Turner v. Hoyle

• Decision Date: 07 May 1888
• Parties: TURNER v. HOYLE.
• Court: Missouri Supreme Court

8 S.W. 157

95 Mo. 337

TURNER v. HOYLE.

Supreme Court of Missouri.

May 7, 1888.

TRUSTS — SECURING DEBT WITH TRUST PROPERTY — NOTICE TO CREDITOR.

A note payable to certain trustees, and secured by a deed of trust, was by them indorsed, as trustees, to their successor in the management of the trust-estate. After maturity, the new trustee pledged both note and deed of trust to secure his private debt, the person receiving the same being ignorant of the trust. Held, that the person receiving said note was charged with notice that it was held in trust, and is liable for the conversion thereof.

Appeal from St. Louis circuit court; GEORGE W. LUBKE, Judge.

This was an action brought by Charles H. Turner against Charles Hoyle for the conversion of a promissory note belonging to an estate of which plaintiff is trustee. Judgment for plaintiff, and defendant appeals.

Dyer, Lee & Ellis, for appellant. Muench & Cline and Fred Wislizenus, for respondent.

BRACE, J.

In this action the plaintiff recovered judgment in the circuit court of the city of St. Louis for the sum of $4,325.32 damages for the conversion of a promissory note belonging to an estate of which he is the trustee. The facts in the case are substantially as follows: On February 9, 1874, Caroline O'Fallon et al. conveyed to Benjamin Farrar certain real estate in said city, in trust for Fanny Wall, Ellen Smith, and Emily O'Fallon, with power "to sell and convey the same to any purchaser at public or private sale, and to receive the proceeds thereof, which shall be by the said party of the second part [said Farrar, trustee] invested and held subject to the same trusts which are by this deed impressed upon the property hereby conveyed." Benjamin Farrar having died on the 7th of November, 1878, John R. Farrar and D. D. Burns were substituted as trustees in his place, who on the 20th of April, 1881, invested a part of said trust fund in the promissory note for the conversion of which this action was brought, and which is as follows: "ST. LOUIS, April 20, 1881. $4,000. Two years after date, without grace, we promise to pay to the order of Jno. R. Farrar and D. D. Burns, trustees, four thousand x/100 dollars, for value received, with interest from maturity at the rate of six per cent. per annum, at the St. Louis Nat. Bank. ESTATE OF BENJ. FARRAR, DEC'D. By SAMUEL SIMMONS, Executor. ANNA R. FARRAR, Executrix." This note was secured by deed of trust of same date, executed by the makers of said note on certain real estate in said city, in which the beneficiaries were designated as "D. D. Burnes and John R. Farrar, trustees for Mrs. Fanny Wall, Mrs. Ellen Smith, and Emily O'Fallon, parties of the third part." On the 17th of January, 1884, W. C. Jamison succeeded Farrar and Burns as trustee in the trust, and received from them, among other assets, the said note and deed of trust; the note bearing the following indorsements: "In't paid on this note to October 20, 1883. Without recourse. JOHN R. FARRAR, D. D. BURNES, Trustees." On the 17th of March, 1884, Jamison borrowed of the defendant $6,000, for which he executed to defendant his promissory note of that date; and as collateral security, in part, for said loan, indorsed said trust promissory note, and delivered the same, together with the deed of trust given to secure its payment, to the defendant. On the 1st of July, 1884, the plaintiff was appointed trustee in place of said Jamison, and thereafter made demand of said note of the defendant; and, upon his refusal to deliver or account for the same, plaintiff brought this suit. The defendant, examined in his own behalf as a witness, gave substantially the following account of this transaction between him and Jamison: "On March 17th, Mr. Jamison met me, and asked me if I could loan him six thousand dollars. I told Mr. Jamison that I had the money, but needed it, or would need it in a very short time. Jamison said he could give me good security for the loan, and he would also pay me the money when I needed it. I told Mr. Jamison that under these circumstances, distinctly understood, that if he would give me good collateral, and pay me this money as I wanted it, I would make him the loan. He said it was all right. I said I would be in his office at ten o'clock the next day to arrange it with him. He said: `Meet me at three o'clock this afternoon.' I went into his office, and Mr. Jamison was sorting a bundle of papers. He said: `Charlie, I am looking over collateral for this money.' He threw out the collateral, and said: `Here is a one thousand dollar deed of trust, — note secured by deed of trust; and here is another one for four thousand dollars.' He said: `I want to give you two thousand dollars more;' and he looked through, and said: `I cannot put my hand on more collaterals to-day, but I will fix that with you in a day or two, and will make that all right.' I hesitated then, and gave Mr. Jamison a check for six thousand dollars; but on his promise that he would give me that extra collateral in a day or two, and supposing at that time that Mr. Jamison was as solvent as any man in St. Louis, I drew up a check, and gave it to him. He gave me his note and these collaterals, one of which was four thousand dollars and and one one thousand dollars. I gave him the money, the six thousand dollars, on the 17th of March, and got these collaterals on the same day, and before I gave him the check. I got this four thousand dollar note in controversy in this suit, and another thousand dollar note secured by a deed of trust, at that time when I gave him the check. At that time I had no knowledge or intimation in any way that Mr. Jamison held the note sued upon in the capacity of a trustee. I supposed that Mr. Jamison had come into possession of the note by purchase, or some other way. I had no idea that he was the trustee of any such estate. I supposed he owned the note. I looked at the note, saw who the payees were. The payees were J. R. Farrar and D. D. Burns, trustees. Then I looked on the back of the note, and saw the indorsement: `Without recourse. D. D. BURNS, J. R. FARRAR, Trustees.' Read the deed of trust, but paid very little attention to it; read the description of the property in the deed of trust. The beneficiaries were some parties named O'Fallon and Wall. Saw the note was overdue; asked no questions. Mr. Jamison simply said: `Here are two good collaterals.' Looking upon the way in which the note was made, it satisfied me, and the description of the property that secured the note, — I was satisfied, and took them."

That the promissory note pledged by Jamison as collateral security for the loan which defendant made him, and for which he executed his individual note to the defendant, was a part of the trust fund; that the plaintiff is the trustee of that fund; that the money obtained by Jamison was not applied to any of the purposes of the trust, but to his own use, — is undisputed. But...