Smith v. Boyd
| Decision Date | 16 April 1901 |
| Parties | FREELOVE M. SMITH, Executrix of the Will of HORACE S. SMITH, et al. v. BOYD, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. Edward P. Gates, Judge.
Reversed.
Karnes New & Krauthoff and H. S. Conrad for appellant.
(1) Registry of a deed is only evidence of notice to after-purchasers from the same grantor. 20 Am. and Eng. Ency of Law, p. 528; Wade on Law of Notice, sec. 96; Jordens v. Schrumff, 77 Mo. 387; Merchant v. Woods, 27 Minn. 396; Palmer v. Bates, 22 Minn. 530; Bacon v. Van Schoonhoven, 19 Hun, 158, 87 N.Y. 441; Jones on Mortgages (5 Ed.), sec. 989; Scott v. McCullock, 13 Mo. 13; Durette v. Briggs, 47 Mo. 356; Tydings v. Pitcher, 82 Mo. 384; Digman v. McCullom, 47 Mo. 374. (2) A trustee's sale, to a bona fide purchaser for value, regularly conducted under the provisions of a deed of trust securing a note, which in fact has been fully paid but not so shown of record, will not be set aside. Murphy v. Simpson, 42 Mo.App. 654; Kelly v. Staed, 136 Mo. 430; Mayes v. Robinson, 93 Mo. 122; Ebersole v. Rankin, 102 Mo. 504; Munsin v. Ensod, 94 Mo. 504; Drey v. Doyle, 99 Mo. 459; Fox v. Hall, 74 Mo. 315; Hickman v. Green, 123 Mo. 165; Jackson v. Stemberg, 14 Johns. 435; Atwater v. Seymour, Brayton, 209; Warner v. Blakeman, 36 Barb. 511; Merchant v. Woods, 27 Minn. 396, 7 N.W. 826; Palmer v. Bates, 22 Minn. 530; Redin v. Branhaw, 43 Minn. 283. (3) Where one by his negligence misleads others, his equity must yield to the better right of an innocent purchaser. Mann v. Jummel, 183 Ill. 523; Terrell v. Andrew County, 44 Mo. 309; St. Louis v. Gas Light Co., 70 Mo. 99; Freeman v. Moffitt, 135 Mo. 290; Bank v. Wade, 73 Mo.App. 588.
George W. Day for respondents.
(1) One who, prior to his purchase, has actual notice of conveyances affecting the title, which are outside of the chain under which he claims, can not, for protection, invoke the rule that no constructive notice is imparted by their registry. Musick v. Barney, 49 Mo. 458; Wade on the Law of Notice (2 Ed.), sec. 12. (2) A purchaser of real estate who, prior to his purchase, requires an abstract of the title, and employs an attorney to examine it, will be charged with actual notice of all conveyances shown therein, though subsequent to the source of his title, on the principle that notice to the agent is notice to the principal. Hayward v. Ins. Co., 52 Mo. 181; Meier v. Blume, 80 Mo. 179. (3) The purchaser of real estate at a foreclosure sale thereof under a deed of trust, who has knowledge of such facts as would start an inquiry by a prudent person, which inquiry would have resulted in knowledge of the payment of the debt secured by such deed of trust, can not claim protection as a bona fide purchaser for value. Vaughn v. Tracy, 22 Mo. 418; Speck v. Riggin, 40 Mo. 405; Majors v. Buckley, 51 Mo. 227; Fellows v. Wise, 55 Mo. 413; Muldrow v. Robison, 58 Mo. 331; Meier v. Blume, 80 Mo. 179; Drey v. Doyle, 99 Mo. 467; Bank v. Frame, 112 Mo. 502. (4) And one who employs an agent to purchase for him, at such a sale, will be charged with the knowledge of such agent concerning such payment, even though such knowledge was acquired by the agent long prior to such purchase, if the agent remembered such knowledge at the time. Wade on the Law of Notice (2 Ed.), 687; Chouteau v. Allen, 70 Mo. 341. (5) Payment of the debt secured by a deed of trust, before sale, discharges it and re-vests the estate without any release, reconveyance or other act on the part of the mortgagee. It ceases to operate and has no force at law or in equity. McNair v. Picotte, 33 Mo. 57; Pease v. Iron Co., 49 Mo. 124; Johnson v. Johnson, 81 Mo. 336; Hagerman v. Sutton, 91 Mo. 531; Kempf v Distilling Co., 41 Mo.App. 31; Murphy v. Simpson, 42 Mo.App. 658; Hand v. Distilling Co., 46 Mo.App. 674; Bartlett v. Eddy, 49 Mo.App. 32; Curtis v. Brown, 63 Mo.App. 431. (6) And payment of the debt will so operate even as to an innocent purchaser for value, unless the mortgagor, or those claiming under him, have done, or neglected to do, something which will operate to estop them from asserting title against such innocent purchaser. McNair v. Picotte, 33 Mo. 57; Pease v. Iron Co., 49 Mo. 124; Redmond v. Packenham, 66 Ill. 434; Shippen v. Whittier, 117 Ill. 286; Jackson v. Anderson, 4 Wend. 477; Cameron v. Irwin, 5 Hill, 272; Warner v. Blakeman, 36 Barb. 501. (7) An owner of real estate is under no obligation, legal or moral, to have cancelled, of record, a deed of trust containing a power of sale in case of default of payment of the debt secured thereby, after said debt has been fully paid; and he, therefore, will not be estopped from asserting title against one who purchases it, relying on the record. R. S. 1889, sec. 7094; McClure v. Logan, 59 Mo. 234; McNair v. Picotte, 33 Mo. 57; Pease v. Iron Co., 49 Mo. 124; Meley v. Collins, 41 Cal. 663; Chandler v. White, 84 Ill. 435.
This is a proceeding in equity to remove an alleged cloud upon the title to lot twenty-six in Knickerbocker Heights, an addition to Kansas City. The plaintiff obtained a decree in the circuit court, and defendant appeals.
The record discloses the following state of facts: On February 20, 1888, Henry L. Tyler owned said lot, and on that day he executed a deed of trust thereon to Charles H. Nearing trustee, to secure his promissory note for twelve hundred and fifty dollars, payable five years after date to the order of Joseph H. Bauerlein, and the same was properly recorded on February 23, 1888. Some time prior to May 21, 1889, Bauerlein transferred the note to George J. Monroe. Because the note was over a year old, but not yet due, Monroe conceived the idea that he would have difficulty in negotiating it, so he procured Tyler to convey the property, by warranty deed, to Daniel Mensendick on May 21, 1889. This deed was also properly recorded. Thereupon, Monroe procured Mensendick to execute a deed of trust on the property to H. J. Zottman, as trustee, to secure a note for twelve hundred and fifty dollars, payable five years after date to the order of the Citizen's Loan & Trust Company. This deed of trust was properly recorded on May 24, 1889. Monroe was president of the Citizens Loan & Trust Company, and that company never owned the note or deed of trust made by Mensendick in May, 1889, but on the contrary Monroe was the real owner of it, and the deed from Tyler to Mensendick and the note and deed of trust made by Mensendick were made at Monroe's request and upon an agreement between him and Tyler that it was to be substituted for the Tyler note and deed of trust to Bauerlein, which Monroe then owned, and that the last named note and deed of trust were to be cancelled and released. Instead of doing so, however, they have never been released. Monroe transferred the Mensendick note, before maturity, for value and without notice, to Horace S. Smith, representing to him that it was a first mortgage, and the interest on the note not being paid as agreed, Smith elected to treat the debt as due, and requested the trustee, Zottman, to execute the trust, which he properly did, and Smith became the purchaser of the property at the trustee's sale on October 31, 1889, for $ 50, and on November 4, 1891, put the trustee's deed to him upon record. Smith allowed the matter to remain in this condition. Monroe retained possession of the note and deed of trust from Tyler to Bauerlein until after its maturity, and then on September 10, 1894, he transferred them to W. M. Castle, who through Monroe requested Nearing, the trustee, to execute the trust, which he did on April 5, 1895, and the defendant, Boyd, became the purchaser of the property for the sum of three hundred dollars, received a deed from the trustee, and placed it on record on April 9, 1895. Monroe explained his failure to cancel and release the Tyler note and deed of trust to Bauerlein, as he agreed to do when he received in substitution therefor the Mensendick note and deed of trust, and his transfer of the Tyler note, after maturity, to Castle, by saying that he forgot his agreement or that it was done by mistake. Boyd entered into negotiation with A. J. King to buy the property and procured an abstract of the title to the property from the King's Realty Company, and consulted his attorney about the title. He was advised of the deed from Tyler to Mensendick, of the Mensendick deed of trust, and of the sale under that deed of trust to Smith, but his attorney advised him that the Tyler deed of trust appeared by the records to be the first deed of trust, and that a sale under the Tyler deed of trust would cut out Smith's title acquired under the Mensendick deed of trust. So, Boyd, on March 11, 1895, entered into a written contract with A. J. King, to take the property from King, either upon his warranty deed, or upon a trustee's deed under the Tyler deed of trust. King bought the property at the trustee's sale under the Tyler deed of trust, and had the deed made to Boyd. Boyd had no notice of Monroe's agreement as to the substitution of the Mensendick deed of trust for the Tyler deed of trust, nor of Monroe's breach of contract to cancel and release the Tyler deed of trust, nor of the fact that Monroe had wrongfully or by mistake transferred the Tyler deed of trust to Castle after the maturity of the note. But King had been treasurer of the Citizens Loan & Trust Company, when Monroe was president, and he knew all about the agreement of substitution and to cancel and release aforesaid, and also knew that the Mensendick note and deed of trust had been issued to and received by Monroe in payment of the Tyler note and deed of trust, and it was while possessing such information that he purchased the property...
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