Cooper v. Newell

BLAIR, O.

Frоm, a decree of the circuit court of Jasper county establishing the lien of a deed of trust and foreclosing the same, defendant Plumer appeals.

The facts are that in 1899 Plumer and J. P. Newell, of the firm of A. G. Newell & Son, became the owners, as tenants in common, of the north half of the southeast quarter of section 7, township 29, range 31, Jasper county, Missouri. In February, 1901, J. P. Newell and wife executed and recorded a deed to A. G. Newell for a one-half interest in this land. A. G. (Anna G.) Newell was the mother and partner of J. P. Newell but had retired in 1898 from active participation in the transaction of the partnership business, being pаid monthly an agreed sum by her son. She knew nothing of the execution or recording of the deed to her until called upon to transfer the title to appellant in 1907, and had paid no consideration for the deеd. In December, 1905, J. P. Newell and wife executed the trust deed in question, conveying the land above described to J. Y. Koontz, as trustee for A. G. Newell, to secure a note for $1000, due December 22, 1910. Soon thereafter A. G. Newell indorsed the note to J. V. Koontz, trustee in the deed of trust, and indorsed the coupons in blank; and in a short time, and prior to June 22, 1906, Koontz indorsed the note to the plaintiff, Mrs. Harriett Cooper, Newell having sold it tо her for face value. The interest was paid regularly to plaintiff by A. G. Newell & Son. The firm, J. P. Newell being the active member, was and for some time had been loaning money for both plaintiff and appellant Plumer. Mrs. A. G. Nеwell, Plumer and plaintiff had been reared together in Franklin, Pa., and plaintiff and Plumer were also personally acquainted with J. P. Newell and with each other. In 1907, J. P. Newell wrote Plumer, who then lived in Ohio, that he desired to sell him the half interest in the land; Newell wrote that he wanted to sell as he needed the money. Plumer then had no actual knowledge of the existence of the deed from J. P. Newell to A. G. Newell. He testified he authorized the First National Bank of Carthage to represent him “in this deal with Newell, and also authorized them to pay Newell $2000 for this land when he delivered the deed — when he made a good deed,” and directed them to have their attorney examine the title and to accept the deed if everything was all right. Plumer wrote the bank he had bought the land from Newell and instructed them to pay Newell out of a fund of $3700 Newell had cоllected for him. The bank had its attorneys examine the abstract of title. The abstract they examined showed the deed of trust J. P. Newell and wife had executed to A. G-. Newell, but showed no release thereof, and, as a matter of fact, it had not been released. The attorneys certified that the abstract showed Anna G. Newell owned a one-half interest and G. W. Plumer (appellant) owned the other half and that they had good title thereto in fee simple, subject only to State and county taxes for 1907. Thereupon the bank accepted and recorded a deed from Anna G. Newell to Geo. W. Plumer and paid J. P. Newеll the purchase price, $2000. ‍‌​​‌‌​‌‌​​​‌​​‌​​​‌​‌​‌‌‌‌​‌‌​​‌​‌​​‌‌​‌‌​​​‌​‌​‍The deed and abstract and opinion of the attorneys as to the title were, in a few days, sent to appellant,- who then wrote to Newell concerning the trust deed shown in the abstract but received no reply. Soon thereafter he was called to Missouri by other things and then visited Carthage and took up with J. P. Newell the matter of the deed of trust in question. The upshot of this was that, on December 23, 1907, J. P. Newell and A. G. Newell each made affidavit (in statutory form) that the note had been paid and destroyed and for that reason could not be produced for cancellation. A. G. Newell then signed a marginal release in usual form. J. P. Newell continued to pay interest to plaintiff on her note until June, 1910, when he defaulted therein and plaintiff sent the note and deed of trust to Carthage for the purpose of еnforcing her lien. Investigation disclosed the sale to appellant and the attempted release of the deed of trust, and this suit followed.

Voluntary Conveyance: Subsequent Deed of Trust by Grantor. I. The deed executed in 1901 by J. P. Newell and wife to A. Gr. Newell was without consideration and not intended by the parties to convey the beneficial title to A. G-. Newell. The clearest proof of this lies in A. Gr. Newell’s conveyance of the same land to appellant at J. P. Newеll’s direction and in consideration of money paid solely to J. P. Newell. Added to this is the fact that A. Gr. Newell knew nothing of the deed to her at least until J. P. Newell ' executed the deed of trust and that then she indorsed for his use the note that deed secured. The cases cited by appellant (Krueger v. Vorhauer, 164 Mo. 156; Caldwell v. Smith, 88 Mo. 44; Scudder v. Morris, 107 Mo. App. 634) merely go to the point that without proof of fraud a voluntary conveyance cannot be set aside аt the suit of a subsequent creditor. The question in this case is as to the actual ownership of the land as between A. Gr. Newell and J. P. Newell. As stated, the evidence clearly shows, as the trial court found, that, as betwеen the parties, the beneficial title remained in J. P. Newell despite his deed to A. G. Newell.

ofSDebt!ent II. The legal title being in A. Gr. Newell but the full equitable title being in J. P. Newell, the trust deed executed by the latter charged his equity with the pаyment of the note in question, and the assignment of the note carried with it, as incident to it, the trust deed securing it. As between these parties (respondent, A. Gr. Newell and J. P. Newell) this was the situation when appellant bought thе land in December, 1907.

w^th ^Notice, III. Appellant claims to be an innocent purchaser, for a valuable consideration and without notice. “Whether one actually knows a given fact is often a secret to which he alone has the key; but justice is not so indulgent as to encourage his throwing the key away. Applying to him the principle of common experience, it is held quite generally, ‍‌​​‌‌​‌‌​​​‌​​‌​​​‌​‌​‌‌‌‌​‌‌​​‌​‌​​‌‌​‌‌​​​‌​‌​‍even in actions at law (Van Rаalte v. Harrington, 101 Mo. 602) and, for stronger reason, in equity, that from facts and circumstances which would naturally put a person of ordinary caution, in the same situation, on an inquiry reasonably leading to a knowledge оf the truth, a court may justly infer and find such knowledge.” [Barrett v. Davis, 104 Mo. l. c. 561, 562.] Applying this rule it is not possible to avoid attributing to appellant knowledge of J. P. Newell’s continuing ownership, in equity at least, of the land in question. The two had been tenants in common of the land; appellant’s testimony shows clearly that Newell was trying to sell the land as his own, that he was claiming to be acting for himself in selling it and that the arrangement as to the payment of the purchase price was upon the basis of his ownership. Appellant advised his agent at Carthag’e, in effect, of this fact, and that agent had actual knowledge of the trust deed securing respоndent’s note, and such knowledge “countervails the effect of registry and dispenses with it” (Gross v. Watts, 206 Mo. l. c. 395), and notice to appellant’s agent was notice to appellant. [Meier v. Blume, 80 Mo. l. c. 183, 184.]

The situation when appellant bought was therefore this: He had notice that J. P. Newell owned the land in equity and that A. G. Newell held title for him and knew that J. P. Newell had incumbered his interest for $1000, the note now owned by respondent.

Reiease than ^Holder of Note. IV. With knowlеdge of Newell’s interest and the unreleased encumbrance upon it, appellant bought the property, and, having bought with knowledge, must be held to have bought subject to that trust deed.

Respondent bought the note before maturity and for value and before the entry of satisfaction. The assignment of the note to her carried ‍‌​​‌‌​‌‌​​​‌​​‌​​​‌​‌​‌‌‌‌​‌‌​​‌​‌​​‌‌​‌‌​​​‌​‌​‍the trust deed as an incident. '

An entry of satisfaction by A. G. Newell after she assigned the note, even had such entry been made before plaintiff’s purchase, would not have protected appellant, for after assigning the note she was no longer the party entitled to execute a releаse. [Lee v. Clark, 89 Mo. l. c. 558, 559; Hagerman v. Sutton, 91 Mo. l. c. 533; Borgess Inv. Co. v. Vette, 142 Mo. l. c. 574; Bank v. Ins. Co., 145 Mo. l. c. 160.]

of^Lo^s'of n otes! Since these cases were decided the statute concerning releases has been in some respects аmended but such amendments do not affect the question in hand. One amendment provides that, in case satisfaction is sought to be entered without the production of the notes secured, it shall not be permitted until “the cestui que trust named in the mortgage or deed of trust desired to be released” and “the maker of such note or notes” or their respective legal representatives shall, respectively, make an affidavit thаt the note or notes* have been paid and delivered to the maker and an affidavit that the note or notes have been paid and cannot be produced because lost or destroyed. This аmendment does not authorize any one to enter satisfaction who was not previously authorized to do so. It simply attempts to guard against a false release by the cestui que tru-st named in the mortgage by requiring of him and the maker affidavits which, if falsely made, subject affiants to the pains and penalties of perjury. Had the Legislature intended by this provision to authorize any one other than the lawful holder of a note to release a deed of trust or mortgage securing it., it could easily have said so. Until it does plainly say so this court ought not by strained construction torture a meaning from the statute which its language does not justify and which would practically put an end to the negotiation of notes secured by mortgages and deeds of trust except in cases in which, buyers of such notes were willing ‍‌​​‌‌​‌‌​​​‌​​‌​​​‌​‌​‌‌‌‌​‌‌​​‌​‌​​‌‌​‌‌​​​‌​‌​‍to take them at the risk of losing’ their security in case thе cestui que trust and maker of the note ignorantly or fraudulently made the statutory affidavits and entered satisfaction.

In this case it seems clear A. Gr. Newell had no fraudulent intent in making the affidavit she did make, being deceived as to the facts. Further, fairness requires the statement that the examiners of the abstract are not chargeable with negligence. As the case appeared from the abstract submitted to them it fell within the rule аnnounced in Barrett v. Baker, 136 Mo. 512. The fact distinguishing that case from this is that in this case J. .P. Newell had a real and mortgageable interest, of which appellant had notice, and in the case cited Roy had none. The fact of Newell’s interest was known to appellant but not to the attorneys who examined the abstract.

The doctrine of merger is patently inapplicable to the facts.

The judgment is affirmed.

Brown, G., concurs in the result. PER CURIAM.

The foregoing opinion of Blair, C., is ‍‌​​‌‌​‌‌​​​‌​​‌​​​‌​‌​‌‌‌‌​‌‌​​‌​‌​​‌‌​‌‌​​​‌​‌​‍adopted as the opinion of the court.

All the judges concur; Bond, J., in result.

Case Details

Case Name: Cooper v. Newell

Court Name: Supreme Court of Missouri

Date Published: Dec 31, 1914

Citation: 172 S.W. 326

Court Abbreviation: Mo.