Lead Opinion
This suit is for damages for the alleged wrongful foreclosure of a deed of trust. Plaintiffs were the makers of the note of $71,000 and the grantors in the deed of trust. The named defendants are William R. Edgar, Jr., the trustee, and David J. and Eleanor L. Lawless, the holders of the note. This appeal pertains to Edgar alone; his separate motion to dismiss plaintiffs’ third amended petition was sustained on September 1, 1971, for failure to state a cause of action against him. In the same order the court ruled: “The within order designated final for purposes of appeal.” This appeal was taken on September 9, 1971, prior to the constitutional change of January 1, 1972, and the suit is for a total of $105,000 in damages. From a monetary
This appeal was first heard in Division Two and transferred by division to the Court en banc. The principal reason for the transfer was to determine whether the order appealed from was an appealable judgment under rule 81.06, V.A.M.R. The question arose because, as noted supra, the record does not show a disposition of all issues and all parties, tо wit: the issues as to parties defendants Lawless were not disposed of as of the time the appeal was taken from the order dismissing plaintiffs’ claim against Edgar for failure to state a cause of action against him.
It has been ruled many times that, since an appeal must be from a final judgment (with specified exceptions), the trial court must have disposed of all issues and all parties. Downey v. United Weatherproofing, Inc.,
An order sustaining a motion to dismiss plaintiffs’ petition on the ground that the petition fails to state a cause of action constitutes a disposition of plaintiffs’ claim on the merits, Continent Foods Corp. v. National-Northwood, Inc.,
In the instant case the order sustaining defendant Edgar’s motion to dismiss plaintiffs’ claim against him disposed of plaintiffs’ claim against Edgar on the merits; however, since other defendants remained in the case and the issues as to them remained undisposed of, the question arises as to whether plaintiffs can then appeal or if they must await the outcome of the remainder of the case before appealing. As stated supra, the trial court designated its order dismissing plaintiffs’ claim against Edgar as final for purposes of appеal pursuant to the second sentence of rule 81.06 (formerly rule 82.06, and earlier amended rule 3.29). The forerunner of rule 81.06 was rule 3.29, adopted in 1945 by this court. Rule 3.29 was amended effective May 15, 1957, and, except for renumbering, has remained unchanged since then.
State ex rel. Thompson v. Terte,
As noted supra, rule 3.29 was amended effective May 15, 1957. About two years later, Dotson v. E. W. Bacharach, Inc.,
The court then held: “It is perfectly clear that the counterclaim of Starr against the plaintiff was one ‘arising out of the same transactions, occurrences or subject matter as the other claims stated or joined in the case * * *.’ All the claims arose out of one automobile collision and the ensuing assertions of negligence, pro and con. If the trial court intended the order of dismissal to be a final judgment for the purposes of appeal it should have ‘specifically so designated’ it. This discretion rests in the trial court, not in this court. Pizzo v. Pizzo, Banc,
Pausing here for a moment, it is to be noted that the court in Dotson was dealing with a dismissal of a claim which arose out of the same transaction (collision) alleged in plaintiff’s petition. In the instant case, plaintiffs’ claim against the several defendants is also premised on one transaction — a wrongful foreclosure, and the order appealed from was also the dismissal of a claim.
Of particular significance is the final paragraph of Dotson wherein the court said, loc. cit. 739: “We shall dismiss this appeal, but since the order appealed from has remained interlocutory, the trial court may now exercise its discretion and, if it so chooses, enter an order by way of amendment providing that its order heretofore entered dismissing the counterclaim of the third-party defendant against plaintiff is thereby specifically designated as ‘a final judgment for purposes of appeal within the meaning of Section 512.020 RSMo, V. A.M.S.’ ”
Before proceeding with cases which have followed Dotson, it is to be noted that the rationale of the court with respect to the propriety of the dismissal of Starr’s counterclaim recognizes that, if the dismissal was erroneous, the trial of the remainder of the case without the counterclaim might well prejudice a determination of the other issues. Apparently this concept was part of the rеason for adopting the rule because the authority of Dotson was a member of this court at the time amended rule 3.29 was adopted and Dotson was decided approximately two years later.
In the instant case it seem obvious that if the order dismissing defendant Edgar is erroneous a trial of plaintiffs’ claim without the presence of Edgar might well prejudice a determination of the issue of the alleged wrongful foreclosure. Furthermore, plaintiffs will never be afforded the right to try their case against all the defendants against whom they have a right to proceed under the law in one trial. It is observed that the court in Dotson believed so strongly in its interpretation of rule 3.29 as amended (now rule 81.06) that it invited the trial court to аmend its prior order of dismissal so as to designate it to be final for purposes of appeal under amended rule 3.29 in order that an appeal could thereafter be taken.
In holding that the first order of dismissal was not a final appealable order, the court said that an appealable judgment “ ‘must be a final judgment and it must ordinarily dispose of all parties and all issues in the case, unless the trial court has ordered a separate trial of any claim or issue, or hаs specifically designated the particular judgment as a final judgment for the purposes of appeal.’ Dudeck v. Ellis, Mo.Sup.,
In Beezley v. National Life & Accident Ins. Co.,
In Beezley the court dismissed the appeal but said at loc. cit. 536-537: “Therefore, ‘[w]e shall dismiss this appeal, but since the order appealed from has remained interlocutory, the trial court may now exercise its discretion and, if it so chooses, enter an order by way of amendment providing that its order heretofore entered * * * is thereby specifically designated as “a final judgment for purposes of appeal within the meaning of Section 512.020 RSMo, V.A.M.S.” See Rule [82.06]. If it does so, an appeal may then be takеn (if plaintiffs so decide) within the appropriate time, for the order of dismissal will have then become for the first time an appealable and final judgment.’ Dotson v. E. W. Bacharach, Inc., Mo.,
The same situation existed in Beezley as exists in the instant case in that plaintiffs’ petition as to one defendant, but not all defendants, was dismissed by the circuit court. It differs from Beezley in that the very order of finality for purposes of appeal, the absence of which caused the court to dismiss the Beezley appeal, was made by the trial court in the instant case.
Woods v. Juvenile Shop Corp. of America,
This court’s footnote with reference to the amendment states at loe. cit. 695: “Apparently following the suggestion of the correct procedure in such situation made in Dotson, supra, 325 S.W.2d, loe. cit. 739, since the language of the order is identical with the language of Dotson.” The court held that the order of October 11, 1961, was interlocutory and not a final appeala-ble order and that a separate appeal from such an interlocutory order would have been premature, citing Dotson. The court then went on to hold that the subsequent designation of the dismissal as a final judgment for purposes of appeal converted the interlocutory order into an appealable final judgment, again citing Dotson. On the merits of the appeal, the court reversed the circuit court and ordered reinstatement of the crossclaim holding that the cross-claim stated a claim upon which relief could be granted.
In Title Insurance Corp. of St. Louis v. United States,
In Johnson v. Great Heritage Life Ins. Co.,
The second sentences of rules 3.29 and 81.06 are different from one another. That part of rule 3.29 began, “When a separate trial of any such claim is had before the court . . . the court may order a separate judgment entered which shall be . . . final . . . for the purposes of appeal . . . .” (Emphasis supplied.) “(S)uch” must refer to that which appears in the first sentence and apparently restricted the application of the rule to that which Terte sets forth — several different claims against different parties joined in one suit.
The second sentence of rule 81.06 is much broader than rule 3.29 and is not restricted to differеnt claims against different parties. The second sentence of rule 81.06 provides, “When a separate trial is had before the court ... of claims arising out of the same transactions, occurrences or subject matter as the other claims stated or joined in the case the judgment entered shall not be deemed a final judgment for purposes of appeal within the meaning of Section 512.020, Revised Statutes of Missouri, unless specifically so designated by the court in the judgment entered.”
It was this second sentence that was the subject of Dotson v. E. W. Bacharach, Inc., supra. And as to this the court said, “All the claims arose out of one automobile collision and the ensuing assertions of negligence, pro and con. If the trial court intended the order of dismissal to be a final judgment for the purposes of appeal it should have 'specifically so designated’ it.” (Emphasis supplied.)
Thereafter the court specifically authorized the trial court to amend its order of dismissal by designating it to be final for purposes of appeal under rule 3.29 as
As indicated by the cases cited supra, the interpretation placed upon amended rule 3.-29 (now 81.06) by Dotson, with reference to the trial court’s authority to designate a dismissal order which order does not dispose of all parties and issues as final for the purposes of appeal, has been followed by the Missouri courts. See also Feinstein v. Edward Livingston & Sons, Inc.,
State ex rel. Thompson v. Terte,
The trial court’s order dismissing plaintiffs-appellants Spires’ claim against respondent Edgar, having been designated as final for the purpose of appeal pursuant to rule 81.06, is an appealable order.
The third amended petition alleged: the ownership of the real estate in question by plaintiffs; the execution by them of a note for $71,000 payable to defendants Lawless in monthly installments of $508.68 on the first of each month, beginning on May 1, 1968, with interest at 6%; the execution of a deed of trust to secure payment of that note, designating defendant Edgar as trustee; that plaintiffs made all of the payments except the one due on October 1, 1968, which was “skipped” by agreement of the holders of the note, as per a letter marked Exhibit “B” and attached to the petition; that various payments were made late but were accepted and credited to plaintiffs; that nevertheless defendants Lawless ordered the trustee to foreclose and that he advertised the property for sale, the first notice being published on October 16, 1969; that the property was sold, and defendants Lawless purchased it for the sum of $70,000, although the reasonable value was $100,000; that defendants Lawless knew that plaintiffs had complied with the covenants and conditions of the deed of trust regarding principal and interest, but acted with reckless disregard for the rights of plaintiffs; that at the time of advertisement and sale the liens and encumbrances were approximately $70,000; that defendant Edgar occupied a fiduciary relationship with plaintiffs and should have ascertained from plaintiffs whether there was any reason why foreclosure should not be commenced and knew, or by reasonable diligence and inquiry would have known, the following: That plaintiffs had complied with the requirements as to principal and interest; of the agreement set out in Exhibit “B”; and that all other monthly payments had been made except the one of October 1, 1968; further, that defendant Edgar failed and refused to make any such investigation, and that he could thus have known that all conditions of the deed of trust had been complied with; that defendants Lawless knew that no payment was delinquent when publication was commenced. Plaintiffs alleged further, in the alternative, that if there was a payment delinquent, defendants Lawless had consented thereto by their letter aforesaid, and by their conduct in accepting late рayments, and that they had “lulled the plaintiffs into a false sense of security and a belief that such conduct was acceptable”; that defendant Edgar knew or should have known of such conduct, and that all defendants failed to give plaintiffs notice of their intention to foreclose or an opportunity to make any delinquent payments. Plaintiffs prayed for $35,000 actual damages and $70,000 as punitive damages. Counsel admitted at the argument that plaintiffs knew of the ad
A bare mention was made in oral argument of the fact that one branch of this case had been in the Missouri Court of Appeals, Springfield District. Neither party has claimed that this has any material effect on the present appeal. We find in our files, of which we take judicial notice, that we denied a motion to transfer filed here by the defendants Lawless following an opinion of that Court which appears in
The question here is whether the amended petition states a claim against the trustee on which relief may be granted. We are not concerned with any possible liability of the holders of the note. The plaintiffs’ theory, as stated and boiled down, is that: the trustee owed plaintiffs a duty, when directed to foreclose, to make an affirmative investigation, presumably by inquiry from plaintiffs, and thus to find out whether plaintiffs claimed that they were not delinquent and the factual reasons for their claim; this would seem to include not only the actual status of the payments but plaintiffs’ claim of waiver or “lulling” in security. It is not alleged the trustee did anything to mislead plaintiffs, but only that, in a fiduciary relationship, he failed to act. Counsel suggested in oral argument that it might even have been the trustee’s duty to decide controverted issues of fact between the parties. The allegations that the trustee knew or should have known certain things by the exercise of reasonable diligence and inquiry are certainly not equivalent to allegations of actual knowledge. There is nоthing alleged here which shows that the trustee actually knew of anything which should legally prevent the foreclosure when he was directed to act. He did not receive any payments on the note.
A trustee in a deed of trust acts in a fiduciary capacity and he must act with complete integrity, fairness, and impartiality toward both the debtor and the creditor. Edwards v. Smith,
We have concluded that in the absence of unusual circumstances known to the trustee, he may, upon receiving a request for foreclosure from the creditor,
Plaintiffs cite and rely largely upon Edwards v. Smith,
Smith v. Haley,
Hrovat v. Bingham,
Looking to other cases, we note first, Farris v. Hendrichs,
We have seen no case where a trustee has been held liable in damages for a failure to make an investigation of the default before foreclosure. The only cited case in which the court entered judgment against a trustee for any purpose (and that merely in setting aside two deeds where the trustee was the then owner) is Smith v. Haley, supra, where the trustee was held to have been guilty of misconduct.
We have concluded that the third amended petition did not state a claim against the trustee on which relief might be granted. Consequently, the judgment is affirmed.
Dissenting Opinion
(dissenting).
I respectfully dissent.
In my opinion Rule 81.06 (and its predecessors, Rules 82.06 and 3.29) was never intended and was not designed to apply to a case involving a single claim or cause of action against more than one defendant. That is what we are presented with in this case — one claim against multiple defendants. To paraphrase what the court said in State ex rel. Thompson v. Terte,
Of the seven cases cited in the majority opinion in support of the proposition that the appeal is not premature, five involve more than one claim. The two which do not are State ex rel. Schweitzer v. Greene,
The Beezley case involved a single claim against multiple defendants and an order of dismissal as to one. The court of appeals held that the order of dismissal from which plaintiff had appealed was not a final appealable judgment and dismissed the appeal as premature. In doing so, the court said that upon remand the trial court could in its discretion designate the judgment as final for purposes of appeal, citing the Greene case and Woods v. Juvenile Shoe Corp.,
At the expense of being verbose, I repeat: this case involves one claim, a single, indivisible claim; not two; it involves a separate trial of a claim against one of the two defendants, the same single claim stated against both; not a separate trial of a single claim which has been divided into two. If Rule 81.06 is to be made applicable to this situation I would hope that it would be done, not by interpretation and the resultant overruling of Terte, supra, a decision upon which at least 15 others have relied, but by amendment of the Rule.
Because the issues as to all parties have not been disposed of, the appeal is premature and I would dismiss it.