Reilly v. Cullen

• Decision Date: 31 March 1903
• Citation: 74 S.W. 370,101 Mo. App. 32
• Court: Missouri Court of Appeals
• Parties: REILLY v. CULLEN.<SMALL><SUP>*</SUP></SMALL>

74 S.W. 370

101 Mo. App. 32

REILLY v. CULLEN.^*

Court of Appeals at St. Louis, Missouri.

March 31, 1903.

MORTGAGES—POWERS OF MORTGAGEE—PRIVATE SALE—LIABILITY OF MORTGAGOR—REIMBURSEMENT FOR COMMISSIONS—VALUE OF PROPERTY—EVIDENCE.

1. Where a contract of defeasance provided that either the mortgagee or the mortgagor could sell the mortgaged property, the agreement to last for 60 days, the mortgagee's authority to sell the property at private sale, without foreclosure, terminated at the end of the 60 days.

2. A mortgagee is not entitled to reimbursement out of the proceeds of the sale of mortgaged property for commissions paid by him to a broker for effecting a private sale of the property after the mortgagee's power to make a private sale had terminated.

3. Where a mortgagee under an equitable mortgage makes a private sale of the mortgaged property after the authority given him by the mortgage to make such sale has terminated, although he should not be regarded as a malefactor, he should be held to the utmost good faith, and is liable over to the mortgagor to account for the full market value of the property, irrespective of what he may have received therefor.

4. Evidence in a suit for an accounting by a mortgagor against the mortgagee, who had made a private sale of the mortgaged property, considered, and held to show that the property was sold at its full market value.

5. The market value of real estate, as applied to the sale of realty by a mortgagee, is the fair value of the property between one who wants to buy and one who wants to sell, irrespective of peculiar circumstances rendering the property of peculiar value to either the purchaser or vendor.

Appeal from St. Louis Circuit Court; W. B. Douglas, Judge.

Action by William V. M. Reilly against Michael J. Cullen. From a judgment for plaintiff, defendant appeals. Reversed.

In February, 1897, plaintiff was the owner of improved property—lot 40, block 1860—in the city of St. Louis, upon which he had given a mortgage to the St. Louis Trust Company to secure a note of $6,000 made to said company. He had defaulted in the payment of interest due on the note, on account of which default the trust company was about to foreclose the mortgage. He applied to defendant, to whom he was indebted, to pay the trust company the overdue interest and prevent a foreclosure sale of the property. On February 18th the following arrangement was entered into by and between plaintiff and defendant:

Plaintiff made and delivered to defendant a deed conveying the fee-simple title of the lot to defendant. At the same time they executed the following contract of defeasance, to-wit:

                      "St. Louis, February 18, 1897
                

"This agreement between W. V. M. Reilly and M. J. Cullen witnesseth: That William V. M. Reilly has this day conveyed by deed to said Cullen his property on Evans avenue, on the following conditions: Mr. Cullen pays the interest on loan of $6,000 on said property, to prevent sale under foreclosure and to secure to said Cullen money owed to him by said Reilly. Mr. Cullen agrees to allow said Reilly to sell said property, or to sell it himself, and on payment to him of what money Reilly owes Cullen, and what money he pays out on said property, together with reasonable compensation for his trouble, said Cullen will make deed to said property to Reilly, or to whoever he may designate. This agreement to last for sixty days from this date.

                                William V. M. Reilly
                               "M. J. Cullen."
                

"It is agreed, under contract on reverse side, to leave to the judgment of John J. Lane and D. J. Hayden the decision as to the acceptance of any trade or sale of said property.

                                  William V. M. Reilly
                                 "M. J. Cullen."
                

Defendant paid the trust company the overdue interest. Plaintiff was unable to find a purchaser for the property within 60 days from the date of the making of the contract. After the 60 days had expired defendant employed John J. Lane, a real estate agent, to find a purchaser for the property, and asked him to make extraordinary efforts to sell it. Lane testified that he did so, and on May 17, 1897, sold the property to Victor Diesing for $7,600. Diesing assumed the payment of the mortgage to the St. Louis Trust Company, on which was due at the time the principal, $6,000, and interest, $120, and paid the balance of the purchase money, $1,480, to defendant. Defendant had paid $788.01, overdue interest, to the trust company, and back taxes on the property. He paid Lane a commission of $200 for selling the property. Plaintiff owed him a judgment of $431.20, recovered October 5, 1895, with 8 per cent. interest thereon, which plaintiff agreed should be paid out of the proceeds of the sale of the property. The interest on the judgment was $66.18 on May 17, 1897. The cost of obtaining the judgment was $5.34. Defendant allowed Diesing $22.50 out of the purchase money on account of the occupation of a part of the premises for one month after its sale by the plaintiff. Defendant testified that he received $12 or $13 net rent out of the property while in his possession.

To restate the account, he received:

                On the sale ..................... $1,480 00
                On rent .........................     13 00
                                                  _________
                    Total ..................................  $1,493 00
                    He paid
                Interest and taxes ............... $ 788 01
                Commission to Lane ...............   200 00
                His own judgment .................   431 20
                Interest on same .................    66 18
                Costs ............................     5 34
                To Diesing .......................    22 50
                                                    ________
                    Total ...................................    $1,513 23
                    Balance due to defendant ................        20 23
                

The plaintiff sued in equity, alleging that the deed to defendant, though absolute on its face, was in fact an equitable mortgage; that the lot, with the improvements, was of the value of $12,000; that defendant violated the trust by illegally selling the property at private sale and at a sacrifice. Defendant in his answer alleged that he was entitled to sell the property, according to the terms of the agreement of February 18, 1897, to reimburse himself for what he had paid out for plaintiff at his instance and request, and for the payment of his judgment against plaintiff; that he acted in good faith, and sold the property for its full market value, and accounted for the proceeds as hereinbefore stated.

This appeal is from a judgment rendered on a second trial of the cause. From the judgment on the first trial there was an appeal to the Supreme Court, where it was held that the deed and contemporaneous defeasances should be read together, and, when so read, they constituted only a mortgage or security for the indebtedness named. Reilly v. Cullen, 159 Mo. 322, 60 S. W. 126. On the second trial, from which this appeal is prosecuted, the decision of the Supreme Court in respect to the transaction of February 18, 1897, was accepted by both parties, and the deed recognized and treated as an equitable mortgage. The only material questions of difference between the parties on the trial were in respect to the market value of the property and the right of defendant to pay Lane's commission for effecting a private sale of the property.

The learned circuit judge, after hearing the evidence, made the following finding of facts and rendered the following judgment:

"Now, at this day, come again the parties to the above-entitled cause, in person and by their respective attorneys, and submit this cause to the court upon the pleadings and proof adduced; and the court, after hearing and considering the evidence, finds the issues herein joined for the plaintiff. The court further finds that the warranty deed made, executed, and delivered by the plaintiff to the defendant, dated February 18, 1897, conveying to defendant the real estate therein described, was by the parties thereto intended to be, and is in effect and purpose, a mortgage on said real estate to secure the payment to the said defendant of a certain debt then due and owing by said plaintiff to the defendant, and also the repayment to defendant of other moneys to be by defendant herein thereafter paid out for and on account of said plaintiff in and about preventing the sale of the real property in said deed described under and by virtue of the terms of a deed of trust on said property theretofore executed by plaintiff and at that time held by the St. Louis Trust Company of St. Louis, securing payment of plaintiff's note for $6,000 and interest thereon. And the court further finds that, after said conveyance by plaintiff to defendant, defendant did not foreclose plaintiff's rights as mortgagor by any suit for that purpose, and that defendant, on May 17, 1897, unlawfully sold and conveyed said real estate so conveyed by said plaintiff to him as aforesaid to one Victor Diesing, for the consideration of the sum of $1,600 cash and the assumption by and agreement of said Diesing to assume the payment of, and to pay off and extinguish, plaintiff's debt of $6,000 and interest thereon, payment whereof was secured by said deed of trust so held by the said St. Louis Trust Company.

                And

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