Turner v. Johnson

Black, J.

Thе plaintiff, Thomas Turner, on the twenty-fifth-of July, 1875, executed a deed of trust on twenty-eight hundred and fifteen acres of land in DeKalb county, this state, to secure the. paymept of his note of that date for fifteen thousand dollars, due in five years with semi-annual interest, payable to the Life Association of America. The defendant Johnson, as the surety of Turner, paid 'a debt to the Northern Bank of Kentucky. He was also bound in a like capacity for the payment of another debt of Turner to the Farmers’ National Bank of Mount Sterling, Kentucky.' Both of these debts had been reduced to judgment against Turner and Johnson. The latter had paid another debt for A. Gr. Peters, for which Turner was bound as a co-surety, but had paid no part of his share, and hence was bound to make contributions to Johnson. ■ To secure these several debts, amounting to seven or eight thousand dollars, Turner made a mortgage to Johnson on the Missouri lands, previously mortgaged to the Life Association. The mortgage to Johnson bears date the sixteenth of September, 1876. Certain lands in Iowa were included in this deed of trust, and in the mortgagе. The Missouri lands were sold under the deed of trust on the twenty-third of April, 1879, and Johnson became the purchaser at the sum of eleven thousand dollars.

On the twentieth of July, 1882, plaintiff commenced this suit in the DeKalb circuit court to redeem from the mortgage and sale under the deed of trust. Relief is asked mainly on the ground that Johnson purchased the property at the trustee’s sale under an agreement with plaintiff that he should have the right to redeem within a reasonable time by paying the amount bid and all other indebtedness of Turner to Johnson. There were unsettled accounts between the parties, besides those mentioned in the mortgage. The venue of the cause was changed to the Livingston circuit court. That court made a decree allowing the plaintiff to redeem, and sent the cause to a referee to hear the evidence and state the accounts between the parties. The report of the referee,, as modified by the court, shows an indebtedness of Turner to Johnson of about eighteen thousand dollars. Both parties have appealed to this court; and the first question on the defendant’s appeal is as to the right of the plaintiff to redeem the land.

The record is voluminous, beyond precedent, but the following statement of the evidence will present the question now to be determined: Turner and Johnson resided at Mt. Sterling, in the state of Kentucky, and for many years had been on friendly terms. Turner as an attorney-at-law had represented Johnson in many matters. Turner had paid some three or four thousand dollars on the principal of the debt to the Life Association, located at St. Louis, but in the latter part of the year 1878, having made default in the payment of the Interest, the Association threatened to sell the land under the powers contained in the deed' of trust. He felt his inability to pay that debt at its maturity in 1880. He applied to various persons, and among others to Johnson for assistance. He testifies to several conversations in November and December, 1878, and in which he says Johnson agreed either to buy the debt of the Life Association, or bid in the land at the trustee’s sale, and hold it as security for the amount bid and for the mortgagе and other debts owing to Johnson. That conversations were had on this subject at that time is conceded; but Johnson, states emphatically that he made no such agreement. Turner was then a member of Congress from Kentucky, and left for Washington the last of December, 1878. About this time Johnson went to Georgia, but left the matter with his attorney, Judge Peters, who entered into correspondence with the-Life Association. A letter from Peters to the Association, dated in January, 1879, stated the fact that Johnson held a second mortgage, and made inquiry if they would allow Johnson to arrange the matter by paying, one-half of the debt down and the other half in twelve months. Further correspondence led toa postponement of the proposed sale until the twenty-third of April, 1879, in order to give Johnson an opportunity to come to this state and examine the land. During this correspondence, Turner wrote the Association that Johnson would buy in the land and allow him to redeem. It does not appear that Johnson ever saw this letter.

On the twenty-fifth of January, 1879, Johnson directed Peters to go ahead a,nd fix а time for a conference-with the Association ; and after speaking of the necessity of making some money arrangements, evidently in respect to this matter, he says in that letter: “I am glad the parties to the mortgage refused to make any arrangement and give time to Turner. I prefer it should be made to suit me. In our conference if I am satisfied the land has value enough to pay me after-paying off the mortgage, I will prefer they go and sell bona jiedly,* and I attend the sale and bid the amount of the debt, take legal title in that sale. If Turner pays mе in a reasonable time the whole amount I paid for land and as his security, let him do so and redeem it. I think this the better plan. What do you think of it?” After this and on the twelfth of February, Johnson, in a letter to Turner, says he had been in communication with the Association; that the debt amounted to twelve thousand five hundred and eighty-two dollars, and he goes on to say : “I will, however, if able when I return home and it is not too late for the sale, go and-see it (the land ).> It is too big a thing to go into blind.” To this Turner replied by urging Johnson to have the-sale postponed, saying: “ I fear this is the only mеans by which I can make you whole.”

Johnson reached St. Louis on or before the sixteenth of ' April, and on that day he telegraphed Tufener : “ Please instruct by telegraph, at my expense, Henry W. Hough, trustee, to sell the DeKalb county lands in one parcel, without subdivision. This will be for your interest and mine, and the Life Association consents.” ‘To this Turner answered by telegram : “Sell DeKalb land in ‍‌​‌​​​‌​‌‌‌‌‌‌​‌‌‌‌‌‌‌‌‌​‌‌​​​​‌​​​​‌‌‌‌​‌​‌‌‌‌​‍a body without subdivision.” Johnson says he did not send this telegram, but only gave his consent to the Association to say to Turner that he, as second mortgagee, was willing for the land to be sоld in a body ; but the evidence is quite clear that he not only knew how the telegram was worded, but that it was sent in his name and with his approval and that he saw the answer.

Johnson then went to DeKalb county, saw the land, and then telegraphed Turner that he could not buy the land until Dawson, a tenant in possession, was directed to turn over possession. Turner at once complied with the request by giving Dawson suitable directions to that end. On the same day, the twenty-first of April, Johnson wrote Turner that he had not yet agreed to buy. This statement clearly means that he had not yet cоme to an agreement with the Association; but he did, before the day of sale, indicate to the Association that he would bid eleven thousand dollars and no more, and it is equally clear the Association had agreed to let the land go at that- price. In this letter of the twenty-first of April, Johnson among other things says: “ I got your answer as I was leaving home for this state. Certainly I would let you redeem the lands if I buy, in any reasonable time, say twelve months, and would no doubt be glad to ,do it by your paying what I pay, and also paying me all you owe me, cost and еxpenses, etc., which I understand as your request, and I repeat I would gladly do it. All I want is my money back, and ten per cent, interest. I can’t bind myself in law to do this any day to come, as that would cut me out of the right of making sale, and I don’t want to hold any lands in this state. I will be liberal with you, and hope you will soon make a rise, and come prepared to buy back the land if I should buy it, and I confess I am at a great loss what to do. If I buy with my claims it will cost me twenty-two or twenty-three thousand dollars, or more. I telegraph you to-day from here. Will post you'after the sale.” This letter was not and could not have been received by Turner, until after the twenty-third of that month, the day of sale.

There is much conflict in the evidence as to what transpired on the day of sale. We are, satisfied, however, there was no offer to sell the land in parcels. It is also clear that a number of persons desired to bid-on parcels and would have paid a much higher price than that bid therefor, per acre, by Johnson, had it been sold in subdivisions. There is evidence to the effect that Johnson gave out word that he bid in the interest of Turner. Johnson says he made no such stаtement, but says he made a public statement at the sale that he bid for himself alone, and that he would bid no more than eleven thousand dollars, and in this he is corroborated by several witnesses who were at the sale.

1. The evidence in this case leads to the conclusion that Johnson had no confidence in Turner’s ability to pay the debts, and his former experience furnished a sufficient basis upon which to rest that conviction. He evidently designed to buy in th e land mainly for his own protection, and to do it in such a way as to be under no' legal obligаtions to Turner on account of the purchase, leaving any favors which he might extend to Turner as a matter of grace. But we are satisfied a different effect must be given to these transactions, and for these reasons: Turner expected Johnson to either take up the note held by the-Life Association, or bny in the lands and hold them as a security for the amount bid and for other debts due Johnson. Johnson’s correspondence .with the Life Association shows that he first contemplated a purchase of the note, then of the land. He hаd .not determined which, if either, he would do before he came to St. Louis, but he had expressed a willingness to Judge Peters to allow Turner a reasonable time to redeem, in the event he bought the land. This was what Turner desired, and that desire must have been known to Johnson, for it had been the object of Turner’s solicitations from first to last. No terms of redemption had been spoken of in the letters, save that of a reasonable time, and we are satisfied these were the only terms spoken of in the conversations. Now when Johnson came tо St. Louis and asked Turner to allow the lands to be sold in a body, and, before the sale, said he could not buy unless the tenant was directed to turn over possession, Turner had a right to conclude, and, indeed, could come to no other conclusion than this, that Johnson intended to buy the land and allow him the right to redeem, and that, too, within a reasonable time. If Johnson intended any other arrangement he could have indicated it to Turner by telegram, and under the circumstances it devolved upon him to do so. He must stand on the state of facts known to bоth parties, and the understanding so clearly to be deduced from them. His uncommunicated intentions can be of no avail. The sale of the land in a lump excluded the other persons desiring to bid from the list of competitors, and for all practical purposes left the matter to defendant’s proposed bid of eleven thousand dollars.

The sale of such a body of lands, constituting at leást three farms, in a lump would of itself be sufficient reason for setting aside the sale on a timely application, ■but for Turner’s consent to a sale in that wаy. This consent and the possession having been obtained upon the understanding on the part of Turner before indicated, it would be a gross injustice to measure his rights by any other agreement. The agreement then is that of a second mortgagee to buy at the sale under the first mortgage, and allow the mortgageor a reasonable time to redeem by paying the amount bid, the second mortgage debt, and other adjusted accounts. The fact that this agreement rests in parol is of no avail to the defendant. The statute of frauds cannot bе invoked by one who purchases with such an agreement, and this for the further reason that the statute was never designed to aid a party in the perpetration of a fraud, but was intended to prevent frauds. Rose v. Bates, 12 Mo. 30; Damschroeder v. Thias, 51 Mo. 100; Gillespie v. Stone, 70 Mo. 506; O'Fallon v. Clopton, 89 Mo. 287; McNew v. Booth, 42 Mo. 190. This view of the case renders it unnecessary to say more of the letter of the twenty-first of April. Nor need we consider the conflicting evidence in respect of two other letters from defendant to plaintiff, one written from Missouri after and on the day of sale, which plaintiff says he did not receive, and the otherin a month or so thereаfter, said by plaintiff to have been lost, ‍‌​‌​​​‌​‌‌‌‌‌‌​‌‌‌‌‌‌‌‌‌​‌‌​​​​‌​​​​‌‌‌‌​‌​‌‌‌‌​‍and which defendant says he did not write. Whether the defendant wrote these two letters or either of them is not important. We let the judgment stand on what we conceive to be reliable evidence of matters as they stood when the sale took place. Our conclusion is, that defendant is substantially a mortgagee in possession, and there was no error in allowing the plaintiff to redeem.

2. Ineffectual efforts were made in November, 1879, and in the year 1880 to come to a settlement of the unadjusted аccounts existing between the parties, each accusing the other of being in fault and the cause of the failure to settle. These accounts were complicated, as shown by the mass of evidence taken in respect of them. The improvements placed on the land by Johnson were of such a character only as good husbandry called for, and for which expenditures he has been compensated. This suit was commenced within three years and three or four months after the date of the trustee’s sale ; and we cannot see that the question of laches, made by defendant, has any proper application to the case. On the accounting branch of the case, defendant filed seven exceptions to the report of the referee, three of which were sustained. Plaintiff filed thirty, one being sustained in part. The other exceptions were overruled. To many of these rulings errors are assigned by one side or the other; and what is hereafter said will be in response to the questions thus raised.

, 3. A mortgagee in possession is held to an еxercise of that care and diligence which a prudent person would-exercise in respect of his own property. He will not be held accountable for more than the rents actually received, unless he has been guilty of fraud or negligence. Ely v. Turpin, 75 Mo. 286; 2 Jones on Mort., sec. 1123. He is not entitled to compensation for his own trouble in taking care of the mortgaged property, the reason of this rule being, that to allow such compensation would tend to facilitate usury and oppression, and besides'this the mortgagee acts in his own intеrest and for his own benefit. 2 Jones on Mort., sec. 1132. There is a tendency toward a modification of this rule as to trustees and possibly even mortgagees in possession ; but where, as here, the mortgagee attends to the business through agents, we think he should not be allowed compensation for his own trouble. Here was a large body of land, three farms, and the defendant built a number of miles of fence. Reasonable expenses paid to an agent to superintend the work, lease the land, and collect rents are proper matters of credit. Á prudent owner acting for himself might well incur like expenses. The evidence of the value of the rent is conflicting ; some of the estimates have all the appearances of being extravagantly high, but the evidence, as a whole, shows that defendant managed the property with full ordinary care. His management of the lands, it is safe to say, has been superior to that of the plaintiff before the sale, and there can be no pretense for a charge of fraud or negligence in the management of the property. He stands charged with the rents received, and in other respects the rulings of the court were in accord with the principles before stated.

4. One of the debts due from Turner to Johnson is described in the mortgage dated the sixteenth of September, 1876, as a judgment in favor of the Farmers’ National Bank against Turner and Johnson, * ‘ and Johnson has agreed to pay it and take a transfer of the judgment.” This judgment bore ten per cent, interest per annum. Johnson was the surety of Turner. The referee allowed six per cent, interest on $2,966.65, the amount paid by Johnson on December 20, 1876. The court modified the allowance so as to bear ten per cent, interest. By the statute laws of Kentucky, a surety who pays a judgment ágainst the principal and himself has the right to an assignment thereof from the plaintiff or his attorney, and may sue out execution thereon. That Johnson would be entitled to ten per cent, is not denied, if the judgment was properly assigned. It was not assigned until December, 1882, or January, 1883. This statute (Stanton’s Rev. Stat., chap. 97, p. 396) was construed by the court of appeals of Kentucky in Veach v. Wickersham, 11 Bush, 261, and in Joyce v. Joyce, 1 Bush, 474; and we do not understand the ruling to be that the assignment must be made at the time the debt is paid by the surety. Without such assignment or an express contract, the surety would stand on his implied contract for reimbursement; but we are of the opinion the assignment may be procured at any time before that implied . contract ceases to be a subsisting demand. No claim is made that it was not a subsisting debt at the date of the assignment. Besides this the mortgage provides for an assignment, doubtless with the view of giving Johnson all the benefits of the judgment creditor in respect of the debt. The debt, it is true, wаs paid directly to the bank, and the assignment was made in the name of the bank by Mr. Reid, who signed the firm name of Apperson & Reid, the attorneys who procured the judgment. Apperson died before the date of the assignment, but Mr. Reid had the power to make the assignment notwithstanding the death of his partner. The fact that Johnson paid the debt directly to the bank and not to the attorneys is immaterial. He paid the debt; the law gave him the right to an assignment from the bank or its attorney, and it is wholly immaterial by which it was made. It was after all the act of the bank, done in compliance with the plain command of statute law. There was, therefore, no error in allowing ten per ■cent, interest on this demand.

5. The defendant stands charged with the price at which he sold two forty-acre tracts in 1880 and 1881. The evidence is satisfactory to the effect that the price at which they were sold was the then full value.. ‍‌​‌​​​‌​‌‌‌‌‌‌​‌‌‌‌‌‌‌‌‌​‌‌​​​​‌​​​​‌‌‌‌​‌​‌‌‌‌​‍It has been held, where the mortgagee disposes of the premises .and the circumstances do not call for the exercise of any rigor, the measure of the damage' will be the value of the land at the date of sale. Wilson v. Drumrite, 24 Mo. 304. This was all the plaintiff claimed in his amended petition, but by the second amended petition he asked for the value of the land at the date of the trial. Our attention is called to the fact that this portion of the second amended petition was stricken out, and that an exception to the ruling is not preserved by the bill of exceptions. The demand for increased damages is, therefore, not properly before us.

6. We may here say the defendant in his briefs <complains that he was not allowed ten per cent, interest on the eleven thousand dollars, and that the court reduced the principal of the little debt from $5,908.70, as stated by the referee, to fifty-five hundred and nineteen dollars ; but as the defendant’s motion for new trial makes no complaint of these rulings they are not considered here.

7. Another question is, what rate of interest should be allowed defendant on the amount he bid at the trustee’s sale. The debt secured by the deed of trust bore eight and two-thirds per cent, before, and ten per cent, after maturity. The sale was made before the maturity of the principal debt. One who purchases or holds under a purchaser at an invalid sale under a mortgage given to secure school moneys will be subrogated to the rights of the mortgagee, 'the purchase money having been paid to the credit of the school fund. Honaker v. Shough, 55 Mo. 472; Wilcoxson v. Osborn, 77 Mo. 632. So where one purchases at a void administrator’s sale, and the money is applied in discharge of a mortgage on the same land, he will be substituted' to the rights of the mortgagee. Valle v. Fleming, 29 Mo. 152. Johnson by his purchase acquired the legal title, but subject to the right of plaintiff to redeem, and there can be no doubt that for all purposes of redemption he stands in the shоes of the Life Association to the extent of the amount bid, namely, eleven thousand dollars. His right to hold the property until the payment of the amount bid, and his liability to account for rents, carry the right to have the full benefit of the deed of trust, including interest on the debt at the rate therein specified. Harper v. Ely, 70 Ill. 581. Defendant is in no sense a volunteer. He purchased to protect himself, as second mortgagee, and at the request of the plaintiff. He is entitled to the full benefit of the deed of trust and that gives him at least eight and two-thirds per cent. Defendant сontends for ten per’ cent. But for the reasons before stated, this complaint is not presented by the record.

8. Numerous other objections are made to the-report of the referee by the plaintiff, and especially as to the amount allowed for services rendered defendant as an attorney, and as to the amount with which the defendant is charged as revenues earned by the stallion “Magic,” the joint property of these litigants. The referee heard the mass of evidence and stated the accounts with greаt care, and'we are satisfied with Ms conclusions. As to the other matters of complaint, so far as we can see from the imperfect abstracts on this-branch of the case, the referee’s report, as modified and confirmed by the court, is without error, both as to the finding of the facts and the statement of the account.

9. Finally as 'to costs: These were, by the final decree, ordered to be taxed to plaintiff, except as otherwise adjudged during the progress of the cause. The statute provides : “In all civil actions, or рroceedings of any kind, the party prevailing shall recover his costs against the other party, except in those cases in which a different provision is made by law.” Other sections provide that costs shall' be given at the discretion of the court, first, where the defendant shall plead several matters, and a verdict shall be for plaintiff on any issue ; second, where there are several counts in the petition, and the verdict on any one shall be for the defendant. These statutes are the same now as in-the Revised Statutes of 1845, save the present statute-speaks of a “petition” and the former of a “declaration.” R. S. 1845, p. 242, secs. 6, 8, 9; R. S. 1879, secs. 990, 992, .993. These provisions in the code of 1845 have reference to actions at law alone, for the-eighteenth section provides: “Upon the complainant dismissing his bill in equity, or defendant dismissing-the same for want of prosecution, the defendant shall recover against the complainant his costs ; and in all other cases in equity, it shall be in. the discretion of the court to award costs or not, except in those cases in which а different provision is made by law.” Under this statute ‍‌​‌​​​‌​‌‌‌‌‌‌​‌‌‌‌‌‌‌‌‌​‌‌​​​​‌​​​​‌‌‌‌​‌​‌‌‌‌​‍it was the uniform ruling of this court, in equity suits, not to interfere in the taxation of costs by the trial court; unless there had been an abuse of the discretion. 7 Mo. 134; 19 Mo. 668; 24 Mo. 304. In the revision of 1855 this section is modified by substituting ■“plaintiff” for “complainant;” and “plaintiff dismisses his suit ” for “ complainant dismisses his bill in equity.” The section still remains, as thus modified. R. S. 1879, sec. 1002. The chief purpose of the change in the phraseology of these sections was to conform them to the nomenclature of the new code, in which the party complaining is called plaintiff, and the first pleading a petition, both in actions at law and in equity.

As a general rule, where the plaintiff is the prevailing party in a suit in equity, he should recover costs. It was so held in Hawkins v. Nowland, 53 Mo. 328, but without any consideration of the history of these statutes. Where, however, substantial issues are found for one party and like issues found for the other, the taxation of costs will rest in the discretion of the court, and will not be disturbed unless there has been a clear abuse of that discretion. This discretion is vested in the court when the verdict is for one party on one count or defenсe and for the other party on another count or defence, and there is no reason why the principle should not be applied in equity suits, though there be but one count, there being distinct issues. S ome support is given to this conclusion by what was said in Dupont v. McLaran, 61 Mo. 511. In this case, there were many distinct issues, that as to the right to redeem being found for the plaintiff, and those as to the amount of money to be paid for the defendant. We may, therefore, settle the question upon equitable principles.

The general rule is, that the plaintiff, and not the defendant, must pay the costs in a suit to redeem from a mоrtgagee’s possession, and this though he succeeds. There are exceptions to the rule, however, as where the mortgagee sets up an unwarranted or unconscientious defence, and thereby makes costs and delay. Slee v. Manhattan Co., 1 Paige, 81; Brockway v. Wells, 1 Paige, 618; 2 Jones on Mort., sec. 1111. In the case last cited, it is said: “The defendant Brookway does not appear to have acted fraudulently or in bad faith in selling the contract. He only mistook his legal and equitable rights, and that forms no ground for charging a mortgagee with' costs on a bill to redeem.”

In the case of Harper v. Ely, 70 Ill. 582, a sale under a trust dеed was held void on the ground that Haddock virtually purchased at his own sale, and for this reason the sale was deemed fraudulent. Ely purchased from him with notice. The bill was one to redeem, and it was held that the. costs were properly adjudged against the complainant. In Phillips v. Holsizer, 20 N. J. Eq. 308, the question was, whether, under the circumstances, the transaction was a mortgage or a contract to reconvey. The defendant refused to accept the money when tendered, and resisted the suit on the ground that the transaction was not a mortgage, аnd failed in his defence ; yet he was allowed costs of the suit. The plaintiff made default in payment ,of the debt secured by the deed of trust, and has been in default for years as to the mortgage debts. He has shown no haste in paying these debts, and made no tender to defendant. Defendant purchased and went into possession at the urgent solicitation of plaintiff. He has been mistaken, but honestly mistaken, as to the character and legal effect of that purchase, and the repeated charges of fraud on his part are without any support in the reliable evidence in the case. The decree is practically a foreclosure in favor of defendant for over eighteen thousand dollars. Heavy as the costs must be, they are properly taxed to plaintiff, certainly no abuse of the discretion of the trial court is shown.

The judgment is in all respects affirmed, except as hereafter stated. Each party will, of course, pay the costs of his appeal to and in this.court. In view of these appeals ‍‌​‌​​​‌​‌‌‌‌‌‌​‌‌‌‌‌‌‌‌‌​‌‌​​​​‌​​​​‌‌‌‌​‌​‌‌‌‌​‍the plaintiff will have six months from this date in which to make the deposit of money specified in the original decree. And to this extent the decree is modified.

Eay, J., absent; the other judges concur.

Case Details

Case Name: Turner v. Johnson

Court Name: Supreme Court of Missouri

Date Published: Apr 15, 1888

Citation: 95 Mo. 431

Court Abbreviation: Mo.