Roberts v. Rider

• Decision Date: 07 June 1996
• Docket Number: No. 20584,20584
• Citation: 924 S.W.2d 555
• Parties: Thomas E. ROBERTS and Patricia Roberts, husband and wife, Plaintiffs-Respondents, v. Ralph RIDER, Substitute Trustee, Defendant, Walter Janssen, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 555

924 S.W.2d 555

Thomas E. ROBERTS and Patricia Roberts, husband and wife Plaintiffs-Respondents, v. Ralph RIDER, Substitute Trustee, Defendant Walter Janssen, Defendant-Appellant.

No. 20584.

Missouri Court of Appeals,

Southern District,

Division One.

June 7, 1996.

John E. Curran, Julie Jinkens McNitt, Curran and Clifford, Osage Beach, for appellant.

W. Gary Drover, Camdenton, for respondent.

BARNEY, Judge.

Walter Janssen (Defendant) appeals from a judgment entered by the Circuit Court of Camden County, Missouri. ¹ Defendant is a cestui que trust (Mortgagee) of a deed of trust granted by Thomas E. Roberts and Patricia Roberts (Plaintiffs). Plaintiffs are grantors (Mortgagors) and obligors on a note belonging to Defendant. This case arises out of an attempt to foreclose a deed of trust containing a power of sale via the extrajudicial procedure provided for in §§ 443.290--.320. ² The salient determination in this case is whether or not the Defendant-Mortgagee should suffer a ten percent penalty per § 443.130 for allegedly failing to provide Plaintiffs-Mortgagors a deed of release on the deed of trust after Plaintiffs' payment of the principal, interest and miscellaneous costs per the note, but not an amount for "reasonable attorney fees" as provided by terms of the note.

The evidence shows that on August 1, 1987, the Plaintiffs executed their promissory installment note in the amount of $240,000.00 in favor of Defendant as well as a July 27, 1987, conveyance of certain parcels of land located in Camden County under a deed of trust to secure the money obligation on the note.

With respect to attorney fees, the note contained the following provisions:

If default be made in the payment of any of said installments when due ... the holder of this note may ... declare all unpaid indebtedness ... due and payable ... and thereupon the undersigned agree to pay all costs of collection, including a reasonable attorney's fee.

Plaintiffs were often tardy on their installment payments culminating in Defendant mailing a letter dated January 15, 1992, by certified mail to Plaintiffs and R & R Investment Company, accelerating the total amount due under the note. ³ Demand was made for payment in full, within ten days, of the principal balance due of $231,699.33 plus interest through January 13, 1992, of $742.70 interest per diem rate was set at $57.131342 until final payment. In addition, the letter recited that "attorney's fees and late charges in the amount of $210.00 and title evidence expense in the amount of $120.00 [were] incurred as a result of ... default in payment when due." The letter was received by the Plaintiffs on the same date. This was followed by the January 29, 1992, letter by the substitute trustee notifying the parties that the real estate would be sold at foreclosure on February 21, 1992.

On February 17, 1992, Plaintiffs learned that Defendant was requesting attorney fees of $23,000.00 in addition to the payment in full of the note, together with other miscellaneous expenses.

On February 18, 1992, Plaintiffs' attorney delivered a cashier's check to Defendant's attorney in the amount of $234,828.74. On the same date, Defendant's attorney responded in writing that the monies received would be applied to principal, interest due and late charges but that further miscellaneous costs, publication fees, and late charges were due. In addition, Defendant persisted in his demand for $23,000.00 as attorney fees based on "Missouri case law [being] legion with respect to ten (10%) percent being a reasonable amount of attorney fees for a note collection." The letter threatened foreclosure if these miscellaneous expenses and attorney fees were not paid.

Plaintiffs then forwarded an additional check for publication and miscellaneous expenses and another for $320.00 "for attorney's fees and costs of collection claimed due under the note." The hearing court found that Plaintiffs eventually overpaid Defendant by some $988.98. Plaintiffs supplied Defendant with a deed of release to sign but Defendant declined to do so, noting a demand for reasonable attorney fees in the amount of $23,000.00 yet due and payable.

On February 20, 1992, Plaintiffs sought injunctive relief to prevent the foreclosure. On the same date the Circuit Court of Camden County, Missouri, granted Plaintiffs' application for a temporary restraining order and restrained Defendant and the substitute trustee from conducting a foreclosure sale.

On September 21, 1992, Plaintiffs filed their First Amended Petition by adding an additional count for statutory penalties under § 443.130 against Defendant for his refusal to convey to Plaintiffs a deed of release. Defendant counterclaimed for attorney fees in the amount of $23,449.87 (being ten percent of the pay off of the note), and requested an order of the court declaring the note in default for purposes of foreclosing on the note. Defendant also sought a declaratory judgment to determine whether or not Defendant could apply the proceeds of the payoff to first satisfy the outstanding attorney fees due under the note. After a hearing, the trial court entered judgment.

The judgment: (1) enjoined the Defendant and the substitute trustee under the deed of trust, from foreclosing on the real estate previously conveyed by the Plaintiffs under the deed of trust; (2) awarded Plaintiffs $24,000.00 under the penalty provisions provided per § 443.130, for Defendant's failure to provide a deed of release to the Plaintiffs upon Plaintiffs paying the note in full and granted Plaintiffs an attorney fee in the amount of $8,300.00; (3) granted Defendant an attorney fee of $320.00 versus the fee of $24,449.87 which he had sought; and (4) denied Defendant's request for a declaratory judgment.

On appeal Defendant posits three points of error. In his first point he asserts that the trial court erred in holding that the attorney fees provided by the note were not secured by the deed of trust. In his second point, Defendant argues that setting Defendant's attorney fees under the note at only $320.00 constituted an arbitrary and unreasonable decision by the court indicating a lack of careful consideration. In his last point of error the Defendant asseverates that the trial court erred in awarding the Plaintiffs a statutory penalty under § 443.130 because the facts did not warrant the imposition of a penalty.

Defendant's first and third points of error are interrelated and will be discussed conjunctively. For the sake of clarity, Defendant's Point Two will be taken up last.

Our review is governed by Rule 73.01(c), Missouri Rules of Civil Procedure (1996), as construed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). The judgment of the trial court will be sustained "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Id. at 32. We view the evidence and permissible inferences therefrom in the light most favorable to the judgment, disregarding all contrary evidence and inferences, Mehra v. Mehra, 819 S.W.2d 351, 353 (Mo. banc 1991), mindful that credibility of the witnesses and the weight to be given their testimony were matters for the trial court, which was free to believe none, part or all of the testimony of any witness. Herbert v. Harl, 757 S.W.2d 585, 587 (Mo. banc 1988).

Section 443.060.1 requires a mortgagee, when it has received "full satisfaction of any security instrument, ... at the request and cost of the person making the same, ... [to] deliver to such person a sufficient deed of release of the security instrument...."

Section 443.130 is the enforcement mechanism for § 443.060.1 and it states:

If [a mortgagee] ... receiving satisfaction, do[es] not, within thirty days after request and tender of costs, ... deliver to the person making satisfaction a sufficient deed of release, he shall forfeit to the party aggrieved ten percent upon the amount of the mortgage or deed of trust money, absolutely, and any other damages he may be able to prove he has sustained, to be recovered in any court of competent jurisdiction.

"The purpose of § 443.130 is to 'enforce the duty of the mortgagee to clear the title of the mortgagor, so that it [is] apparent upon examination that the incumbrance of record no longer exist[s].' " Ong Bldg. Corp. v. GMAC Mortgage Corp., 851 S.W.2d 54, 55 (Mo.App.1993). However, § 443.130 is penal in nature and must be strictly construed. Id.

Defendant argues that he did not obtain satisfaction of the indebtedness owed him, since the promissory note secured by the deed of trust provided for reasonable attorney fees and the amount he determined to be reasonable (either $23,000.00 in his original demand or $24,449.87 in his counter-claim) were not tendered by Plaintiffs. Therefore, Plaintiffs were not entitled to a deed of release. He argues further that by the very terms of the deed of trust, particularly in the defeasance clause, ⁴ that his attorney fees were secured by the deed of trust.

[A] note is the basic contract to which [a] deed of trust is collateral. Whatever discharges the debt, discharges the collateral. The performance, or tender of performance due on the note--even after default--therefore, releases the collateral lien and defeats the power of sale in the deed of trust.

Tipton v. Holt, 610 S.W.2d 659, 662 (Mo.App.1981) (citations omitted).

"It has long been recognized that a provision in a promissory note for the payment of an attorney's fee [upon] collection is binding and enforceable. The trial court is not at liberty to ignore it, absent proof that to enforce it would be unreasonable and unconscionable." Stern Fixture Co. v. Layton, 752 S.W.2d 341, 343 (Mo.App.1988) (citation omitted). In like manner, the courts have regularly enforced provisions in a note providing for attorney fees based on a specified percentage of the note....