Smith v. Holdoway Const. Co.

• Citation: 129 S.W.2d 894,344 Mo. 862
• Decision Date: 14 June 1939
• Docket Number: 35214,35215
• Parties: Alice M. Smith, Respondent, v. Holdoway Construction Company, a Corporation; William J. Holdoway, J. G. Holdoway and W. A. Houston, as Trustees of said Holdoway Construction Company, a Corporation; William J. Holdoway, George R. Hunsche, as Trustee; J. B. Corn, Jr., and Mutual Bank & Trust Company, a Corporation, Intervenor, Appellants, and Peter F. Smith, Defendant
• Court: United States State Supreme Court of Missouri

129 S.W.2d 894

344 Mo. 862

Alice M. Smith, Respondent, v. Holdoway Construction Company, a Corporation; William J. Holdoway, J. G. Holdoway and W. A. Houston, as Trustees of said Holdoway Construction Company, a Corporation; William J. Holdoway, George R. Hunsche, as Trustee; J. B. Corn, Jr., and Mutual Bank & Trust Company, a Corporation, Intervenor, Appellants, and Peter F. Smith, Defendant

Nos. 35214, 35215

Supreme Court of Missouri

June 14, 1939

[Copyrighted Material Omitted]

Appeal from Circuit Court of City of St. Louis; Hon. Max G Baron, Judge; Opinion filed at September Term, 1938 April 1, 1939; rehearings denied at May Term, 1939, May 2 1939 and June 14, 1939.

Reversed and remanded (with directions).

Robert E. Hannegan, Oliver Blackinton and Robert L. Aronson for appellants, except intervenor.

(1) Defendant Smith was not entitled to any relief whatsoever under the equitable principle that he who comes into a court of equity must come with clean hands, and one who is guilty of unconscionable conduct should not be heard in a court of equity in a prayer for relief from the consequences thereof. Jones v. Jefferson, 334 Mo. 606, 66 S.W.2d 555; Keener v. Williams, 271 S.W. 489, 307 Mo. 682; Creamer v. Bivert, 214 Mo. 473, 113 S.W. 1118; Derry v. Fielder, 115 S.W. 412, 216 Mo. 176; Stierlin v. Teschemacher, 64 S.W.2d 652; LaRue v. LaRue, 317 Mo. 207, 294 S.W. 723; Crane v. Deaton, 253 S.W. 1068. (2) The court erred in awarding to plaintiff a greater title in the real estate than she had before the alleged perpetration of the fraud. If fraud had been established, the most that plaintiff should have been awarded would be the restoration of her prior position, wherein her sole interest was an inchoate right of dower. All else that was conveyed to defendant Holdoway Construction Company had been the property of defendant Smith, which he voluntarily conveyed for the accomplishment of his own purpose. (a) A dower right remains when a wife does not join in a conveyance. Lee v. Lee, 167 S.W. 1030, 258 Mo. 599. (b) The value of an inchoate right of dower can be measured. Grayson v. Grayson, 190 S.W. 930. (3) Since plaintiff could have readily ascertained the nature of the deed which she signed, she is bound to know the contents thereof, and she cannot complain of fraud because of a representation as to what she was signing. Hannah v. Butts, 51 S.W.2d 7; Zeilman v. Insurance Co., 22 S.W.2d 92; Brennecke v. Ganahl Lbr. Co., 44 S.W.2d 627. (a) Fraud is never presumed and must be proved. (b) The burden of proof rested upon plaintiff to establish the allegations of fraud. (4) A deed imports consideration. (5) There was legal delivery of the deed. (6) A deed is fully effective between the parties, though the acknowledgment be defective. Staples v. Shackelford, 150 Mo. 471, 51 S.W. 1032; Hanna v. Davis, 112 Mo. 599, 20 S.W. 686; Finley v. Babb, 173 Mo. 257, 73 S.W. 180. (7) There was no evidence in the case to support the money judgments; further, same is outside the scope of the pleadings. (8) The so-called amended petition to conform to the proof should have been stricken from the files, because it was filed long after trial and submission of the cause, because it was a departure from the original petition and the cause of action stated therein, and because it was not actually in conformity with the proof. Sec. 819, R. S. 1929; Prichard v. Dubinsky, 89 S.W.2d 530; Joyce v. Growney, 154 Mo. 253, 55 S.W. 466.

A. B. Frey for appellant intervenor.

(1) The relief of cancellation will not be granted against a bona fide purchaser for value and without prior notice of alleged fraud. This rule applies irrespective of the grounds on which the recision or cancellation is sought. Morris v. Hanssen, 336 Mo. 169, 78 S.W.2d 95; Crawford v. Aultman, 139 Mo. 262, 40 S.W. 952; Ludwig v. Scott, 65 S.W.2d 1036; Mayes v. Robinson, 93 Mo. 114, 5 S.W. 611; Sec. 2685, R. S. 1929. (2) The intervenor being a holder in due course of the negotiable promissory note, dated April 26, 1931, for $ 20,000, reduced to $ 15,000 is similarly a holder in due course of the deed of trust which secured the note. The deed of trust partakes of the incidents of the negotiability of the principal note which it secures. Mayes v. Robinson, 93 Mo. 114, 5 S.W. 611; Baade v. Cramer, 278 Mo. 529, 213 S.W. 121; First Natl. Bank v. Rohrer, 138 Mo. 383, 39 S.W. 1050; Crawford v. Aultman, 139 Mo. 270, 40 S.W. 952; Borgess Inv. Co. v. Vetty, 142 Mo. 573; Eggiman v. Hauck, 213 Mo.App. 515, 255 S.W. 951; Farmers State Bank v. Miller, 222 Mo.App. 638, 300 S.W. 834; George v. Surkamp, 336 Mo. 1, 76 S.W.2d 371. (3) One who conveys his property with intent to defraud his creditors or to defraud his wife of her marital rights is not entitled to any relief in equity to have such conveyance set aside as against an innocent holder for value. He who has committed iniquity may not have relief in equity. Creamer v. Bivert, 214 Mo. 485, 113 S.W. 1118; Derry v. Fielder, 216 Mo. 194, 115 S.W. 412; Jones v. Jefferson, 334 Mo. 606, 66 S.W.2d 560; George v. Surkamp, 336 Mo. 1, 76 S.W.2d 370; Keener v. Williams, 307 Mo. 707, 271 S.W. 497. (a) Defendant Smith having admitted of record in his answer and in his amended answer and having testified that he conveyed the real estate in controversy to the defendant corporation to defraud his wife of her marital rights is not entitled to have the conveyance canceled, or to have the title to the property revested in himself or his wife as against intervenor. He does not come into court with clean hands. (b) The plaintiff, not having been the owner of said real estate at the time of the execution of the quitclaim deed in controversy, had only an inchoate right of dower therein. With respect thereto she can have no right to have said quitclaim deed, or the deed of trust made subsequent thereto, canceled as against intervenor, since where one of two innocent persons must suffer by another's fraud that one must suffer who placed the party to the wrong in a position to do it, or who carelessly or trustfully made the loss possible. Baade v. Cramer, 278 Mo. 516, 213 S.W. 126; C. I. T. Corp. v. Hume, 48 S.W.2d 157; General Motors Acceptance Corp. v. Holland, 30 S.W.2d 1087; N. Y. Indemnity Co. v. Andrew County Bank, 227 Mo.App. 878, 59 S.W.2d 741; Klebba v. Struempf, 224 Mo.App. 193, 23 S.W.2d 205; Bost v. McFarland, 229 Mo.App. 776, 79 S.W.2d 521; Kuraner v. Col. Natl. Bank, 230 Mo.App. 358, 90 S.W.2d 465. (4) The requirements of due process of law extend to every case of the exercise of governmental power, and a State may not by any of its agencies, legislative, judicial or executive, disregard the constitutional prohibition. The purpose of this clause is to exclude arbitrary power from every branch of the Government. Hence it is a restraint on the legislative, executive and judicial departments. 6 R. C. L. 44, sec. 440. A denial of due process of law results from any procedure which takes away any of the essential attributes of private property or imposes unreasonable restrictions on its use. 12 C. J. 1214, sec. 991; In re Flukes, 157 Mo. 131. The right to bring a suit to enforce a contract is an integral part of the contract. It is one of the essential attributes of property, of which the owner cannot be deprived if the organic law of both State and Nation be obeyed. In re Flukes, 157 Mo. 131; Wright v. Hart, 182 N.Y. 330, 75 N.E. 404, 2 L. R. A. (N. S.) 341. The final decree of the trial court in the instant case, canceling the security of the intervenor and in lieu thereof constituting intervenor as a pledgee of a lien for $ 8500 and interest, sought, to be created by the court against the real estate in controversy without defining the rights of the pledgee, and at the same time, prohibiting intervenor from taking any action until ninty days after a final decree on appeal, and then only to making a new application to the trial court for leave to foreclose, with the probable delays and appeals that might naturally ensue thereafter, constituted a denial of due process to intervenor, and an impairment of its obligation of contract to the same extent as if said result had followed from an act of the State Legislature. Fourteenth Amend. U.S. Const., Art. II, Sec. 30, Mo. Const.

Frank P. Ashemeyer, Montague Punch, Carl M. Dubinsky, A. B. Elam and Jerome F. Duggan for respondent.

(1) Since the intervenor has made no complaint as to the findings of fact in the decree, either on motion for a new trial or in assignments of error, such findings of fact are conclusive as to the intervenor and cannot be questioned by it. Globe Securities Co. v. Gardner Motor Co., 337 Mo. 177, 85 S.W.2d 568; Banner Iron Works v. Resmond Co., 107 S.W.2d 1068; Spotts v. Spotts, 331 Mo. 917, 55 S.W.2d 977; Perryman v. Mo. Pac. Ry. Co., 326 Mo 176, 31 S.W.2d 4; Moffett v. Butler Mfg. Co., 46 S.W.2d 869; Scott v. Mo. Pac. Ry. Co., 333 Mo. 374, 62 S.W.2d 834. (2) Intervenor can only complain if the decree has substantially prejudiced its interests. It cannot be heard to complain that the decree has invaded the rights of other appellants. Neal v. Curtis & Co. Mfg. Co., 328 Mo. 389, 41 S.W.2d 543; Barr v. Nafziger Baking Co., 41 S.W.2d 559; Summers v. Cordell, 187 S.W. 5. (3) Even conceding that the relief of cancellation cannot be granted so as to prejudice the rights of an innocent purchaser for value, the decree of the lower court was entirely equitable and proper because: (a) Intervenor was the pledgee and not the owner of the $ 15,000 note secured by deed of trust. As pledgee, it had possession of such secured note with a lien thereon, enforceable in an appropriate way, to secure the collection of the debt owing to it. Amick v. Empire Trust Co., 317 Mo. 157, 296 S.W. 802; Tennent v. Union Central Life Ins. Co., ...