201 Mo. App. 596 | Mo. Ct. App. | 1919
— Plaintiff, owner of the equity of redemption in a number of lots on North Taylor Avenue in the city of St. Louis, bought them subject to a deed of trust in which one A. R. Fleming, co-defendant herein, was trustee, the deed of trust securing the payment of thirty-five notes, of date March 27, 1914, each note for the sum of $500, with interest at six per .cent, per annum after maturity, and one other note for the sum of $41.28, it is said in the petition but obviously that is an error, as it appears that this note was for $452.26. The notes are due and payable consecutively and from one to thirty-six months after date. Plaintiff, in buying subject to this deed of trust, assumed payment of the indebtedness. On September 12, 1914, by an agreement entered into by and between plaintiff and the defendant Realty Company, it was stipulated that the plaintiff should assign, and it is averred that plaintiff did assign, to that defendant all the rents to be collected from the property, that defendant to apply the rent to the payment of the notes above mentioned. It is further averred that thereafter the collection of rents was in the sole control of defendant Realty Company, and that the amount of rents collected, together with such sums of money as had been paid to that defendant by plaintiff, is more than sufficient to pay all of the notes that had become due and payable up to date,
A temporary injunction was issued, restraining the sale, bond being given, and, filing an answer, defendants moved to dissolve the injunction.
The answer is a general denial.
The motion for the dissolution of the injunction is based on the ground that the statements contained in the petition upon which it was granted are not true and that the temporary injunction was improvidently issued. The cause was heard before the court as in equity and a decree entered dissolving the temporary injunction and dismissing the case. From this plaintiff appealed.
Plaintiff introduced his testimony tending to show that there had been no accounting between him and the realty company of matters connected with the transaction. After plaintiff’s testimony had been introduced and defendants were introducing their evidence, counsel for defendants asked a witness to take the statement, which had been introduced by .plaintiff, and concerning which the witness had been interrogated, and give the gross amount of rents collected up to May 20, 1915, at the time the foreclosure proceedings were, had, meaning by that the date of the advertisement by the trustee of the sale, and to then figure up the amount of the repairs that were made and give the separate figures. The
It will be seen that the learned trial court proceeded on the theory that in showing that there was an amount due on the notes under which the foreclosure was to be had, it was unnecessary to go into and take an accounting as between the parties covering all the receipts and expenditures and payments on account of the indebtedness. In this we are compelled to hold that the learned trial court was in error.
The primary object of this action was for an accounting between the parties, plaintiff as debtor, the realty company as creditor, and the final action of the court in dissolving the temporary injunction and allowing the sale under the deed of trust to proceed does not pretend to state the account between the parties, even as to the notes under which the foreclosure was being had. In an accepted and accurate work, Ruling Case Law, vol. 19, p. 619, sec. 435, it is said:
“An injunction is a proper remedy where a mortgagee exercises his power of sale by attempting to sell*605 to satisfy an amount largely in excess of the actual debt. . . . Certainly an excessive claim by a mortgagee is ground for an injunction where it is expressly provided by statute that a foreclosure may be enjoined where the mortgagor has a legal counterclaim, or any other valid defense, against the collection of the whole or any part of. the amount claimed to be due on the mortgage.”
We have no such statute in our State, although we do enforce the principle there announced. It is further said in the same section, following the above:
“It is the general rule that, to entitle him to an injunction on the ground that the mortgagee’s claim is excessive, the mortgagee must have tendered the amount which he admits to be due or must offer in his bill to pay it. . . . Where there-is a controversy as to the amount due under the mortgage and the accounts are complicated, the court will order an account to be taken and will prevent the mortgagee from selling until the balance due is ascertained.”
The authorities cited support the text.
A tender could not be made here, for plaintiff denied that there was anything due on the notes involved and avers ignorance of the state of his account.
In -2 Jones on Mortgages (7 Ed.), p. 733, sec. 1114, it is said:
“A mortgagee in possession, whether in person, by trustee, receiver, or by tenant, is in equity accountable for the rents and profits of the estate, and is bound to apply them in reduction of the mortgage debt. After-paying the interest of the debt, any balance of receipts is applicable to reduce the principal. The mortgagee is not allowed to make a profit out of his possession of the estate. Therefore, upon a redemption of the mortgaged premises by any one interested in them, he is obliged to state an account of his receipts from the mortgaged property, and he is entitled to allowances for*606 all proper disbursements made by Mm in respect of the premises.”
As said by that text-writer, it rarely happens under our system where, as here, there is a deed of trust securing an indebtedness, that the mortgagee may be said to be in possession, but we take it that the same doctrine applies where it is proposed to sell the incumbered property under the provisions, of the deed of trust, which, as here, conveys the legal title to the trustee. That is to say, the liability of the mortgagee to account is just the same when the trustee in a deed of trust, acting under the powers of sale conferred by the deed, of trust, is attempting to foreclose.
Further, in section 11Í5, Mr. Jones says that while at law the trustee or cestui que trust cannot be made to account, the mortgagor' has a right of -redemption only in equity, and the right to an account is only incident to this:
“Where the grantee agrees to re-convey upon payment of the debt the grantor is entitled to recover in equity the amount of rents and profits collected, there being no adequate remedy at law.”
In an action at law the court does not go into an accounting of the rents and profits as they are received. “But,” says Mr. Jones in the same section, “When the rents and profits received are sufficient to satisfy the mortgage debt and the mortgagor in a foreclosure proceeding asks for an accounting the court should strike a balance between the amount due on the mortgage and the amount chargeable to the mortgagor and give judgment accordingly.” ,
While the law as between mortgagor and mortgagee is not in all respects applicable to proceedings practically amounting to a foreclosure under our forms of deeds of trust, the right to an accounting in equity as between the grantor- and the grantees in such a deed, is very clear.
It is true that, there was a partial accounting here rendered, on which the learned trial court evidently
In Hammerslough v. Kansas City Building, Loan & Savings Ass’n, 79 Mo. 80, it is said (1. c. 86):
“It is true that equity will sometimes restrain the enforcement of a security until the indebtedness it covers has been ascertained and adjudged. This has been done when the indebtedness depends upon very complicated accounts extending through a long period of time, and the necessity for an accounting is apparent or is admitted by the other side filing a bill for it.”
It was held in that case that no such situation was presented there; that the items containing the disputed indebtedness are neither complicated nor numerous; that there was no doubt about the amount paid by the stockholder to the association, nor about the amount due from him monthly according to the conditions of the notes and deed of trust.
In the case at bar, however, we have a long account of debits and credits, rents collected, costs of repairs, interest charges, commissions, all to be considered and determined on, so that we have here the converse of the proposition presented in the Hammerslough Case, and the case at bar, in our judgment, presents a clear one in equity, requiring an accounting between the' parties. It was error for the learned trial court to deny this and to dissolve the injunction and dismiss the bill on an exceedingly imperfect and partial account, which, even as produced at the. trial, presented lump sums of charges for various matters, the credits being an arbitrary deduction from the amount of- receipts made by the creditor, without advising plaintiff of the items in such a way as to enable him to challenge their correctness.
That the plaintiff was clearly entitled to an accounting and was entitled to know exactly how much
There was testimony in this case tending to show that the holder of the notes had never made out a statement for plaintiff of his account and when the bookkeeper of the defendant Bealty Company was asked why that had not been done, his answer was, that plaintiff had never asked him for an accounting, nor had he even seen any agent or representative of plaintiff in .regard to it. The deed of trust in this case provided for the release of one or more of the, houses covered by it when a payment was made of a certain amount. The notice of the sale covers all of the property without exception, and it was in evidence that the defendant Bealty Company had never released any of these houses for the reason, as the witness stated, the plaintiff had never asked it to do so. The statement upon which the court apparently proceeded in arriving at its conclusion was made out for the attorney for defendants and presented by him to plaintiff or his representative, either directly before or after the proceeding for foreclosure was instituted, either a week or a month before. In that the amounts credited or charged are generally in gross sums. According to it the total amount due under the deed of trust, with interest, was $14,889.96. No statement was made out, charging plaintiff with the notes as they became due, the balance of the Jiotes being added. This was the testimony of the bookkeeper. In this statement referred to, there was a large charge for interest, which is disputed. There was a credit for .net rents collected, deducting charges for improvements, etc., but no statement of the cost or nature of the improvements. In short, even at the trial of the case, as far as it proceeded, there was no account stated as between the parties, yet an accounting was the very
It follows that the judgment of the circuit court cannot be sustained. It is reversed and the cause remanded for further proceedings as herein indicated.