Smith v. Haley

• Decision Date: 14 July 1958
• Docket Number: No. 46504,No. 2,46504,2
• Citation: Smith v. Haley, 314 S.W.2d 909 (Mo. 1958)
• Parties: Charles E. SMITH and Zola F. Smith, his wife. Appellants, v. John HALEY and Henrietta Haley, his wife, Respondents, Ellis S. Ruby and Anna M. Ruby, his wife, Defendants
• Court: Missouri Supreme Court

Page 909

314 S.W.2d 909

Charles E. SMITH and Zola F. Smith, his wife. Appellants, v. John HALEY and Henrietta Haley, his wife, Respondents Ellis S. Ruby and Anna M. Ruby, his wife, Defendants.

No. 46504.

Supreme Court of Missouri, Division No. 2.

July 14, 1958.

Roy Hamlin, Hannibal, William Turpin, Bowling Green, for appellants.

John Haley, Bowling Green, pro se, Ely & Hibbard, Ben Ely, Hannibal, for respondents.

BOHLING, Commissioner.

Charles E. Smith and Zola F. Smith, his wife, sued John Haley and Henrietta Haley, his wife, and Ellis S. Ruby and Anna M. Ruby, his wife to set aside a trustee's deed to Ellis S. Ruby by John Haley, trustee, following a foreclosure sale under a deed of trust securing plaintiffs' $1,650 note payable to defendants Ruby, and a deed by defendants Ruby conveying said land to defendants Haley. These deeds are dated February 13, 1954. The defendants' answer was in the nature of a general denial, with the defendants Ruby filing a counterclaim for a deficiency judgment on plaintiffs' note. Plaintiffs' reply to the counterclaim was a general denial. The chancellor found that defendants Ruby were entitled to a deficiency judgment, with interest, against plaintiffs on plaintiffs' $1,650 note, less payments thereon ($910) and the proceeds of the foreclosure sale ($400); that plaintiffs were entitled to damages against defendants Ruby arising out of the fraudulent foreclosure sale ($1,250) and the destruction of the house on the land, hereinafter detailed ($1,725); and that defendants Haley were innocent purchasers for value. The chancellor denied plaintiffs' prayer to set aside the trustee's deed and deed from defendants Ruby to defendants Haley. This appeal is by the plaintiffs from the decree and judgment in favor of defendants Haley.

Defendants Ruby are the parents of plaintiff Zola F. Smith. The Rubys conveyed the land, approximately eighteen acres near Bowling Green, in Pike County, by warranty deed to the Smiths, as husband and wife, on September 12, 1951. The consideration was $1,650. Plaintiffs gave their note of said date for $1,650, payable, with four per cent interest, to the Rubys in monthly installments of $35, beginning October 1, 1951, and secured said note by their deed of trust on the land to John H. Haley, trustee. The deed and deed of trust were recorded September 25, 1951.

Mr. Haley is an attorney and Mrs. Haley assists him in his office. He drafted and Mrs. Haley typed the deed and deed of trust.

Plaintiffs moved onto the land in early 1952, and made improvements thereon for living purposes, as found by the trial court, of $1,725.

Plaintiffs had Mr. Ruby enter and initial payments on their note in a book, and these entries showed $35 payments each month beginning with October 1, 1951, and ending with April 1, 1953, a $5 payment May 1, 1953, and a $240 payment November 24, 1953, a total of $910. However, up to the foreclosure sale the credits endorsed on the $1,650 note covered only the $35 monthly payments from October 1, 1951, through April 1, 1952, and the $5 payment of May 1, 1953, a total of $250. Ruby at first testified that the credits endorsed on the note included all payments made by the plaintiffs, but, upon being shown the book kept by plaintiffs, admitted the credits shown therein were acknowledged by his writing his initials opposite each credit.

In November, 1953, Mr. Smith told Mr. Ruby the place was for sale. Smith testified Ruby stated he was selling his place and when paid he would buy the land from the Smiths for $1,650 in cash and forego the $740 balance due on the note. Ruby testified he agreed to buy the place for 'a couple thousand dollars,' he imagined. He stated there was then about $700 unpaid on plaintiffs' note.

Mr. Ruby intended to live on the land. He purchased $285 worth of lumber, placed a King heater stove in the house and started remodeling about the first of December, 1953. There was a 'little fire' in the stove when the Rubys left the first evening. The house and Ruby's lumber were completely destroyed by fire that night.

The Smiths were living in Hannibal. Ruby went to the Smith home, told his daughter about the fire, and said it was his loss, 'I am buying the place.' He never paid the Smiths any money.

The only time plaintiffs thereafter saw Mr. Ruby prior to the trial was at Ruby's son's home just before Christmas, 1953. At that time Ruby told Smith he thought he would have the $1,650 before the first of the year. Ruby stated he had not talked to Mr. or Mrs. Smith after telling his daughter he assumed responsibility for burning the house; and that he did not remember any conversation with Smith at his, Ruby's, son's home, but he would not deny having had the conversation.

Plaintiffs consulted an attorney in Hannibal. The attorney wrote the Rubys, then living in Center, Missouri, on January 15, 25, and February 8, 1954, to the effect the Smiths wished to settle the matter amicably, were willing for the Rubys to deduct the balance due on the note from the loss caused by the fire (placed at $2,000), and desired to avoid unnecessary expense. The Rubys received each of these letters, but did not take the matter up with the Smiths or their attorney.

The first insertion of the avertisement of the foreclosure sale to be held by the trustee on February 13, 1954, appeared in the Bowling Green Times on January 21, 1954. No effort was made by the Rubys or by trustee Haley to advise the Smiths of the sale or to demand payment of the note. The Smiths had no actual knowledge or notice of the sale. Mr. Ruby, trustee Haley and Mrs. Ilah Bannister were the only persons present at the sale. There was only one bid for the land, $400 by Ruby. The sale was held open for ten or fifteen minutes and the land was struck off to Ruby. The trustee endorsed a credit of $350 on the note ($400 less expenses of sale of $50).

Mr. Ruby accompanied Mr. Haley to Haley's office immediately after the sale. Trustee Haley executed a trustee's deed conveying the land to 'Ellis S. Ruby' for the bid price of $400; and Ellis S. Ruby and Anna M. Ruby, who was at Haley's office, executed a warranty deed conveying the land to 'John H. Haley and Henrietta Haley, husband and wife,' the proved consideration being $600 and the expenses of the sale. Haley gave Ruby a check for $200, and the Haleys executed a deed of trust against the land to the Rubys securing a note for $450. These deeds were recorded February 15, 1954.

Mr. Ruby was called to the stand by plaintiffs under the rules of cross-examination. He testified that immediately after the fire he was 'in touch with' his attorney John Haley, and, on cross-examination, that in the latter part of January, 1954, he had a talk with Haley. 'Q. What did you tell him to do? A. I just told him to foreclose'; that he did not tell Haley 'at that time about any agreement or contract or understanding' he had with the Smiths 'about buying the place back or anything of that kind'; and:

'Q. Did you have any talk with him [Haley] about the burning of the place down at that time? A. Yes. I talked to him.

'Q. You told him it had burned down? A. Yes.

'Q. Did you tell him you had promised or told anybody that you were going to pay these damages for burning it down? A. No.

'Q. Did you or did you not at that time have any understanding with Mr. Haley that if you bought in the place at the foreclosure that you would turn around and sell it to him? A. No, sir.'

He did not know whether he ever talked with Haley about the circumstances of the house burning; did not remember whether he told Haley anything of a row with the Smiths about paying for the house; and did not tell Mr. or Mrs. Haley about promising to pay the Smiths so much money for the place.

Mr. Haley testified that he was 'first consulted by Mr. Ruby about the foreclosure of that deed of trust' a short time prior to the first publication of the notice to sell; that at or prior to that time he had no knowledge of the burning of the improvements or of any trouble between the Rubys and Smiths; that it would be difficult to state what the conversation was when Ruby came to him about the foreclosure; that 'my recollection is that he brought the deed of trust securing the payment of the note and said that the note was past due and had been for some time; that he needed the money and that he wanted me to prepare the necessary publication, the necessary papers as he put it, to sell under the deed of trust.

'Q. Was there at that time anything said to you about there being a claim of Mr. Smith against him or Mrs. Ruby growing out of the burning down of the house? A. No. He told me nothing about it and I know nothing about it.

'Q. Did Mr. Ruby show you that promissory note, the note that was secured by the mortgage? A. Oh, yes.

'Q. And did you notice the payments endorsed on the back thereof? A. Yes, sir.

'Q. Form those payments, did it appear that the note was delinquent at that time? A. Yes.'

Ruby testified that a few minutes after the foreclosure sale, he asked Haley if he wanted to buy the land and Haley said he would. Asked how much time elapsed between his bid and his deed to his attorney Haley, Ruby answered: 'Oh, thirty minutes.'

Haley's testimony was that after the sale he prepared the trustee's deed in his office and Judge Motley came in and took the acknowledgment; that Ruby said he was disappointed; he needed money, and asked him if he was interested in buying; that they...