| Mo. Ct. App. | Jun 13, 1914
This suit, founded upon section 2850, Bevised Statutes 1909, is brought to enforce a forfeiture of $700, being ten per cent of the amount of a deed of trust, and to collect $250 general damages, for failure to release said deed of trust.
. The case was tried by the court sitting as a jury, and judgment was rendered for the penalty only, with interest thereon from date of the alleged refusal to satisfy.
Defendant held a deed of trust on the farm of P. H. Burton to secure the latter’s negotiable promissory note for $7000 due ten years after date bearing six per. cent interest per annum. The interest was evidenced by ten interest coupon notes of $120 each, respectively due on the first day of December in each succeeding year thereafter. These coupon notes were negotiable, and if not paid when due, bore eight per cent interest from maturity.
After giving this deed of trust, Burton executed a second deed of trust upon .the farm to other parties. These other parties are not interested in this suit in any way. The second deed of trust is mentioned here only to show how plaintiffs, by becoming purchasers of the Burton farm at foreclosure of this second deed of trust, obtained title to the Burton farm and are here demanding the penalty.
•Burton paid the first coupon note on the first deed of trust when the coupon fell due. He paid the second shortly after it fell due except a small amount of interest which had accumulated thereon. The third coupon note fell due December 1, 1908, and he could not pay it. Defendant was pressing him for it, and the deed of trust was. likely to be foreclosed. Burton, in order to save his farm from foreclosure, applied to the holders of the second deed of trust, but they refused
Boggs agreed that he would furnish the money to take up the two coupons (consisting of the full amuont of No. 3 and the small balance due on No. 2) provided that they could be assigned to him and carry with them the security of the deed of trust supporting them. Boggs did not want to advance money to pay interest on the first deed of trust and be postponed in his security until after the second deed of trust. Boggs was not sure at this time that an assignment ■of.the coupon notes to him would carry the security of the first deed of trust.
About January 20,1909, P. H. Burton and his son, R. R. Burton, saw Boggs in an endeavor to obtain money to meet the coupons above mentioned and also the interest coupon note of $900 due on a deed of trust owed to defendant by Ben Burton, another son of P. H. Burton.
An agreement was entered into between P. H.' Burton and Ben Burton on one side and B'oggs on the other whereby the two Burtons gave a chattel mortgage on some personal property and Boggs furnished something over $1300 to take up all three coupons. Boggs sent this money to defendant, and the coupons were assigned without recourse by defendant to Boggs. There is no dispute over the fact that Boggs did furnish this money; that it was sent direct from him to the defendant; that the coupons were assigned, without recourse to Boggs; and that B'oggs has continued to hold them ever since. The only matter in dispute as to Burton’s arrangement with Boggs is whether or
Six months after the assignment of the coupon notes to Boggs, the holders of the second deed of trust foreclosed, and plaintiffs bought the P. H. Burton land at said sale. They notified defendant of this fact, and, after sending the money to pay off the $7000 note held by it, demanded that the deed of trust he released. Defendant executed a deed of release except as to said two coupons and notified plaintiffs that they had been assigned to Boggs. Plaintiffs thereupon made a formal demand of defendant to execute a full deed of release which defendant refused to give, and after the expiration of the thirty days required by section 2850', brought this suit for the penalty.
It is plaintiff’s contention that the transaction between P. H. Burton and Boggs was a loan made by Boggs to Burton and that the money sent to the defendant by Boggs was a payment, discharge and ex-tinguishment of said coupons, and hence defendant had no right to refuse to execute a full deed of release and is, therefore, liable for the penalty inflicted by the statute.
Defendant’s contention is that the agreement between Burton and Boggs was that Boggs should have ■said coupon notes assigned to him and hold them as .security along with the chattel mortgage; and that defendant assigned said coupons in good faith to Boggs ■and he still holds the same, and therefore, Boggs is the man to release as to them whenever he is repaid. And as .the defendant has released as to everything except said two coupon notes, it ought not to be held liable for the penalty.
The judgment is for the penalty only and plaintiffs must, therefore, bring their case clearly within the spirit and manifest intent of the statute. Section 2850 is highly penal and must be strictly construed. [Wing v. Central Life Insurance Co., 155 Mo. App. 356" court="Mo. Ct. App." date_filed="1911-05-01" href="https://app.midpage.ai/document/wing-v-union-central-life-insurance-6627495?utm_source=webapp" opinion_id="6627495">155 Mo. App. 356; Snow v. Bass, 174 Mo. 149" court="Mo." date_filed="1903-04-01" href="https://app.midpage.ai/document/snow-v-bass-8014623?utm_source=webapp" opinion_id="8014623">174 Mo. 149.] When the basis of an action is a statute which is highly penal, the statute must not only be strictly construed but must be applied only to such eases as come clearly within its provisions and manifest intent. [Eddington v. Telegraph Co., 115 Mo. App. 93" court="Mo. Ct. App." date_filed="1905-11-14" href="https://app.midpage.ai/document/eddington-v-western-union-telegraph-co-8264014?utm_source=webapp" opinion_id="8264014">115 Mo. App. 93, l. c. 98; Bradshaw v. Telegraph Co., 150 Mo. App. 711" court="Mo. Ct. App." date_filed="1910-11-10" href="https://app.midpage.ai/document/bradshaw-v-western-union-telegraph-co-6626375?utm_source=webapp" opinion_id="6626375">150 Mo. App. 711; Rixke v. Telegraph Co., 96 Mo. App. 406" court="Mo. Ct. App." date_filed="1902-11-03" href="https://app.midpage.ai/document/rixke-v-western-union-telegraph-co-6620542?utm_source=webapp" opinion_id="6620542">96 Mo. App. 406.]
The coupon notes were negotiable, and, when detached from the bond or note to which they pertained, they possessed all the attributes of commercial paper. [8 Am. & Eng. Ency. of Law (2nd Ed.), 6. Edwards v. Bates County, 163 U.S. 269" court="SCOTUS" date_filed="1896-05-18" href="https://app.midpage.ai/document/edwards-v-bates-county-94482?utm_source=webapp" opinion_id="94482">163 U. S. 269, l. c. 271.] And when negotiated they carried with them the security given by the deed of trust pro trnto. [8 Am. & Eng. Ency. of Law (2nd Ed.), 13.]
The assignee of a note secured by a deed of trust is the party entitled to receive payment and who is thereupon bound to satisfy the record as to that note.
The trial court found that the coupons were in fact assigned and delivered to Boggs. And while the trial court omitted to find specifically that there was no agreement between Burton and Boggs that the latter was to have them assigned to him, yet, the inference is that the court proceeded on this theory since the court states, in a written memorandum filed, that Burton borrowed the money and directed it to be sent to-the defendant for the purpose of paying off, taking up and returning to him, Burton, said coupons 2 and 3.
It is not seen how the trial court could have reached the conclusion that there was no agreement that Boggs should take an assignment of the coupon notes. Boggs testified to it, Burton’s son who was present, testified to it. The letters written to the company by Boggs show that he was acting in his own behalf and was proposing to take the coupons on condition they were assigned to him. The assignment was strictly in keeping with , the preliminary negotiations between Boggs and defendant’s agents Knapp and Hairston. The only evidence tending to show that P. H. Burton did not agree to them being assigned to Boggs is contained in the testimony of Burton taken at a former trial of the case before another judge. It was agreed that this testimony should be admitted in this trial. In that testimony P. H. Burton denied that there was any agreement that B'oggs should have an assignment of the coupons. But when he went on the. stand at this last trial, he was asked if he had any agreement other than that disclosed by the chattel mortgage. He answered: “I don’t remember of anything. I know I was trying to borrow money of different fel
Plaintiffs cannot claim in this case that they were misled by anything Boggs did or failed to do at this foreclosure sale. The defendant company had nothing to do with that foreclosure. It was not represented at that sale, and it took place months after the assignment had been made to Boggs. Neither can plaintiffs enforce the penalty provided by the statute on the ground that plaintiffs were misled by defendant’s first letter to plaintiffs, because that letter was not written to plaintiffs until after plaintiffs had purchased at said foreclosure sale. Whether plaintiffs can be required to pay the amount due on these two coupons because of what took place at the foreclosure sale is vastly different from the question whether defendant can be made to pay a penalty for refusing to release as to those two coupons. We express no opinion on the question as to whether Boggs by failing to announce his title to the two coupons at said sale is estopped from claiming that they are now liens upon the land plaintiffs bought. And such failure, if any, to assert his claim, and his alleged silence when it is’ claimed that the announcement was made that the interest on the prior deed of trust had been paid, may be indeed some evidence that he did not have the right to hold them. But there is no evidence anywhere tending to show or carrying even the slightest inference that the defendant knew that he had no right to take an assignment. It is true that when one deals with an agent he is bound to know that agent’s authority unless the principal has so conducted, himself as to lead one to believe that the agent has the authority. But there is no evidence anywhere showing that the defendant had any notice whatever that Boggs was acting as Burton’s agent. On the contrary, all of Boggs ’ communications with the defendant show that he was acting for himself, and that he was furnishing the money on condi
However, passing the question whether there was any evidence tending to show Burton agreed to an assignment, and without deciding whether there was or not, the case may be considered on the assumption that Burton did not in fact agree to-an assignment. If the defendant in good faith believed, and had no reason to think otherwise, that Boggs was acting for himself and was entitled' to an assignment of the coupons, and defendant assigned said coupons to him, and notified Burton of that fact, and Burton thereafter made no objection thereto, then it is not seen how the defendant company could be penalized under the statute for failure to release. If, as a matter of fact, there was no agreement from Burton that the coupons should be assigned to Boggs, but they were to be paid off and extinguished, this might affect the right of the holder of the assigned coupons to participate in the funds or property covered by the deed of trust, but it would not be conclusive in a suit by plaintiffs, or by Burton, against defendant for the penalty in this suit.
Upon this view of the case there is no evidence anywhere tending to show, or from which an inference can be drawn, that defendant knew, or had any notice, when it received from Boggs the money on the two coupons, that Boggs was Burton’s agent and had no right to an assignment thereof. On the contrary, all the information it received was that Burton was acting for himself and was taking up the coupons as as
This was done on February 11,1909. The next day, February 12,1909, defendant wrote Burton that Boggs had paid the balance due on coupon No. 2 and all of coupon No. 3 “and the same have therefore been assigned to him without recourse on this company. ’ ’ The letter also told him that when he paid the principal note he should show that he had paid Boggs in order to get a full release. Burton never objected nor made any reply to this letter. He admits receiving a letter which he did not produce, and attempts to recall what the letter contained. He admitted that he understood from it, however, that he would not get the coupons until he had paid Mr. Boggs, and also admitted that he made no reply to it. Later on, when testifying in answer to a question whether he agreed "with Boggs that the latter should hold the coupons, he answered that if he did, he didn’t remember it. Defendant then asked him this question:
“Q. You wouldn’t be right positive about - it though, now would you, Mr. Burton?” To which he made the following answer: “A. I couldn’t say; there
Now, even on the assumption that Boggs had no agreement with Burton that the coupons should be assigned to him, still as the defendant had no knowledge other than that Boggs was taking them up as assignee and had no notice to the contrary nor anything to lead a reasonable man to believe otherwise, and as the company notified Burton that the coupons had been assigned to Boggs and Burton made no objection thereto, certainly Burton could not claim the penalty for refusing to release. If Burton entrusted money to his agent Boggs to pay the coupons, and Boggs, in violation of his duty, took an assignment of the notes to himself and the company, without'notice of Boggs’ agency or of any other fact, assigned them in good faith to Boggs, and notified Burton of that fact and Burton made no objection thereto, certainly Burton would not be in a position to enforce the penalty. And if he could not, how could plaintiffs, since they, by purchasing at foreclosure sale under a deed of trust held by other parties, stepped into Burton’s shoes and have no better nor greater rights than he.
This is not a suit to determine whether or not the coupon notes assigned to Boggs are alive and subsisting obligations. It is a suit to penalize the defendant for refusing to release the deed of trust as to coupons which it had assigned to a third party under circumstances that, so far as defendant is concerned, were perfectly right and proper. Burton was notified and clearly acquiesced in it. And it was done for his benefit since it was the only way to save his farm from immediate foreclosure. It will not do to say that inasmuch as Boggs was in reality Burton’s agent to pay. off the
The judgment is, therefore, reversed.