Saline County v. Thorp

• Citation: 88 S.W.2d 183,337 Mo. 1140
• Parties: Saline County and R. L. Hyatt, James M. Parks and C. B. Davis, Judges of the County Court of Saline County, v. Richard J. Thorp, E. L. Parsons, Trustee, George H. Althouse and Jacob Wise, Appellants
• Decision Date: 12 November 1935
• Court: Missouri Supreme Court

88 S.W.2d 183

337 Mo. 1140

Saline County and R. L. Hyatt, James M. Parks and C. B. Davis, Judges of the County Court of Saline County, v. Richard J. Thorp, E. L. Parsons, Trustee, George H. Althouse and Jacob Wise, Appellants

Supreme Court of Missouri

November 12, 1935

Appeal from Saline Circuit Court; Hon. Robert M. Reynolds Judge.

Affirmed.

T H. Harvey and North T. Gentry for appellants.

(1) If fraud is relied on, the bill in equity should state specifically in what that fraud consists. Hoester v Sammelmann, 101 Mo. 624; Wagner v. Binder, 187 S.W. 1147; Bliss on Code Pleading, sec. 211. (2) If relief is asked because of a mutual mistake, the bill in equity must allege such mistake in appropriate language. Bartlett v. Brown, 121 Mo. 362; Penn v. Brashear, 65 Mo.App. 27; Henderson v. Beasley, 137 Mo. 203; Atkins v. Tomlinson, 121 Mo. 493; Robinson v. Korns, 250 Mo. 675. (3) "If the agreement is what the parties thereto intended it should be, equity will not interfere because the parties did not understand its legal effect." Williamson v. Brown, 195 Mo. 331; Corrigan v. Tiernay, 100 Mo. 281; 2 Pom. on Eq. Jur., sec. 843. (4) The bill must show that the plaintiffs were free from negligence, and that the act complained of was not due to the consequences of their neglect. Betzler v. James, 227 Mo. 392; Sanderson v. Voelcker, 51 Mo.App. 332; Jones v. Rush, 156 Mo. 374. (5) Where a party fails to avail himself of means of knowledge of the facts, or negligently fails to make inquiry, equity will not grant him relief. Miller v. Railroad Co., 162 Mo. 441; Brown v. Fagan, 71 Mo. 568; 21 C. J., pp. 88-9; 16 Cyc. of Law, p. 69; Kerr on Fraud & Mistake, pp. 406-7; Story on Eq. Jur., sec. 146; Spelman v. Railroad Co., 187 Mo.App. 126. Neither will equity aid him where the true state of facts were within his reach. Felni v. Futcher, 51 Pa. S.Ct. 239; McDaniels v. Bank, 29 Vt. 238; Bibber v. Carville, 101 Me. 62; 2 Pom. on Equity Jur., sec. 856. Equity will not make contracts for parties. Terry v. Michalak, 319 Mo. 296. (6) Where one party voluntarily takes the wrong road, the other party doing nothing to deceive him, equity will not relieve the injured one. Thompson v. Lindsay, 242 Mo. 76; Schaffner v. Schilling, 6 Mo.App. 46; Mires v. Summerville, 85 Mo.App. 186. (7) There is no accident or surprise pleaded; if they were so pleaded, the same were the results of negligence of the plaintiffs. State ex rel. v. Innes, 137 Mo.App. 426; 21 C. J., pp. 82-3; 1 Story on Eq. Jur., sec. 28.

Owen C. Rawlings for respondents; James & James of counsel.

(1) Appellants have waived all claims of error in the overruling of the demurrer other than those included in assignment of errors, and points and authorities in their brief. Scott v. Ry. Co., 62 S.W.2d 840, 333 Mo. 374; Moffett v. Butler Mfg. Co., 46 S.W.2d 873; Aulgur v. Strodtman, 46 S.W.2d 172, 329 Mo. 738. (2) Where there are three mortgages, two held by the county, the conveyance of the property by the mortgagor to the county, does not work a merger of the equitable and legal title and extinguish the lien of the first two mortgages where such result would be against the interest of the first mortgagee. Scott v. Hill, 50 S.W.2d 110, 330 Mo. 490; Collins v. Stocking, 80 Mo. 290; Wilson v. Van Stone, 112 Mo. 315; Williams v. Brownlee, 101 Mo. 309; Hayden v. Lauffenburger, 157 Mo. 88; Pugh v. Sample, 39 L. R. A. (N. S.) 839; Seiberling Miller & Co. v. Tipton, 113 Mo. 373; Troll v. Sauerbrun, 114 Mo.App. 323. (3) Equity will not permit a third party to take advantage of and claim benefit for a mistake of fact or law when no intervening rights of third parties have come in. Blanford v. Graff, 50 S.W.2d 741. Authorities under Point 2. (4) Negligence will not be sufficient grounds for refusing relief if the other party was not prejudiced thereby. Pennington v. Ry. Co., 284 Mo. 22; 2 Pomeroy Eq. Juris. (3 Ed.) 856; Authorities under Point 2.

Hyde, C. Ferguson and Bradley, CC., concur.

OPINION

HYDE

This is an action in equity brought by Saline County (in which the members of the county court joined as plaintiffs) to cancel a quitclaim deed to Saline County, to set aside the entry of satisfaction of two county school fund mortgages, to set aside the cancellation of the bonds secured thereby, and to restore lien of said mortgages. Defendants' pleading was denominated a demurrer, and sought the dismissal of plaintiffs' bill on the ground that it did not state sufficient facts to show that plaintiffs were entitled to the relief prayed for. This was overruled by the court and, upon defendants' refusal to plead further, a decree was entered granting the relief asked by plaintiffs. Defendants have appealed from this decree.

The following facts are stated in the petition. On the 24th day of February, 1919, the county loaned defendant Thorp four thousand dollars of public school fund money. Thorp executed his bond to the county therefor and secured same by a mortgage on 120 acres of land in Saline County, which was on the same day filed for record. On the 4th day of January, 1926, the county made a further loan to defendant Thorp of three thousand dollars of public school money, for which he executed his bond to the county therefor and secured same by a mortgage on the same land, which was on the same day filed for record. On the 4th day of January, 1926, defendant Thorp executed a note for one thousand dollars to defendant Althouse, and secured same by a deed of trust, whereby the same land was conveyed to defendant Parsons, as trustee, which was on the 29th day of March, 1930, filed for record. Thorp failed to pay interest on the four thousand dollar note in 1927 and failed to pay interest on the three thousand dollar note in 1930. The county informed defendant Thorp that foreclosure would be had unless the past due interest was paid. Thorp then offered to execute and deliver a deed conveying all of his right, title and interest in said real estate to the county in consideration of the premises. On the 15th day of March, 1933, Thorp did execute and deliver a quitclaim deed, conveying all his interest in said real estate to plaintiff county, which was on that day filed for record. At the time said conveyance was made, the county court believed that said real estate was free of all liens and incumbrances except the two mortgages to the county, and that said deed was accepted by them under that belief. A marginal release on the record of each mortgage in the recorder's office was thereupon entered by the county clerk, showing satisfaction of said mortgages; and at said time the bond for four thousand dollars and the bond for three thousand dollars were presented to the recorder of deeds of said county, and by her stamped canceled. At that time, the deed of trust executed by Thorp to Parsons trustee, to secure said one thousand dollar note, was an unsatisfied lien on said real estate, of which fact plaintiffs were ignorant.

It was also stated that if plaintiffs had known that said deed of trust was a lien upon said real estate, plaintiff would not have accepted said deed from Thorp, nor would plaintiffs have caused the marginal entry of satisfaction of said two mortgages to have been entered on the record; that the county court is prohibited by statute from investing any school funds on encumbered real estate security; and that the county court had no authority to accept a deed from Thorp in satisfaction of said indebtedness, while said real estate was encumbered. There was a further allegation that defendant Althouse had assigned and transferred said one thousand dollar note to defendant Wise.

Appellants point out that no fraud, on the part of defendants or any of them, was alleged; that the petition shows no mutual mistake of fact; that the $ 1000 trust deed was a matter of record; that the members of the county court could only fail to discover it because of gross negligence; and say that equity will grant no one relief, from the consequences of his own neglect, due to failure to avail himself of means of knowledge at hand. Perhaps, if this was a case between individuals, the allegations of this petition would not show clearly enough the right to equitable relief. [See Scott v. Hill, 330 Mo. 490, 50 S.W.2d 110.] Even between individuals, there are circumstances where there may be a duty to make disclosure of certain facts, so that silence, when there is a duty to speak, may even amount to fraud (see 12 R. C. L. 307, sec. 68), or at least it may prevent one, who has gained an advantage thereby, to which in good conscience he is not entitled, for which he has given nothing, and because of which he has in nowise changed his position, to profit at the expense of one who acted under mistake as to material facts, even though that mistake be unilateral. [See Frederich v. Union Electric Light & Power Co., 336 Mo. 1038, 82 S.W.2d 79.] In that case we said: "One cannot, of course, have rescission merely because he finds that, in the light of changed conditions, he made a bad deal. [See Krueger v. Licklider (Mo.) 76 S.W.2d 113.] . . . Reformation, and ordinarily rescission or cancellation, is only granted where there is a mutual mistake. However, there are exceptions made to these general rules in cases where the mistake of one party is either known to the other party or is so obvious, under the circumstances, that it must have been known to him, and the mistake concerns a matter so vital that it can be said that the parties, because of miscalculation or false information, never actually agreed to the same proposition."

It appears here (although it is not so clearly stated as it could have been) that the proposition of the court was to release the bonds and mortgages for a conveyance of the land with no other...