Small v. Hatch

• Decision Date: 15 June 1899
• Citation: 52 S.W. 190,151 Mo. 300
• Parties: SMALL v. HATCH et al.
• Court: Missouri Supreme Court

52 S.W. 190

151 Mo. 300

SMALL v. HATCH et al.

Supreme Court of Missouri, Division No. 2.

June 15, 1899.

TRUST — EVIDENCE TO ESTABLISH.

Plaintiff purchased certain land, making payment thereon, and placing the title in the hands of defendant, his son-in-law, who executed a note for the balance of the purchase price. Plaintiff claimed that the land belonged to him, and that defendant held it in trust, and that, on the sale of the land by defendant, the moneys paid to defendant rightfully belonged to him, and were not payments by his son-in-law on account of any debt to plaintiff. The evidence was conflicting, but the documentary evidence was all in favor of the claim of the plaintiff. Defendant was a man without means, who had been the beneficiary of plaintiff for the home in which he lived, and the risk assumed by him in making the notes for the additional payment was nominal only. When the sale was made, defendant paid over the cash promptly to plaintiff, and indorsed the notes for the purchase money to plaintiff, though at the time the notes which he claimed were paid by the transfer of such money were outstanding against him, and no indorsements were made thereon. Held to sustain the claim that the land was held in trust by defendant for plaintiff.

Appeal from circuit court, Jackson county; Edward P. Gates, Judge.

Bill by William Small, Jr., against P. E. Hatch and others. From the decree, plaintiff appeals. Reversed.

This is a suit in equity to reform and foreclose two certain deeds of trust, in the nature of mortgages, to secure two promissory notes, — one for $5,000, dated April 7, 1884, bearing 7 per cent. interest, and due two years after date, and the other note for $4,500, dated September 6, 1884, and bearing 8 per cent. interest, and due five years after date. The title to the mortgaged property was in Mrs. Lillian L. Hatch, who was the wife of defendant Peter E. Hatch, and the mother of the two minor defendants, and the daughter of plaintiff, Small. Mrs. Hatch had died prior to the institution of this suit. It appears that in June, 1883, the plaintiff had conveyed to his daughter, Mrs. Hatch, the lot described in the mortgage. It cost him $3,500. He paid $1,000 cash, and assumed a mortgage thereon for $2,500. This action was commenced September 14, 1894. The deed of trust of date April 5, 1884, by mistake of the scrivener, was so drawn as to make John T. Marshall the beneficiary, instead of trustee; and the petition, as to that deed of trust, prayed for reformation. Defendant Peter E. Hatch, in his answer, neither admitted nor denied the receipt of the $9,500, but prayed an accounting. The defenses are: (1) That plaintiff urged his son-in-law to improve this lot, and furnished the most of the money to do it; that these notes were given for this money; that this money was in the nature of an advancement by plaintiff to his daughter; and that he agreed never to claim payment of the notes. (2) That plaintiff owed defendant P. E. Hatch $1,000 at the time the first note was made, which should be credited thereon. (3) That plaintiff owed defendant P. E. Hatch $3,392.25 for legal services, for which he claimed a set-off. (4) That in 1887 and 1888 he became convinced that plaintiff did not intend to keep his promise as to said notes sued on, and that on January 7, 1888, he paid plaintiff on said notes $7,000; that on March 3, 1889, he paid him $2,500, and in August, 1893, he paid him $2,500, to lift the incumbrance which was on the lot when it was conveyed by plaintiff. He prayed that plaintiff should be ordered to give up and cancel the notes and deeds of trust sued on; that defendant have judgment for $3,300, with interest at 6 per cent. thereon from August 1, 1883, on his counterclaim growing out of the sale of the mining plant in New Mexico; and for general relief. The reply was a general and special denial of all the allegations in the answer, except that plaintiff admitted that he purchased the property for $3,500; that he paid $1,000 cash, and afterwards paid the $2,500 mortgage thereon, for the benefit of his daughter. He pleaded the statute of limitations to the alleged attorney's fees, and also a general denial thereof. The cause, on motion of defendant, was referred on January 1, 1895, to a referee, to take the account as to alleged professional services of defendant to plaintiff. On motion of plaintiff this order of reference was set aside, and at the April term, upon stipulation, the whole cause was referred to Hon. M. A. Fyke, to report the evidence and his findings of law and facts. The referee in due time heard the evidence and made his findings — First, that the money represented by the notes in suit was received by defendant from plaintiff; second, that the defense that the same was a gift or an advancement was not sustained, and that the finding should be for the plaintiff on both counts of the petition; third, that the credit for $1,000, claimed on account of the application of a part of the money represented by the notes to the payment of a claim from the plaintiff to the defendant, was not sustained, but disallowed; fourth, that the credit of $7,000 of date January 7, 1888, and of $2,500 of date March 23, 1889, claimed in the answer, was found to have been made by the defendant to the plaintiff, and the deduction thereof made by the referee from the amount found due by defendant to plaintiff; fifth, that the account for legal services was disallowed, on account of the fact that defendant made no charge, and intended to make none, and for the further reason that plaintiff produced numerous receipts, given by defendant, in full for legal services; sixth, on the counterclaim the finding was against defendant and in favor of plaintiff. No appeal was taken by defendants from any of the adverse findings against them. The final conclusion of the referee was that, after deducting the sum of $7,000 January 7, 1888, and $2,500 March 23, 1889, plaintiff was entitled to judgment for $3,914.47. The plaintiff duly filed exceptions to the report, which were overruled, and plaintiff excepted. Plaintiff then filed his motion for rehearing, which was overruled, and plaintiff excepted, and perfected his appeal to this court.

Brown, Chapman & Brown and Johnson & Lucas, for appellant. R. B. Middlebrook and C. O. Tichenor, for respondents.

GANTT, P. J. (after stating the facts).

Both sides to this controversy are committed to the doctrine that a reference of this case was proper for several reasons. The defendant moved the court to refer because the counterclaim required the examination of a long account, and the court referred the counterclaim. It was then urged by the plaintiff that the cause was one in equity, involving the reformation of a written instrument, and that the whole cause should be referred, if any part was. It is obvious, from the length of the account filed, that it was within the province of the court to refer the case without the consent of either party. In a word, it was what is denominated under our practice a "compulsory reference." In such cases it can no longer be doubted that the court may, on motion of either party, review the findings of the referee on the evidence reported and make its own findings. State v. Hurlstone, 92 Mo. 333, 5 S. W. 38; Tobacco Co. v. Walker, 123 Mo. 671, 27 S. W. 639; Hardware Co. v. Wolter, 91 Mo. 484, 3 S. W. 865. This is a suit in equity for the reformation of a written instrument, in addition to the long account set up in the answer; and for this reason, also, compulsory reference was proper, under that other provision of our statute which provides for a compulsory reference when the taking of the account is necessary for the information of the court before judgment can be properly rendered. This being a reference which the circuit court could review on the evidence reported, and render its own judgment thereon, the judgment of the circuit court is likewise reviewable in this court. In such cases, while this court ordinarily defers to the judgment of the circuit court, it is settled law that we are not bound to adopt the decree of the circuit court, if, upon a re-examination, we are of opinion that it has erred.

One question alone is before us, and that is the propriety of the holding that the Moses Levy notes for the Boone tract belonged to defendant Hatch, and not to plaintiff, and charging plaintiff with their proceeds as a payment on defendant's notes, secured by the mortgages which this suit seeks to foreclose. The burden to establish his ownership of said notes was assumed by defendant Hatch. As this right depends wholly upon the evidence, the substance thereof must be given, in order to understand the findings.

The defendant Hatch testified that he was 38 years old; that the minor defendants are his children; that their mother, Lillian L. Hatch, was the daughter of plaintiff; that they were married on November 12, 1882, and went to live on the premises in controversy; that the improvements thereon consisted of a one-story basement cottage, containing about six rooms; that soon afterwards plaintiff came to live with defendant; that the title to the property at this time was in plaintiff; that on June 25, 1883, he conveyed the same to defendant's wife; that he subsequently improved the property, on the suggestion of plaintiff; that he and his wife executed the notes and deeds of trust sued on; that notwithstanding the fact that the money advanced by plaintiff for the improvements was in the nature of a gift or an advancement, and notwithstanding that plaintiff said that he would never enforce payment upon the notes, defendant became suspicious of plaintiff, and came to believe that he was not acting in good faith, and feared that there would be trouble between them, so that, on January 7, 1888, he paid the plaintiff $7,000, and on March 23, 1889, he paid the plaintiff $2,500, in payment of the notes, and asked that they be...