Riggs v. Kellner

• Citation: 716 S.W.2d 3
• Decision Date: 12 August 1986
• Docket Number: No. WD,WD
• Court: Court of Appeal of Missouri (US)
• Parties: Leon RIGGS, Trustee, and George William Pierson and Suzanne Pierson, Appellants, v. Edward G. KELLNER and Louise Kellner, and Arnold Bratland and Barbara Bratland, Respondents. 36974.

Page 3

716 S.W.2d 3

Leon RIGGS, Trustee, and George William Pierson and Suzanne Pierson, Appellants, v. Edward G. KELLNER and Louise Kellner, and Arnold Bratland and Barbara Bratland, Respondents.

No. WD 36974.

Missouri Court of Appeals Western District.

Aug. 12, 1986.

William J. Kleinkauf, Dallas, Tex., for appellants.

Richard L. Parker, Bethany, for respondents, Kellner.

R.E. Moulthrop, Bethany, for respondents, Bratland.

Before NUGENT, P.J., and BERREY and GAITAN, JJ.

BERREY, Judge.

This is an appeal of the trial court's judgment denying plaintiff's petition for judicial foreclosure on a deed of trust. This court reverses.

The facts material to this appeal are not in dispute ¹ and are as follows:

George and Suzanne Pierson, the plaintiffs, owned 110 acres of land located in Harrison County, Missouri. On December 26, 1979, they sold the Harrison County property to defendants James and Kathryn Kellner, who in consideration made a promissory note in the amount of $96,250. The Kellners executed a deed of trust as security for the note; it was properly recorded by the county recorder of deeds on the same day.

On February 18, 1981, James and Kathryn Kellner executed a promissory note for $8,000 in favor of Edward and Louise Kellner, also defendants in this action, and a second deed of trust was made to secure the note. This second deed of trust was recorded on February 24, 1981, in Harrison County. Thereafter on October 11, 1982, James and Kathryn Kellner executed a note for $8,000 and a corresponding real estate deed of trust to defendants Arnold and Barbara Bratland. This deed of trust was recorded on October 15, 1982.

Subsequently James and Kathryn Kellner filed for bankruptcy on December 22, 1983. The trustee in bankruptcy released all interest in the property to the secured creditors on February 15, 1984.

On July 16, 1984, defendants James and Kathryn Kellner executed and delivered to plaintiffs, George and Suzanne Pierson, a quitclaim deed which was accepted by the Piersons and recorded on July 23, 1984. The Piersons took possession, paid the taxes, and obtained insurance on the property in the name of the Kellners. Mr. Pierson testified the quitclaim deed was used only to show that he and his former wife, Mrs. Pierson, have rights in the property as tenants in common and not as tenants by the entirety.

Plaintiffs filed a petition to foreclose on their deed of trust and answers were filed by Edward and Louise Kellner and the Bratlands. After a hearing on the evidence the trial court entered a judgment finding the Piersons' deed of trust merged with the fee title acquired by the quitclaim deed extinguishing their lien and preventing the foreclosure. The court also found Edward and Louise Kellner now held the first deed of trust on the property and the Bratlands were next in line holding the deed of trust dated October 11, 1982. The Piersons' only point here on appeal disputes the court's findings alleging that they, as mortgagees, intended for a merger to occur.

Under the theory of merger, when property is conveyed by a mortgagor to the mortgagee, the equitable title is merged into the legal title, and the lesser estate, or the lien held by the mortgagee, is destroyed. Scott v. Hill, 330 Mo. 490, 50 S.W.2d 110, 112 (Mo.1932); Reed v. Inness, 102 S.W.2d 711, 716 (Mo.App.1937). They are not favorites of the law, Lundoff v. Garfinkel, 467 S.W.2d 298, 300-1 (Mo.App.1971), and, as such, the question of whether a merger occurred is dependent upon the intention of the parties. Shiner v. Polk, 374 S.W.2d 550, 553 (Mo.App.1963); Reed v. Inness, supra, 102 S.W.2d at 716; see also Boesel v. Perry, 268 S.W.2d 68, 70 (Mo.App.1954) (a determination of the parties' intention is also made when viewing the effect of a quitclaim deed as the release of a mortgage).

The parties' intention to effectuate a merger is a question of fact, Hayden v. Brock, 157 Mo. 88, 57 S.W. 721, 723 (Mo.1900), and this court recognizes that deference must be given to the trial court's finding in this determination, Shiner v. Polk, supra, 374 S.W.2d at 553 [1, 2], however, it's judgment will not be sustained if there is no substantial evidence to support it; it is against the weight of the evidence; or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

Where the intention is expressly stated it shall be controlling. Putney Realty Co. v. Frank, 52 S.W.2d 1025, 1026 (Mo.App.1932); Shiner v. Polk, supra, 374 S.W.2d at 552-3. If not, the intention is presumed to be in accordance with the best interest of the parties as shown by the surrounding circumstances, id.; the interest of the holder of the first deed of trust is governing. DeWees v. Stoup, 494 S.W.2d 372, 374 (Mo.App.1973). Missouri law reveals a merger will not be declared where it would work against the interest of the first mortgagee to give the holder of an intervening encumbrances a greater lien or priority than he previously had. Saline County v. Thorp, 337 Mo. 1140, 88 S.W.2d 183, 186 (Mo.1935); Scott v. Hill, supra, 50 S.W.2d at 113; Hayden v. Brock, supra, 57 S.W. at 723. In this case, the subordinate lien holders, Edward and Louise Kellner and Arnold and Barbara Bratland, act as a bar to the merger. Any other result would effectively...