State v. Trimble

• Decision Date: 20 November 1931
• Docket Number: No. 30646.,30646.
• Parties: STATE ex rel. CARY v. TRIMBLE et al.
• Court: Missouri Supreme Court

43 S.W.2d 1050

STATE ex rel. CARY v. TRIMBLE et al.

No. 30646.

Supreme Court of Missouri, Division No. 1.

November 20, 1931.

Original certiorari proceeding by the State of Missouri, on the relation of Claude R. Cary, against Francis H. Trimble and others to have the opinion of the Kansas City Court of Appeals in the case of Florence W. Buzby v. Claude R. Cary, 30 S.W.(2d) 171, quashed.

Writ of certiorari quashed.

Edmund H. McVey and Samuel R. Freet, both of Kansas City, for relator.

L. L. Watts and Paul E. Basye, both of Kansas City, for respondents.

STURGIS, C.

This is an original proceeding in this court by certiorari for the purpose of having this court quash the opinion of the Kansas City Court of Appeals in the case of Florence W. Buzby, appellant, v. Claude R. Cary, respondent, appealed from Jackson county to that court, and reported in 30 S.W.(2d) 171, 172. It is claimed that the opinion in question is in conflict with Brown & Pounds v. Lead & Zinc Mining Co., 231 Mo. 166, 132 S. W. 693, 140 Am. St. Rep. 509, and Estes v. Reynolds, 75 Mo. 563. This is the only question for our consideration. We say this for the reason that the statements and briefs of counsel take a much wider range.

The case of Buzby v. Cary, as stated by the Court of Appeals, is an action for damages for defendant's misrepresentations in connection with the sale of a secured note by defendant to plaintiff, based on these facts: The Roberts Realty & Investment Company owned the Margate Apartment Hotel in Kansas City which it equipped with furniture and fixtures at an expense of about $20,000. The realty company then sold the furniture and fixtures and leased the building to one Wetzel for a period of five years beginning April 1, 1925, at a rental of $851 per month. This lease contained the usual clause giving the landlord a lien on the furniture and fixtures to secure payment of the rent as and when due. This lease could be assigned only in writing, with written acceptance by the assignee agreeing to assume the obligations of the lease, and by the written consent of the landlord. Wetzel then sold the furniture and fixtures and assigned the lease in the manner provided to Rose Quaranta, who gave to Wetzel her note for $8,500 secured by chattel mortgage on the furniture and fixtures. This note passed into the hands of the defendant Cary, who, by reason of default in payment, foreclosed the chattel mortgage and became the owner of the furniture and fixtures. Thereupon Rose Quaranta assigned the lease, by written consent of the landlord, to defendant Cary, who gave his written acceptance agreeing to carry out the terms of the lease. Defendant Cary, being the owner of both the furniture and fixtures and the leasehold, operated the hotel apartments for a few months and then sold the furniture and fixtures to one Grant Jeffers, who gave him a note for $6,000, secured by chattel mortgage on the furniture and fixtures, payable $200 each month. Cary also promised to have the lease properly assigned to Jeffers with the landlord's written consent, which was not done till some time later. In the meantime, Cary sold this $6,000 note to the plaintiff, Florence W. Buzby, indorsing it without recourse, and representing in writing that the mortgaged furniture and fixtures were free of all other liens. This is the basis of the fraud and misrepresentation for which plaintiff claims damages. It appears that shortly after plaintiff purchased this note, the maker, Jeffers, defaulted in paying the rent, and the owner of the hotel building notified plaintiff of his lien for the rent on the furniture and fixtures as provided by the lease made to Wetzel and assigned to defendant Cary, and threatened enforcement of the lien unless the rent was paid. The plaintiff then investigated the lease, which was on record but had never been seen by her, and ascertained that the lease contained a clause which gave a first lien on the furniture and fixtures securing the present and future rents, superior to the chattel mortgage securing plaintiff's note. In this predicament, the plaintiff concluded it would be best to herself take over the furniture and fixtures under her mortgage, and assume the operation of the hotel. She got the owner of the hotel building to make a new lease to her on substantially the same terms as the old lease to Wetzel, inclusive of the lien clause on the furniture and fixtures to secure the rent. Plaintiff then tried to operate the hotel, but failed to make it pay expenses, and the owner of the building took and sold the furniture and fixtures to pay the rent. Plaintiff then brought the suit for damages on account of the fraud and misrepresentation as to the mortgaged property being clear of other liens, placing her damages at the amount of the note.

Quoting from the opinion:

"It is alleged in the petition that plaintiff relied on the representations made by defendant as follows: (1) That $200 interest had been paid on the said note, and (2) that it was, in fact, not delinquent and past due; (3) that a proper transfer of the lease had been made to Grant Jeffers; (4) that said note was secured by a chattel mortgage, and that there were `no other liens on said property or furniture' at the time the property was delivered to plaintiff, `wherefore in truth and in fact said lease agreement was a prior lien upon and against the furniture in said chattel mortgage securing plaintiff's note herein for $6,000.'

"Judgment is asked for $5,800 and costs."

The Court of Appeals then says:

"The amended answer consists of a general denial, and for affirmative defense it alleges that on or about March 22, 1926, and after the sale and delivery of the note mentioned in plaintiff's petition, the same having been indorsed without recourse by defendant, `plaintiff voluntarily and of her own accord, and for her own purposes, and without notice of any claim against this defendant, requested, directed and caused defendant to release said chattel mortgage and to discharge the same of record, and said note was marked "cancelled" by the recorder of deeds of Jackson County, Missouri, in whose office said chattel mortgage had been filed; that by reason thereof plaintiff is estopped from making any claim against the defendant Claude R. Cary on account of any matters or things alleged in her petition.'

"The answer further alleges: `That on the 17th day of March, 1926, the plaintiff entered into a contract with E. H. Roberts Realty & Investment Company, the owner of the real estate described in plaintiff's petition, whereby the plaintiff, expressly and voluntarily, and without complaint or notice to the defendant, assumed all of the obligations of the lease mentioned in plaintiff's petition, including the lien for rent upon the furniture and fixtures mentioned in plaintiff's petition, and by said contract plaintiff agreed that the same should be considered a new lease upon the same terms and conditions of the original lease, in lieu of the drafting and signing of a new lease; that thereafter plaintiff defaulted in the payment of rent under said agreement and lease, and thereupon said lien was foreclosed and said furniture and fixtures sold. Defendant further states that on account of the premises aforesaid, plaintiff is estopped from making any claim against the defendant Claude R. Cary on account of any matters or things alleged in her petition.'

"The reply was a general denial. Upon the pleadings thus made, the case was called for trial, and, after jury impaneled, opposing counsel made their opening statements. Defendant then objected to the introduction of any evidence, for the reason that the petition failed to state facts sufficient to constitute a cause of action, and that said petition affirmatively shows plaintiff is not entitled to recover. The point was argued not in the presence of the jury, and the objection was overruled. Defendant then moved the court to dismiss plaintiff's petition, for the reason that, on her opening statement, she is not entitled to recover. The motion was sustained, the court basing its ruling upon the opinion of the St. Louis Court of Appeals in Ebel v. Roller et al., 21 S.W.(2d) 214, quoting therefrom as follows (loc. cit. 216):

"`The trouble with plaintiff's position, in a nut shell, is that after discovery of the fraud which had been practiced upon her, instead of promptly announcing her purpose to rescind the transaction, she sold the property which she had acquired from the Rollers, and thus elected to stand by the transaction and to accept the fruits thereof in so far as she might, looking to the defendants only for a recoupment of whatever losses she may have suffered in the deal. * * *

"`In other words, when a party desires to rescind upon the ground of fraud, he is bound upon discovery of the facts to at once announce his intention to disaffirm and adhere to it. He may not blow both hot and cold; and if he accepts whatever benefits are to be derived from his contract, or exercises the prerogatives of dominion or ownership over the property acquired by virtue thereof, after knowledge of the existence of the ground for rescission, he will be held to have ratified the agreement, particularly if, after discovery of his right to rescind, he has dealt with the property in such manner as to make restoration impossible.'

"The ruling of the court on the motion was in the following language: `The view of the court is that the plaintiff by her opening statement in this case did not, upon discovery of the alleged fraud, immediately take action to rescind the trade, but she kept the property and exercised dominion over it. And the court, under that view of the matter, sustains the demurrer to the introduction of evidence.'

"Judgment was entered for defendant, and, after timely motions for a new trial and in arrest, plaintiff appeals."

It thus appears from the statement of the Court of Appeals that the trial court refused to...