Tobin v. Wood
| Decision Date | 26 February 1942 |
| Docket Number | 37641 |
| Parties | TOBIN v. WOOD et al |
| Court | Missouri Supreme Court |
J. L London, of St. Louis, for appellant.
Thos J. Noonan and Stauton E. Boudreau, both of St. Louis, for respondent First Nat. Bank of Wellston.
This is suit brought by the trustee in bankruptcy of the Conway Road Estates Company to establish a constructive trust in lots, 4, 5, 6, 7 and 21 in Fontenac, a subdivision in St. Louis County, and for the recovery of said lots from certain individual defendants. An injunction was also sought to restain the corporate defendant, First National Bank of Wellston, from foreclosing a deed of trust on these lots and for a decree cancelling the deed of trust for fraud. The trial was directed against the bank which conducted the only defense, the individual defendants fading from the case. Judgment was for defendants and plaintiff appeal.
Conway Road Estate Company was organized about October, 1928 for the purpose of acquiring and assuming land in the vicinity of Conway and Spoeda Roads in St. Louis County. It planned to subdivide the land into large building lots for expensive residences, put in necessary improvements and utilities and then to sell the lost for profit.
One of the incorporators of the company was defendant Benjamin A. Wood, now dead, who is his lifetime owned some land in this vicinity. In August, 1929 Wood sold part of his land to the company for $ 15,000. The company paid $ 10,000 of this amount by its note, secured by its purchase-money deed of trust on the land. Wood promptly delivered this note and deed of trust to the defendant bank as additional collateral for a pre-existing debt to the bank. The bank was holding as collateral a deed of trust on land owned by Wood, which previously had covered the land Wood sold to the company. When Wood sold part of the land to the company the bank released such part from its deed of trust and then subsequently received this note and deed of trust given Wood by the company to be held with other collateral.
Improvements were made by the company on the whole subdivision which included about ten acres of land owned by Wood individually, and in which the company had no interest, but the land was included by the company in the contract for the improvements. The company paid for all the improvements. Wood's share the cost was about $ 17,000, for which he was to reimburse the company.
The improvements were completed and the subdivision made ready for sale by lots in October, 1929 on the day the stock market broke. The crash, no doubt, spelled the doom of this venture.
In 1930, the company was being harassed for payment of its debts an pressed Wood for payment of the $ 17,000. Wood as unable to make any payment in cash, but agreed with the company that he would enter from time to time credits on the company's $ 10,000 note to him. Consequently, on March 27, 1930 he procured a credit from the bank of $ 2,500 and had this credit indorsed on the company's note. The company appointed a committee to go to the bank and look at the note to verify the fact that such a credit had been make on it. Evidently, the company continued to press Wood for money because over a year later a second credit was made on the note, this time in the amount of $ 1,000, reducing the principal to $ 6,500. Again a committee was sent out to the bank to inspect the indorsement to this credit.
On August 19, 1932 the principal note for such balance matured and was unpaid. Installments of interest were also unpaid. After proper advertisement the deed of trust securing this note was foreclosed on October 18, 192 and Wood bought in the property. He immediately gave the bank his note for $ 6,500 payable to a third party, secured by a deed of trust on the same lots to be held as collateral for his continuing indebtedness to the bank. It is this foreclosure which the company charges was in fraud of it rights.
On February 1, 1934 this suit was filed by the company against Wood and his wife. It was not immediately prosecuted but lay dormant while other litigation was in progress.
On October 18, 1935 Wood's note held by the bank matured and was unpaid. Foreclosure was advertised to be held on April 26, 1936. Two days before the foreclosure sale was to be had, the company filed a petition in the United Sttes District Court for corporate reorganization under Sec. 77B of the National Bankruptcy Act, 11 C.S.C.A. § 207, and for an injunction against the foreclosure sale. An injunction was granted by the district court. The United States Circuit Court of Appeals found that the company had not filed this proceeding in good faith and injunction was dissolved.
Thereafter foreclosure of the deed of the trust was again advertised, the sale to be held on September 8, 1938. On the day before the sale of company amended its petition in this suit and joined the bank as a party defendant. In addition to praying for cancellation of the deed of trust it asked that this foreclosure be enjoined and for a temporary restraining order. Evidently no restaining offer was granted because the trustee proceeded with the foreclosure sale and the bank bought in the lots for approximately the amount of the debt. There is no change of irregularity about this foreclosure. Of course if the deed of trust under which the sale was held would be found void and be cancelled the foreclosure sale to the bank would be a...
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