Leonard v. Shale

266 Mo. 123 | Mo. | 1915

GRAVES, P. J.

Action to ascertain and determine title. Judgment below was for the plaintiff, and defendant has appealed. The facts relied upon by plaintiff are concisely stated in the petition thus:

“That the defendants claim to have some title, estate or interest in said lands; that the plaintiff is informed, believes and charges that the defendants’ claim aforesaid is based upon a certain deed of trust made by Reid H. Huff to the defendant, Charles W. Meyer, as trustee, to secure the payment of a note of said Huff to one William H. Wilson of the Philippine Islands in the amount of fifteen hundred dollars, payable three years after date, with interest at five per cent, which said deed of trust bears date November 3, 1909, was acknowledged before competent authority on said date and recorded on the same date in the recorder’s office of Buchanan county, in book 391, at pages 66 and 67; that the said Reid H. Pluff, who made said deed, had no title, estate or interest in said lands, but had fraudulently, wickedly and surreptitiously obtained the semblance thereof by purloining from the custody of plaintiff’s agent, a deed which the plaintiff had made, signed and acknowledged and entrusted to said agent for delivery to said Reid H. Huff, in the event that said Reid H. Huff should make a contemplated purchase of said lands; that said Huff did not purchase said lands or any part thereof or interest therein, and said deed has been, in a certain action brought by plaintiff against said Huff, declared to be null and void, by reason of its non-delivery to him, and the record thereof has been set aside and can-celled; that said action and the decree therein "was lately had and made in this court, in which action this plaintiff was the plaintiff, and the said Beid H. Huff was defendant, and wherein the said Beid H. Huff was duly served with process and appeared in said action.

“That the said note made by Beid H. Huff to said Wilson, and pretended to be secured by said deed of trust to the defendant Meyer, was not made and delivered upon any consideration whatever from said Wilson, but the name of said Wilson was used as a cover for a transaction between said Beid H. Huff and the defendant Shale, and that while said note was made to said Wilson, it was intended for said Shale, and was by Wilson in form assigned and transferred to said Shale, who is now the owner and holder thereof.”

The answer admits that Shale is the owner and holder of the deed of trust and note mentioned in the answer, and avers that the same was duly and properly executed. The answer also sets up the plea that Shale was a purchaser for value of said note, and without notice of any alleged defects in the proceedings. In terse terms, that he, Shale, was an innocent purchaser, for value. There was also in the answer facts pleaded tending to show an estoppel.

The pertinent facts are such as can be stated shortly. Plaintiff was not a resident of Missouri, but had a brother who lived in St. Joseph. Plaintiff resided at Cincinnati, Ohio. He owned this land in Buchanan County, which was under the immediate control of his brother, Dr. Leonard. In January, 1909, Dr. Leonard was sick at the residence of A. B. Huff in South St. Joseph. A. B. Huff was the father of Beid Huff, who figures conspicuously in this case.' During the time Dr. Leonard was at the residence of A. B. Huff some kind of a trade for this land and other lands belonging to Leonard’s sisters was made. Dr. Leonard wrote the plaintiff to make ont a deed to the forty acres of land in question and inclose it in an envelope addressed on the outside-to him (Dr. J. W. Leonard), and to inclose this in another envelope and address it to A. B. Huff, South St. Joseph, Mo., and mail it to A. B. Huff in that way. This was done. When Huff received the letter thus addressed, he evidently opened the letter to Dr. Leonard and took out the deed, and it was immediately placed of record without the knowledge or consent of either Dr. Leonard or the plaintiff. This deed conveyed the land to Reid H. Huff, and the Huffs took possession of the land. The deed was acknowledged in Ohio January 27, 1909, and recorded in St. Joseph January 29, 1909, or just two days later. In October, 1909, Reid H. Huff began to negotiate a loan on this land. The first arrangement was to get a loan of $1500 from William' H. Wilson, then in the Philippine Islands, through his brother, Sidney C. Wilson, an attorney at St. Joseph and an agent of William H. Wilson. This was to be a five per cent loan. Papers were accordingly drawn up, but Sidney O. Wilson found that he could get a better rate of interest for his brother, and the defendant Shale was induced to take thfe loan on this land. Accordingly the note was assigned to Shale and he put up the $1500, which was received by Reid H. Huff, less the expenses of making the loan. There is no question of Shale being out $1500. The plaintiff learned in April, 1909, that this deed had been placed of record, and Dr. Leonard, his agent, knew that it had been placed of record, about the date of its record. Shale says he had no knowledge of any trouble about the title until Leonard sued Reid H. Huff to cancel the deed. This was early in 1910. His suit was successful, and shortly thereafter the present suit was brought. Details will be left to the opinion. This outlines the case.

wrongful Delivery, I. Upon this record it is quite clear that the possession and record of the deed from plaintiff to Reid H. Huff was wrongful. It appears to have ^eei1 so i*1 a suit for its cancellation, in which judgment cancelling it was entered. We start this case with that concession. A. B. Huff should have delivered plaintiff’s deed to Dr. J. W. Leonard, and not to Reid H. Huff, as was evidently done. But this concession does not of itself justify the judgment nisi in the instant case.

Subsequent °f Purchaser. II. The real questions in this case are (1) the good faith of Shale, and (2)' the question of estoppel urged as against the plaintiff. We have rea<^- recolU thoroughly and there is no substantial evidence against the good faith of Shale. Nor is there substantial evidence 'tending to show that he had any knowledge of what happened between the Leonards and the Huffs. The fact that he had heard discussed at times that the Huffs had gotten a farm at a bargain, is not such as would impugn his good faith in making this loan. Nor is there any thing in this record that would cast upon Shale the duty to make inquiry. The record title was in Reid H. Huff. The Huffs were in possession, and nothing on the surface to call for an inquiry by Shale. We therefore dismiss this branch of the case by saying that there is nothing in the record which would impugn the good faith of Shale in the transaction, and that in good faith he parted with $1500 on the apparent title of Reid H. Huff to this land.

III. Conceding then that the possession of the deed from Leonard to Huff was wrongful, and that the recording thereof occurred by reason of the wrongful possession, how stands the case?

Esto pel s oppe. It is undisputed that the Huffs went into possession and remained in possession for a year. They were in P°ssession w^en the deed of trust was made. ^ .g ■¿pat the plaintiff’s agent in charge of this land knew this fact. It is undisputed that plaintiff’s agent, in charge of this land for him, knew of the record of this deed, at or about the time it was placed of record, and plaintiff admits that he knew of it six months before the defendant Shale bought the $1500 note and deed of trust. With these patent and undisputed facts, should the plaintiff be protected by a decree such as was entered nisi? We think not. Respondent’s very able counsel, in the brief say:

“The deed never having been delivered, no title passed, and Shale acquired no right under the deed of trust unless respondent has eslopped himself. Shale’s position is that he is an innocent purchaser in good faith. The onus is on him.”

We think counsel have well expressed the law of the ease. Defendant’s evidence clearly shows good faith, and its force and effect is not impaired to any serious extent by a close and vigorous cross-examination, upon which the plaintiff relies. That Shale was in good faith when he took this note and deed of trust, we have no doubt under the record before us. That there were no circumstances which called for a special inquiry as to title by Shale is equally clear. No facts appear which would lead a reasonably prudent man to suspect that the reco’rd title was not the true title, and therefore there was no legal demand upon Shale to look further, or inquire further as to the title. The onus of showing good faith has been borne by the defendant Shale. The above leaves only the question of estoppel. This can be approached from two angles: (1) the conduct of the plaintiff in placing a fully executed deed in the hands of the father of Reid H. Huff and (2) the conduct of the plaintiff after he knew that such deed had in fact been delivered and placed of record. For this case we may assume, as contended by plaintiff, that a deed stolen from a grantor, before delivery, passes no title to the grantee therein named, nor to one acquiring a deed from him, but there are exceptions to such a rule. Thus the Wisconsin court speaks in Tisher v. Beckwith, 30 Wis. l. c. 58:

“The only question which can ever arise to defeat the title of the supposed grantor in such cases, is whether he was guilty of any negligence in having made, signed and acknowledged the instrument, and in suffering it to be kept or deposited in some place where he knew the party named as grantee, might if so disposed, readily and without trouble obtain such wrongful possession of it and so be enabled to deceive and defraud innocent third persons. It might possibly be that a case of that kind could be presented where the negligence of the supposed grantor in this respect was so great, and his inattention and carelessness to the rights of others so marked, that the law would on that account estop him from setting up his title as against a bona-fide purchaser for value under such deed. [See Everts v. Agnes, 6 Wis. 453.] ....

“The same case (Burson v. Huntington, 21 Mich. 415) also makes a distinction between a note or other instrument so obtained and one deposited in escrow and afterwards fraudulently delivered by the depositors, holding that in the latter case the maker would • be bound as against an innocent holder for value, on the ground of the trust or confidence reposed by him in the depositary, and upon the principle that, when one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it. Upon the same question also of negligence, see Wait v. Pomeroy, 20 Mich. 425, 4 Am. R. 395.”

Both these doctrines apply to this ease. The agent of plaintiff knew the relationship between A. B. Huff and Reid H. Huff (that of father and son and member of the same household) when he directed the deed to be mailed to said Huff. This knowledge should be attributed to plaintiff, because his agent was the party in charge of the land (and its sale) which was the subject of the trade and deed. Then in addition to that the plaintiff made the elder Huff his depositary, and if he violated his confidence, innocent third parties should not suffer. Upon the ground of negligence, as well as the latter ground, the plaintiff should be estopped to assert his title as against Shale.

IY. Not only should the plaintiff be estopped by reason of his own negligence in placing an acknowledged deed in a place where its delivery might be obtained wrongfully, and by reason of the further fact that A. B. Huff was the depositary of his own selection, and thereby his agent, but his conduct after the delivery and record of the deed should bar his action by way of estoppel. In 27 Cyc. 1036 the rule is thus stated:

“If the real owner of property allows it to stand recorded in the name of another, by a title such as to pass the fee, he puts it in the power of that other to create a valid mortgage upon it. And the lien of a mortgage will prevail against the right of any third person to impeach and divest the mortgagor’s title as having been obtained by fraud or false representations, where the mortgagee relied on the clear record title of his mortgagor and had no notice actual or constructive of the rights of the stranger.”

Plaintiff knew that his deed was of record long before this deed of trust was taken by defendant Shale. He knew that the Huffs had gone into possession. The deed conveyed the fee to Reid H. Huff. Plaintiff should have taken prompt action toward divesting Huff of his apparent title. Such action would have saved the defendant Shale. One can not knowingly permit the title to his lands to stand in the name of another, and then defeat liens placed thereon by such person, if the party who takes the lien, acts in good faith and without knowledge of the true facts. "We have no hesitancy in holding that the conduct of plaintiff: after he discovered that his deed had been delivered and placed of record, is such as to estop him from enforcing his title as against Shale. Where one of two innocent parties must suffer the one which has by his acts placed or left it within the power of a wrongdoer to do the wrong, must be the loser, under well established doctrines of equity. Plaintiff falls within this rule. A court of conscience can not permit Shale to lose his lien under the admitted facts of this case.

The judgment nisi is for the wrong party, and such judgment is reversed, with directions to enter up a judgment which will in all respects fully protect the deed of trust and interests of Shale. It is so ordered.

All concur.