186 Mo. App. 196 | Mo. Ct. App. | 1914
— This is a suit in equity by respondent, as public administrator in charge of the estate of one Hector A. Piednoir, deceased. The petition sets up that Piednoir in his lifetime held notes secured by a deed of trust on various properties, one note being for $10,000 and fifty notes for $200 each, aggregating $10,000, all executed by appellant, all the notes representing but one. indebtedness of $10,000'.
The answer challenges the claim of any remaining indebtedness, averring that one of the pieces of property pledged, consisting of parts of two lots in Temple Place, had been discharged from the lien of the deed of trust without the knowledge and consent of defendant and for the sum of $2500 (at the trial it appeared that this should have been $2000), when in point of fact the equity of the defendants in it was worth $5000, and judgment over is asked by the defendant for this difference.
The trial was before the court, as in equity, and resulted in a finding for plaintiff as prayed by it, save as to attorney’s fees, the claim to which was not pressed, and a denial of the relief asked by defendant. From this defendant has appealed.
There are but two points that need be considered in the determination of this case. First, whether the evidence warranted the learned trial court in finding that the Temple Place property had been released with the consent of defendant, and, second, if that consent
Turning to the evidence in the case, it appears that there had been a practical dissolution of the corporation defendant and a distribution of its assets among the two gentlemen, Messrs. Dougherty and Bush, who appear to have been practically the sole owners of its stock and to have composed the corporation, as well as of another allied one, called the Hampton-Russell Investment Company; It appears that on this dissolution, Mr. Dougherty took over certain of the assets, including the properties which are here in controversy, all under various mortgages, the defendant company holding merely equities in them subject to two or more prior encumbrances. Being indebted to a Mr. Dowling and being pressed by Dow-ling for a payment of his indebtedness, Dougherty told Dowling that he had not the money to pay him, and telling him that he and Mr. Bush had divided up their interest and that he (Dougherty) had taken over the equities in a lot of property, he would turn that equity over to Dowling. Dowling figured on the value of the property, and finding it all under two or more deeds of trust, and that the only interest of the defendant corporation was in the equities, and figuring up the encumbrances, agreed that if Dougherty would straighten up some of the indebtedness, taxes, etc., he would take it. Dougherty told him he could not do anything of the kind; that he (D'owling) would have to take it just as it was. Dougherty explained to Dow-ling that the properties were tied up in the blanket deed of trust which was held by Piednoir, and if he took the properties subject to this encumbrance, he (Dow-ling) would have to work his way out of it the best he could, and if he sold any of the property which Dougherty was transferring to him, he (Dowling) could get a release of the property so sold from the Piednoir
The indebtedness of defendant to Piednoir originally was $10',000, evidenced by a $10,000 note as well as by fifty notes for $200 each,' the latter payable monthly. Mr. Hornsby was the agent and attorney for Piednoir in the collection of this indebtedness during the latter’s lifetime and from time to time Dow-ling paid off several of these collateral notes to Horns-by as such agent, and as he paid off any of the notes he secured releases from Piednoir on various pieces of property that he, more accurately his wife, had thus acquired and which Piednoir held. That is, he and Hornsby or Piednoir agreed upon the price which should be paid for the release of these separate pieces of property. It does not appear that either Dougherty or Bush were consulted or had anything to do with these releases, or the terms upon which they were made. As Dougherty would sell any of these pieces in which he held equities of the Hampton-Russell Investment Company, he would procure a release from Piednoir for that piece, paying him what was' agreed upon apparently between Piednoir, or Hornsby, as his representative, and Dowling. ■ It is in evidence that
Having acquired the equities in these properties, it appears that Dowling negotiated for a trade of this Temple Place property for some other property in the city of St. Louis, and to do so it was necessary to have it released from the Piednoir deed of trust. It appears that both Dougherty and Bush knew of this but neither of them said anything to Hornsby about it or made any suggestion to Dowling. When Dowling was ready to close this trade and had arranged with Mr. Hornsby for the release of the Temple Place property from the lien of this deed of trust, he went to Mr. Dougherty and obtained from him certain of the collateral notes which had been paid and which were covered by this deed of trust, the notes being in the possession of Dougherty, and which it was necessary to present to the recorder of deeds in order- to have the release en
So much for the matter of consent.
Turning to the question of the value of the equity in the Temple Place lots, we find the testimony was that this value did not,exceed $7000 or $7500; other testimony was to the effect' that it was worth not to exceed $5000. There were two prior deeds of trust on this Temple Place property, each for $4800. There were also $6300 unpaid on the $10,000 (the Piednoir) indebtedness, and Dowling paid off $600 on this before he secured the release of the Temple Place property. That is, there were $7500 due on the whole debt, for which Piednoir held the Temple Place property, the Wyoming street property and the leasehold, as well as fifty-seven of the notes and perhaps other pieces of propetry. When the $2000 were paid for the release of the Temple Place property, Piednoir still had the Wyoming street property, the leasehold and the collateral notes. The highest value put upon the Temple Place property was $7750. Dowling had tried in vain to sell them for $7000 each. So the evidence places the equity as worth from $3250 to $2500.
There can be no question of the principles which must govern cases of this kind. On the kindred question of the discharge of a surety by the acts of the creditor, it is said by an accepted authority (1 Brandt on Suretyship & Guaranty (3 Ed.), sec. 480), that “if the creditor has a surety for the debt, and also has a lien on property of the principal for the security of the same debt, and he relinquishes such lien, or by his act such lien is rendered unavailable for the payment of the debt, the surety is, to the extent of the value of the Ken thus lost, discharged from liability. . . . Upon obtaining such a lien the creditor becomes a trustee for all parties concerned, and is bound to apply tbe property to the purposes of the trust. . . . The surety
It is further said by this author that the mere silence of the surety when he knows that the creditor is about to release securities, will not prevent his discharge, “as in such case he is not called upon to speak. But where such release is made at the instance and request of the surety, he is not thereby discharged.” One of the authorities cited for this, Polak v. Everett, Law Rep. 1 Q. B. Div. 669, states the rule somewhat differently, following what was held in Freeman v. Cooke, 2 Ex. 654, where it was said “that if a man stands by and allows another to act without objecting, when, from the usage of trade or otherwise, there is a duty to speak, his silence would preclude him as much as if he proposed the act himself.”
In Pence v. Gale, 20 Minn. 257, it is held that where .the owner of a promissory note who holds collateral security for it, gives a release at the surety’s instance and with his consent the. surety is not discharged. So, too, in Brown v. Abbott, 110 Ill. 162, where it is held that when a party consents to the doing of the act which would not have been done but for his assent thereto, the person so assenting will not be permitted to make the doing of it a matter of personal advantage to himself.
The settled law of our State, in line with that regognized all over the country by all respectable authorities, is, that it is the duty of the party holding a collateral as security to carefully and faithfully perform all acts necessary, to make the collateral available and that this is a duty owing to the surety and failing in it by which the collateral is lost, the surety will be discharged to the extent he is thereby injured. [Na
Applying these principles to this case, we cannot but conclude with the learned trial judge that in turning over the equities of the defendant to Dowling, and that is all that defendant had in these various pieces of property, afid referring him to Piednoir or to his agent as the parties who would do the right thing by him with respect to releases, as well as by the other acts in evidence to which we referred, Dougherty and defendant, through him, left the terms of the release so entirely a matter to be settled between Dow-ling and Piednoir and his agent and had in so many prior instances connected with releases of the property, conveyed to D'owling’, ratified or acknowledged this as the proper manner of transacting the business, that it cannot now be claimed that the defendant is entitled to be discharged from, any part of this liability by reason of the release of the Temple Place property from under the deed of trust. Considering the course of conduct of the parties in this matter, it would be inequitable and unfair to now hold that the release of this Temple Place property was without authority and unauthorized. That is undoubtedly the view taken by the learned trial court of this matter.
It is hardly necessary to remark that in suits of this kind, that is, in equity, heard before the court as chancellor, the appellate court is not bound by the finding of the chancellor on the facts but may draw its own conclusion from the facts in evidence as presented by
The judgment of the circuit court is affirmed.