Reger v. First National Bank of Milan
| Decision Date | 11 January 1926 |
| Parties | ORA M. REGER AND W. S. SHATTO, RESPONDENTS, v. FIRST NATIONAL BANK OF MILAN, MISSOURI, A BANKING CORPORATION, LENNY BALDRIDGE, AND HOMER A. HIGGINS AND A. RALPH McDUFF, A PARTNERSHIP DOING BUSINESS IN MILAN, SULLIVAN COUNTY, MISSOURI, AS BROKERS, ABSTRACTORS AND LOAN AGENTS UNDER THE FIRM NAME AND STYLE OF HIGGINS & McDUFF, APPELLANTS. [*] |
| Court | Kansas Court of Appeals |
Appeal from the Circuit Court of Sullivan County.--Hon. J. E Montgomery, Judge.
REVERSED.
Judgment reversed.
John H Taylor, R. E. Ash and W. H. Childers for respondents.
Calfee & House for appellant, Higgins & McDuff; H. J. West, L. E Atherton and Hudson, Weatherby & James for appellant Bank.
Trimble, P. J., absent.
In this action plaintiffs seek cancellation of a certain alleged spurious deed of trust and to recover damages for alleged fraud. The amended petition is in two counts of which the first asks to have the alleged spurious deed of trust cancelled and annulled because procured by conspiracy, fraud and deceit. The second is for damages resulting from the alleged conspiracy.
Plaintiff Ora M. Reger owned 688 acres of land in Sullivan county, Missouri, encumbered for $ 26,000. Negotiations were pending for a new loan of $ 30,000, part of the proceeds to be used to take up the old loan. In July, 1919, Reger entered into a verbal contract with defendants Higgins & McDuff, real estate and loan agents at Milan, Mo., to sell said land at $ 75 per acre, or an aggregate of $ 51,600 for which the agents were to receive a commission of $ 1 per acre. Said agents procured a purchaser in the person of one Herbert Williams, at the price mentioned in the verbal contract, and on August 19, 1919, Reger and Williams entered into a written contract whereby Williams agreed to buy the land at the price above mentioned. The terms of the contract provided for the payment by Williams of $ 1000 in cash on the execution of the contract, $ 4000 when the deal was closed, and the assumption by Williams of the $ 30,000 encumbrance. It was further provided that Williams should execute a second deed of trust for $ 16,600, deferred payment, to Reger and his son-in-law W. S. Shatto, the other plaintiff herein.
At the time the contract was entered into between Williams and Reger, Williams owned a note for $ 5200 made by one Emery D. Myers and secured by a deed of trust on 160 acres of land in Sullivan county, which Williams had sold, or traded, to Myers. It was the intention of Williams to dispose of the Myers note and thereby secure the $ 4000 he was obligated to pay Reger by the terms of the contract. However, at the time Reger was ready to close the deal, January 17, 1920, Williams found he was unable to dispose of said note, whereupon defendant McDuff arranged with defendant the First National Bank of Milan (of which Lenny Baldridge was cashier) for a loan to Williams of $ 4000, for which Williams and Higgins & McDuff were to give their note to the bank, including one year's interest, or $ 4320, due in one year at eight per cent interest from maturity. As collateral for this note, Williams and his wife were to give their note to Higgins for $ 4000, due in one year, secured by a deed of trust on the 688 acres of land, which note, together with the deed of trust securing same, and the Myers note and deed of trust for $ 5200, were to be assigned and held by said bank as collateral.
Pursuant to the contract, Reger executed his deed to the 688 acres of land and left it with Higgins & McDuff to close the deal with Williams, expecting them to collect the $ 4000 cash payment and to take back from Williams a second deed of trust for the $ 16,600. However, when the $ 4000 was borrowed from the bank a second deed of trust as security therefor was placed on the 688 acres of land and recorded, and plaintiffs received only a third deed of trust for the $ 16,600 indebtedness. The evidence shows that plaintiffs did not know of the deed of trust to the bank until long after the deal was closed. Shortly after the deal was closed, Reger got the Reger and Shatto notes from Higgins & McDuff and took them for safe-keeping to the Citizens International Bank at Milan, and a little later, assigned them to that bank as collateral for some debt Reger owed the bank. It was after this transaction that Reger discovered that his deed of trust was a third, instead of a second. He then complained to McDuff and later to Baldridge that he had been defrauded and that the matter would have to be adjusted.
There were several conversations between the parties, the exact purport of which is in dispute. The testimony shows that defendant Bank, on April 6, 1922, sold and endorsed without recourse the $ 4320 note to the Citizens International Bank and also turned over to that bank the collateral notes and deeds of trust. Sometime after the purchase of the $ 4320 note, it was sold by the bank to its president Frank O. Custer, who thus became the owner and holder of said note and the security that went with it. Williams being desirous, thereafter, of renewing the Myers loan (having been compelled to take back the land from Myers) arranged with Custer to release the deed of trust on the Myers land long enough to permit him to get a new loan. A new loan was secured and by payment the $ 4320 note was reduced to $ 3850, for which amount a new note was given, secured by a deed of trust on the Myers land, subject to the new loan and a chattel mortgage on some stock.
When Higgins endorsed the $ 4000 note to the First National Bank at the time the $ 4000 loan was made, he signed his name on the back thereof; but sometime in the spring of 1920, while this suit was pending and shortly before the trial, Custer took the note to Higgins and had him write the words "without recourse" above his (Higgins) name. This was done without the knowledge of the First National Bank. Williams was unable to meet his payments and the 688 acres of land reverted to Reger.
The petition is in two counts, the first of which seeks to cancel the $ 4000 deed of trust on the ground that defendants Higgins & McDuff, Baldridge and the First National Bank fraudulently conspired together to secure the same as a second deed of trust ahead of plaintiffs' deed of trust for $ 16,600. It is not charged therein that Williams and his wife were parties to said alleged fraud.
The second count of the amended petition seeks damages in the following language: ". . . that the said Higgins & McDuff, agents of plaintiff Ora M. Reger, Lenny Baldridge and First National Bank, Milan, Missouri, and the other defendants herein, did, on or about the--day of January, 1920, wrongfully, deceitfully and fraudulently conspire and confederate together for the wrongful and unlawful purpose of then and there fraudulently and unlawfully to cheat, wrong and defraud plaintiffs, and especially the plaintiff Ora M. Reger, out of his security for the payment of said three negotiable promissory notes, by then and there wrongfully and unlawfully combining and confederating together to wrongfully and unlawfully deceive and procure the purchaser of said lands, Herbert Williams, from executing and delivering to plaintiff, Ora M. Reger, a second deed of trust on said lands to secure the payment of said three negotiable promissory notes; and did then and there, wrongfully and fraudulently deceive and procure him, the said Herbert Williams, to execute and deliver to said defendant Homer A. Higgins a second deed of trust on said 688 acres of land as trustee for said defendant First National Bank, thereby cheating and defrauding; and then and thereby intending to cheat, wrong and defraud; and did then and there and thereby, intentionally, wrongfully, unlawfully and fraudulently cheat, wrong and defraud these plaintiffs, and especially the plaintiff Ora M. Reger, out of a second deed of trust on said 688 acres of land, to plaintiff's damage in the sum of $ 14,682.95, as follows:
Herbert Williams, Virgie Williams, the Citizens International Bank of Milan and Frank O. Custer were also made defendants but they interposed no defense in the court below, nor are they represented in this appeal. All the other defendants appeared and defended in the court below and are represented here, and all filed demurrers to the petition which were overruled, whereupon they filed separate answers to the amended petition.
These answers admit formal matters but deny specifically that conspiracy, fraud and deceit entered into the procurement of the deed of trust for $ 4000, declare plaintiffs were in full possession of all the facts surrounding the execution of the said deed of trust and deny generally all matters in the petition not specifically admitted in the answers. The reply to the separate answers was a general denial. Upon the issues thus made the cause went to trial to the court without the aid of a jury.
At the beginning of the trial counsel for the respective parties made opening statements to the court, in the course of which counsel for defendants admitted that the note for $ 4320 for which the alleged fraudulent second deed of trust was collateral had been fully paid and discharged. Whereupon, on motion of plaintiffs' counsel, the court entered the following order:
"Wherefore by reason of the admission of the said defendants that the note secured by said deed of trust...
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Adkison v. Hannah, 55369
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