgment in the main action, and related to the distribution of the money accruing from a sale under a decree foreclosing a deed of trust on the land. The defendants in the ejectment suit were Nannie, Sallie, and Albert Reveley, and the plaintiff was George B. Polliham, on the appeal the respondent. John H. Bobb, the appellant, came into the proceedings by a motion filed after judgment, in which he asked to participate in the distribution of the proceeds of the sale of the land. Nannie and Sallie Reveley are the sisters of Albert L. Reveley, who, in 1897, held the title to the land under a conveyance from Martha E. Bobb. Though the title was in him, it seems that he acquired it for his two sisters, whom he put in possession as early as October, 1898. While the land stood in his name, he incumbered it by three deeds of trust to secure notes given by himself. The senior of those incumbrances was dated February 27, 1897, and conveyed the premises to Joseph Franklin as trustee to secure the payment to Susan Franklin, of a principal note for the sum of $2,000, payable three years after date, and six semiannual interest notes for $60 each; all the notes bearing 8 per cent. interest from maturity. The second deed of trust was dated March 1, 1897, made to Wilbur F. Parker, as trustee, and secured the payment of a principal note of $2,600 due three years after date, to Martha E. Bobb, and six semiannual interest notes each for the sum of $78. On this indebtedness, $125 was paid October 4, 1900. The third incumbrance was dated March 16, 1897, made to Thomas J. Rowe, as trustee, to secure the payment to John H. Bobb of a principal note for $1,250 due two years after date, and four interest notes for $37.50 each. The senior incumbrance contained a clause authorizing the trustee, Joseph Franklin, in case of default by the grantor, to sell the property at public vendue in the usual method. Said clause reads, that in case of default, "said party of the second part (whether acting in person or by attorney in fact, thereunto authorized by law) or in case of his death, his successor in this trust may proceed to sell the property hereinbefore conveyed," etc. Default having been made in the payment of the notes secured by the first deed, the land, of course, became subject to foreclosure sale. William C. Waldeck, a real estate agent, in the city of St. Louis, knew of the default, and took certain steps, which will be related, to acquire the land under a deed of trust sale. In doing so, he appears to have acted as the agent of Martha E. Bobb, the holder of the notes secured by the second deed of trust. The evidence tends to show that at the time of the default, in the summer of 1900, the land was worth about $7,000; whereas the first incumbrance and accummulated interest amounted to between $2,000 and $2,500. G. Wm. Senn, who is an attorney at law in the city of St. Louis, was the attorney for Waldeck and also for Martha E. Bobb. Waldeck purchased from Susan Franklin, the beneficiary in the first deed of trust, the notes thereby secured and at the same time procured from Joseph Franklin, the trustee in that instrument a power of attorney authorizing Senn to advertise and sell the property under the deed of trust in place of said Franklin. Pursuant to this power of attorney, Senn advertised the property for sale and sold it on June 2, 1900, at public outcry at the place designated in the deed. The purchaser was the respondent, George B. Polliham, who bid the property in for $2,500, or less than one-half its actual value. Polliham was not acting for himself in the transaction but for Waldeck, in whose office he was employed as a clerk, and Waldeck, the evidence goes to show, was acting for Martha E. Bobb. Senn executed a trustee's deed conveying the premises to Polliham, canceled the notes secured by the first deed of trust, paid the expenses of the sale, and had left, a surplus of $136.81, which ought to have been applied on the debts secured by the second incumbrance. Polliham paid no money on the purchase to Senn, except enough to cover the expense of the sale and the said surplus. The balance of the purchase price of $2,500 was discharged by satisfying and cancelling the notes secured by the incumbrance under which the sale occurred. On December 14, 1900, Polliham instituted this action of ejectment to recover from the three Reveleys the possession of the premises. His demand was resisted by the defendants, who set up in their answer the facts we have stated, and alleged that the sale by Senn was illegal and contrary to the true intention of the deed of trust, which empowered no one but Joseph Franklin to act as trustee in selling the premises. Wherefore, they prayed that the conveyance from Senn to Polliham be set aside and for naught held. At the trial of the ejectment action, the circuit court found the facts in accordance with the foregoing narrative, set aside the sale Senn had made and the trustee's deed he had executed to Polliham as attorney in fact for Franklin, and ordered a resale of the premises by the sheriff of St. Louis county for the purpose of enforcing the deed of trust; ordered further that the sheriff report the sale to the court for approval and distribution of the proceeds. This decree was entered March 25, 1901. Polliham appealed to the Supreme Court, where the decree was in all things affirmed on May 25, 1904. Polliham v. Reveley et al., 181 Mo. 622, 81 S. W. 182. The appeal was accompanied by a supersedeas bond which prevented a sale by the sheriff until the case was disposed of by the Supreme Court; hence, no sale occurred until October 14, 1904. The property brought the sum of $4,000 in cash. A report of the sale was filed by the sheriff and duly approved by the court. The appellant, Bobb, filed his motion to participate in the distribution of the proceeds on October 14th.

To make the grounds of this motion clear it is necessary to narrate what occurred between Waldeck and Bobb after the sale of the premises by Senn, as attorney in fact, for Joseph Franklin. Bobb conceived the notion that said sale was illegal and would be set aside by the court. With this opinion in mind, he contrived a scheme to become the owner of the notes secured by the first two deeds of trust, being already the owner of the notes secured by the third one. The theory on which he acted was that if he acquired all the notes secured by the two senior liens and the sale of the premises by Senn was annulled, he would be entitled as the owner of the notes secured by the first deed of trust, to the proceeds of any subsequent sale under it. Senn had sold the premises on June 2, 1900, to Polliham, but the latter did nothing towards asserting title until the following December. During the interval, to wit, on or about August 2, 1900, John H. Bobb sent William Reveley, brother of Albert Reveley, to Waldeck to buy the notes secured by the second deed of trust. These notes were held by Martha E. Bobb, but Waldeck controlled them as her agent. The...