Davidson v. I. M. Davidson Real Estate & Investment Co.

226 Mo. 1 | Mo. | 1910

GRAVES, J.

On January 3, 1895, Isaac M: Davidson departed this life in Butler county, Missouri, leaving an estate, consisting mostly of real estate, valued at something near $200,000. He was a lawyer by profession. He prepared, executed and left a will, only one clause of which has any significance in this suit. That clause reads:

“ Secondly: I give and bequeath all the remainder of my estate, both real and personal, or mixed, debts and wages due me, except the law office and fixtures therein contained, to my eldest son, Dr. Ira M. Davidson, and his mother, my beloved wife, for the use hereinafter declared, and request them to hold the same without sale or disposal, for a period of at least fifteen years, and then only to .be disposed of by the. concurrence of all the heirs. Also to cause the houses, lots and farms, wheresoever they may be, to be kept rented and in good repair, collecting the rents and paying the same over to my said heirs according, to their respective rights.”

Mr. Davidson left surviving him a wife and eight children. By the fifth clause of the will he defines what he means by the terms “my heirs,” there naming his wife and children. At his death most of his children were minors and three of them were yet minors when this suit was brought. The plaintiff in this suit is one of the children, and the widow and the other children are made defendants, together with a corporate defendant and two individual defendants. Under the will, the widow, Mary J. Davidson, and a son Ira M., were made executors.

The purpose of the plaintiff’s suit is well described in the prayer of her petition, thus:

“Wherefore, plaintiff prays the court to cancel, set aside and for naught hold the decree of partition aforesaid and the order of sale made thereunder, set aside and for naught hold the report of sale made by the special commissioner thereunder, set aside and for naught hold the order of this court ordering said special commissioner to make and execute the deeds aforesaid, and to cancel, set aside and for naught hold both of the special commissioner’s- deeds above referred to as constituting a cloud upon the title of plaintiff, and to render judgment against the defendants, determining the title to said real estate, and quieting and confirming plaintiff’s title to an undivided one-ninth interest in and to all the above described real estate, and to enjoin the defendants, their officers, attorneys, agents, servants and employees from selling or disposing of said real estate, or otherwise dissipating or injuring the same, pending the final disposition of this cause; and that the court appoint some suitable person to take charge of said real estate as trustee or receiver, collect the rents and profits thereof, and pay the same over to this plaintiff and the other heirs of Isaac M. Davidson, deceased, as is provided by the terms of said will and for all other proper relief in the premises, plaintiff. will ever pray.”

The petition in this case charges that in September, 1901, a certain attorney filed a suit in the circuit court of Butler county asking for a construction of the will and a sale of the property; that in January, 1902, the petition was amended, the amended petition setting out the will, describing the real estate, and asking for a construction of the will and for a sale of the real estate. In that suit -Mary J. Davidson, three adult children, and four minor children, through Mary J. Davidson, appeared as plaintiffs in the petition, and Rosa Belle Finley, nee Davidson, and others were defendants. The court in that case determined and ended the trust created by clause two of the will, decreed partition of the property and ordered it sold, one-half of the purchase price to be paid in cash, and the balance in one and two years, to be secured by deed, of trust, or all cash if the purchaser elected so to pay before approval of sale; that under this decree on October 12, 1903, the land was sold by the sheriff as a special commissioner and was bid in for $98,752 in the name of I. M. Davidson Real Estate and Investment Company; that report of sale was made by the commissioner and deed, immediately made to said company; that later a deed amendatory of the first was by said commissioner made and delivered; that the petition in said partition suit did not state a cause of action and that the judgment and all subsequent proceedings are void or voidable; that the order of partition violated the express terms of the will; that said judgment and subsequent proceedings were beyond the jurisdiction-of the court making the same; that all this was without the consent of plaintiff, then a minor; that the report of sale was never confirmed by the court; that at the date of sale and at the time the property was bid off by an attorney for the corporate defendant herein, said corporation had not been organized and no title did or could pass; that at the date of sale neither the circuit court nor the county court of said county was then in session; that the judge of the circuit court was absent from the county; that the record of the circuit court showing the said judge present and court in session was false and untrue; that the probable bidders knew these facts and would not bid; that it was generally understood that no title would pass owing to the irregularities aforesaid; that $200,000' worth of real estate was sold at a sacrifice for the sum named above as the selling price; that $98,752 was a shockingly inadequate price for the property sold; that only two attorneys bid at sneh sale, and parties who would have bid agreed with them not to bid and complied with the agreements; that said sale was not made in accordance with the order, viz., one-half cash and the balance in one and two years, which was prejudicial. The petition names the parties to the agreement not to bid at the sale and then further charges that the purpose of the pretended sale was to get the property out of responsible hands, those of a trustee previously appointed by the court, and place it in the hands of an irresponsible corporation, so. that said estate might be dissipated and taken from the rightful owners; that the corporation defendant never had a dollar of its stock paid up; that said corporation has since been managing the property and trying to sell the same and denies that plaintiff has an interest therein.

All of the defendants except the corporation and Dalton and Lavin filed answers admitting the things charged in the petition.

The other defendants file lengthy and appropriate answers admitting some things in the petition, denying others and in addition plead certain matters of res adjudicata and estoppel. So far as necessary these will be mentioned and discussed in the course of the opinion. Eeplications in due form were filed.

The cause was taken by change of venue to Mississippi county where it was tried, a finding of facts made and a judgment entered. By the judgment, the chancellor, nisi, said:

“Wherefore, it is considered, ordered, adjudged and decreed by the court that the attempted sale of the above described real property made on the 12th day of October, 1903, and report of said sale made by the special commissioner thereunder, the two deeds made by the special commissioner to the I. M. Davidson Eeal Estate & Investment Company, the record of the circuit court of Butler county, Missouri, approving said sale and ordering said deeds made, be set aside, cancelled and for naught held.

“It is further considered, ordered, adjudged and decreed by the court that the devisees’ title in fee simple to the property above described be, and the same is hereby confirmed, and forever quieted against the defendant corporation, I. M. Davidson Real Estate & Investment Company, James L. Dalton and James Lavin,- that they and each of them be, and they are hereby and forever enjoined from claiming or asserting any claim, right or title to said real property adverse to said devisees.

“It is further considered, ordered and adjudged by the court that the defendants, I. M. Davidson Real Estate & Investment Company, James L. Dalton and James Lavin pay all the costs of this suit, and that execution issue.”

The finding of facts is very lengthy, but by omitting the formal findings as to the relationship of the parties, the making and probating of the will, the description of the property and rental value thereof, the more material portion thereof reads:

“The court further finds that on the 4th day of September, 1901, Messrs. Phillips & Phillips and Lambert E. Walther, Esq., attorneys-at-law, filed a suit in the circuit court of Butler county, Missouri, for the construction of said will, and for the partition and sale of the above described real estate, in which cause, Mary J. Davidson and others appeared as plaintiffs, and James L. Dalton and others appeared as defendants; that afterwards, to-wit, on the 19th day of June, 1903, the circuit court of Butler county, Missouri, entered of record an interlocutory decree of partition and order of sale of the above described real estate; that by said interlocutory decree of partition and order of sale said court provided that the above described, real estate should be sold by special commissioner, one-half of the purchase price in cash, balance in one and two years, deferred payments to bear six per cent interest and to be secured by deeds of trust upon property sold, or more or all cash, at option of the purchaser if he elects, before the approval of the sale. That said decree of partition and order of sale so rendered as aforesaid, are recorded in Book S, at page 352, of the circuit court records of Butler county, Missouri. That thereafter, to-wit, on the 12th day of October, 1903, by virtue of said decree and order of sale, James R. Hogg, sheriff of Butler county, Missouri, acting as special commissioner, attempted to sell the above described real estate at public sale and the whole thereof was bid in at the price of ninety-eight thousand, seven hundred and fifty-two dollars, no part of which was ever paid to the sheriff; that the above described real estate was bid in in the name of I. M. Davidson Real Estate & Investment Company, and thereafter, to-wit, on the 22d day of October, 1903, the said James R. Hogg filed a report of said attempted sale in the office of the clerk of the circuit court of Butler county, Missouri, and immediately made out, acknowledged and delivered to some one for the I. M. Davidson Real Estate & Investment Company, a deed purporting to convey to it the above described real estate, which said deed was recorded December 1, 1903, in book 68, at page 525, and a deed amendatory thereof recorded March 25, 1905, in book 75, at page 201, of the deed records of Butler county, Missouri; that in said report and that in said deeds, it is falsely recited that, the consideration for said real estate had been paid in cash, when in fact and' in truth no cash or other valuable thing had been paid to the sheriff or any person for him for said real estate on the bids therefor; that the defendant I. M. Davidson Real Estate &• Investment Company was not incorporated until the 14th day of October, 1903; that the statement made in the articles of incorporation of the I. M. Davidson Real Estate & Investment Company that forty-five thousand dollars had actually been paid up in lawful money of the United States, and was on the 12th day of October, 1908, in the hands of its board of directors, is absolutely false, while in fact and in truth, no part of the capital stock of said corporation was ever paid in money by any of the. subscribers for the stock; that the recital' in the certificates of stock issued by said corporation to the effect that the full amount of the capital stock was fully paid, was likewise absolutely false, while in truth and in fact no part of the capital stock was ever paid by the subscribers thereof.

“The court further finds that the defendant, I. M. Davidson Real Estate and Investment Company, without any authority of law or equity, issued stock to the extent of ninety thousand dollars in the name of the guardian of the minors for their interest in the real estate, and to the adults for their interest in the real estate; that said stock was absolutely worthless, having been issued by a corporation without assets and without any property whatever, and that the defendant I. M. Davidson Real Estate & Investment Company, and its officers, have, since the formation of said company, fraudulently and oppressively obtained a large majority of this stock from the adults and heirs at thirty cents on the dollar; that the defendant, Mary J. Davidson, was unduly influenced and caused to enter into the corporation in her own right and as guardian for the minors by promise and agreement on the part of Isaac H. Barnhill and William Ferguson, the managing officers of the corporation, that the corporation would immediately assume and pay a mortgage on her homestead aggregating some twenty-six hundred dollars, which indebtedness has never been paid nor has the defendant, Mary J. Davidson, been released therefrom, but said indebtedness and mortgage on her homestead has been used oppressively to unduly influence her in her relations with the defendant corporation; that the defendant corporation in purchasing its own stock, used the rents and profits of the above described real estate to pay for said stock which has been issued to minors as well as adults.

“The court further finds that on the 12th day of October, 1903, the date of the attempted sale of the above described property, the circuit court of Butler county, Missouri, was not in session, and the judge thereof was absent from said county while the attempted sale was being made, and that the county court of Butler county, Missouri, was not in session on the 12th day of October, 1903, and that the recitals in the special commissioner’s report of the sale and the deeds made thereunder, and all other proceedings of the court relative thereto, were false and fraudulent.

“The court further finds that the record entry of the circuit court of Butler county, Missouri, purporting to show that the circuit court of Butler county, Missouri, was in session on the 12th day of October, 1903, is false and a fraud upon the rights of the devisees of Isaac M. Davidson.

“The court further finds that the price at which the above described real estate was bid in was shockingly inadequate and a fraud upon the rights of the devisees of Isaac M. Davidson, deceased. That the attempted sale was unjust and unfair to the devisees of Isaac M. Davidson, deceased, in this; that the property was not sold to its best advantage, there having been practically three or four bidders only.

“The court further finds that the officers of the I. M. Davidson Real Estate & Investment Company, for the purpose of disposing of and dissipating said! estate advantageously to the officers of said corporation, took possession of the above described real estate under said deed, immediately after the attempted sale thereof, and ever since that time converted the rents and profits thereof to their own use; have failed to account therefor to the devisees of Isaac M. Davidson, deceased, and are selling and dissipating said real estate to great injury to the said devisees.

“The court further finds that the curator, W. W. Turner, was not in fact a curator for the minors, but a mere figurehead for the defendant corporation.

“The court further finds that the nine devisees of Isaac M. Davidson, deceased, are the owners in fee simple in equal shares of the above described real estate, and that they are entitled to a decree of this court quieting the same against the defendant, I. M. Davidson Real Estate & Investment Company, and ■ that said devisees are entitled to a restraining order against the I. M. Davidson Real Estate & Investment Company, to restrain said corporation from asserting any title to the above described real property adverse to said devisees, and restraining said corporation from interfering with the possession of said property, or any other right of the devisees thereto.

“The court further finds that all the proceedings relative to the attempted sale of the above property on the 12th day of October, 1903', from the time of the crying of the sale until this time, are tainted with the frauds of the I. M. Davidson Real Estate & Investment Company and its officers.”

The court also appointed a receiver to collect the rents, and look after the property pending this suit, and made an order restraining the corporation defendant, and defendants, D'alton and Lavin, from further collecting rents or otherwise controlling said property.

In due time and proper order the cause has been appealed here.

The plaintiff, as well as the corporation and Dalton, appealed, but the plaintiff did not perfect her appeal-. Lavin did not appeal. Plaintiff’s counsel, however, urge that this being an equity case, this court being possessed of the cause, can see that equity is done by its judgment. The trial court did not annul the interlocutory judgment in partition, and this is the question complained of by the plaintiff.

As to all other matters, the judgment entered was satisfactory to plaintiff. The record is voluminous, but we can and will discuss the facts found by the court, together with the applicable evidence touching the fact, in the course of the opinion, on the points made by the defendants. This sufficiently states the general outlines of the case for a discussion of the various contentions made, when in connection therewith the applicable evidence in support of the findings of fact is considered.

I. A question might be raised as to whether or not the refusal of the chancellor nisi to annul and cancel the interlocutory decree in partition is. properly here for consideration. The defendants do not question this part of the decree entered by the circuit court and the plaintiff has not appealed. However, the question is argued upon both sides in this court, and in view of things presently to be stated, we think it best to go into the question. From, the evidence it appears that I. M. Davidson left a large estate, consisting of town property (vacant lots and lots with buildings thereon), farms and considerable personal property. There were no debts worth mentioning. The real estate alone in 1903 was worth $200,000 or more under the evidence. It is clearly inferable from the proof that neither the' widow nor the heirs possessed much business judgment. The executor's named in the will made poor progress in the management of the estate, and in 1897, voluntarily quit the job, and James L. Dalton was first made receiver and shortly thereafter trustee of the property. "When he took it there were delinquent taxes to the amount of $3000 or perhaps a little more, and a judgment of $5000 against the estate. This vast estate was then indebted about $8000'. Dalton, as trustee by order of the circuit court, borrowed money to improve two pieces of the property. He borrowed to this end, $22,-500, hut as often happens, it required some $5000 or $6000 more to complete the work, and Dalton advanced it. Dalton increased the earning capacity of the estate from $250 per month to $1000 per month, or nearly so.

In 1901, whilst the estate was in the hands of Dalton, all of the heirs, except Rosa Belle Finley, joined in a petition asking the court to construe the will of I. M. Davidson, and to hold, among other things, that said second clause of the will was void for vagueness and other reasons assigned, and further to partition the lands.

In this case the widow and adult heirs were plaintiffs in person, and the minor _heirs, four in number, prosecuted the suit in the name of Mary J. Davidson, their guardian and curator. Mrs. Finley was made defendant, as were also James L. Dalton, and the holders of mortgage liens upon the lands. This case, after all necessary pleadings were filed and the issues duly made up,' finally reached a hearing, which resulted in an interlocutory decree in partition at the June term, 1903, of said Butler County Circuit Court. Under this decree the land was sold in October following.

The evidence does not disclose fraud in the concoction of this interlocutory decree. The only thing appearing herein is some testimony to the effect that ■one William Ferguson, who had loaned Jay Davidson some $12,000 on his interest in the estate, counseled .and advised the heirs and widow to bring the suit. They did bring the suit and did not appeal from the judgment, which judgment, however, was in accordance with their desires as expressed in the petition. Nor did defendants appeal in that case from this interlocutory decree.

It is urged, however, that the petition stated no cause of action in this, that it pleads the will and the will shows that there.could not be a sale of the property for fifteen years, and hence the judgment rolls show that the circuit court exceeded its jurisdiction, and the judgment is void or at least voidable. We are not impressed with this contention. That the circuit court has jurisdiction in partition proceedings goes without question. That courts of chancery, and a circuit court is such, have power to construe wills and declare the character of a trust created therein, or say whether or not a trust has been created by the will, we think equally as well settled.

In Hamer v. Cook, 118 Mo. l. c. 489, it is said: “It was a part of the ancient and well defined jurisdiction of the courts of chancery to construe wills and declare the limitations of trusts created thereby, and the creation of our county and probate courts has not divested them of this power.” This case received the approval of this court in the later case of Heady v. Crouse, 203 Mo. l. c. 113.

We conclude, therefore, that the circuit court of Butler county had complete jurisdiction over both the parties and the subject-matter. If it erred in its judgment as to what construction should be given to the will in question, that question cannot avail the plaintiff in this case. That error could have been corrected upon appeal. It is true the petition in this case is a direct and not a collateral attack on this interlocutory judgment, but unless we can say there was fraud in the concoction of the judgment we should not disturb this interlocutory decree. It is argued that the action of Ferguson in urging the bringing of the suit, and his subsequent conduct thereafter as president of the corporation defendant, in practically absorbing the whole estate for himself, and of one Barnhill, secretary of the corporation defendant, by acquiring' the stock in such corporation, are evidence of a conspiracy from the beginning, but we hardly feel that the facts before us justify this conclusion. We agree with the learned chancellor below, that the conduct of Ferguson’s company, the defendant corporation, has been reprehensible from the date of its birth. Many things point to the fact that this corporation defendant was conceived in sin and born in iniquity. This is judging by its conduct since its organization, which was some time after the interlocutory decree in the partition suit. There was no error in the action of the trial court in refusing to set aside the interlocutory decree in the partition suit, although attacked in the bill in equity herein.

The heirs long prior had made similar attempts to partition the land, but the cases were dismissed, or disposed of without trial. At least two previous attempts had been made.

This contention of the plaintiff is therefore ruled against her.

II. The plaintiff in this case also attacks in her bill the validity of the sale, the validity of the order approving the sale, and the deeds made thereunder. It is said the property sold for a grossly inadequate price, and this would appear to be true, for from the evidence there were really only/ two or three bidders— really only two, as to most of the property. There seems to have been two syndicates or combinations of individuals, who were undertaking to buy the property; one set afterward became the defendant corporation, incorporators, and were represented by their attorney, as a bidder, and the other syndicate of ten men, had their attorney, who was one of their number, bid. This latter syndicate had agreed among themselves not to bid over forty-five per cent of the value of the property, and got only one house and lot for $1000, which under the evidence was worth not less than $2500. They did not take a deed to that, be'cause the corporate defendant gave them $500 for their bargain, and took the property. The evidence discloses that there was a pretty general consensus of opinion to the effect that the interlocutory judgment was invalid, and the air being full of such rumors might have deterred bidders, but be that as it may, the corporate defendant got about thirty-five farms and seventy-five or more pieces of town property, reasonably worth $200,000, for less than $99,000'. This sale took place on October 12, 1903, and the property was stricken off' and sold to the defendant corporation, although at that time it had not been incorporated. "The articles of association were acknowledged upon that day, but it was not issued a charter by the Secretary of State until October 14, 1903. It also appears in evidence' that at the time of its incorporation not a dollar of the capital stock of $90,000 had been paid, and not a dollar has since been paid in by the incorporators or stockholders.

The order of sale provided for part cash or all cash as the purchaser might elect, before approval of the sale. The sheriff who made the sale as a special commissioner under an order of the court, made a report of sale, not as special commissioner, but as sheriff, as we read the record. His said report begins thus: “I, James R. Hogg, Sheriff of Butler County, Missouri, beg leave to respectfully report that, in pursuance of an order of sale,” etc., and concludes thus: “ All of which is respectfully submitted, James R. Hogg, Sheriff of Butler County, Missouri.” Mr. Hogg, as the court’s special commissioner, nowhere makes a report of sale, so far as this very voluminous record shows.

In the report as sheriff he does say that he had: been paid the amount of the bid by the defendant corporation, and that said defendant had elected to pay cash, although it did not have a cent in. its treasury. This report of sale was accompanied by receipts for the money signed up by the parties interested, the receipts of the four minors being signed by Mary J. Davidson, guardian curator, although never a cent passed into her hands from the sheriff or any other person for said minors. The order approving the sale was based upon the recitals in the report of sale. The amount going to the plaintiff was $6731.98, and the same to each of the other three minors.

There was evidence pro.and con upon the fact as to whether or not Judge Fort was actually in the county seat at the date of the sale. No witness saw him at the courthouse that day. The court record shows that court adjourned from Friday to Monday, and Monday was the day of sale. The testimony also shows that Judge Fort came and left the county seat by rail, and there were but two trains a day, one leaving Poplar Bluff in the morning at 8:45 and the other coming to Poplar Bluff at about six in the evening. By at least one of plaintiff’s witnesses, it was shown that Judge Fort was not in the courthouse to open court that day or at any time during the sale. These are the questions as to the validity of the sale, and the order approving the sale.

Defendants contend that as there was no question about Judge Fort being present on October 22d when the report of the sale was approved and the first deed was made, and as this was the final judgment in partition, and1 no appeal was taken, the matter is closed. Plaintiff urges as to the judgment approving the sale, that there was fraud in the concoction thereof, and that inasmuch as she attacks that judgment in a direct equitable proceeding she is entitled to have the judgment below on that question affirmed.

There is no question that plaintiff’s petition attacks this order or judgment approving the sale on the ground of fraud in its procurement. Nor is there any question as to her having brought her action within a short time after the date she became sui juris.

That judgments can be attacked in an equitable action to set them aside on the ground of fraud in the procurement thereof, there can be no question. [McClanahan v. West, 100 Mo. l. c. 320; Nelson v. Barnett, 123 Mo. 570; Smith v. Hauger, 150 Mo. 444.]

In this case it was a fraud perpetrated upon the court when the commissioner reported to the court that the defendant I. M. Davidson Real Estate & Investment Company had paid him over $98,000 in cash, when he had never received a cent.

In the interlocutory judgment in the partition suit, James L. Dalton, one of the appealing defendants in this case, had a large allowance as a lien upon the estate, and from the order approving the sale it appears that he made and gave to the commissioner ?a receipt for $28,618.94, when in fact he had never received a cent from the commissioner, and this was a fraud upon the court in the procurement of the order of approval. On October 21st, and prior to the order of approval, the defendant corporation gave Dalton a deed of trust on the lands, not yet deeded to it, for the same sum, and it appears that said corporation had previously agreed to assume the debt, thus showing that said corporation had full knowledge that fraud was being perpetrated upon the court in getting its. sale approved through the false report of the commissioner. Barnhill, defendant corporation’s secretary, contributed to the fraud by giving his receipt for cash which was never received. And so we might go through with each item of the distribution said to have been made by the sheriff, but which distribution was never in fact made.

Such conduct was a fraud upon the minors involved in that suit, and they were each interested to the extent of nearly seven thousand dollars, notwithstanding the low price obtained at the sale. The order of approval recites that the cash had been reported as received by the commissioner, and had been by him paid out on the receipts of the parties entitled thereto. This fraud perpetrated upon the court in the very concoction and make up of this judgment is of itself sufficient to sustain the action of the chancellor, nisi, in vacating the same, and in holding for naught the report of sale, and the deeds, made under the order or judgment aforesaid.

It is argued, however, that the corporation had been organized to take over the estate, and that, the Davidson heirs were all interested in the organization. It is true that it appears that Ferguson induced the widow for herself and as guardian for the minors to agree to organize a corporation, and the widow became an incorporator, but she had no authority in law under the evidence in the case to hazard the rights of these minors by such an agreement.

The later relationship between these minors and defendant we will discuss under another proposition in the case.

III. The trial court found as a fact that the circuit court of Butler county was not" in session on the day of sale, and also that the county court was not in session at said time. There is evidence upon which a finding might be made either way upon that question. As to this finding, if it be material, which we discuss later, we shall give deference to the judgment of the chancellor, nisi.

Defendants contend (1) that the record shows the presence of the judge and all officers, and the opening of the court on that day, and this record imports verity, and (2) that inasmuch as the court at its October term was in actual session transacting business both before and after that date (October 12th, the day of sale) said day was a day whilst said court was in session. An ingenious argument is builded up on the latter proposition.

(a) Going to the first point just above suggested, it may be said that in collateral proceedings, it is certainly true that parol evidence is not admissible to impeach the court record. In an ejectment suit, wherein it was sought to attack the record showing the adjournment of court in case of Mobley v. Nave, 67 Mo. l. c. 549, Hough, J., said: “Parol testimony was offered by the defendant to show that the court was in session on the 18th of September, 1863, but it was rejected by the court, and properly so. If it can be shown by parol that a court was in session on a day when the records of such court show that it stood adjourned on that day, we see no reason why it cannot also be shown by parol that a court was not in session when its records show that it was in session. The confusion and injury which might ensue upon the admission of parol testimony for such a purpose, in a collateral proceeding, is manifest. Proceedings in a court of record can only be proved by the record. [Medlin v. Platte County, 8 Mo. 235; Milan v. Pemberton, 12 Mo. 598; Dennison v. County of St. Louis, 33 Mo. 168; Maupin v. Franklin County, 67 Mo. 327.]” But he likewise adds: “Mistakes in the record, as to the'date of the sittings of a court, or of any proceeding therein, must, like other mistakes in the records of such courts, be corrected by a direct proceeding for that purpose.”

It should be borne in mind that in this case the plaintiff charges the falsity of this record. This is a direct proceeding attacking the court proceedings, so far as they relate to this case from the interlocutory judgment in partition down to the making of the deed. But be the law as it may upon this question, we need not directly pass upon it here in order to sustain the trial court’s finding. Both plaintiff and defendant offered parol evidence upon the question. Plaintiff’s evidence went in without objection, as also did that of the defendant. It is too late now for the defendant to urge the incompetency of that method of proof. They proceeded below upon the theory that it was competent, and cannot change their attitude here and thereby convict the lower court of error.

(b) Passing now to the second contention. Many authorities are cited to the effect that a term of court is continuous from the day of its opening until the final day of its adjournment. In other words, if the court should begin on the 5th of October, and then adjourn over until the 15th, and then continue in session until the 20th, and again adjourn over until December 1st, and continue in session until December 15th, when it finally adjourned the October term, there is no question about these different sittings being at the October term of the court. But that is not the question here. We must go to the statutes. By section 4407, Revised Statutes 1899, which applies to partition sales, it is provided, among other things: “ . . . and the sale shall take place during some day of the term of the court, and be governed by the same regulations prescribed by law for sales of real estate under execution, notice thereof being given in the same manner, by the sheriff as provided by law for such sales.”

Section 3197, Revised Statutes 1899, relates to execution sales, and upon the question of time it says: “When real estate shall be taken in execution by an officer, it shall be his duty to expose the same to sale at the courthouse door, on some day during the term of the circuit court of the county where the same is situated. ’ ’

The nearest case which we find in our reports is the case of Sarpy v. Detchemendy et al., 31 Mo. 196, which ease has never been cited from that day to this. There the judge of the court did not arrive on the first day of the term, and under the statute the court !Was adjourned over from day to day until the evening of the third day, when, of course, the term elapsed'. During these days the officer sold a large tract of land and the sale was set aside. In that case, Scott, J., used the following pertinent language: “This is the first instance in which real estate in Missouri has been sold by a sheriff under such circumstances. Our books of Reports furnish no case in which such a sale has been made, nor do our memories recall any such proceeding. Had the opinion prevailed that such sales were authorized by law, they would have been made, as the lapse of the term of the circuit court is a thing of no unusual occurrence. If such a sale was tolerated, it would lead to a great many abuses. The.law directs sales of real estate to be made during the terms of the circuit court, because, on such occasions, the people of the county are assembled, or at least more of them than at any other time, with the view of remaining together and transacting their business. The absence of the judge is frequently anticipated; it is known that a court will not be held. The people may assemble on the first day of the term, and learning that there will be no court, they will disperse immediately. Now if a sale should be advertised to take place on the third day, what a door under these circumstances would be opened to trick and management for sacrificing men’s estates.”

Under the evidence in this case the court adjourned from Friday until Monday. By section 1604, Revised Statutes 1899, it is provided: “If, at any time after the commencement of a term, it happen that the court shall not be held according to its adjournment, it shall stand adjourned from day to day, until the evening of the third day.”

Under this statute, if Judge Fort did not appear and open his court on October 12th, the court stood adjourned from day to day until the evening of the third day, at which time the term would elapse.

But be this as it may, we are of tbe opinion that when tbe Legislature said that such sale should be made “on some day during the term” it meant some day when the court was in actual session for the transaction of business, and not some day of vacation between two portions of the term. According to defendants’ contention'had the court adjourned from Friday, the 9th of October, to Tuesday, the 13th of October, yet this sale on the 12th would be good. Such is not the spirit of the statute. Judge Scott has given one reason in the opinion supra, but there is another reason for requiring the court to be in session, and that is, that during such sales questions might come up which would require the immediate action of the court, as all who have had experience upon the nisi prius bench know.

The suggestion of Judge Scott upon the reason for the statute, has been .made in other cases in this State. In Mers v. Bell, 45 Mo. l. c. 335, Wagner, J., said: “Now, the statute provides that when real estate shall be taken in execution by any officer, it shall be his duty to expose the same to sale at the courthouse door, on some day during the term of the circuit court of the county where the same is situated. [1 Wagn. Stat. 609, sec. 42.] This is the general rule, and is founded in justice and wisdom. The sessions of the circuit court attract people from all parts of the county, and sales at the courthouse, whilst that court is holding its term, conduces to competition in bidders.” The very purpose of the statute as found by Judge Wagner would be defeated, if a sale could be held on some day between two portions of the same term.

Under the findings of fact, the circuit court of Butler county was not in session on the day of this sale, and no such sale could have been made.

IY. The sale was void for another reason, because made in violation of the order of sale. Under that order at least one-half had to be paid in cash, and this was not done. The order was in no way complied with by the commissioner. We do not mean that the adults mentioned in a partition sale may not give their receipts for their shares in a partition sale by some arrangement with the purchaser, but the guardian and curator of a minor, with no direction whatever from a probate court, can’t give her receipt for nearly $28,000, the money of her wards, and thus secure, with the assistance and confederation of the adult heirs, and other parties interested as lienors in the fund, an approval of a sale made in violation of the order of sale. When they all acted together, as they did in this case, to deceive the court in order to secure an approval of the sale, such conduct cannot bind the minors, and is a fraud upon them. As to them, at least, the cash should have been in the hands of the sheriff. But in this case we have the defendant corporation, the defendant Dalton, the president of the corporation, Ferguson, and the secretary, Barnhill, all joining with the widow and other parties in inducing the court to believe that the cash belonging to the minors had been received and paid. It took the concerted act of all to perpetrate the fraud upon the court. We mention Ferguson because Ms firm had a claim against the estate and receipted therefor.

Y. There is yet another reason for holding that there was no valid sale on October 12th. The sale was ipade to the corporation defendant herein, as shown by the report of sale. There was no such, corporation at that time. It had no power to act in any way at the date of sale. It had no power to appoint an agent to purchase for it at the sale. It did not become a legal entity until two days after the sale. At the day of sale said corporation was only in embryo, and didn’t receive the breath of life and being until after the sale. Neither dead men nor unborn infants can become purchasers at execution sales. As said by Mr. Freeman in his work on Executions (3 Ed.), vol. 2, sec. 292, p. 1690: “The purchaser must have capacity to receive and hold real estate. ’ ’

Of course, the promoters of defendant might have had some one bid' the property in, and afterwards transfer the bid to the corporation when it came into existence, and had the deed made to the corporation, but this was not done. The property was not stricken off and sold to the attorney who did the bidding, so that the sheriff might have some real person to look to for the bid. The sheriff must sell to some person of whom he can then and there demand the amount of his bid, and if not paid, he can resell to another. We shah not go fuither. The trial court was right in setting aside the sale, the order approving it and the deeds, unless it be for another matter presently to be considered.

YI. The corporation defendant, and defendant Dalton, pleaded an estoppel. They plead that Mary J. Davidson, guardian and curator for the plaintiff and other minor heirs, agreed for herself and the said minors to organize the defendant corporation and take over the lands at the sale, and to receive stock of the corporation for their respective .shares; that in pursuance of such agreement with Ferguson, Barnhill, and other incorporators, the defendant corporation was organized, and did purchase the said property, and did afterward issue stock in the sum of $10,000 to the guardian and curator of the plaintiff, which stock said guardian and curator still holds.

A. little history of the corporation defendant may not be amiss here. At its organization, one Isaac H. Barnhill subscribed for four hundred and ninety-nine shares. It is claimed that four hundred of these shares were held by him in trust for the minors. The articles of association sa.y no such thing. Nor is there any order of the probate court authorizing such subscription. Nor did either Barnhill or Mary J. Davidson, the then guardian and curator, have any legal right to so subscribe for such shares. But we have diverted from the trend of our thought as to the conduct of the defendant corporation. After its organization, Ferguson, who was the alleged owner of practically three shares of the estate, took two hundred and ninety-nine shares, Mrs. Davidson, one hundred shares and W. W. Turner, one share. Ferguson was made president and Barnhill secretary. They succeeded in getting Mary J. Davidson out of the position of guardian and curator of the minors and W. W. Turner appointed, and the conclusion reached by the chancellor, nisi, to the effect that said Turner was not in fact a guardian and curator of the minors but a mere figurehead for the defendant corporation, is well founded in the evidence.

The corporation collected as rents about $12,000 per year from 1903'to 1908, the date of the decree, nisi. It also collected, each year, several thousand dollars on the account of sales. Ferguson, the president, drew $1200 per year; Barnhill, the secretary, $1200 per year; a bookkeeper, $420 per year. An attorney, $100 per year (extremely reasonable when compared with the officials), and office rent, $120 per year. All this in connection with the collection of $12,000 in rents, watching the houses, the farms and the vacant lands.

The evidence conclusively shows that neither Mary J. Davidson nor .W. W. Turner, respectively guardian and curator of the minors, ever had or held a cent of cash belonging to these minors, yet Turner, who says his business in the probate court was attended to by the corporation, gets an order of the probate court to invest $6731.98 in one hundred shares of the corporation stock for this plaintiff.

The corpora,tion, although receiving each year the amounts above mentioned, always managed to come out about even at the end of the year as between receipts and expenses. During this time the corporation paid Mrs. Davidson money ranging from $50 to $100 per month to support the minors, but the bookkeeper of the corporation says that whilst this was done, the said Turner would at times get orders from the probate court to sell shares of stock belonging to the minors at thirty cents on the dollar to cover these payments to the widow for the minors. The shares were paid for by the corporation, but afterwards reached Ferguson and: Barnhill. We shall not go into the transactions between the widow and the corporation on her own personal account. The testimony shows that after plaintiff had reached her majority she had never received a share of stock or other thing from the corporation. Just how much of the stock, claimed to be hers, was transferred to the corporation at thirty cents on the dollar does not clearly appear from the record. Certain it is, however; that since reaching her majority plaintiff has done nothing to ratify the sale or to estop her. Upon these facts defendants say she is now estopped from questioning this sale.

That the agreement of Mary J. Davidson with the other promoters to put the shares of these minors in the estate of their father into this corporation is void, there can be no question. No authority of the probate court is shown, for that act of hers, and this accounts perhaps for having her removed, so that something might be done toward getting sanction from the probate court. We care not what be the order of the .probate court as to investing $6731.98 of plaintiff’s money in stock of the corporation; if, as a matter of fact, plaintiff had no such money in the hands of her guardian, it could not be done.

In our judgment, the plea of estoppel is not sustained by the evidence.

VII. It is urged that the trial court erred in appointing a receiver. This alleged error is not found in the motion for new trial, and is therefore not a matter for consideration here.

"We do not deem it necessary to go further. The conduct of the defendant corporation and its officers has been reprehensible in the extreme. A valuable estate is being frittered away, as far as the minors are concerned. The price paid was inadequate in the first place, and irregularities and fraud crop out at nearly every turn in the proceedings after the date of the interlocutory decree. By the interlocutory decree, Dalton and all parties having legitimate claims against the proceeds of sale are fully protected. The judgment of this court holding the interlocutory decree good, will disarm people who may be disposed to say that no title will pass by a sale thereunder, and upon a resale there will be better opportunity to obtain fair prices. The circuit court of Butler county can renew its order of sale, and in so doing, could modify it, if thought best, to the end that a fair price may be obtained from the property. In this way all who deserve protection at the hands of a court of conscience will be protected.

The judgment of the circuit court of Mississippi county should be and is affirmed.

All concur.

OPINION ON MOTION TO MODIFY JUDGMENT.

GRAVES, J.

Appellant, James L. Dalton, has filed a motion to modify the judgment of this court in affirming the judgment, nisi, as has also the respondent, Laura Carter Davidson. Of these in their order.

I. The portion of the decree which is affirmed aild of which Dalton complains, reads: “ It is further considered, ordered, adjudged and decreed by the court that the devisees’ title in fee simple to the property above described be, and the same is hereby confirmed, and forever quieted against the defendant corporation, I. M. Davidson Beal Estate & Investment Company, James L. Dalton and James Lavin; that they and each of them he, and they are hereby and forever enjoined from claiming or asserting any claim, right or title to said real property adverse to said devisees.”

Upon an examination of our opinion, wherein we set out the material portions of the findings made by the chancellor, nisi, we find that, as to this point, the chancellor said: “The court further finds that the nine devisees of Isaac N. Davidson, deceased, are the owners in fee simple in equal shares of the above described real estate, and that they are entitled to a decree of this court quieting the same against the defendant, I. M. Davidson Real Estate & Investment Company, to restrain said corporation from asserting any title to the above described real property adverse to said devisees, and restraining said corporation from interfering with the possession of said property, or any other right of the devisees thereto. The court further finds that all the proceedings relative to the •attempted sale of the above property on the 12th day of October, 1903, from the time of the crying of the sale until this time, are tainted with the frauds of the I. M. Davidson Real Estate & Investment Company and its officers.”

In the original opinion, we said: “By the interlocutory decree, Dalton and all parties having legitimate claims against the proceeds of sale, are fully protected. ’ ’

By the interlocutory decree of the Butler County Circuit Court, Dalton was allowed a given sum for his services and for money advanced by him to the estate. This sum was made a lien upon the real estate of the estate, and to be paid out of the selling price. It was not our purpose to change the terms of the interlocutory decree. Nor, when we examine the finding of facts made in the case at bar, and quoted supra, does it appear that the circuit court trying the case at bar proposed such a decree. The decree itself would seem to go further than the court’s finding, and further than we intended. At least the finding, which is a part of the decree and judgment, and the portion of the judgment above quoted, makes the matter somewhat uncertain, and to the end that there should be no uncertainty it should be modified so as to meet the views above expressed, as well as the views expressed in the original opinion. That portion of the decree above quoted will therefore' be modified so as to thus read: “It is further considered, ordered, adjudged and decreed by the court that the devisees’ title in fee simple to the property above described be, and the same is hereby confirmed1, and forever quieted against the defendant corporation, I. M. Davidson Real Estate & Investment Company, James Lavin and James L. Dalton, except that interest and lien given the said Dalton by the interlocutory decree, so long as such decree stands in the circuit court of Butler county; that the said I. M. Davidson Real Estate & Investment Company, James Lavin and James L. Dalton, and each of them be, and they are hereby and forever enjoined from claiming or asserting any claim, right or title to said real estate adverse to said devisees, except as above stated.”

The. judgment and decree as thus modified, clears up any uncertainty and accords with what we undertook to express in the latter part of the original opinion.

II. It developed in the evidence in the case at bar, that Dalton had been allowed in the partition suit $150 per month for his services. It was also proven that- Dalton whilst acting as trustee had bought the interests of two of the devisees for $8000 and had sold them for $15,000, thus clearing $7000 on the deal. The plaintiff, in her motion, asks us to modify the interlocutory judgment in the partition suit so. as to cut down Dalton’s allowance for services, and to charge him with this seven thousand dollars. Counsel misconceive the case we have before us. The case at bar is an action to set aside the judgment of the circuit court of Butler county, because of fraud in the concoction of that judgment. The circuit court of Butler county construed the will, declared that no valid trust had been created thereby and entered first an interlocutory judgment of partition and order of sale. Afterward it approved the report of sale and entered its final judgment. This entire judgment was attacked for fraud in the present case, which is a direct proceeding in equity to set the same aside. The trial court held that there was fraud in the proceeding occurring after the interlocutory judgment, but that there was no fraud in the procurement of this interlocutory judgment. In these views of the trial court we concurred. There was no fraud in the proceedings thus far, but the fraud began thereafter.

Had there been an appeal from this interlocutory judgment, or from the final judgment, then we could review the matters urged in this motion, but there was no such appeal, and in the case at bar, the only thing we can do as to this interlocutory judgment is to set it aside on the ground of fraud in its concoction, or in the absence of such fraud, permit it to stand. The latter we have done, so that the original partition suit' stands in the circuit court of Butler county with an interlocutory judgment only. That case is not now before us and never has been before us. The case we have is simply one attacking the judgment in the partition case. It should be remembered that in the partition ease after the affirmance of the judgment in this case, there is only an interlocutory decree and not a final decree. As to what powers the circuit court of Butler county has as to this simple interlocutory decree, it is not proper for us to say in this case. We can only discuss that question, if the partition case ever reaches this court. For the present, the circuit court of Butler county will have to wrestle with all questions pertaining to its duties relative to the interlocutory decree. We can only say that there was no fraud in the concoction thereof, so far as this record is concerned, and protect the interest of Dalton thereunder so long as it stands.

III. WTe are asked to modify the order of sale. This we cannot do. The trial court in Butler county will at this late date have to renew its order iii that regard, and should he permitted to use its untrammeled judgment as to the terms of the order made. Nor should we give any directions to the receiver appointed by the trial judge in the case at bar. He is the receiver of that court and not of this. His actions must be reported to the court appointing him and not here. From what has been said it follows that Dalton’s motion to modify will be sustained in manner and to the extent above indicated, and the original judgment as thus modified is affirmed. The motion of plaintiff to modify is overruled.

Let the modified judgment.be affirmed.

All concur.

Case Details

Case Name: Davidson v. I. M. Davidson Real Estate & Investment Co.

Court Name: Supreme Court of Missouri

Date Published: Mar 1, 1910

Citation: 226 Mo. 1

Court Abbreviation: Mo.