Verdon v. Silvara

• Decision Date: 05 June 1925
• Docket Number: 24716
• Parties: VERNIE VERDON, Appellant, v. L. J. SILVARA, MAX ABRAMOWITZ, RUTH B. RUNKLE, MINNIE MOVITZ and SOL MOVITZ, her husband, and OVERTON H. GENTRY, JR., Sheriff and Substitute Trustee
• Court: Missouri Supreme Court

274 S.W. 79

308 Mo. 607

VERNIE VERDON, Appellant, v. L. J. SILVARA, MAX ABRAMOWITZ, RUTH B. RUNKLE, MINNIE MOVITZ and SOL MOVITZ, her husband, and OVERTON H. GENTRY, JR., Sheriff and Substitute Trustee

No. 24716

Supreme Court of Missouri

June 5, 1925

Appeal from Jackson Circuit Court; Hon. Thomas B. Buckner Judge.

Reversed and remanded.

J L. Oldham and G. W. Stubbs for appellant.

(1) The $ 400 note in question was tainted with usury and therefore the pledge or hypothecation of the $ 900 note as security for the payment of the said $ 400 note was void. Sec. 6496, R. S 1919; Keim v. Vette, 167 Mo. 389; Western Stg. & Warehouse Co. v. Glasner, 169 Mo. 38. The note for $ 400 given by Abramowitz to Ruth B. Runkle was tainted with usury. Kreibohm v. Yancey, 154 Mo. 67; Gen. Motors Acceptance Corporation v. Weinrich, 262 S.W. 425. (2) Unless a judgment is responsive to the issues set out in the pleadings, it is erroneous. Schneider v. Patton, 175 Mo. 684; Howard v. Scott, 225 Mo. 685; Davidson v. Davidson R. E. & Inv. Co., 249 Mo. 474.

Railey, C. Higbee, C., concurs.

OPINION

RAILEY

This is a suit in equity, brought and tried in the Circuit Court of Jackson County, Missouri, at Kansas City. It was tried on a second amended petition, which pleads in substance the following facts:

That for some time prior to August 16, 1919, Max Abramowitz was the owner of Lot 14, in Greendale, an addition in Kansas City, Missouri, although for convenience he carried the legal title to said lot in the name of his sister, Minnie Movitz, and her husband, Sol Movitz, defendants herein; that on said August 16, 1919, said Max Abramowitz sold said lot to this plaintiff, and caused the legal title thereto to be conveyed to him by Minnie and Sol Movitz by warranty deed, free and clear of all encumbrances done or suffered by him, except a deed of trust for $ 500 on which the sum of $ 250 had been paid; that on the date aforesaid and contemporaneously with the delivery of said warranty deed, plaintiff executed his promissory note for $ 900 to Minnie Movitz, payable in monthly installments of $ 10, payment of which was secured by a deed of trust of even date therewith, on the lot aforesaid, which was duly recorded on August 18, 1919, and in which R. C. Cashner was named as trustee for this plaintiff and Minnie Movitz; that while the latter was named as payee in said note, it really belonged to her brother, Max Abramowitz, and she indorsed and delivered it to him; that subsequent to the delivery of said warranty deed, and said $ 900 note and deed of trust, Max Abramowitz, the owner of said note, informed this plaintiff that a sewer-tax bill was in existence, amounting to $ 80, which was a superior lien on said lot, and requested plaintiff to pay said tax in monthly installments, and that he would give plaintiff credit on his said $ 900 note, monthly, as he made the payments of said sewer-tax bill, which was a primary obligation said Abramowitz and Movitz and wife covenanted to pay under said warranty deed; that plaintiff has made the payments monthly on said sewer-tax bill, and said Abramowitz, the owner of said $ 900 note, failed and neglected to credit said note therewith; that subsequent to the 16th of August, 1919, said Abramowitz, Minnie Movitz and Sol Movitz borrowed money of Ruth B. Runkle, and executed their principal promissory note payable to her order, in the sum of about $ 400, due in six months after date, and to secure the payment of their note put up as collateral security said $ 900 note and deed of trust (including abstract of title to said lot); that said Ruth B. Runkle, for the use and forbearance of the money loaned, charged and received interest in excess of eight per cent per annum for said loan, which was more interest than she was allowed, or entitled to, under the law; that said loan at the time it was made, and now, is affected with usury; that said pledge and lien of collateral security was rendered void by virtue of Chapter 51, Revised Statutes 1919. Said petition further charges that after the maturity of said principal note of said Abramowitz, Minnie and Sol Movitz, said Ruth B. Runkle unlawfully and wrongfully transferred and delivered possession of said principal note, with the collateral security aforesaid, to defendant L. J. Silvara; that while the latter had possession of said collateral security, he was not the owner of same, and did not have the legal right to declare said installment note of $ 900 due, as it was not in default as to this plaintiff, on account of the owner of same having failed and neglected to credit the payment of the monthly installments on said note, as they had been paid by plaintiff as aforesaid.

The petition further alleges that defendant L. J. Silvara, with the intention to cheat, wrong and defraud this plaintiff out of said lot, by the unlawful and wrongful foreclosure of said deed of trust which secured the payment of said $ 900 note, knew, or by the exercise of ordinary diligence might have known, of said agreement between plaintiff and the legal owner of said $ 900 note, that while plaintiff was making the monthly payments on said sewer-tax bill aforesaid, the amount paid by him would be allowed as credits on said installment note, and that there had been no default in the monthly payments of same; that said defendant Silvara had both actual and constructive knowledge of the fact that said Ruth B. Runkle had charged and received from said Max Abramowitz, Minnie and Sol Movitz, more interest on said loan than she was entitled to charge and exact under the law, making void the lien and pledge of said collateral security, and that said Silvara did unlawfully and wrongfully receive possession of said $ 900 note and deed of trust from Ruth B. Runkle.

It is further alleged in the petition that pursuant to the general scheme aforesaid, to cheat, wrong and defraud plaintiff, defendant Silvara made a demand on R. C. Cashner, trustee in said deed of trust, to advertise and sell plaintiff's lot on account of the alleged default in the payment of monthly installments of said note, which gave the owner and holder of same the right to declare all the installments of said note due, etc.; that said Cashner refused to act as trustee aforesaid and advertise or sell said lot, giving as his reason that there had been no default in the payment of the installments of said note, and so advised defendant Silvara, who then requested Overton H. Gentry, Jr., the Sheriff of Jackson County, Missouri, to act as substitute trustee and sell plaintiff's lot by virtue of said alleged default in said installment note and under the terms of said deed of trust; that said sheriff did unlawfully and wrongfully advertise plaintiff's lot for sale and, on the 13th of May, 1920, said sheriff, as substitute trustee, sold said lot at an unfair price, and much less than its real value, to Neva J. Morris, who assigned her interest to defendant, Silvara, etc.; that said defendant Silvara did unlawfully and wrongfully take possession of said lot, and has been collecting rents from the same since the early part of the year 1921, all of which rents plaintiff claims as his own. It is further alleged that Max Abramowitz has sold and assigned to plaintiff all of his right, title and interest in said $ 900 installment note and deed of trust.

The petition concludes with a prayer, in which the court is asked to set aside the sale under said deed of trust, to cancel said trustee's deed, made by the sheriff as substitute trustee aforesaid, to defendant Silvara. He further prays that possession of said $ 900 installment note, deed of trust and abstract of title to said lot be given to this plaintiff; that defendant Silvara be directed to turn over all money collected by him, or his agents, as rent of said lot to this plaintiff, and for such other relief in equity as may be just, etc.

The answer of defendant Silvara denies that he ever entered into any agreement with his co-defendants, or any of them to cheat and defraud plaintiff. He denies that he purchased of Ruth B Runkle the $ 412 note, described in petition, executed by said Abramowitz and Movitz, or any of them. He alleges that on or about March 24, 1920, he purchased from Ruth B. Runkle a promissory note executed by plaintiff herein in the sum of $ 900, the same being secured by deed of trust as described in the petition; that he purchased said $ 900 note before maturity, for value in due course and without notice of any equity in any other person, and without notice of any defense on the part of the maker of same; that he knew of no agreement between the maker and the former holders of said note. He further alleges that when said $ 900 note became delinquent, and he declared the same due, he made demand of plaintiff, and offered at that time to accept the amount which he paid for said note, together with interest thereon, and he still offers to accept the sum of $ 412, the amount paid for said note, with interest, expenses and costs in connection therewith, up to the time of filing said answer. He admits that he caused the deed of trust securing said $ 900 note to be foreclosed, and has been in possession of the lot so foreclosed since the delivery of the trustee's deed to same. He concludes, with a general denial, and as follows: "Wherefore having...