Title Guaranty Trust Co. v. Sessinghaus

• Decision Date: 03 June 1930
• Docket Number: No. 28097.,28097.
• Citation: 28 S.W.2d 1001
• Parties: TITLE GUARANTY TRUST COMPANY v. WILLIAM SESSINGHAUS and ANTON SCHULER, Sheriff of City of St. Louis; WILLIAM SESSINGHAUS, Appellant.
• Court: Missouri Supreme Court

28 S.W.2d 1001

TITLE GUARANTY TRUST COMPANY v. WILLIAM SESSINGHAUS and ANTON SCHULER, Sheriff of City of St. Louis; WILLIAM SESSINGHAUS, Appellant.

No. 28097.

Supreme Court of Missouri, Division One.

June 3, 1930.

Appeal from Circuit Court of City of St. Louis. — Hon. John W. Calhoun, Judge.

AFFIRMED.

E.H. Wayman and H.A. Loevy for appellant; J.D. Johnson of counsel.

(1) The burden of proof was upon plaintiff below to show that the foreclosure sale of said lands was made by the trustee, in accordance with the provisions of said deed. Griffith v. Casualty Co., 299 Mo. 426; Menzenworth v. Ins. Co. (Mo. App.), 249 S.W. 113; Mason v. Geist (Mo. App.), 263 S.W. 237; Pauley v. Assurance Assn. (Mo. App.), 261 S.W. 340. But there was an entire failure of proof in support of said issue. (2) The foreclosure sale of said land made by said trustee was void, because at that time no breach of the conditions of said deed of trust had occurred which authorized such sale. Wilson v. Reed, 270 Mo. 400; Canton Trust Co. v. Durrett, 9 S.W. (2d) 927; Eitelgeorge v. Building Assn., 69 Mo. 52; Long v. Long, 79 Mo. 652; Verdon v. Silvara, 308 Mo. 607. (3) The Mathiason Company had no power to deal in real estate, but it was authorized by the statute then in force "to hold, purchase, mortgage or otherwise convey" such real estate "as the purposes ... of the corporation shall require." Secs. 2496, 2508, R.S. 1889; Prairie Slough Fishing & Hunting Club v. Kessler, 252 Mo. 424. (4) The presumption of law is that all purchases of land by a corporation having power to purchase same for any purpose are valid. Thompson on Corporations (3 Ed.) sec. 2467. But the evidence for plaintiff in this case rebuts said presumption and shows that the purchase by said Mathiason Company of the lands conveyed to it by Stephens was ultra vires of its corporate powers. (5) The sale of said lots under said deed of trust having been void, said Mathiason Company still retains an interest in the same, which was subject to levy and sale under said Sessinghaus execution. Sec. 1623, R.S. 1919; Halloway v. Halloway, 103 Mo. 275; Ensberg v. Carter, 98 Mo. 647; Goodman v. Simmons, 113 Mo. 122; Williams v. Lobban, 206 Mo. 399; Neef v. Sealey, 49 Mo. 209; Jones v. Howard, 142 Mo. 117. (6) This defendant was not estopped from pleading that the agreement to purchase said lots from the Title Company was ultra vires the corporate powers of the Mathiason Company. 4 Thompson on Corporations (2 Ed.) sec. 2880; Hunting Club v. Kessler, 252 Mo. 436. See also; Hunter v. Garanflo, 246 Mo. 131; Shawhan v. Distillery Co., 195 Mo. App. 445; 14a C.J. 317, sec. 2166; Wilson v. Torchon Lace etc., 167 Mo. App. 305. (7) According to the evidence, at the time said foreclosure sale was made, the trustee's connection with the Title Company and the interest which it had acquired in said $95,000 note, were such as to render the foreclosure sale void. 2 Perry on Trusts (6 Ed.) par. 602-o; Givens v. McCray, 196 Mo. 306; Cassady v. Wallace, 102 Mo. 574. (8) Where evidence is admissible for a particular purpose, even though it may not be admissible for general purposes, it is error to exclude it, especially where the objection made thereto is general in character. Yarbrough v. Lumber Co., 211 S.W. 714; Brennan v. St. Louis, 92 Mo. 482; Kirby v. Railroad, 146 Mo. App. 304; Sotebier v. Transit Co., 203 Mo. 702; Willgues v. Railroad Co., 298 S.W. 875.

Wilfley, Williams, McIntyre & Nelson for respondent.

(1) An attempt to sell real estate under execution against a person or corporation having no interest in such real estate subject to execution at the time of sale will be enjoined by a court of equity to prevent the casting of a cloud on the title of the owner of said land. Rookery Realty & Building Co. v. Johnson, 243 S.W. 130; Sec. 1969, R.S. 1919. (2) "The settled law of this State, as illustrated by frequent instances in this court, is that the capacity of a corporation to take a conveyance of land cannot, after the transfer has reached a completion, be called in question in a collateral way, but by the State and not by a private suitor. The doctrine applies to all classes of action and in every variety of cases." Continental Mutual Life Ins. Co. v. Smith, 117 Mo. 289; Hall v. Bank, 145 Mo. 425; National Bank v. Matthews, 98 U.S. 628.

ELLISON, C.

The defendant William Sessinghaus obtained a judgment for about $8,800 against the P.B. Mathiason Manufacturing Company, a Missouri corporation, in the St. Louis City Circuit Court, in October, 1920. The judgment remaining unpaid, some five years later, in February, 1926, he caused an execution to be issued directed to the defendant Anton Schuler as sheriff. The latter levied on the real estate in controversy in the instant case as the property of said Mathiason Company, and advertised the execution sale for April 1, 1926. The plaintiff Title Guaranty Trust Company thereupon brought this suit to enjoin the sale, claiming to be sole owner of the property as grantee of the purchaser thereof at a foreclosure sale held in March, 1921, under a deed of trust theretofore given by the Mathiason Company to it, the plaintiff, in January, 1919, before the defendant Sessinghaus had obtained his judgment.

The ultimate questions for decision are whether the deed of trust and foreclosure were valid. The court below held they were and perpetually enjoined the sale. The defendant Sessinghaus has appealed; the defendant sheriff has not. The principal contentions made by the appellant are: (1) that the foreclosure should be held invalid because the respondent failed to show the conditions of the deed of trust had been breached, and because the trustee named therein was not disinterested, but a subsidiary corporation of the respondent and under its control; (2) that the deed of trust was void, because its execution by the Mathiason Company was ultra vires, in that part of the consideration therefor was the purchase of certain other land hereinafter called the Mayer property which the company had no right to buy; and that if the deed of trust was not wholly void, at least an accounting should be taken and all payments made on the debt secured should be credited to the valid part of the indebtedness, which would give the Mathiason Company an equity in the real estate involved in this suit subject to sale under respondent's execution.

The evidence shows the Mathiason Company was incorporated under the laws of Missouri in August, 1896, with a full paid capital of $100,000, for the purpose of manufacturing "fertilizers, glue and any or all other kinds of products made from animal bones or other animal matter" ... and "to rent, lease, buy, sell, hold and own real estate [and] to make, build, buy, sell, hold and own machinery." The company established a factory at St. Louis on the parcels of land described in the petition, consisting of nearly one entire block, and equipped it with buildings, machinery and other equipment for carrying on its business. The title to said land and equipment was, on January 8, 1919, vested in the company free from encumbrance. On that date the respondent Title Guaranty Trust Company was the owner of certain adjoining real estate which it had acquired from the Mayer Fertilizer Company.

On December 28, 1918, the Mathiason Company negotiated a lease of its factory and equipment to Wilson & Co., for occupancy and use in the manufacture of glue and fertilizer. The lease was for a term of two years, beginning on February 15, 1919, with the right of renewal for one year, and called for a rental in the nature of a royalty of two and a half cents per pound on all finished glue manufactured by the lessee on the leased premises, the annual rental to be not less, however, than $18,700, payable $1558.33 on the 15th day of each month, beginning on March 15, 1919. The lessor obligated itself to set aside out of the annual rental the sum of $5,000 for application, at the direction of the lessee, to extensions, improvements and repairs, and to pay all taxes and other liens and the cost of insurance on the demised premises.

After the negotiation of the foregoing lease the deed of trust involved in this suit was executed, dated January 8 and acknowledged January 16, 1919, along with a chattel mortgage or deed of trust covering the machinery and other like equipment of the Mathiason Company. Both secured the payment of a note for $95,000 of even date. The note did in fact, as appellant contends, cover the purchase price of the Mayer property which was contemporaneously conveyed by or at the direction of the respondent Title Guaranty Trust Company to the Mathiason Company for a consideration of $35,000; and the Mayer property was included in the deed of trust. As a further consideration for the note and deed of trust the respondent advanced to the Mathiason company $60,376.45 in money, which amount the bank records show was paid by the latter a week later to another concern called the National Glue Company.

The principal of the $95,000 note was payable in monthly installments of not less than $500 on the first day of every month after date during the period of the aforesaid Wilson lease. On the expiration of the lease the balance then remaining was to be paid in equal monthly installments so that the whole note should be satisfied within ten years from date. The note bore interest at the rate of six per cent per annum, payable monthly from date on the entire indebtedness or so much thereof as might from time to time remain unpaid. The deed of trust authorized foreclosure on default for three consecutive months in the payment of principal or interest as called for by the note, and conferred a power of sale in that event on the trustee, the American Trust Company. The instrument likewise contained an assignment to the trustee of all rents, issues, profits and income accruing from the property encumbered.

In harmony with this provision of the deed of...