153 Mo. 7 | Mo. | 1899
This is a suit in equity to set aside a deed of release of a deed of trust. The facts of the case are
On October 12th, 1892, while the note was still in the hands of the bank, Penny the trustee, and Boucher the nominal beneficiary, executed a deed referring to the deed of trust-above mentioned, reciting that McDonald had paid the note therein secured and then formally releasing the deed of trust. This deed was recorded on the day of its date and is the gravamen of-plaintiffs’ petition. On October 10, 1892, McDonald executed five principal notes payable three years after date for $3,750 each, with interest notes to suit, and a separate deed of trust to secure each of said notes on several parcels of the
After the execution by McDonald of the above described deeds of trust he on October 11th, 1892, made an absolute deed conveying all ithe land mentioned to Florida subject to the incumbrances, which deed was recorded January 7, 1893. On January 9th, 1893, Florida and wife by deed of that date, filed for record the day following, conveyed the real estate to Joseph Dickson for the nominal consideration of $35,000; the real consideration was indebtedness to that amount which Florida owed the St. Louis National Bank. Dickson was the bank’s attorney, -and took the title in reality as trustee for the bank.
On January 21st, 1893, Dickson and 'wife, at the request of the bank, for the consideration of $15,000, executed a deed whereby they remised, released and quitclaimed unto Leroy P. Curtis the land above mentioned, without reference 'to any encumbrance. The habendum of this deed was: “To have and to hold the same with all the rights, immunities, privileges and appurtenances thereto belonging, unto the said parity of the second part, and his heirs and” assigns forever, so that neither the said parties of the first part, nor their heirs, nor any other person or persons for 'them, or in their names or behalf, shall or will hereafter claim or demand any right or title
The second $5,500 deed of trust above mentioned, the one from McDonald to Florida’s trustee of date October lOith, 1892, was foreclosed on the 21st of February, 1894, and Somerville became the purchaser at the foreclosure sale and holds that title also.
Returning now to the $5,500 note first mentioned, the one indorsed by the plaintiffs and discounted by the St. Louis National Bank; this note was not paid at maturity, but was protested and notice given the plaintiffs as indorsers. After-wards Florida paid $500 on it; on March 1st, 1894, plaintiff George paid $1,000, and on April 15th, 1894, the plaintiffs Albert O. and Theodore T. Terry paid $4,550 to the bank in full and took up the note. This note was in the possession of the bank as owner from the day ill discounted it, July 29th, 1892, until its payment by the indorsers as above stated April 15th, 1894, but the bank never had the deed of trust in its possession and seems to have had no knowledge of it; and it was never in plaintiffs’ possession, but plaintiffs were informed of its existence at the time they indorsed the note although it was not then recorded.
Plaintiffs claim that the deed of Penny and Boucher of date October 12th, 1892, whereby they falsely recited that the note was paid and purported to release the deed of trust, was a fraud on their rights, and they bring this suit in equity to cancel the deed of release and reinstate the deed of trust. To give the plaintiffs the relief they claim would be to incumber defendant Somerville’s land with plaintiff’s debt; and make the deed of trust for $3,750 held by the defendant Mississippi Yalley Trust Go. a second lien. The decree of the circuit
"When the $5,500 note first mentioned was offered to the St. Louis National Bank for discount, the parties seem to have acted on the idea that because that was a national bank, forbidden by the act of Congress under which it was organized to lend money on real estate security, it could acquire no legal right to the security afforded by the deed of trust, and therefore Florida kept back the deed and offered the note on the credit of the indorsements, and the bank received it on that credit.
But the fact thaJfc it was a national-bank that discounted the note did not affect the rights and liabilities of the parties differently from what they would have been if it had been a State bank. A national bank is forbidden to lend money on real estate security, but if it should violate that provision of its charter such violation would not affect the contract; it would only render -the bank liable to a proceeding by the United States looking to a forfeiture of its charter or other disciplinary measure. If a national bank lends money on a note secured by real estate it may foreclose the mortgage as a State bank might. And when, as in the case at bar, the deed of trust is not delivered, nor the bank informed of its existence when it receives the note, nevertheless since the deed is incident to thehiote the security passes to the bank, and the bank may claim and enforce it when it is afterwards discovered. [National Bank v. Matthews, 98 U. S. 621; National Bank v. Whitney, 103 U. S. 99.] The national banking law therefore is of no influence on the rights of the parties in this ease.
When the plaintiffs indorsed the note they became entitled to the security afforded by the deed of trust to the extent of their liability and of their discharge of that liability. That is to say, since their liability as indorsers was conditional, if those conditions were performed and their liability became ab
After the sale of the note to the bank, Florida retained
It must be remembered that ithe plaintiffs are here seeking to establish their claim against the claims of innocent purchasers who have invested their money on the faith of a clear record as to the title to this real estate. This is a case where one of two innocent persons must suffer for the wrongdoing of a third person. The plaintiffs have no superior equity to thait of the defendants upon whose shoulders they seek to lay this burden; that is, there is nothing in their case more than in that of the defendants that appeals especially to a court of conscience. Now what were the subsequent facts? While the bank held the note, Florida, who had then become, the owner of the land subject to the encumbrances, conveyed it by -absolute deed to Dickson, who was the bank’s attorney, in trust for the bank; and Dickson at the direction of the bank sold the land to Curtis without reservation, and that title 'Somerville now holds. Could the bank have enforced that deed of trust against the title that it conveyed to Curtis by -the hand of its trustee Dickson? In that deed which the bank caused Dickson to make for a large consideration which the bank received it declared that the grantee should hold .the land to himself “and his heirs and assigns forever, so that neither the said parties of the first part, nor their heirs, nor any other person or persons for them or in their names or behalf, shall or
But if plaintiffs prefer not to call their claim a right of subrogation, but that of indorsers who have paid the note and in their own right own the security, the result must be the same.
We quote with approval the following propositions of law from the brief of the learned counsel for the plaintiffs:
“The general principle is that any one standing in the relation of a surety (or indorser) after paying the obligation, is entitled to the benefit of all securities attending it. [Benne v. Schnecko, 100 Mo. 250; Campbell v. Pope, 96 Mo. 468; Berthold v. Berthold, 46 Mo. 557; Furnold v. Bank, 44 Mo. 336.] The proofs show that the plaintiffs indorsed this paper upon the sltrength of this deed of trust. But this was not essential. They would have had the same right to avail themselves of it, if they had discovered its existence long after making the indorsement. [Salmon Falls Bank v. Leyser, 116 Mo. 78; Major v. Hill, 13 Mo. 247; Furnold v. Bank, 44 Mo. 339; Bake v. Brutton, 8 De G. M. & G. 440.] It is immaterial that the deed of trust was not placed in the hands of the bank. The rights of the indorsers are the same. [Jones on Pledges, sec. 513].”
And it is also the law thaJb if the holder of a note amply secured by a deed of trust releases that security without the consent of the indorser, he thereby discharges the indorser from his liability. [Ferguson v. Turner, 7 Mo. 497; Rice v.
And it may be also that the plaintiffs if they had known, that the bank had released the security afforded by the deed of trust would not have paid the note, but that was their lookout, they have no right (bo impose the consequence of their mistake on these defendants.
Therefore although the Penny-Boucher deed of release was a fraud, yet the plaintiffs are not hurt by it, because, if it had never been executed or put on record, the deed of trust it purports to release would be of no avail to the plaintiffs in tire face of the Dickson deed; and the owner of the note having released the security, the plaintiffs were discharged from their liability as indorsers, and if after that they chose voluntarily to pay the note, or paid it supposing they were bound to do so
There are other points presented in the briefs of the learned counsel for appellants but it is unnecessary to consider them because what is above said disposes of the case.
The judgment of the circuit court is reversed.