State Bank of St. Louis v. Frame

• Decision Date: 29 November 1892
• Citation: 20 S.W. 620,112 Mo. 502
• Parties: The State Bank of St. Louis v. Frame et al., Appellants
• Court: Missouri Supreme Court

20 S.W. 620

112 Mo. 502

The State Bank of St. Louis v. Frame et al., Appellants

Supreme Court of Missouri, Second Division

November 29, 1892

Appeal from Saline Circuit Court. -- Hon. Richard Field, Judge.

Reversed and remanded.

John R Walker and Draffen & Williams for appellants.

(1) The deed to Samuel C. James, trustee for Lucy Doran, vested the legal title to the land in controversy in said trustee, if said deed was made for a valuable consideration, and without actual notice upon part of said trustee or Lucy Doran of the prior unrecorded deed of trust. The defendants' right was not a mere equity. They had the legal title, and were entitled to a verdict upon the legal defense set up in the answer. 1 Revised Statutes, 1889, sec. 2420; Youngblood v. Vastine, 46 Mo. 239; Hetzell v. Barbour, 69 N.Y. 1; Callaway v. Fash, 50 Mo. 420; Gatewood v. Hart, 58 Mo. 261; Draper v. Brison, 26 Mo 108. (2) If the defendant, Lucy Doran, accepted the deed to the land, in satisfaction and discharge of $ 3,500 of the debt due her from her husband, Benjamin F. Doran, then she is a purchaser for value, and the court committed manifest error in refusing the fourth declaration of law asked by the defendants. Harold v. Owen, 7 West. 662; Outhwaite v. Porter, 13 Mich. 533; Clements v Doerner, 40 Ohio St. 632; Hoyt v. Oliver, 59 Mo. 188; Redpath v. Lawrence, 42 Mo.App. 101; Lawrence v. Owens, 39 Mo.App. 318; Feder v. Abrahams, 28 Mo.App. 454; Hess v. Clark, 11 Mo.App. 492; Hoyt v. Jones, 31 Wis. 389. (3) The court erred in refusing to give the first, second and third declarations of law asked by the defendants. "Circumstances may arise where a purchase, subsequent to an unregistered conveyance, may be made in such good faith that it will be protected, even though the purchaser has undeniable knowledge of the prior deed, as where he is informed by the grantee himself that the deed is withheld from record because he does not intend to assert any title under it." Wade on Notice [2 Ed.] sec. 259, p. 144; Rogers v. Jones, 8 N.H. 264-8; Martindale on Conveyances, sec. 281, p. 240; Vaughn v. Tracy, 25 Mo. 318. Even though the $ 20,000 note secured by the deed of trust had been indorsed to the State Bank, yet if said bank intrusted the unrecorded deed of trust to Bartle, and relies on his statements to show notice to defendants, it must be bound by the whole of his statements. Rogers v. Jones, 8 N.H. 264. (4) The finding of the court upon the equitable defense, under the evidence, should have been for the defendants. Justice v. Lancaster, 20 Mo.App. 559; Rice v. Groffman, 56 Mo. 434.

John G. Chandler and John Cosgrove for respondent.

(1) The court found from the evidence that Mrs. Doran and her trustee had notice of the deed of trust to Anthony to secure the $ 20,000 held by the respondent. This court is bound by the findings of the trial court, where there was evidence to support such findings. Pike v. Martindale, 91 Mo. 268; Baum v. Fryrear, 85 Mo. 151. (2) The defendant, Lucy Doran, is not a bona fide purchaser for value. To say that she was a purchaser for value would be to hold that a credit of $ 3,500 on a note which was not worth a dollar was parting with something for value. Martin v. Jones, 72 Mo. 23; Aubuchon v. Bender, 44 Mo. 560; Kitteridge v. Chapman, 36 Iowa 348; Phelps v. Feckler, 61 Iowa 340; Fox v. Hall, 74 Mo. 317. (3) The court did not err in giving the instruction number 3, asked by the plaintiff. The evidence of Mrs. Doran and Dr. James, her trustee, was that they had notice of the existence of the deed of trust; and the court having found that fact from said defendant's testimony, it was proper to declare that plaintiff was entitled to recover. The court would not have permitted a verdict to stand, if this case had been tried before a jury, and a verdict had been rendered for the defendants. It was not error for the court to decide that the judgment should be for the plaintiff. Jackson v. Hardin, 83 Mo. 175; Powell v. Railroad, 76 Mo. 845; Donahue v. Railroad, 91 Mo. 357; City v. Jones, 27 Mo.App. 537; Lenox v. Railroad, 76 Mo. 91. (4) When the note of $ 20,000 was transferred to respondent the deed of trust passed with it as an incident. No formal assignment or delivery or even mention of the deed of trust was necessary. The note had to be discharged before the deed of trust could become inoperative. No arrangement or contract between Bartle and Dr. James could affect the bank's right to have its debt satisfied out of the mortgaged property. Hagerman v. Sutton, 91 Mo. 531, and cases cited; Mayes v. Robinson, 93 Mo. 114. (5) The judgment was for the right party on the uncontroverted evidence, and should be affirmed regardless of the instructions. Fairbanks v. Long, 91 Mo. 628.

OPINION

Macfarlane, J.

The suit is ejectment, commenced in Morgan county, to recover two hundred and forty-two and one-half acres of land situate in said county. The answer of defendant Frame was a general denial. Samuel C. James, trustee for Lucy Doran, Lucy Doran herself and her husband, Benj. F. Doran, were made defendants on their own motion and filed an answer setting up a general denial and an equitable defense. Defendant Frame was the tenant of defendant James, who claimed the land as trustee for Mrs. Doran. By their equitable defense they charged that plaintiffs' only claim of title was under a deed of trust made by defendant, Benj. F. Doran, on December 22, 1885, and filed for record July 12, 1887, to secure the payment of a note of $ 20,000, payable to the order of W. C. Bartle ninety days after date, and a sale thereunder and deed by the trustee to plaintiff, dated June 14, 1888. The answer then sets up in detail a state of facts under which it is claimed that the trustee's sale and deed should be set aside and canceled, which defendant asked should be done. The case was taken by change of venue to Saline county, where it was tried, a judgment rendered for plaintiff, and defendants appealed.

On the trial both parties claimed title under defendant, B. F. Doran, plaintiff under the sale by the trustee under deed of trust before mentioned, and defendant under a deed directly from Doran to James, as trustee for Mrs. Doran, dated January 6, 1887, and recorded January 8, 1887, for an express consideration of $ 3,500.

After the introduction of these deeds defendant offered evidence showing that on the twenty-second day of December, 1885, B. F. Doran made two deeds of trust to secure the note of $ 20,000, payable to Bartle, one on the land in dispute, situate in Morgan county, and under which plaintiff claims, and the other on about six hundred acres of land in Cooper county.

The evidence tended to prove that these deeds were both withheld from record at the request of Doran, who was an extensive dealer in live stock, to avoid injuring his credit. Bartle was a brother of Mrs. Doran and James was a son-in-law. About the first of January, 1887, Doran recognized his own insolvency and inability to continue his business. He owned the two farms held under the two deeds of trust and personal property valued at about $ 8,000. His debts largely exceeded the value of his property. Among his debts, as claimed, was a note to his wife for $ 6,000, dated March 2, 1884. At the request of Mrs. Doran, her son-in-law, James, went to St. Louis on the fifth of January, 1887, to see Bartle, who lived there, and to try to make some arrangement about securing her debt. Mr. Doran went to St. Louis at the same time. The $ 20,000 note made by Doran to Bartle had been assigned to the plaintiff bank before its maturity. On January 6, Bartle, Doran and James met in St. Louis and talked over the matter, and the evidence of defendants tends to prove that they came to an agreement and understanding that the deed of trust on the Morgan county land should not be recorded or enforced, and that Doran should convey to James, as trustee for Mrs. Doran, the land in dispute, and in consideration therefor she would satisfy Doran's note to her to the extent of $ 3,500. Bartle at the time had in his possession the deed of trust, which all the parties saw. The next day the parties all went to the residence of Doran, in Cooper county, and the deed was executed and acknowledged conveying the land to James, as trustee, in pursuance of the previous agreement, and Mrs. Doran entered a credit for $ 3,500 on the note. After that James took possession of the land, paid delinquent taxes amounting to $ 100 and made some improvements. Neither James nor Mrs. Doran knew the note had been transferred to the bank, nor did they make inquiries about it.

The evidence of plaintiff tended to prove that there was no agreement to withhold the deed of trust from record; that it never agreed not to set up any claim on the Morgan county land, and never authorized Bartle to make such an arrangement. It also tended to prove that the only talk about releasing the deed of trust was on condition that Mrs. Doran would release her dower in the Cooper county land, which she had afterwards refused to do.

The court at the request of plaintiff declared as a matter of law that upon the pleadings and undisputed evidence plaintiff should recover.

The court refused to declare the law to be, as asked by defendants, that if Doran was indebted to Mrs. Doran, and the deed to James, trustee, was accepted by her in part payment and satisfaction of her debt, then she was a purchaser for value of the lands in controversy; that if, when they bought the land, the only notice they had of the existence of the deed of trust was from the statements of Bartle and seeing him have the deed of trust, and that Bartle stated that said deed of trust would never be filed for record, but would be surrendered, and that no lien was claimed on...