58 Mo. App. 335 | Mo. Ct. App. | 1894
This action is founded on three negotiable promissory notes, two executed by Clark O. Simpson and the third by Gillies, all payable to O. H. Queal, secured by mortgage on certain real estate in Kansas City. Defendants are not the payors but their liability is sought to be established by reason of their having assumed (as is alleged) the payment of the notes. The judgment below was for plaintiff. Plaintiff obtained the notes before maturity as collateral
It appears that Queal and defendants were joint -owners of twenty acres of land in Jackson county, Missouri, and that by an arrangement between them it was agreed that the lands should be platted and laid off into an addition to Kansas City, to be known as Horton Heights. It was further arranged between them that the lots thus laid off should be mortgaged to the amount of $10 per foot, making an incumbrance of $500 on each lot. To carry out this arrangement, these parties deeded the land to Clark O. Simpson and he, retaining a portion thereof, divided the remainder by deeding to other parties. Each of these parties then executed, separately, the notes (of which those in suit are a part) and mortgages, payable to Queal, on the respective portions of the property thus held by them. Queal retained his one-third of the notes and indorsed, without recourse, the remaining two-thirds to these defendants who received the same in New York, where they resided, in due course of mail. Simpson and these other parties to whom he had conveyed, then conveyed the property back to Queal .and these defendants by quitclaim deeds — each deed specifying that each grantee took an undivided one-third interest. Each deed contained a clause assuming the payment of the notes secured'by the mortgages on the lots. The clause in the tAed from Simpson (the other - deeds containing similar clauses) is as follows: “The grantees herein in accepting this deed assume and agree to pay as a part of the above named consideration eighteen certain notes of unequal amount aggregating the sum of $8,900, secured on the above described lots by eighteen deeds of trust, one deed of trust securing one note on each
In making and carrying out this arrangement we shall assume defendant’s contention to be the fact, that they were moved thereto by a desire to accommodate Queal, their co-owner, he having been their agent in Kansas City in other real estate transactions or speculations, their preference being to dispose of the land by sale directly to purchasers; and also that Queal was the active party in consummating the arrangement.
It was agreed between the parties at the trial that while plaintiff obtained the notes in suit after the quitclaim deeds were executed and recorded, it had no knowledge in fact, until shortly before bringing suit, of the clause of assumption. And it was further agreed that plaintiff did not know that there was any question made about the assumption until defendants filed their amended answer in the cause.
I. It is a part of the contention in behalf of plaintiff that the promise of these defendants contained in the clause of assumption in the quitclaim deeds, is a negotiable promise as applied to the notes to which the promise relates, and that since plaintiff is an innocent holder of the notes for value before maturity, any equities between the original parties are not available
By an examination’ of the case of Fitzgerald v. Barker in. the different reports in which it is found, it will be noticed that the note assumed was purchased by the plaintiff in that case after the deed reciting the assumption of the note was filed for record. Presumably the purchase was made with a knowledge of its having been assumed by the grantee in the deed and on the faith thereof. It was from this fact that we distinguished the case of Saunders v. McClintock, 46 Mo. App. 216, from Fitzgerald v. Barker. In Saunders v. McClintock we, in effect, held that unless the case presented an element of estoppel in its essential
But it may be suggested here that the same element of estoppel exists in this case as did in the Fitzgerald case, since the evidence here shows the deeds to these defendants containing the clause assuming the notes were recorded before plaintiff obtained the notes. This, however, is met by the stipulation to which we have referred wherein it was agreed that plaintiff had no knowledge of the deeds or the assumption at the time it purchased the notes. We can not allow ourselves, therefore, to presume that plaintiff acted upon the assumption clause in the deed of which it had no knowledge. If the broad language used in Fitzgerald v. Barker, is to be construed as intending to assert that the promise assuming an incumbrance on the land represented by a negotiable note, partakes of all the negotiable character of such commercial paper we believe such meaning is limited -and restrained by the more recent case of Ellis v. Harrison, supra.
II. Notwithstanding the foregoing, the judgment for plaintiff should, from other considerations, be affirmed. It was conclusively shown at the trial that the scheme aforesaid, whereby the land was divided into lots and conveyed to Simpson and by him to the other-“straw men,” as defendants term them, including Simpson; and whereby these notes and mortgages on the lots to secure them, were executed by the “straw men” to Queal and then the lots deeded back to Queal and defendants; Queal transferring to defendants their portions of the notes, amounting to $16,000, each; was the scheme of these defendants as well as of Queal. Queal, we have already conceded, was the original deviser of the scheme, but it was nevertheless the
This, then, being the state of the case as presented by defendants, they might, perhaps, be held to have adopted the transaction in toto and to be liable on the clause in the deed assuming the notes. Keller v. Ashford, 133 U. S. 619, 620; Coolidge v. Smith, 129 Mass. 554; Parkinson v. Sherman, 74 N. Y. 88; Gifford v. Father Matthew, etc., Society, 104 N. Y. 139; Gifford v. Corrigan, 117 N. Y. 257. These authorities may be
It should be kept in mind in considering the question that there is no fraud charged upon Simpson (or the other grantors to whom Simpson conveyed) in the execution of the quitclaim deeds, including the insertion of the assumption clauses. The only fraud charged is the alleged fraud of Queal, defendant’s co-owner, and defendants’ agent in carrying out and manipulating the scheme. The law invoked by defendants and to which we have called attention in the first part of this opinion (stated in its broadest sense in behalf of defendants) is, that the right of a third party to enforce the promise of assumption made by a grantee to a grantor is a derivative right, and is only such right as the grantor has or would have against the grantee, and that when the grantor could not enforce the promise of assumption against the grantee, then a third party could not. Does the case made by defendants enable them to successfully invoke this principle? I think it does not. While the assumption of the debt owing by the grantor is generally a part of the consideration which the grantee is to pay for the land which
III. Even to regard the action as in equity the result is the same. It is well settled that when a grantee assumes the grantor’s debt to a third party as between grantor and grantee the grantee becomes the principal debtor, and the grantor his surety. It is also a rule of equity that whatever securities (and the grantee’s assumption is a security) the surety holds against his principal can be made available to the creditor. This (when considered in equity) arises, not from contract but from equitable principles. Judge Sherwood says in Burnside v. Fetzner, 63 Mo. 107, that this “is too well settled, both on reason and authority, to admit of question.” The following authorities present a comprehensive and lucid state‘ment of this proposition, as applied to the obligatory promise which the surety grantor holds from the principal grantee: Keller v. Ashford, 133 U.S. 623-625; Union Life Ins. Co. v. Hanford, 143 U. S. 187; Willard v. Worsham, 76 Va. 401; Osborne v. Cabell, 77 Va. 467; Crowell v. St. Barnibas, 27 N. J. Eq. 650.
We are, in consequence of the foregoing, con