174 Mo. 186 | Mo. | 1903
This is a bill in equity for leave to redeem the land in controversy from, sale under exe
The case made is this: On October 10, 1888, the plaintiff owned lot 1 and the west half of lot 2, in block 93 of Smith & Martin’s first addition to Sedalia. Her husband owned the east half of lot 2 and the whole of lot 3. They lived upon lot 1. Lots 2 and 3 were improved and the tenement houses thereon were leased. On October 10, 1888, Joseph Gr. White borrowed five thousand dollars from the Penn Mutual Insurance Company, and gave therefor his note secured by a deed of trust, in which his wife, the plaintiff, joined, covering all three lots aforesaid.
On February 6, 1890, Joseph Gr. White borrowed seven thousand dollars from the defendants, Martha E. Smith and Sarah E. Cotton, and to secure the same Mr. and Mrs. White executed their note secured by a deed of trust on certain land owned by Mr. White in Kansas City. At the same time Joseph Gr. White borrowed five thousand dollars from L. S. Mitchell, and to secure the same gave him a deed of trust on certain land owned by him in Kansas City. Thereafter the defendant, Phil E. Chappell, purchased the Mitchell note and still owns it.
S. P. Johns was surety for Joseph Gr. White, and to secure him Mr. and Mrs. White, on November 23, 1896, executed to him a deed of trust on all three of said lots, for thirty-five hundred dollars. Afterwards Johns had to pay the debt of White, for which he was surety, amounting to $232.05, and was about to foreclose the deed of trust, when at the request of Mr. and Mrs. White, the defendant, Phil E. Chappell, on Octo
On November 23, 1896, Mr. and Mrs. White executed to the defendant Ittel as trustee for the defends ants, Mrs. Smith, Mrs. Cotton and Mr. Chappell, a-deed'of trust on the three lots aforesaid, as an additional security for the seven thousand dollars borrowed from Mrs. Smith and Mrs. Cotton, and the five thousand dollars borrowed from Mitchell, and then held by Chappell, as aforesaid, and to cover certain unpaid interest due on said loans. As a consideration for this additional security the holders of the notes secured reduced the interest on the loan to seven per cent. This deed of trust recites that it is subject to the deeds of trust given to the Penn MutualLifelnsurance Company, and to Johns, and contained a provision that if the makers did not pay off the said prior deeds of trust, the parties of the third part (Smith, Cotton and Chappell) might, at their option, do so, and in such event the same should become a debt due to said third parties “and be secured by this instrument in the same manner as said notes were secured.”
The Ittel deed of trust was made to fall due October 20, 1898.
None of these deeds of trust were paid by Mr. and Mrs. White, and thereafter in July, 1899, Mrs. Smith, Mrs. Cotton and Mr. Chappell caused the trustee, Ittel, to advertise under the deed of trust dated November 23, 1896. Thereupon, Mr. White entered into the following contract with Mrs. Smith, Mrs. Cotton and Mr. Chappell (Mrs. White did not sign the contract and does not seem to have known of it at that time):
‘ ‘ Certain property of J. G-. White is advertised to be sold this 22nd day of July, 1899, under a deed of trust made by said J. Gr. White and Mary B. White, his wife, to Adam Ittel, trustee for Martha E. Smith, Sarah E. Cotton and Phil E. Chappell, dated November 23, 1896, and recorded in the recorder’s office in*196 and for Pettis county, in book 111, page 526. To which deed of trust and record thereof reference is specially made. In consideration of $180 paid by the said J. Gr. White to said Smith, Cotton and Chappell, on the indebtedness secured by said deed of trust and the payment of costs of said advertisement, said Smith, Cot-, ton and Chappell hereby agree that said sale shall not, be made as advertised and also agree to not advertise said property for sale under said deed of trust until after September 11, 1899. On September 12,. 1899, said White agrees to deliver possession of the-property covered ,by said deed of trust to the said, Adam Ittel, trustee as aforesaid, for the use of said Smith, Cotton and Chappell, and at that time said White is to have the tenants in the houses on said lots 2 and 3 attorn to said Ittel as trustee as aforesaid. And, said White who now occupies the building on said lot 1 agrees to rent the said lot 1 at a rental of $20 per month, payable monthly at the end of each month, and in ease of the sale of said property under said deed of trust and a purchase of said lot 1 by said Smith, Cotton and Chappell, they agree to continue the said White as tenant of lot 1 and the buildings thereon for one year from September 12, 1899, at a rental of $20 per month, payable, at the end of each month. Signed and delivered in duplicate by said parties'this 22d day of July, 1899.”
Pursuant to this agreement Mr. White paid the $180 on the past-due indebtedness, and gave an order to the tenants, on lots 2 and 3 to attorn to Ittel, the trustee, which they did, and the trustee has collected the rents ever since. A lease on lot 1 was also prepared for Mr. and Mrs. White to execute, but they refused to do so, and repudiated that part of the contract.
In the meanwhile, however, the Penn Mutual Life Insurance Company brought suit to foreclose its deed of trust, and made Mr. and Mrs. White,-.Mrs. Sinith, Mrs. -Cotton, Mr. Chappell, Mr. Johns,-Mr: Lamm- and
This was the status of affairs on December 27, 1899, and on that date Mrs. Smith, Mrs. Cotton and Mr. Chappell, the beneficiaries, caused Mr. Ittel, the trustee, under the deed of trust, of November 23, 1896, to institute a suit in ejectment, against Mr. and Mrs. White, for the recovery of lot 1 aforesaid. They appeared, on February 5, 1900, and filed a joint answer, and such proceedings were had in the case that a judgment was entered for the plaintiff, on March 26, 1900, for possession, ninety-three dollars damages, and the rents and profits were assessed at twenty-five dollars a month. From this judgment the. defendants appealed to the Supreme Court-
On March 31, 1900, Mrs. White began this suit, asking to have the Ittel deed of trust cancelled, and the enforcement of the judgment in ejectment enjoined.
On September 7, 1900, Mrs. Smith, Mrs. Cotton •and Mr. Chappell, the assignees of the judgment fore■closing the Penn Insurance Company deed of trust, caused an execution to be issued on said judgment, and the land (lots 1, 2 and 3) was sold on October 6, 1900. Lot 3 was sold first. A third party became-the purchaser, for $1,600. Lot 2 was next sold to Mrs. Smith, Mrs. Cotton and Mr. Chappell for $3,375. Lot 1 was sold last to Mrs. Smith, Mrs. Cotton and Mr. Chappell, for $3,000. Thus the sale realized $7,975. The sheriff applied $151.40 to costs, $5,587.88 to the judgment, and the balance of $2,235.69, he asked leave to pay into court, because Mrs. White, on the one hand, and Mrs. Smith, Mrs. Cotton and Mr. Chappell on the other, had served written notices on him claiming the surplus.
But on November 10, 1900, Mrs. White filed an ¡amended petition in this case. The gravamen of that petition is, that she was a mere surety for her husband, and that the defendants knew that to be the fact when they took the deed of trust on November 23, 1896, and that by the agreement made between Mr. White and the defendants on July 22, 1899, the time for the payment of the debt by Mr. White was extended by the defendants, without the knowledge or consént of Mrs. White, and therefore she, as surety, was discharged, and the deed of trust on her lot 1 became extinct, and therefore the judgment in ejectment in favor of Ittel, the trustee thereunder, was without support or authority in law, and that she (Mrs. White) never knew of the agreement of July 22, 1899, until after the judgment in ejectment was rendered.
The petition alleges that after the institution of this suit, the defendants, Mrs. Smith, Mrs. Cotton and Mr. Chappell, assignees of the Penn Insurance Company judgment of foreclosure, caused an execution to issue on said judgment and the land to be sold, and that at the date of the sale, on October 6,1900, the judgment, with interest, amounted to $5,586.93, and that lot 3 and the east half of lot 2 (this is a mistake as the sheriff’s return shows it was the whole of lot 2) sold for $4,975, which was within $611 of the amount due on the judgment, and that by deducting the rents that the trustee had collected from the tenants on lots 2 and 3, amounting to $572, there was only $99 due on the judgment after the proceeds of the sale of lots 2 and 3 were applied to the judgment. The plaintiff then says she is entitled to redeem lot 1 and asks that the defendants be compelled to accept $99 as the balance due on the judgment, and that lot 1 be vested in her, or if she be not entitled to' redeem, then she asks that the surplus
The circuit court cancelled the deed of trust of November 23, 1896, enjoined the enforcement of the judgment in ejectment, quashed the execution, and entered a decree allowing the plaintiff to redeem lot 1 from the sale under the judgment of foreclosure in favor of the Penn Insurance Company, upon condition that the plaintiff pay into court $899.13, to be applied as follows : if the judgment should be affirmed on appeal, the fund to go to the defendants as the price of redemption, but if the judgment was reversed and Mrs. White lost the case, then the fund or so much as was necessary for the purpose, was to be given to the defendants to pay them the rent for the house on lot 1, at the rate of $25 a month. The surplus of $2,235.69 was adjudged to the defendants. The court refused to take into account the rents collected by the trustee from lots 2 and 3.
Prom this judgment the defendants appealed.
I.
The first question is whether the plaintiff is entitled to redeem.
There is no statute in this State allowing land sold under a judgment foreclosing a mortgage or deed of trust to be redeemed. A judgment in such a case stands upon the same footing as any other judgment so far as the right of redemption is concerned.
Section 4342, Revised Statutes 1899, provides for a foreclosure of a mortgage by a judgment “and that the equity of redemption may be foreclosed, and the mortgaged property sold to satisfy the amount due.” In sueh cases no right of redemption, after a sale under the judgment, exists.
Tbe Penn Insurance Company mortgage or deed of trust was foreclosed by a judgment of tbe court, and tbe equity of redemption was foreclosed by tbe judgment, as contemplated by section 4342, Revised Statutes 1899. Hence, no statutory right of redemption is present in this case.
. This is a bill in equity, and therefore it is claimed tbe plaintiff bad a right of redemption in equity. No ground for invoking tbe aid of a court of equity is stated in tbe petition. Tbe debt, tbe deed of trust, tbe judgment of foreclosure, tbe assignment of tbe judgment, tbe execution and sale are all admitted, and there is no intimation of any fraud, mistake, unfairness or overreaching in any of those predicates. Tbe petition is predicated solely upon an absolute right in equity to redeem the land after tbe foreclosure of tbe deed of trust by a suit, a judgment, an execution and a sale. No authority is cited in support of tbe position and it is believed none can be found. Tbe statute expressly provides for foreclosing tbe equity of redemption as well as for foreclosing tbe mortgage by tbe judgment. The doctrine that “tbe right to foreclose and tbe right to redeem are reciprocal and commensurable” [2 Hilliard on Mort. (4 Ed.), p. 2, sec. 2], does not apply to foreclosures under our statute, where tbe equity of re
But aside from all this it will be noted tbat tbis suit w;as begun on March 31, 1900. Tbe Penn Insurance Company judgment was rendered on June 3,1899. Tbe petition asked no relief as against tbat judgment. No request was made for leave to redeem tbe land tben, nor was there any doubt cast upon tbe force or effect of that judgment. Thereafter, on October 6, 1900, tbe 'judgment was executed and tbe property sold. Tbe plaintiff stood by and saw her lot sold, and said not a word and did‘not offer to pay anything. Lots 3 and 2 were sold first, and according to tbe allegations of the petition and tbe evidence in tbis case, those two lots brought within $611 of enough to satisfy tbe judgment. Tbe plaintiff did not offer tben to pay tbat (or any other) amount and stop tbe sale and save her property. On the contrary, -she stood by and permitted tbe sale to proceed. Tbe sheriff bad not received enough from tbe sale of tbe other lots to satisfy tbe execution, so be bad no option but to proceed and sell tbe plaintiff’s lot number 1. After be sold it, tbe plaintiff made no claim or demand that she bad any right of redemption, but on tbe contrary she filed a claim, in writing, with tbe sheriff, for tbe surplus after satisfying tbe execution. Thus at tbat time she asserted no claim of any right to redeem. After that'she did not give tbe bond to secure tbe accruing interest as required by section 4344, as a ■condition precedent to a right to redeem, even where tbe foreclosure is by tbe trustee or mortgagee and not by suit.
In short, no right to redeem is pleaded or proved, .and that tbe plaintiff did not feel tbat she bad safe ground to stand on in asserting a right to redeem, she pleaded, in tbe alternative, to be awarded tbe surplus If she was not allowed to redeem.
IL
The next question is, whether the plaintiff is entitled to the surplus resulting from the’ sale of the land under the judgment foreclosing the Penn Insurance Company deed of trust?
This depends upon whether the plaintiff is entitled to have the deed of trust of November 23, 1896, to Ittel, trustee for the defendants, cancelled and the judgment in ejectment enjoined. If she so succeeds there can be no question that she is entitled to the surplus, under the issues and pleadings as they stand in this case.
III.
The original purpose of this suit was to have the Ittel deed of trust cancelled, and the enforcement of the judgment in ejectment enjoined. The plaintiff bases her claim' upon the grounds, first, that she was a mere surety for her husband and that the defendants knew it, and that her separate property (lot 1) was mortgaged solely as surety for her husband’s debt to the defendants; and, second, that as such surety, she was discharged and her property released' from the' mortgage, because by the agreement of July 22, 1899, the defendants extended the time for the payment of the debt for which she was surety, without her knowledge or consent.
There is no room to doubt that the plaintiff and her property were merely surety for her husband’s debt to the defendants, and that the defendants knew such to be the fact.
The $7,000 loan from Mrs. Smith and Mrs. Cotton to the plaintiff’s husband was made on February 6,
The Ittel deed of trust was given November 23, 1896. At that time the debts it was given to secure were more than two years and’ a half past due. The Ittel deed of trust expressly declared on its face that it was given as additional security for the original debts. No new note was given, but by the terms of the Ittel deed of trust the grantors were given until October 20, 1898, in which to pay the original debt, and until default the deed of trust could not be foreclosed.
It is true. Mrs. White signed the original notes with her husband, but she testifies that Mrs. Smith and Mrs. Cotton and Mr. Mitchell knew that she was to be only a surety for her husband, and that of the $12,000 so borrowed by her husband, he expended $10,000 in improvements on the Kansas City property belonging to him, that was mortgaged to secure those loans, and the remaining $2,000 in providing sewers for the property, and that neither she nor her separate property profited a cent by the loan, and that the lenders knew these facts. Her testimony in- this regard stands uncontradicted. The defendants were not even questioned on the subject.
In Vogel v. Leichner, 102 Ind. 55, it was said: “Whether a contract executed by a married woman is one of suretyship or not, will be determined by a consideration of whether or not it was made by her on her behalf, and upon a consideration moving to her or for the benefit of her separate estate. To the extent that the consideration was received by her, or inured to the benefit of her estate, she will be held to have contracted as principal. To the extent that the consideration was received by her husband, or that it went to ■ pay a debt or liability, for which neither she nor her property was bound, it will be held to be a contract of suretyship. . . . And whether she was principal or
In Bank v. Burns, 46 N. Y. 170; Smith v. Townsend, 25 N. Y. 479, and Trentman v. Eldridge, 98 Ind. 525, it was held that where tbe title to tbe wife’s property mortgaged for ber husband’s debts is recorded, such record will, be sufficient notiee to tbe creditors of tbe fact of suretyship.
In Hubbard v. Ogden, 22 Kan. 363, it was held that where a husband and wife execute a mortgage on two separate pieces of real estate, one of wbicb belongs to tbe husband and tbe other to tbe wife, and tbe mortgage is executed for tbe purpose of securing tbe individual debt of tbe husband, tbe wife is surety for tbe husband to tbe extent of her mortgaged separate estate.
“Where a husband mortgages' bis property for bis debt, and in tbe same mortgage tbe wife conveys ,ber own separate property as security for tbe same .debt, ber property so conveyed will be treated in all respects as a surety. ’ ’ [Wheelwright v. DePeyster, 4 Edward’s Ch. 232; Loomer v. Wheelwright, 3 Sandf. Ch. 135; McCollum v. Boughton, 132 Mo. 601.]
In Knight v. Whitehead, 26 Miss. 245, it is held that where tbe fact of suretyship does not appear from the mortgage, tbe wife must show that tbe creditor knew of tbe suretyship in order to entitle tbe property to stand in tbe position of a surety. But tbe fact of suretyship may be proved by parol.
In Leffingwell v. Freyer, 21 Wis. 398, it was held that when a wife mortgages ber real estate for tbe debt ■ of a firm of wbicb ber husband is a member, such real ' estate occupies tbe position of a surety, and if it be- ' comes released at law equity will not., charge it.
It follows, therefore, both from the uncontradicted testimony of Mrs. White and from the record evidence and physical facts in the case, that Mrs. White and her separate property, stood only as surety for her husband’s debt, and that the defendants knew such .to be the fact.
The defendants claim, however, that Chappell bought the Johns deed of trust, and that by the terms of the Ittel deed of trust he was entitled to buy it, and if he did so the Ittel deed of trust was to stand as security for the Johns debt. This is true. But the Johns deed of trust was given to secure Johns against loss as. surety for plaintiff’s husband, and Johns afterwards, paid the debt for which he was surety. So this does not help the defendants at all, for this is a debt of the husband, and at best, the wife and her separate property is only surety for it.
The preponderance of the evidence likewise sustains the finding of the trial court that the plaintiff did not know of the contract of July 22, 1899, between her husband and the defendants until the conclusion of the trial of the ejectment suit, and that she never ratified that agreement, but within a very few days after that,. trial she brought this suit.
The serious question in this case, however, is,.. whether or not the contract of July 22, 1899, granted
The defendants claim that this was not an agreement extending the time for the payment of the debt, but only an agreement not to enforce the deed of trust until after September 11, and that they could have demanded and sued for the debt immediately, notwithstanding such agreement, and that it is only in cases where the payment of the debt is postponed that the surety is released.
The general rule of law is that, “when time is given to the principal debtor by a valid agreement which ties up the hands of the creditor, though it be for a single day, the surety is discharged.” [Bank v. Leavitt, 65 Mo. l. c. 565.]
In Stillwell v. Aaron, 69 Mo. l. c. 542, it was said: “It has uniformly been held in this State, that, if a creditor, for a valuable consideration, make an agreement with the principal debtor which suspends his right of action on the demand for a definite period of time, without the consent of the surety, it operates to discharge the surety. [Rice v. Morton, 19 Mo. 263; Dodd v. Winn, 27 Mo. 501; Ins. Co. v. Carson, 31 Mo. 218; Smarr v. Schnitter, 38 Mo. 478; Bank v. Helmrick, 57 Mo. 100; Coster v. Mesner, 58 Mo. 550; Kincaid v. Yates, 63 Mo. 46; Bank v. Leavitt, 65 Mo. 562; State to use v. Roberts, 68 Mo. 234.]” To the same effect are the cases of Headlee v. Jones, 43 Mo. 237; Rucker v. Robinson, 38 Mo. 154; Barrett v. Davis, 104 Mo. 549; Schuster v. Weiss, 114 Mo. 158; Owings v. McKenzie, 133 Mo. 323.
In Smarr v. Schnitter, 38 Mo. 478, the facts were that Schnitter, as principal, and Stevens and McMaster
This case is authority, therefore, for the proposition that Mrs. White’s property was not only discharged from the Ittel deed of trust by virtue of the contract of July 22, 1899, but also that she herself was discharged from liability on the original $7,000 note of
And the principle announced in that case is sound, and peculiarly pertinent to this case. The Ittel deed of trust covered lot 3 and the east half of lot 2, owned by her husband, as well as the west half of lot 2 and the whole of lot 1, owned by her. As surety for her husband’s debt, she was entitled if sued or without suit to pay the debt and proceed at once against the principal, and be subrogated to the creditor’s right under the Ittel deed of trust, to hold her husband’s property for the debt. This right, at least so far as the immediate right to proceed against her husband’s property was concerned, was cut off by the agreement of July 22, 1899. True that agreement does not in terms extend the time for the payment of the debt, and so far as the words employed go, postpones the right of the creditor to foreclosure of the deed of trust to a time definite, but its effect is the same, for it pro tanto changes the rights of the surety; and postpones the right to resort to the mortgage if the surety paid the debt.
There can be no doubt that if the creditor had released the husband’s property from the operation of the deed of trust, without relinquishing or postponing his right to sue on the note, the surety and her property would be discharged and released. [24 Am. and Eng. Ency. of Law (1 Ed.), p. 851, and the many cases cited in note 2.]
And the principle is the same if, instead of releasing the lien or mortgage on .the husband’s land, the creditor simply postpones the right to proceed against it. For in both eases the contract with the principal is changed without the consent of the surety, and is no longer the contract for whose performance the surety became responsible, and therefore the surety is released. The difference between an absolute release of the lien and a postponing of a-.right under it, is only' a
It follows that Mrs. White and the Ittel deed of .trust on lot 1 and the west half of lot 2, being her separate property, were released by the contract of July 22, 1899.
This being true the trustee under that deed of trust, was not entitled to recover possession of her property as, he did in the ejectment suit on March 26, 1900, and as Mrs. White did not know of the contract of July 22, 1899, until after the conclusion of the trial of the' ejectment case; she could not interpose that contract as a defense in that suit, but may avail herself of it in this action, which was begun as soon as she learned of that contract, which was within a few days after that judgment was rendered. For these reasons the trial court was right in cancelling the Ittel deed of trust on Mrs. White’s property, and in enjoining the enforcement of the judgment in ejectment, and in quashing the execution issued thereon.
It also follows from the premises that the surplus arising from the sale of lots 1, 2, and 3, under the Penn Insurance Company judgment of foreclosure, belong of right to Mrs. White.
The rents collected by the trustee, Ittel, from lots 3 and the east half of lot 2 after he was put into possession under the contract of July 22, 1899, can not be taken into account in this case, because they were collected from the husband’s property and were properly applied to the payment of the husband’s debt. The rent collected by Ittel from the west half of lot 2, that belonged to Mrs. White, between the date on which the tenant attorned to Ittel, under the contract of July 22, 1899, and the date of the sale under the Penn Insurance Company judgment, must be regarded as collected by him as trustee for the plaintiff, and if he has turned it over to the defendants, that amount should be added-
The judgment of the circuit court is reversed and the cause remanded to that court with directions to ascertain the amount of rent that was collected by Ittel from the west half of lot 2, between the date of the attornment aforesaid and the sale aforesaid, and add. that sum so ascertained to the surplus, resulting from the sale under the Penn Insurance Company judgment, and to enter a judgment for the plaintiff for the total amount so found, and to also return to the plaintiff the sum of $899.15 with any accumulated interest thereon, heretofore paid into court under the decree of the circuit court as a condition to the right to redeem, and to adjudge all the costs in the circuit court against the defendants.