Stone v. Hammons

• Decision Date: 04 January 1941
• Docket Number: 36691
• Citation: 146 S.W.2d 606,347 Mo. 129
• Parties: J. W. Stone and Myrtle Stone, Appellants, v. W. E. Hammons, Trustee, and W. L. Brandon
• Court: Missouri Supreme Court

146 S.W.2d 606

347 Mo. 129

J. W. Stone and Myrtle Stone, Appellants, v. W. E. Hammons, Trustee, and W. L. Brandon

No. 36691

Supreme Court of Missouri

January 4, 1941

Appeal from Butler Circuit Court; Hon. Robt. I. Cope Judge.

Reversed and remanded (with directions).

John W. Noble for appellants.

(1) A trustee's sale under trust deed will be set aside, if not entirely fair. Guels v. Miss. Valley Trust Co., 329 Mo. 1154, 49 S.W.2d 60; Vannoy v. Duvall Trust Co., 29 S.W.2d 692; West v. Axtell, 322 Mo. 401, 17 S.W.2d 328; Borth v. Proctor, 219 S.W. 72; Hurst Automatic Switch & Signal Co. v. Trust Co. of St. Louis, 216 S.W. 954; 42 C. J. 234, sec. 1875. (2) There was sufficient evidence to show that the sale of the land under the trust deed was not fairly conducted, and that it brought an inadequate price. Krug v. Bremer, 316 Mo. 891 292 S.W. 702. (3) The sale of the land under the trust deed extinguished the subsequent lease. McFarland Real Est Co. v. Gerardi Hotel Co., 202 Mo. 597, 100 S.W. 577; Plum v. Studebaker Bros. Mfg., 89 Mo. 162, 1 S.W. 217; Travelers Ins. Co. v. Beagles, 333 Mo. 586, 62 S.W.2d 800; Roosevelt Hotel Corp. v. Williams, 227 Mo.App. 1063, 56 S.W.2d 801.

Henson & Henson for respondents.

(1) Fraud or mistake in trustee's sale is not to be presumed but must be proved by clear convincing and cogent evidence or circumstances. Masonic Home of Missouri v. Windsor, 92 S.W.2d 713, 338 Mo. 877; Judah v. Pitts, 62 S.W. 715, 333 Mo. 301; Schwarz v. Kellogg, 243 S.W. 179. (2) There was sufficient evidence to show that the sale of the land under the trust deed was fairly conducted and that it brought an adequate price. East Arkansas Lbr. Co. v. Rainer & Connell Cotton Co., 24 S.W.2d 1001, 324 Mo. 706; Webb v. Salisbury, 39 S.W.2d 1045, 327 Mo. 1123; Maloney v. Webb, 112 Mo. 575, 20 S.W. 683; Prather v. Hairgrove, 112 S.W. 552, 214 Mo. 142; Schwarz v. Kellogg, 243 S.W. 179. (3) When a case is submitted to the court, and no declarations of law are asked or given, the judgment rendered by the court must be affirmed if it is supported by substantial evidence and is consistent with any tenable theories of law. Briggs v. Kansas City Joint Stock Land Co., 328 Mo. 23, 40 S.W.2d 682; Amer. Metal Co. v. Dougherty, 204 Mo. 71, 102 S.W. 538; Pfenninger v. Brevard, 129 S.W.2d 924.

OPINION

PER CURIAM

This is a suit to set aside a sale under foreclosure and to cancel the trustee's deed. Judgment below was for defendants and plaintiffs have appealed.

The plaintiffs, husband and wife, bought the land and gave back a purchase money deed of trust. The tract, known as Ringo Ford Tourist Camp, is in Butler County and contains approximately ten acres. It lies along the west bank of Little Black River and another boundary is a creek called Spring Branch. It is used as a fishing and swimming resort and has seven clubhouses on it. Plaintiffs operated it and conducted a store and filling station to serve visitors and those who occupy the cabins. After buying the land they leased a clubhouse site to defendant Brandon who erected a cabin which, with improvements, cost about $ 1,300. Brandon subsequently became the owner of the debt secured by the deed of trust and had it foreclosed by defendant Hammons, the sheriff, acting as substitute trustee. It was bought in for Brandon for $ 2,800.

Plaintiffs charge that the sale was unfair in that Brandon's business manager and an attorney representing Brandon together acting with the trustee discouraged and chilled free bidding at the sale by representing that Brandon's lease was prior to the deed of trust being foreclosed and the land was being sold subject to such lease so that Brandon could and did obtain the property for less than its value. The record shows without dispute the trustee at the sale first read the notice of sale and then he read a notation from a slip of paper that there was a lease on a certain part of the property which had seventeen years to run and that the lease had been recorded. The trustee admitted that he had been directed by Brandon's attorney to read this announcement and had received from the attorney the paper from which he read. Plaintiffs' testimony shows that the trustee in response to a question announced also that the lease came ahead of the deed of trust and that the property would be sold subject to the lease. This is denied by defendants but there is testimony produced by defendants themselves as well as by plaintiffs which indicates that when the question as to the priority of the lease was asked of the trustee he permitted either Brandon's attorney or business manager to answer for him that the lease came first. The sale then proceeded and there was but one bid of $ 2,800 by Brandon's business manager. Hutchison, a prospective bidder, testified that he was prepared to bid $ 3,500 but did not make any bid because he felt he would be buying a lawsuit in view of the statements about the lease. Hutchison deposited the sum of $ 3,500 in the trial court to show his good faith.

The facts manifest to us a clear and positive plan by the defendants to protect Brandon's lease. The part played by the trustee was perhaps from innocent motives, but gave color to the picture and was effective. With such activating purpose, what better way to protect the lease could be found than by setting the stage to eliminate, if possible, any contest in bidding against Brandon who held the debt? The record demonstrates the success of the plan. There was testimony that the property was worth $ 4,000 and we have the actual tender of $ 3,500. Although the selling price was not grossly inadequate, yet it was in fact inadequate. And it was inadequate because of the unfairness which pervaded the sale. The announcement of the lease by the trustee served no impartial purpose. It immediately caused doubt whether the land would be sold free and clear. Under the circumstances of this case there could have been no reason for making such an announcement except to mislead and thereby to frighten prospective bidders. It did so. If the representation that the lease was ahead of the deed of trust, which is disputed, actually was made, it added to the deception. We have the glaring result that all but the interested bidder were silenced. The fact that Brandon claims he had taken over the debt as a favor to plaintiffs to prevent a threatened earlier foreclosure and was to receive another lease does not palliate or excuse the improper conduct of the sale.

It is conceded that the lease was made subsequent to the date of the deed of trust being foreclosed. Therefore, it cannot properly be contended that the sale was subject to the lease...