The Proctor Trust Company v. Neihart

• Decision Date: 07 June 1930
• Docket Number: 29,165
• Parties: THE PROCTOR TRUST COMPANY, Appellee, v. C. T. NEIHART et al., Appellants; v. A. YOUNG, THE RAILROAD BUILDING, LOAN AND SAVINGS ASSOCIATION and THE NEW ENGLAND SECURITIES COMPANY et al., Appellees
• Court: Kansas Supreme Court

288 P. 574

130 Kan. 698

THE PROCTOR TRUST COMPANY, Appellee, v. C. T. NEIHART et al., Appellants; v. A. YOUNG, THE RAILROAD BUILDING, LOAN AND SAVINGS ASSOCIATION and THE NEW ENGLAND SECURITIES COMPANY et al., Appellees

No. 29,165

Supreme Court of Kansas

June 7, 1930

Decided January, 1930.

Appeal from Osage district court; CAREY E. CARROLL, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. MORTGAGE--Assumption of Mortgage by Grantee--Requisites and Validity of Assumption. A purchaser of real property cannot be held to have assumed the mortgaged indebtedness on the property purchased, where it is shown he never knowingly promised or agreed to assume it, unless he has lost his right to object to his apparent or formal assumption of the same by some inconsistent word or act of acquiescence, waiver or estoppel.

2. SAME--Assumption of Mortgage by Grantee--Waiver of Right to Object--Implied Assumption. The findings and the evidence considered, and it is held: (1) that appellant Neihart is neither found or shown to have knowingly promised or agreed to assume and pay the mortgage on the property conveyed to him; (2) that the right of the appellant to object to the assumption clause placed in the deed, without his knowledge or consent, was not waived either by the deed being recorded without the clause being observed, or by any voluntary or intentional renunciation of such right; (3) that the findings and record do not bring the case under the rule of an implied assumption by an arrangement to deduct the mortgaged indebtedness from the purchase price, the transaction occurring in an exchange of property where no purchase price was named; (4) the material alteration of the deed by the unauthorized striking out of the assumption clause with the approval and consent of the appellant, may entitle parties to a reformation of the deed, but it will not of itself create an obligation when none otherwise exists; and (5) that the rights of the mortgagee are on the same level with those of the mortgagor in the controversy here involved.

A. K. Stavely, of Lyndon, C. G. Messerley, of Osage City, and William Wallace, of Topeka, for the appellants.

Earl Bohannon, of Oswego, for appellee The Proctor Trust Company; Fred S. Jackson, P. H. Forbes and James E. Smith, all of Topeka, for appellees Logan and Young.

OPINION

HUTCHISON, J.:

This is a foreclosure action, and the appeal is from a personal judgment rendered against a purchaser of the property after the mortgage had been given, as having assumed and agreed to pay the same. The judgment was also rendered against the makers of the note and mortgage, but no appeal has been taken by them.

The answer of the appellant set up two written agreements for the exchange of property, the latter being the same as the earlier except to correct two mistakes in figures in the earlier one, and plead the agreement as shown in the contracts to take the property subject to the mortgage; that one of the deeds contained a clause to assume and pay the mortgage and was placed on record by the agent without his having seen it and without his knowledge or consent as to such clause, and the other deed had no such clause in it when delivered to him; that there was no delivery to him or acceptance by him of deeds containing such assumption clause.

The written contract was between appellant and one A. W. Logan, to exchange appellant's business property in town to Logan for several tracts of land standing on record in the name of Logan and several other parties whose names were not mentioned in the contract. The agreement stated that the town property was subject to a mortgage of $ 3,500, and the farm property subject to a mortgage of $ 16,000. This contract was made February 24, 1926. No prices were placed in the contract on either property, but one was to be exchanged for the other, only $ 3,500 in cash was to go with the business building to Logan for the land. The contract provided that the deeds be held in escrow until each party fulfills his part of the contract, and contained the following sentence:

"It is further agreed between the parties to these presents that possession of said premises be transferred when this article is signed."

The agent that effected the exchange was a brother of Logan, but the court found he was not the agent of Logan or of any of the other parties owning the land with him, but was the agent of the appellant Neihart. The deeds were prepared by the agent, one Thayer and Neihart, and were taken by the agent to Logan and his people. They were made, like the contract, subject to the mortgage. One of the owners of the Logan farm changed the deeds conveying the farm land to the appellant by adding the following words after the statement of the land being subject to the $ 16,000 mortgage: "which is hereby assumed by party of second part." After this amendment these deeds were executed and acknowledged, conveying the land in this manner to Neihart, the appellant. Instead of putting the deeds in escrow, the agent brought one of these deeds to Neihart, the one signed by Logan and another party, with the suggestion that because of threatened litigation against the other party signing this deed, it would be well to place it on record at once. Neihart did not examine it, but answered, if it was drawn according to contract, he didn't see any harm in having it recorded. This conversation was in the field on the 15th of March. The deed was dated March 9, acknowledged by Logan March 12, by other party March 15, and recorded on same day by the agent shortly after his conversation with Neihart in the field. The other deed covering land included in this mortgage, known as the Eggert deed, was dated March 9, acknowledged March 12, and recorded June 28. It was left in escrow at the bank by the agent some time prior to June 21, and was not seen by any of the parties except the agent after its execution, until Neihart saw it in the bank June 21, when a new contract was made and signed at the request of Logan, substantially the same as the former, except changing the amount of encumbrance on the business property to $ 3,700, instead of $ 3,500, and increasing the cash from $ 3,500 to $ 3,700, no change being made as to the exchange of properties being subject to the mortgages on each side.

On March 29 Neihart examined the record in the register of deeds' office and found the Logan deed to him that was recorded March 15 contained the words "which is hereby assumed by party of second part," and called the agent and complained about it. The agent said that clause should not have been in the deed, and started to strike it out. Neihart asked if he had authority to strike it out. He replied that he had, and struck it out; then the register of deeds struck it out of the record as well. When Neihart first saw the Eggert deed at the bank on June 21 this clause had been stricken out.

There was evidence tending to show that the agent represented Neihart, that he represented his brother, A. W. Logan, and his associates and that he represented both parties at the same time, but, as stated above, the court found that he was the agent of Neihart and not the agent of any of the other parties involved. That finding is binding upon this court as well as all other findings of fact made by the trial court if there was, as there is in this question of agency, sufficient evidence to support such finding.

The following findings of fact made by the trial court are especially involved in this controversy:

"5. March 12, 1926, defendants, V. A. Young and Edna F. Young, executed their deed to the defendant, C. T. Neihart, for part of said land and thereafter on the 15th day of March, 1926, defendants, A. W. Logan and A. Maude Logan, executed the same deed to the said C. T. Neihart, and that by the terms and conditions of said deed at the time of its execution and delivery, the grantee therein assumed and agreed to pay the mortgage of this plaintiff. That thereafter, and on the 29th day of March, 1926, the defendant, C. T. Neihart, by and through his agent, Carl Logan, struck from said deed the words, 'which is hereby assumed by party of the second part'; and that the said change or alteration in said deed was made without the consent or knowledge of any of the grantors and after the same had been delivered and recorded.

"6. That Carl Logan was acting as the agent of and for the defendant, C. T. Neihart, in securing the execution of the deed and was not the agent of the defendants, V. A. Young and wife and A. W. Logan and wife, in connection with the exchange of the real estate.

"7. On March 12, 1926, defendants, Robert Eggert and Florence J Eggert, his wife, executed a deed covering part of the above-described lands to the defendant, C. T. Neihart; that by the terms and conditions of the deed C. T. Neihart assumed and agreed to pay the mortgage indebtedness due the plaintiff. That when the said Robert Eggert parted with the deed for the purpose of delivery to C. T. Neihart, the deed contained the assumption clause, but that thereafter and at some time undisclosed by the evidence, the words, 'which is hereby assumed by party of the second part,' were stricken from the said deed, and that the said Robert Eggert did not authorize or consent to the changing of said deed. That when the said deed was presented to the defendant, C. T. Neihart, at the bank to be placed in escrow the said Neihart made no inquiry as to when or by whom said assumption clause was stricken from the deed, and that neither the said Robert Eggert, A. W. Logan or V. A. Young have ratified, consented or agreed to the changing of the said deeds in the manner hereinbefore set forth, and that said changes constitute...