Scott v. Shy

• Decision Date: 31 October 1873
• Citation: 53 Mo. 478
• Parties: JOHN G. SCOTT et al., Plaintiffs in Error, v. ALFRED H. SHY, et al., Defendants in Error.
• Court: Missouri Supreme Court

53 Mo. 478

JOHN G. SCOTT et al., Plaintiffs in Error,

v.ALFRED H. SHY, et al., Defendants in Error.

Supreme Court of Missouri.

October Term, 1873.

Error to Iron Circuit Court.

Reynolds & Relfe, for Defendants in Error.

I. The rights and duties of the trustee depend upon the instrument creating the trust. (2 Wash. Real Prop., (3rd Ed.,) 482.) These powers are special and must be strictly pursued. (Balis vs. Perry, 51 Mo., 449; Wallis vs. Thornton, 2 Brockenb., 422.)

II. The trustee must first apply the proceeds, as far as they will go, to the costs and expenses of the trust, and to the extinguishment of the debt secured, for the payment of which he was appointed, before he can undertake settlement of other claims. This is the extent to which the authorities cited by plaintiffs go. (Doolittle vs. Lewis, 7 Johns. Ch., 45; Turner vs. Johnson, 7 Ohio, (2nd pt.) 216.)

III. In no case can the trustee apply the proceeds to pay offprior incumbrances, (Helwig vs. Heitcamp, 20 Mo., 569;) though he may pay subsequent ones. (Mead vs. McLaughlin, 42 Mo., 198.)

IV. Plaintiffs, as subsequent incumbrancers, had a right to redeem from prior incumbrances by paying the money themselves. (Mullanphy vs. Simpson, 4 Mo., 319; Idem, 3 Mo., 492.)

J. P. Dillingham, for Plaintiffs in Error.

I. Taxes are a legal charge upon the estate. They may be paid off by the mortgagee or trustee, and added to the mortgage debt. (Willard's Equity, 448.) On the sale of the premises under a mortgage, it was represented, that the property was free from all incumbrances; but after the sale it was discovered that the property was subject to a city assessment and taxes. The court directed the master to discharge the incumbrance out of the proceeds of the sale. (4 John. Ch., 542,)

II. A junior mortgagee will be permitted to redeem a prior mortgage, and to sell the whole premises to refund to himself the redemption money, and to satisfy his own mortgage. (Willard's Eq., 445, 447; Western Ins. Co. vs. Eagle Fire Ins. Co., 1 Paige, 284; 4 John. Ch., 371; Bell vs. The Mayor, 10 Paige, 49; 11 Paige, 39; Moore vs. Beasom, 44 N. H., 215; Norton vs. Warner, 3 Edw. Ch., 106; 34 N. H., 92; 11 Gray, 276; 20 Iowa, 101; 1 Green Ch., 151; Penn vs. The Railway Co., Am. Law Reg., (Sept. 1872,) 582, 583; Dix on Subrog., 122, 116; 15 Cow., 137.)

III. If this is not the law, the plaintiffs have no means to recover back this money. (Lawless vs. Collier, 19 Mo., 480.)

NAPTON, Judge, delivered the opinion of the court.

This suit was brought in 1870 against defendants to recover balance due plaintiffs on a certain promissory note executed by defendants in October, 1868, due in twelve months, with interest at the rate of 10 per cent. per annum. This note was secured by deed of trust on certain lands described in said deed. These lands were sold on the 30th of November, 1869, for the sum of $7,650, and this amount was applied, to expenses of trust and costs, $64.50, for taxes assessed against the Shy property, $59.70, for prior mortgage due school fund of Iron county, $338.95. The balance of $7,186.85 was paid by the trustee on the note.

And the plaintiffs brought their action, claiming that they were entitled to judgment for the note and interest, less $7,186, the credit placed on it by the trustee. The defendants in their answer admitted the costs and expenses of the trust, an item of $64.50, but they claimed that the items, of $59.70 for taxes, and $338.95 for paying off the mortgage to Iron county on account of school fund, were improperly paid out by the trustee, and should not be allowed. They also claim, that the note only bore 8 per cent. interest.

An agreed statement of facts was filed, which conceded the facts to be as stated in the answer; that the sums above stated were allowed by the trustee, and that the note only bore 8 per cent., but admit that the sum of $444.43, with interest from November 20th, 1869, at the rate of 8 per cent., was due. The court rendered a judgment for $810.50 for plaintiffs.

A motion for a new trial was filed, and the court took the case under advisement. At the next term this motion was overruled, and the defendants filed a motion in arrest of judgment, and this motion was sustained, and the court gave judgment for the defendants as follows:

“Wherefore it is ordered, adjudged and decreed, by the court, that the judgment heretofore rendered in this cause be, and the same is hereby, arrested, and held as null and void, and of no effect, as fully as if the same had never been rendered. It is further ordered and adjudged by the court, that the plaintiffs take nothing by their said suit, and that the defendants go hence without day, and recover of and from said plaintiffs the proper costs herein expended, and have execution therefor.”

The bill of exceptions offered by plaintiffs was not signed, but the one offered by defendants was signed by the judge, the former having been signed by the bystanders; but there is no point made on this here, as the facts agreed on are conceded by both sides.

The only point in this case is, whether the trustee had power, out of the proceeds of his sale, to pay off the taxes that had accrued on the lands embraced in the deed of trust before the sale, and further to apply the proceeds to paying off a senior incumbrance.

It is conceded that the final judgment for defendants was wrong, since the pleadings and agreed facts admitted an indebtedness of $446.44. But whether the original judgment for $810.50 was right, depends on whether the trustee had a right to charge for taxes, and to redeem a prior incumbrance.

Taxes...