Progress Press Brick & Mach. Co. v. Sprague

• Decision Date: 07 November 1933
• Parties: PROGRESS PRESS BRICK & MACHINE COMPANY, A CORPORATION, PLAINTIFF, v. JESSE M. SPRAGUE ET AL., DEFENDANTS. and WILLIAM A. LAHRMAN, TRUSTEE IN BANKRUPTCY OF RELIABLE LOAN & INVESTMENT COMPANY, A CORPORATION, APPELLANT, v. LEO G. HADLEY, FRANK CROWDER, JESSE M. SPRAGUE, DAVID G. BOSSERMAN, E. McD. STEVENS, J. W. LOSSE, P. J. WUEST, SENECA C. TAYLOR AND R. C. BRINKMAN, RESPONDENTS
• Court: Missouri Court of Appeals

65 S.W.2d 154

228 Mo.App. 1116

PROGRESS PRESS BRICK & MACHINE COMPANY, A CORPORATION, PLAINTIFF, v. JESSE M. SPRAGUE ET AL., DEFENDANTS. and WILLIAM A. LAHRMAN, TRUSTEE IN BANKRUPTCY OF RELIABLE LOAN & INVESTMENT COMPANY, A CORPORATION, APPELLANT, v. LEO G. HADLEY, FRANK CROWDER, JESSE M. SPRAGUE, DAVID G. BOSSERMAN, E. McD. STEVENS, J. W. LOSSE, P. J. WUEST, SENECA C. TAYLOR AND R. C. BRINKMAN, RESPONDENTS

Court of Appeals of Missouri, St. Louis

November 7, 1933

Motion of appellant, Leo G. Hadley, for rehearing, overruled November 21, 1933.

Appeal from Circuit Court of St. Louis County.--Hon. Jerry Mulloy Judge.

REVERSED AND REMANDED.

Stern & Burnett for appellant.

(1) All of the payments made to respondents with exception of payments made to Leo Hadley on March 27, 1930, and July 22 1930, were made without order of court and constitute an unlawful diversion of a fund in custody of the court. Stone v. St. Louis Union Trust Company, 183 Mo.App 261, l. c. 278; State v. Hartman, 221 Mo.App. 215 300 S.W. 1054; Seaboard National Bank v. Rogers Milk Products Company, 21 F.2d 414; Boice v. Conover (N.J.), 35 A. 402; 53 Corpus Juris, page 154, section 193. (2) Payments made to Leo G. Hadley on March 27, 1930, and July 22, 1930, pursuant to order of February 3, 1930, were unlawful and void because of insufficiency of motion and the lack of notice to appellant and interested parties. State v. Hartman, 221 Mo.App. 215, 300 S.W. 1054; Seaboard National Bank v. Rogers Milk Products Company, 21 F.2d 414; 53 C. J., p. 314, sec. 523. (3) Where a fund in court has been improperly disbursed by an officer of the court the court is under the duty of compelling, by its summary process, repayment by the persons who have unlawfully received the fund. Boice v. Conover (N.J.), 35 A. 402; Seaboard National Bank v. Rogers Milk Products Company, 21 F.2d 414; Kneisel v. Ursus Motor Company, 238 Ill.App. 50; 53 C. J., p. 313, sec. 521; In re Burkhalter & Company, 179 F. 403.

R. M. Nichols for Leo G. Hadley; R. C. Brinkman pro se.

The appellant without the establishment of itself as a creditor in said original proceeding its petition does not state a cause of action. State v. Hartman, 221 Mo.App. l. c. 227; 23 R. C. L., Receivers, sec. 113, p. 102; Barber v. International Co., 74 Conn. 652, 151 A. 857; 23 C. J., sec. 392, p. 236; 1 Clark on Receivers, sec. 657, subsec. 6. (2) The appellant could have appealed from the decision of the court and the acts of the receiver thereunder in the case wherein such order and acts were made, but cannot have a review of these orders and acts in a collateral attack. Clark on Receivers, sec. 685; Platt v. N. Y. & S. B. Ry. Co., 170 N.Y. 452; New Western Match Co. v. Watt, 180 S.W. 625; Guaranty State Bank & Trust Co. v. Thompson, 195 S.W. 660; Greeley v. Provident Savings Bank, 103 Mo. 212; State ex rel. v. Skelton, 238 Mo. 282; 23 C. J., p. 140. (3) It does not appear from the record in this case that the trustee in bankruptcy had, or obtained, from the referee any authority to bring this suit, or initiate this proceeding; and in the absence of such authority the trustee in bankruptcy has no right to bring such proceeding. Hall v. Main, 34 F.2d l. c. 531; 53 C. J., sec. 528, p. 316; Hatfield v. Cummings, 142 Ind. 350; Rev. Stat. U. S. 1913, sec. 9595. (4) The record shows that the receiver filed in court his statement showing payment of coupons to divers bondholders from November 29, 1929, to November, 1931, and these reports were approved by the court. No exceptions were ever filed to these reports during any of the terms of the court, or no effort was made in any way to carry over the question to the present or subsequent terms of the court. The only way appellant could preserve for a consideration of this or any other court would be by exceptions to those reports, and the trial court had no authority or jurisdiction to modify or set aside the judgments of approval of the reports made at a subsequent term. R. S. 1929, Secs. 992, 1099; Ashby v. Glasgow, 7 Mo. 320; Hill v. City of St. Louis, 20 Mo. 584; State ex rel. v. Ross, 118 Mo. l. c. 47; Hall v. Lane, 123 Mo. 633; Lovitt v. Russell, 138 Mo. 474; 23 C. J., sec. 601, p. 370. (5) The appellant was made a party to this suit and chargeable with notice of everything that occurred therein; it did not present its coupons for payment, but others who presented their coupons for payment and received payment have a prior equity which should prevail over the claim of the appellant. Coleman v. Farrar, 112 Mo. 54; 10 R. C. L., pp. 386, 388, secs. 136, 138; Gray v. Jacobsen, 13 F.2d 959; Thompson v. Lindsay, 242 Mo. 53; Abernathy v. Hampe, 53 S.W.2d ___; Follingstead v. Syverson, 160 Minn. 307; 1 Clark on Receivers, p. 920, sec. 652b. (6) Whether paid under the order of the court or under the belief that the order of the court justified the payments, the payments of interest were for the best interest of the estate being administered. Woolsey v. Cummings Car Works, 33 N.J.Eq. 432; Wheelock v. Cantley, 50 S.W.2d l. c. 733; 34 Encyclopedia of Law, p. 270; Northern Finance Corp. v. Byrnes (Mo.), 5 F.2d 11; Wigton v. Climax Coal Co. (Pa.), 113 A. 425; Louisiana N.W. R. Co. v. McMorella, 282 S.W. 6. (7) The rents collected by the receiver were not in or by the deed of trust assigned or in any manner appropriated by the deed of trust as a security for the payment of the bonds or coupons. The rents accruing from the property would belong to the mortgagor until foreclosure or until a receiver was appointed. Simpson v. Keane, 39 Mo.App. 635; Armour Packing Co. v. Wolff, 59 Mo.App. 665; In re Life Assn. of America, 96 Mo. 632; Grafeman Dairy Co. v. Mercantile Club, 241 S.W. 966; St. Louis National Bank v. Field, 156 Mo. 306; Hunter v. Green, 181 S.W. 597; Omaha Hotel v. Kuntz, 107 U.S. 378; 2 Clark on Receivers, sec. 690, p. 1385. (8) The rents not being conveyed or assigned by the mortgage, then it must follow that the rule of equal payment contained in the mortgage refers to and must be held to refer only to the foreclosure of the mortgage, and the equal distribution of the proceeds received therefrom, and has no application to the payment or distribution of the rents collected by the receiver. Mitchell v. Ladew, 36 Mo. 526; Hurck v. Erskin, 45 Mo. 484; In re Ferguson's Estate, 124 Mo. 574; Stewart v. Omaha L. & T. Co., 283 Mo. l. c. 377; 1 Wiltsie on Mortgages, sec. 618.

E. McD. Stevens pro se.

(1) Respondent E. McD. Stevens was acting on behalf of Richard H. Stevens, a disclosed principal, and the acts of said agent were within the scope of his authority. They are, therefore, considered the acts of the principal, and said agent cannot be held personally liable. Hunt v. Sanders, 281 S.W. 422, 313 Mo. 169; Meyers v. Kilgen, 160 S.W. 569, 117 Mo.App. 724; Serat v. Winter, 262 S.W. 66, 218 Mo.App. 60. (2) The money having been paid to respondent E. McD. Stevens, who acted solely as the agent of Richard H. Stevens, the mere fact that the receiver may have reported the payment of said money to E. McD. Stevens would not make the agent, E. McD. Stevens, personally responsible. Ashley v. Jennings, 48 Mo.App. 142. (3) Even though the money might have been paid under a mutual mistake, E. McD. Stevens, acting as the agent of Richard H. Stevens, cannot be held personally liable. Mason v. Commerce Trust Company, 183 S.W. 707, 192 Mo.App. 528.

BENNICK, C. Becker, P. J., and Kane and McCullen, JJ., concur.

OPINION

BENNICK, C.

This is an appeal by William A. Lahrman, trustee in bankruptcy of the Reliable Loan & Investment Company, a corporation, from an order of the Circuit Court of St. Louis County, denying his application for an order upon the respondents herein as interest coupon holders to repay to the receiver of the mortgaged property certain interest payments alleged to have been improperly and unlawfully paid out to such respondents from the funds of the receivership estate in the hands of the receiver.

In order to appreciate the issues involved on this appeal it is necessary to refer in as brief manner as possible to certain preliminary matters which antedated and gave occasion for the controversy out of which this proceeding has arisen.

While much of the record in the cause proper is not before us, the parties inform us that the same is an action in the nature of an equitable mechanic's lien suit, the purpose of which is to determine the question of priority as between the alleged mechanic's liens and the lien of the deed of trust upon the property, and to adjudicate and foreclose the mechanic's liens. The action was commenced on April 4, 1928, by the Progress Press Brick & Machine Company as plaintiff, against Jesse M. Sprague and the unknown owners and holders of the negotiable promissory notes and coupons described in and secured by the said deed of trust. The property in question is a twelve-family apartment building known as 7204-7208 Zephyr Place, in Maplewood, St. Louis County, Missouri.

From so much of the deed of trust as has been incorporated in the record, it appears that it was executed on May 2, 1927, by one Della M. Brodhage to the Title Guaranty Trust Company as trustee for the persons, firms, or corporations who might afterwards become the owners and holders of the notes described in and secured thereby. It recited an indebtedness of the mortgagor in the sum of $ 50,000, for which debt she had executed a series of negotiable promissory notes in different amounts, one hundred eleven in number, payable to bearer, and bearing interest at the rate of six per cent per annum as evidenced by semi-annual interest coupons executed by her and attached to the notes to cover the successive installments of interests thereafter to become due on the second days of may and...