116 Mo. 346 | Mo. | 1893
This suit is against O’Reilly, Francis Fisher, John 0. Hacken, Will J. Howard, Charles Moran and Mary Moran, his wife; and its purpose is to have an accounting and redeem lots three and four, block one of Groff’s addition to the city of St. Louis, from certain deeds of trust made to secure notes held by defendants, as is charged.
It is charged in the petition and shown by the evidence, that on the twentieth day of February, 1871, Robert Wright, being the owner of the property, conveyed the same to Andrew S. Barada, as trustee, to secure a note of $2,000, payable to Margaret Barada; on the ninth day of April, he conveyed the same property to the same trustee to secure to the said Margaret another note for$1,000; andón the twenty-fourth day of April, 1875, he again conveyed the lots to one A. C. Taylor as trustee, to secure a note of $500. These notes bore interest at ten per cent, per annum. The notes and deeds of trust are in the pleadings and evidence designated respectively as exhibits A, B, and C.
On the twenty-eighth day of August, 1875, the said Wright by deed of warranty conveyed the lots to defendants Moran and wife. Moran assuming as part of the purchase price the notes secured by deeds A, B, and C. On this purchase by Moran and wife they gave back a deed of trust on the property to Wright to secure $1,000 purchase price which is called exhibit E. On the fifth of October, 1876, Moran and wife conveyed the same property to secure some notes due
On the second day of February 1880, the said Moran and wife conveyed the 'property to a trustee .with power of sale, to secure to plaintiff a certain note therein described, and on the twenty-first day of February, 1888, the trustee sold and by deed conveyed the property to plaintiff. Holding the equity of redemption under this conveyance, ■ plaintiff asked that an account be taken of the amount due on the prior deeds of trust and for leave to redeem. It was charged that the notes secured by Exhibits A, B, and C were held by defendant Fisher, and that secured by'■exhibit E by defendant Hacken. It was also charged that the note for $3,500 was given to defendant O’Reilly (though made in the name of Howard) in consideration that he would pay the notes secured by Exhibits A, B and C, and also that said defendant had collected from Moran and wife sums which had not been accounted for. A separate answer and cross bill were filed by defendant O’Reilly, in which he admitted the execution and delivery of all the conveyances mentioned in the petition. Admitted that the note for $3,500'(F) was assigned by Howard to him but he denied that he undertook and agreed to pay said first three notes (A, B and 0) as charged.
In respect to the $3,500 note (F) said defendant charged that on the third day of March he was engaged in the business of financial agent' in the city of St. Louis, and at the time the holders of notes (A, B and C) amounting to $3,500 were pressing Moran and wife
He stated further that at the request of said Moran and wife, he did on the twenty-seventh of November, 1887, purchase from Wright the note for $1,000 (Ex. E.) and assigned the same to defendant Hacken, who afterwards re-assigned the same to him and that he was hen the owner thereof and said defendant Hacken had no interest therein or in this suit. That in consideration that defendant would secure an extension of time ■on this note “E,” said defendant Moran agreed to pay interest thereon at nine per cent, semi-annually, and on the twenty-eighth of February, 1882, in consideration ■of procuring a further extension they agreed to pay ten per cent, interest. That'the interest was so paid by said Moran until February, 1884, after which and up to ■June 1888, at the' request of said Moran he had advanced and paid the interest on said note. He
It was shown on the trial that when the notes A, B and C were assigned by O’Reilly to Pisher, there was an agreement between them that the latter should receive six per cent, interest on them and that the former collected the full rate and after paying Pisher six per cent, retained the balance.
Defendant O’Reilly testified substantially to the .facts charged in his cross bill. The Morans testified that the agreement was that the defendant O’Reilly should pay off the prior notes (A, B and 0), and not that he should take an assignment of them, and that they supposed it had been done and denied that said defendant paid interest at their request.
The court found that deeds of trust A, B,. C and E were valid and subsisting liens for the principal and unpaid interest on the notes secured thereby. That deed of trust P or the notes secured thereby never became effective and were invalid. That defendant
I. There was much conflict in the evidence as to the effect that was intended by the parties should be given the note for $3,500, and the deed of trust to secure the same, known in this record as exhibit “E.” We think the evidence quite conclusive that the notes and deed were executed with the understanding that O’Reilly should furnish and use the money in paying the three prior deeds of trust (A, B and 0), provided that it was found on examination of the title that a first lien on the land would thereby be secured. When it was found that there were other liens on the land and the proposed deed of trust would not provide a first lien, that arrangement was abandoned altogether, and it was agreed that O’Reilly should purchase the prior notes, instead of paying them, extend the time of their payment and hold.them as security for the money furnished. The object of Moran was to secure time for the payment of these notes and the purpose was fully accomplished by this subsequent arrangement. The deed of trust (E) never became, as between the parties, a valid and effective instrument.’
II. The question of most difficulty is the proper application of the equitable principle of subrogation to the facts in this case. It is unquestioned under the evidence that O’Reilly, after the notes A, B and 0 had been assigned to Eisher, and an extension of time for their payment endorsed thereon, himself paid several instalments of interest, and the question is whether, as against the .plaintiff, a juniormortgagee, he is entitled to be subrogated to the rights of Eisher, the assignee of the notes secured by the prior mortgage, and upon which the interest was paid, so as to require plaintiff to refund such interest in order to redeem.
Mr. O’Reilly himself testified: “I generally paid the interest to all my customers, Mr. Fisher included, whenever they called for it, whether I had collected it or not; that was my business habit.” Now we think the circumstances entirely consistent with this declaration. O’Reilly had purchased those notes at the request ■of Moran. "When the interest maturedhe made demand, collected it and gave receipts in his own name. He collected eight per cent., and by arrangement with Fisher, only accounted to him for six per cent. Fisher was not known in the transactions between O’Reilly and the Morans. O’Reilly testified that he never told any one who was the real owner of the old notes. “It was a secretin the business as to who owns the paper.” Our conclusion from the evidence is, that O’Reilly advanced the interest, not at the request of Moran, but voluntarily, in his own interest, to prevent default and foreclosure and for the further purpose of maintaining his own credit with his customers.
The doctrine is well settled in this state that “the demand of a creditor which is paid with the money of a third person, without any agreement that the security shall be assigned or kept on foot for the benefit of such third person, is absolutely extinguished; but the •doctrine of subrogation will be applied to reimburse
III. Defendant O’Reilly also purchased and assigned to defendant Hacken the $1,000 note and deed of trust (E) made by Moran to Wright. This note ’was assigned to Hacken, the interest collected by O’Reilly and paid by him under the same circumstances • and arrangement as in the case of the first three notes, with the material difference that O’Reilly absolutely assumed the payment on this note, of the semi-annual interest, and agreed to take the note back whenever requested by Hacken to do so. Under these circumstances we think O’Reilly stood in the relation of a surety to Moran' and equity will imply that he requested that payment of the interest should be made. In Evans v. Halleck, supra, it is said ‘ 'ordinarily it is only when a person pays the debt of another at his'instance, or is ^ compelled to pay to protect his own, or stand in the relation of a surety that he will be subrogated to the rights of the creditor.” We think O’Reilly entitled to subrogation for the interest paid on this note.
IY. The note, exhibit “E,” was re-purchased by O’Reilly from Hacken on June 8, 1888, and the last installment of interest paid to Fisher on the notes A, B and C, amounting to $105-, was on October 10, 1888. At the time this payment was made, it is seen O’Reilly held a junior mortgage on the land and for the amount so paid was entitled to subrogation, under the fore
Y. It is claimed that O’Eeilly should be made to account for the difference between the interest collected from Moran and that paid to the holders of the notes. This contention is on the theory that in negotiating the loan, and securing an extension, of the notes, O’Eeilly was acting as the agent or broker of Moran. An agent must act honestly and will not be allowed to make a profit out of a transaction conducted in behalf of his principal. We entirely agree that if O’Eeilly was acting as agent for Moran, he could be required to account, to him at least, for the advantage obtained in the reduction of interest. Story on Agency, sec. 207.
The evidence, while somewhat conflicting, we think quite conclusive that O’Eeilly did not occupy the relationship of agent to the Morans. They went to him to borrow the money, and according to their testimony, supposed all the while that he was their creditor. They do not pretend that they employed him to procure the money for them from another. His undertaking was to furnish them the money on certain conditions. That undertaking did not create confidential relations between them, though the conditions may have required them to pay the expense of an examination of the title. The parties dealt at arm’s length. We are not concerned about the agreement between O’Eeilly and Fisher. Under the evidence, we think O’Eeilly had the right to collect interest at the rate agreed upon, and is not accountable to plaintiff for it. Judgment reversed and cause remanded with directions to so modify the decree as to make it conform to this opinion.