193 Mo. 235 | Mo. | 1906
— Cast below in ejectment for block 14 in Maxey’s addition to the city of Willow Springs, Cobe appeals.
The petition was in conventional form, laying the ouster as of March 15,1902.
The answer admits' possession, denies all other averments, and pleads certain affirmative defenses, which may be summarized as follows: (1) adverse possession for ten years under a claim of ownership; (2) that plaintiff and those under whom he claims have not been seized or possessed of the premises within ten years; (3) that plaintiff claims title by virtue of a foreclosure by advertisement and sale under a trust deed, ■executed to the Willow Springs Building & Loan Asso
Issue having been joined, the state of the proof was ' such that the court ruled against respondent’s defense of the Statute of Limitations, thus leaving as the sole issue the validity of the trustee’s deed from the then sheriff of Howell county, as acting trustee under the Building and Loan Association deed of trust.
Stated in free outline, appellant contends that the irregularities, if any, shown in the proceedings leading up to the sale are not fatal to his right to recover under tire rule laid down in Schanewerk v.-Hoberecht, 117 Mo. 22, and later decisions following that case, and the cause should be reversed.
Stated in free outline, respondent contends that such irregularities were shown-as rendered the trustee’s deed void under the rule laid down in Lovelace v. Pratt, 163 Mo. 70, and, hence, his judgment, nisi, should stand.
The facts, much condensed and to some extent stated in their legal effect, are as follows:
Lovan resides in "Willow Springs on the locus in quo as a homestead. Cobe resides in Chicago and is vice-president of the Assets Realization Company, Lo-
Certain by-laws of the Willow Springs Building and Loan Association were introduced in evidence. In a nutshell, they provided that there should be a president, a vice-president, a secretary and a treasurer and seven directors. That such officers and directors should constitute the board of managers of the business of the association. That every person who subscribed stock should then pay one dollar on each share and thereafter pay a like sum to the association at each stated meeting of the board of managers. That the stated monthly meetings of the board of managers should be on the first Monday after the 15th of each month for the purpose of receiving memberships, monthly dues and fines from the shareholders, interest on loans, and to loan the funds of the association, and the transaction of other business.
Lovan owned three shares. The date of his membership does not appear, and, hence, no account of payments prior to his loan can be rendered, but on giving his note for $300 and executing his deed of trust, he received $135 from the association. Thereafter, at the stated meetings of the board of managers in Willow Springs, he paid $5 monthly for the months of April to November, 1890, inclusive, making his last payment on December 2,1890. That date was also the last time the board of managers ever met to receive dues or for any other purpose. From that day to this, as gleaned from the corporate books, there was-not a corporate act done or line written by the directors or the board of managers or by the corporation itself. The corporate story of what happened may be painfully spelled out in the following from its £ £ Joumal Book: ’ ’
Page 35 of said Journal Book is in words and figures as follows:
££ Willow Springs, Sept. 18,1890.
“Board of managers and stockholders of Willow Springs Building, and Loan Association met in called*243 meeting for the purpose of considering the question of merging or transferring the Willow Springs Association into the Phoenix of St. Joe, Mo. Mr. Robinson, agent of the Phoenix, explained the Phoenix method of doing business and submitted a proposition for merging the association into theirs. On motion of Mr. Teeter a committee consisting of W. E. Drew, E. H. Farnsworth and S. W. Wilkinson was selected to ascertain the wishes of the stockholders of this association as to merging the two association. No other business, the meeting adjourned.
“E. H. Farnsworth, Sec.”
Page 36 was as follows: .
“Willow Springs, Mo., Oct. 28, 1890.
“Board of managers met. -Quorum present. After some discussion motion to .adjourn to Saturday night, November 1, 1890. Carried. Adjourned.
“E. H. Farnsworth, per Patterson.”
Page 37 was as follows:
“Willow Springs, Mo., Nov. —, 1890.
“Board met, no quorum. On motion adjourned to meet on December 2, 1890.
“E. H. Farnsworth, Sec.”
Page 38 was as follows:
“Willow'Springs, Mo., December 2nd.
“ Board managers met. Quorum present. Minutes of Sept. lst-18th and October 28th approved. Report of committee to arrange transfer to Phoenix filed and ■accepted. Show vote to transfer, Drew, Teeter, Wilkinson, T. Hughes absent, Randal, Rowe, Gaylord, Withaup, ab., Thomas. Yeas 8, absent 2.
“Bills allowed: S. W. Wilkerson, $25, services; E. H. Farnsworth, $55, services; S. W. Wilkinson, $5.25, record.
* ‘ Moves to prepare release by secretary. Motion to accept prop, of Phoenix carried. D. — , Teet, Wilk, G. — , Tho-s., Farm, six yeas.
*244 “Motion to presdt. transfer bills rec. to Phoe. Motion carried to settle treasurer. Gorman and Layker.
“Report Treas. Allowed withdrawn.
John Kelly........................$14.85
Frank Sass......................... 40.90
I. S. McDonald..................... 18.42
Mrs. S. E. Davids................... 16.75
H. J. Rowe......................... 11.25
Farnsworth........................ 20.48
49.68
22.65
$194.98.”
Meditation, more or less profound, on the foregoing may result in a conclusion that there was a building and '.loan association in St. Joseph, Missouri, known as the Phoenix. That on September 18, 1890, one Robinson, representing the Phoenix, appeared at Willow Springs before the board of managers, in which meeting possibly some stockholders participated, and there discussed with them a pending proposition of the Willow Springs Building and Loan Association’s going out of business and “merging or transferring” itself in or over to the Phoenix. That thereupon a committee was appointed to ascertain the wishes of the stockholders. That another meeting was held by the board of managers in October, at which the matter was discussed, but no ac- ■ tion taken. That in November no quorum was present at the meeting; and that on December 2d the board of managers met, eight being present and two absent. If the narration in the record of this meeting, to-wit. ‘ ‘ Motion to accept prop, of Phoenix carried,” be construed into the acceptance of a pending proposition (of unknown terms) on the part of the Phoenix Loan Association to take over the assets and assume the stock and other liabilities of the Willow Springs Building and Loan Association, it may be seen what happened. If the further narration' therein, to-wit, “Motion to
This deed was placed of record, and matters again lagged along until July 15, 1899, when, upon the application of the State Supervisor of Building and Loan Associations, the Phoenix Loan Association was placed in the hands of receivers by the circuit court of Buchanan county. [State ex rel. v. Phoenix Loan Association, 159 Mo. 102.] Thereafter its affairs seem to have come within the jurisdiction of the United States Circuit Court at St. Joseph, and, on the 23d of February, 1902, a decree of the Federal chancellor was handed down confirming a sale to appellant herein of all the assets of the Phoenix Loan Association, and the
Was that result right? We think so, because:
(1) An incorporated building and loan association differs from an ordinary corporation. Among other ways, in the fact that in an ordinary business corporation, stock is subscribed and either paid for at the time, and thus becomes the property of the shareholder, or it is partly paid for and becomes his property, subject to future calls upon his subscription; while in a building and loan association the stock subscriber is not the out-and-out owner of his stock from the start. He pays thereon a minimum monthly payment, and when these monthly payments, with his increment of gains accrued, equal the par value of the share of stock, he is entitled to receive that amount. [4 Am. and Eng. Ency. Law. (2 Ed.), 1004.] If, in the meantime, a member has borrowed on his stock, it, by pledge or operation of the loan, remains the property or quasi property of the corporation, and the loan is returned by the payment of interest and stock dues, penalties, etc. — the repayment of the loan culminating at the same time the stock itself matures, at which time, in theory at least, the corporation, or a given series of its stock, is liquidated, that is to say, the non-borrowing stockholders have their stock redeemed and the borrowers have their loans cancelled.
The loans made to borrowers, evidenced by secured - notes, together with all stock subscriptions calling for periodical dues, are assets of such corporation. It is self-evident that in a solvent corporation — a going concern — these assets must be kept together to subserve the underlying purposes of the corporation itself, and
We are not dealing with the case of an insolvent building and loan association whose right to collect stock subscriptions and continue business is arrested at a given time by the hand of the law and whose assets are thereupon collected and marshaled for the purpose of winding up its affairs. There is not a hint in this record that the Willow Springs Association was insolvent on December 2, 1890, at the time .its board of managers assumed to part with its assets to a stranger corporation (whose power to purchase may well be doubted), and undertook to make its stockholders recognize a new and distant master residing in anther corner of the State. No reason is suggested for this extraordinary performance and we are cited to no authority giving a board of managers of a building and loan association such capricious power to end its life, to unsettle the vested rights of its members, and to make such rights depend not only on the business vicissitudes incident to the selling corporation, but to take on a new burden of dangers in business vicissitudes arising in the life of the buying corporation.
What might have happened if a stockholders’ meeting, duly called, had unanimously consented to such proceeding, and after a board of directors had, pursu
Nor is it necessary for us to consider whether in a court of equity the buying corporation might have asserted and established, in a proper proceeding, equitable rights by subrogation or otherwise to the transferred assets; nor is it necessary for us to consider whether a promissory note, evidencing some incidental indebtedness to a building and loan association and not a loan to a subscriber upon stock, might, or might not be transferred by authorized indorsement. Take, for instance, the emergencies provided for by section 2811, Revised Statutes 1889, where loans are allowed to be made to others, who are not shareholders, at such rate of interest as the directors may fix in case there is no stockholders’ demand. If loans so made had been re-discounted for the purpose of creating a fund to sub-serve a stockholders’ demand, springing into existence during the life of such loan, a different question might arise. Nor are we dealing here with close questions relating to the right of a building and loan association to borrow money for legitimate corporate purposes and hypothecate stockholders’ papers to secure such loan. We are dealing with the right to absolutely transfer a loan made to a stockholder and secured on his home,' which, under the constitution and by-laws referred to and read into the note and deed of trust, he was entitled to repay to the board of managers of the Willow Springs Building and Loan Association, at Willow Springs, monthly in small installments. And dealing with this case we are of the opinion that the attempted transfer of this mortgage loan by said board of managers to the Phoenix association was without shadow of legal right and wholly ultra vires. In our view it is contrary to the reciprocal rights and duties existing between such corporation and its members, and, if the principle were once established, it would result in mischief — lift the lid of a Pandora’s box of ills. This is the
(2) Appellant insists the case at bar is not on all-fours with Lovelace v. Pratt, supra, and therefore that case ought not to control this. Let ns see about that. The Lovelace case was an ejectment suit, as is this. In that case the title of plaintiff to the locus in quo originated in the foreclosure of a building and loan mortgage, as does the title of plaintiff here. In that case, the building and loan association had transferred its mortgage security to another; so here. In that case, at the request of the transferee of such mortgage security, the trustee sold. The gist of the defense in that case was that the building and loan association had no authority to part with the security, and that a foreclosure, so procured, avoided the trustee’s deed; so, too, here. And it is at this point appellant discovers what he urges is a controlling factor in the present case, and distinguishes it from the Lovelace case, to-wit, in this case the foreclosure was directed by Drew, the one-time president of the Willow Springs Building and Loan Association. If, now, it be remembered that Drew, in directing the advertisement and foreclosure', admitted he was the agent of the Phoenix association and was transacting his master’s business and if we add to that admission the further contention of appellant, to the effect that, if the title to the security did not pass by the transfer, it must have remained in the Willow Springs association and, therefore, that association had the power and duty of directing a foreclosure, we have the present question presented to us in a nutshell. In disposing of it, it must be borne in mind that the law regards substance, rather than form — the spirit and essence of a thing, rather than the mere dry letter. One may not do by indirection what he can not do directly; or, as said by Valliant, J., in a case just handed down,
(3) Lovelace v. Pratt, supra, must either be overruled, or the case before us must be controlled by it. Appellant contends that the Lovelace case is out of line with Schanewerk v. Hoberecht, 117 Mo. 22, but we think not. The answer in that case was a general denial, and this is true, generally speaking, of the cases following that.' The answer in this case pleads facts showing that the trustee’s deed, under which appellant holds by mesne conveyances, quitclaim deeds, is void. Under Revised Statutes 1899-, section 605, a defendant may plead his legal defenses as well as his equitable defenses to a suit at law. As a general proposition, he need not ask for affirmative equitable relief, unless the case admits of it and hé chooses to. It would serve no useful purpose to review the Schanewerk case and the cases following it. That case does not decide that a defendant is cut out of an equitable defense setting forth facts which, if true, show that a certain deed, upon which plaintiff must rely, is void. That case does not decide that in order to make such equitable defense, when well pleaded, defendant must ask to redeem under every and all circumstances. Prom whom would defendant redeem in this case, for instance 1 If the Phoenix corporation got no title, because its sale was brought about in violation of law, it would follow necessarily that appellant got no title; and if he held no title, there was nobody in court’ from whom respondent could redeem.
(4) But, says appellant, by letting the trust deed remain unsatisfied of record since 1890, and by letting the recorded trustee’s deed go unchallenged, as an medida of ownership, respondent is estopped to now question the validity of either as against appellant, a purchaser without notice.
To this contention respondent answers, in one form, in the pioneer figure, and warlike metaphor, following: “Lovan has done what many a good man has done under similar circumstances. He has sat quiet in his castle, blunderbus in hand, while the wolves howled and prowled through the woods. It so happenedthatthe vice-president of the Assets Realization Company is the first to come within easy range. ’ ’
The familiar elements of estoppel are wanting in appellant’s case. It can not be pretended that the indicia of ownership-, allowed to remain of record' in Howell county, misled appellant to his prejudice and caused a change in his position. He was a resident of' Chicago. He dickered for the whole of the assets of the Phoenix association and paid therefor the sum of $80,000. It is inconceivable-, in the absence of positive proof, that the $50 purchase of the Phoenix association at Willow Springs had a feather’s weight in that transaction. It comes well within the maxim, de minimis. Besides, appellant holds under quitclaim deeds, following the trustee’s deed in question. He is no such innocent purchaser for value as would entitle him to avoid the effect of outstanding equities, but is charged with notice of the contents of the trust deed foreclosed, of
In conclusion, in our opinion, respondent under the facts uncovered should be allowed, so far as this case in its present aspect is concerned, to sit unmolested under his own vine and fig tree — if such tree grows in Howell county (on which we express no opinion).
The judgment is, accordingly, affirmed.