Smith v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 12 January 1970
• Docket Number: No. 2,No. 54099,54099,2
• Parties: William N. SMITH and Margaret Jean Smith, Plaintiffs-Appellants, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Ray J. McGuire, McCue-McGuire Mortgage Company, a corporation, and McCue-McGuire Real Estate, Inc., a corporation, and George Hamm, Defendants-Respondents
• Court: Missouri Supreme Court

Page 588

448 S.W.2d 588

William N. SMITH and Margaret Jean Smith, Plaintiffs-Appellants, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES Ray J. McGuire, McCue-McGuire Mortgage Company, a corporation, and McCue-McGuire Real Estate, Inc., a corporation, and George Hamm, Defendants-Respondents.

No. 54099.

Supreme Court of Missouri, Division No. 2.

Jan. 12, 1970.

Alder & Rixner, John J. Alder, Shawnee Mission, Kan., Wiley W. Morrison, Raytown, for plaintiffs-appellants.

William H. Sanders, William C. Nulton, Henry G. Eager, Charles L. House, Kansas City, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, Swanson, Midgley, Jones, Eager & Gangwere, Kansas City, of counsel, for respondents.

FINCH, Judge.

This is an equity suit by mortgagors in a deed of trust who sought to set aside a trustee's deed given to the purchaser at a foreclosure sale and to redeem from that sale. The trial court entered judgment in favor of defendants and plaintiffs have appealed. We have jurisdiction because title to real estate is involved. We affirm.

In our review of a case such as this, we do not disturb the findings and judgment of the trial court unless clearly erroneous. Supreme Court Rule 73.01(d), V.A.M.R.; Pope v. Cox, Mo., 417 S.W.2d 929. The transcript in this case exceeds one thousand pages and there are many exhibits, and it would serve no useful purpose for us to detail all of the evidence and the various conflicts therein. We have reviewed all of that evidence and have concluded that the findings of the trial judge are supported and are not clearly erroneous. We recite the evidence only to the extent necessary to explain that conclusion.

On April 6, 1965, plaintiffs borrowed $12,000 from defendant Equitable. Their note in that amount was payable in monthly installments of $113.28 and was secured by a first deed of trust on their residence property at 836 Westover Road in Kansas City. The note specifically incorporated all of the terms of the deed of trust. These included a provision that, in the event of default, all of the indebtedness, at the election of the holder of the note, should become due and payable, and that notice of such election to the mortgagor was waived.

In his testimony, Mr. Smith, one of the plaintiffs, said of himself that 'he had been the worst credit risk in the world and caused them all kinds of problems.' Only three of the first twenty-five installments accruing were paid on time. Equitable sent numerous notices of default. On April 14, 1966, it declared the entire balance due and informed plaintiffs by letter that foreclosure would follow if the default was not cured within ten days. Plaintiffs paid up within that time.

On September 23, 1966, plaintiffs again were delinquent. An attorney for Equitable wrote plaintiffs of acceleration of the note and warned of foreclosure. Payments were not brought up to date, and on November 28, 1966, the attorney mailed to plaintiffs a notice of trustee's sale set for December 22, 1966. On the day before the scheduled sale, plaintiffs cured the delinquency, bringing payments up to date and paying other costs which had been incurred such as attorney's fees, publication fees and abstracter's charges. Equitable accepted these payments, but plaintiffs were warned by Mr. Wood, residential loan manager in Kansas City for Equitable, that if any future loan delinquency occurred, foreclosure of the deed of trust would result and reinstatement would not be allowed.

On May 2, 1967, plaintiffs again were delinquent. On that date, Mr. Wood wrote them that they again had failed to comply with their contract and that the matter was being referred to Equitable's attorney with instructions to call the loan. Wood's letter stated that no further reinstatement would be permitted, and then concluded as follows:

'Since it takes several weeks for the necessary legal work to be accomplished in a foreclosure, I would suggest that you take this time to see about refinancing your loan.

'Any further communication will be through our attorney.'

Plaintiff Smith thereafter talked on the telephone with Equitable's attorney, William Nulton. In a conversation on May 10, 1967, Smith stated that he would be willing to pay six months to catch up and get ahead, and he then could use that time to refinance his loan. Nulton remarked to him that this seemed to be a reasonable plan but that he had no authority to accept it. He told Smith to call Wood and discuss the proposal with him because any decision thereon would be made by Wood.

Smith did not call Wood or make contact with anyone at Equitable between May 10 and May 26. On that date, Nulton called Smith to say that he was sending a notice of trustee's sale to be held June 19. When Nulton ascertained that Smith had not contacted Wood, as he had suggested, he informed Smith that Wood had told him that the six months' proposal was not acceptable. Smith asked to meet again with Nulton, and an appointment was made for May 31, even though Nulton advised Smith that he had no authority and that any decision would be by Mr. Wood. Smith did not keep this appointment. Thereafter, on June 8, Nulton wrote Smith, sending him a copy of the foreclosure notice and advising him that notification was also being given to the Sugar Creek National Bank, holder of a second deed of trust on the same property.

Nulton next heard from Smith on June 13, when he came to Nulton's office and asked for a conference. Smith expressed concern about the approaching foreclosure. Nulton again told him that he would have to discuss that with Mr. Wood. A call to Wood's office disclosed that Wood was out of town, but Smith arranged an appointment for June 15.

On the morning of June 15, Smith talked to Wood, who refused to agree to accept a six months' payment and call off the foreclosure. At Smith's insistence, Wood did agree to call his superior in Dallas, but advised that he would not recommend the proposal to Dallas. On the next day, which was Friday, June 16, Smith called Wood's office and was advised that the Dallas office had not agreed to call off the foreclosure.

On Sunday evening, June 18, Smith called Alex Barket, President of Civic Plaza National Bank, in his first and only attempt to refinance his loan. An appointment was made for a conference on the morning of June 19. At that conference, Barket told Smith that the making of any loan would be conditioned on stopping the foreclosure sale. Barket called a man whom he knew at Equitable and offered to pay up the arrears on the note, including foreclosure expenses, but stated he would not be willing to buy at the foreclosure sale. Barket did not offer to pay off the Equitable loan, and the trial court specifically so found. The court also found that the holder of the second deed of trust did not offer to pay off Equitable's loan.

The foreclosure sale was conducted, as scheduled, on the afternoon of June 19. There was spirited bidding by several persons and the property was sold to McCue-McGuire Mortgage Company at its high bid of $16,700.

The trustee designated in the deed of trust from plaintiffs to Equitable was H. A. Lee, cashier of the Kansas City office for Equitable. His name was shown in the notice of trustee's sale, publication of which first appeared in the Daily Record on May 22, 1967. Mr. Lee retired from his employment with Equitable on June 1, 1967, and he did not handle the foreclosure sale. Instead, the sale was conducted by George G. Hamm, who was appointed as successor trustee in an instrument executed on behalf of Equitable by Mr. Wood.

Plaintiffs assert that 'The principal issue is whether the non-judicial foreclosure of the DT was valid.' They assert that it was invalid and that Hamm's deed was void because the factual situation did not authorize the appointment of a successor trustee.

Paragraph 'Thirteenth' of the deed of trust provides, inter alia, as follows:

'In case of the death, inability, refusal to act or absence from said County wherein the said land herein described is situate of said party of the second part, or in case the mortgagee should desire for any reason to remove the party of the second part or any of his successors as trustee hereunder and to appoint a new Trustee in his place and stead, the holder of the debt hereby secured is hereby granted full power to appoint in writing a substitute Trustee for said party of the second part, and such substitute Trustee shall, when appointed, become successor to the title to the said property, and the same become vested in him in trust for the purposes and objects of these presents with all the power, duties and obligations herein conferred on the said party of the second part.'

The above provision clearly gave Equitable the right to name a successor trustee in the instances enumerated therein. Acting pursuant to that provision, Mr. Wood, on behalf of Equitable, executed a written instrument which recited that Lee, by virtue of his retirement, refused to act as trustee under the deed of trust, and that consequently he was removed and George G. Hamm appointed as successor trustee, 'with all the powers, duties and obligations of said original Trustee, as provided in said Deed of Trust.'

Plaintiffs say that the right to remove a trustee is purely contractual and that such power must be strictly construed, citing and relying on Adams v. Boyd, 332 Mo. 484, 58 S.W.2d 704. They claim that the evidence disclosed that Lee did not refuse to act as trustee, that he would have acted if notified and called upon, that he did not resign and that no vacancy existed. However, the trial court specifically found that Lee expressed a choice not to act, that he considered that he had resigned and that his conduct was equivalent to a refusal to act within the terms of the deed of trust.

There was testimony to support the court's conclusion. Mr. Wood talked to Lee around May 8 about his approaching retirement and inquired...