Opinion
No. 38770.
May 2, 1944. Rehearing, Motion to Modify Opinion or Transfer to Banc Denied, June 5, 1944.
1. MORTGAGES: Damages: Deed Intended as Mortgage: Wrongful Disposal: Right to Money Damages. Where the grantee of a deed intended as a mortgage wrongfully disposes of the land to an innocent purchaser, the mortgagor may be awarded money damages.
2. MORTGAGES: Redemption: Right of Court to Fix Terms. The trial court had the right to fix the terms of redemption of the deed intended as a mortgage upon a basis which would provide just compensation to the mortgagor, refusing to award money damages.
3. MORTGAGES: Redemption: Computation of Debt. It does not appear that the trial court incorrectly computed the total debt of the mortgagor.
4. MORTGAGES: Redemption: Proceeds of Timber as Credit. The mortgagor was entitled to a credit for the proceeds of timber sold by the mortgagee.
5. MORTGAGES: Redemption: Terms Fair to Mortgagor. The terms of the decree permitting redemption of the deed intended as a mortgage were fair to the mortgagor.
6. PARTIES: Judgments: Executrix Individually Bound by Decree. The answer of the executrix was sufficiently broad to respond in her individual capacity and plaintiff filed a reply thereto without objection. The executrix is bound individually by the decree and plaintiff may not complain because she was not originally a party to the suit.
7. COSTS: Equity: Assessment Against Prevailing Party: Discretion of Court Sustained. The trial court had the discretion to assess the costs against the plaintiff in an action in equity even though a decree was entered in favor of the plaintiff.
Appeal from Circuit Court of St. Louis County. — Hon. Peter T. Barrett, Judge.
AFFIRMED AND REMANDED ( with directions).
John A. Nolan, J. Arthur Francis and Arthur T. Brewster, pro se, for appellant.
(1) The decree, as rendered was contrary to the pleadings and issues tried, and, therefore, not responsive to the issues pleaded. Payment of the sum decreed in favor of Lucy A. Terry, to her, could not be pleaded in bar as against a later claim against plaintiff by the estate of P.S. Terry, deceased. Hecker v. Bleish, 319 Mo. 149, 3 S.W.2d 1008; Ross v. Ross, 81 Mo. 84; Schneider v. Patton, 175 Mo. 684, 75 S.W. 155; Agan v. Quick, 226 S.W. 601; State ex rel. v. Ry., 193 S.W. 932; Kortjohn v. Seimers, 29 Mo. App. 271. (2) Plaintiff had a right to elect to accept damages in lieu of his property, and did so elect in his amended petition. Nor could the trial court compel the plaintiff to accept a reconveyance of the property, unless it was in the same condition as it was when it was converted by Terry. Wilson v. Drumrite, 24 Mo. 304; Turner v. Johnson, 95 Mo. 431; Jones v. Bank, 67 Mo. 109; Reilly v. Cullen, 159 Mo. 322, 60 S.W. 126; Smith v. Dickerson, 199 S.W. 956; Mooney v. Byrne, 163 N.Y. 86, 57 N.E. 163. (3) The trial court's finding of an indebtedness from plaintiff to the estate of P.S. Terry, deceased, of $6,668.55, was arrived at by charging plaintiff not only with the amount of the total debt, including taxes and interest to June 29, 1932, but by adding thereto all expenditures made by Terry after he had converted the property to his own use, and also interest on the debt after June 29, 1932. This was error, because the date of conversion (June 29, 1932) automatically fixed the liabilities of each party to the other, and closed the books. Any expenditures by Terry after that date could not be charged against plaintiff. Neither can he be charged with interest on the debt after that date. The wrongdoer cannot be permitted to profit by his own wrongful acts. Wilson v. Drumrite, 24 Mo. 304; Smith v. Dickerson, 199 S.W. 956; 41 C.J., p. 370, sec. 152; 42 C.J., pp. 425-426, sec. 2231; Mooney v. Byrne, 163 N.Y. 86, 57 N.E. 163. (4) A successful litigant should not be penalized with payment of costs incurred in proceedings brought to enforce his right to recover from one who has wrongfully and fraudulently deprived him of his property and concealed his conduct by false statements. Hawkins v. Nowland, 53 Mo. 328; Turner v. Johnson, 95 Mo. 431.
Hennings, Green, Henry Evans for respondent.
(1) Where the evidence shows that a decree is for the right party it should be affirmed. Potes v. Pyles, 202 S.W. 446; Meeks v. Mining Co., 124 S.W. 1084; Brigham v. Zollman, 220 S.W. 911; Peetz Bros. v. Vahlkamp, 11 S.W.2d 26; Reynolds v. Reynolds, 234 Mo. 144. (2) The presumption is that a deed absolute in form is a deed and not a mortgage. Pomeroy, Equity, sec. 1196; Burke v. Murphy, 275 Mo. 397; Mosley v. Cavanah, 125 S.W.2d 852; Bobb v. Wolff, 148 Mo. 335; Gerhardt v. Tucker, 187 Mo. 46. (3) Before a deed absolute in form will be construed to be a mortgage, the evidence must establish such fact, not merely by a preponderance of the evidence, but beyond a reasonable doubt. Smith v. Dickerson, 199 S.W.2d 956; Gerhardt v. Tucker, 187 Mo. 47; Hutchings v. Terrace City, 175 S.W. 905; Runkel v. Lubke, 246 Mo. 377; Mayberry v. Clark, 317 Mo. 442; Robinson v. Field, 342 Mo. 778. (4) Where the grantee takes possession and pays taxes this is strong evidence that no mortgage was intended. Carson v. Lee, 281 Mo. 166; 41 C.J., sec. 106. (5) The intention that the deed was to be a mortgage must appear as of the time of the transaction. Knight v. Ins. Co., 49 S.W.2d 682; Carson v. Lee, 281 Mo. 166; Williamson v. Frazee, 294 Mo. l.c. 329. (6) In a suit to redeem, plaintiff must plead a willingness to do equity by offering to pay the debt. Pomeroy, Equity, sec. 392; Gerhardt v. Tucker, 187 Mo. l.c. 58; Allen v. Best, 58 S.W.2d l.c. 812; Lipscombe v. Ins. Co., 138 Mo. l.c. 24; Constant v. Simon, 302 Mo. 202. (7) Under the evidence plaintiff was guilty of laches in bringing his suit, therefore was not entitled to redemption. Schradski v. Allbright, 93 Mo. 42; Dexter v. McDonald, 196 Mo. l.c. 399; Gerhardt v. Tucker, 187 Mo. l.c. 58; Snow v. Funke, 41 S.W.2d 2; Bobb v. Wolff, 148 Mo. 335. (8) Assuming that plaintiff was entitled to redeem, he was not entitled to a money judgment because it was not shown that it was impossible for defendant to permit redemption. The law allowing money judgment in lieu of redemption only applies where the grantee has sold the land and is for that reason unable to recover the property. Mooney v. Byrne, 57 N.E. 163; Bell Ayre Co. v. State, 211 N.Y.S. 641; United States v. Dunn, 45 Sup. Ct. 451; Bobb v. Wolff, 148 Mo. 335; Pierson v. Freeman, 166 A. 121; 41 C.J., p. 364, sec. 133. (9) The court was within its power to permit Lucy A. Terry, either individually or as executrix, to tender a deed to the property. Because under the pleadings Lucy A. Terry, in effect, became a party to the suit and offered to permit the redemption of the property. 4 C.J., p. 1324; Anderson v. Watts, 138 U.S. 694; 34 C.J., p. 1008; Edgar v. Huff, 235 Mo. 552; Sharp v. Garesche, 90 Mo. App. 233; Green v. Conrad, 114 Mo. l.c. 665. (10) Because Lucy A. Terry was interested in the estate of P.S. Terry and therefore in the subject matter of the suit. Kincaid v. School Dist., 11 Me. 189; Gould v. Aringost, 46 Neb. 897; Kartright v. Cady, 21 N.Y. 343; McDougal v. Dougherty, 11 Ga. 588. (11) Because plaintiff by permitting Lucy A. Terry to plead and offer a tender of the deed waived the right to object to her becoming a party for the purpose of the tender. Wegenka v. St. Joseph, 212 S.W. 71; 27 C.J., p. 322; Anderson v. Watts, 133 U.S. 694; McMullen v. Eagan, 21 W. Va. 233.
In August, 1923 Senator P.S. Terry loaned Mr. Arthur Brewster $2,000.00. To secure the note Senator Terry was given a deed of trust on 790 acres of land in Butler County, the title to which was in Mr. Brewster's mother, Mary J. Harston. In 1924, 1925, 1926 and 1927 interest was paid on the indebtedness. After 1927 little, if any, interest was paid, the taxes became in arrears in the sum of $1,556.60 and in October, 1929, Mr. Brewster delivered Senator Terry a warranty deed to the land with Mrs. Harston as grantor. Senator Terry and his wife, on June 29, 1932, conveyed the land to Louis Kay for a recited consideration of $4,000.00. Subsequently Kay, in turn, transferred the land back to Senator Terry and Mrs. Lucy A. Terry as tenants by the entirety. Mrs. Harston died and in 1937 Mr. Arthur Brewster acquired from his mother and his brother whatever interest they may have had in the land. The land in fact belonged to Mr. Brewster and title to it was in his mother for convenience only. Senator Terry died in June, 1936, and in 1937 Mr. Brewster instituted this action against Lucy A. Terry as the executrix of her husband's estate, claiming that the warranty deed of June 29, 1932 was in fact intended by the parties as a mortgage rather than an absolute conveyance and he asked the court to so declare. He alleged the value of the land to be $15,000.00 and stated that it was impracticable and impossible to redeem the land in kind and "in lieu of his equitable right to redeem said land in kind and as an equitable substitute therefor he is entitled to an equitable money judgment representing the land, in a sum equal to the difference between the reasonable market value of said land and the total indebtedness due by plaintiff to the said P.S. Terry on said June 29, 1932." Mr. Brewster, in his petition, admitted an indebtedness to Senator Terry of $2,950.00, which may have included another loan, and prayed that the court (1) declare the absolute deed to be in fact an equitable mortgage to secure his indebtedness, (2) "that the plaintiff is entitled to redeem said land," (3) that the Terry estate does not own the land and that he is entitled to "a judgment of redemption in money" and (4) for an accounting.
Mrs. Terry filed an answer containing a general denial and a statement that she was the owner of the land in question and that Senator Terry purchased the land in order that he might be made whole on account of previous loans to Mr. Brewster. However, Mrs. Terry plead that she was now and had always been willing to account for the rents, profits and proceeds from the farm and in her petition set forth what she considered a true account. She stated that she did not know whether she was sued individually or in her representative capacity but in any event it was practicable and possible for her to convey the land to Mr. Brewster and she tendered into the court a deed to the land to be delivered upon his paying the indebtedness, consisting of the note, interest and taxes due. She also tendered the original note and deed of trust.
The trial court found that Mr. Brewster was indebted to Senator Terry in the total sum of $6,668.55. He found that the "real property is capable of being redeemed" and that Mrs. Terry was willing to convey it upon Mr. Brewster's payment to her of the amount the court finds due. He also found that if Mr. Brewster did not redeem Mrs. Terry was willing to keep the land and surrender the note and deed of trust for cancellation. The court entered a decree in accordance with its finding and gave Mr. Brewster thirty days in which to pay the debt and comply with the judgment of redemption and assessed the costs against the plaintiff.
Mr. Brewster appeals from the decree of redemption insisting now as he did throughout the trial that he had asked for and was entitled to a money judgment and that the decree entered was contrary to the pleadings, not responsive to the issues, that Mrs. Terry is not a party to the suit and that payment of the sum due to her could not be pleaded in bar against a later claim by the Terry estate. His position is that, of necessity, the court found in his favor on his right to redeem and the court could not enter a judgment of redemption of the land because the Terry estate did not own the land and he was not compellable to accept a deed from one not a party to the suit. He also objects to the court's finding as to the sum due and to the payment of the costs.
The gist of the appellant's contention is summarized by this statement from his [602] argument: "It is the well settled rule in Missouri, and in most of the other states, that land wrongfully disposed of, and which it is not in the power of the wrongdoer or his estate to restore in a condition equally as good as that in which it was at the time of its wrongful disposition, then the relief to be granted is to determine the value of the land at the time of its wrongful sale, and in its then condition, and award to the person wronged, damages in said sum, with interest, less the indebtedness existing at the time of the conversion."
Of the existence of such a rule there can be no doubt. It is particularly applicable and most frequently employed when the mortgagee under an absolute deed conveys the land to an innocent third party who becomes a purchaser for value without notice and it is thus impossible to restore the land to the mortgagor-grantor. Wilson v. Drumrite, 24 Mo. 304; Reilly v. Cullen, 159 Mo. 322, 60 S.W. 126; Smith v. Dickerson (Mo.), 199 S.W. 956; Mooney v. Bryne, 163 N.Y. 86, 57 N.E. 163 and the annotation 46 A.L.R. 1089. Depending on the circumstances, the court may enter a decree for the value of the land even though it has not been conveyed to an innocent third party. Turner v. Johnson, 95 Mo. 431, 7 S.W. 570.
However, the court is not absolutely bound, in any event, to enter the decree the plaintiff asks. If the court's decree can be sustained upon any theory supported by the facts the appellant is not entitled to have it set aside. Reynolds v. Reynolds, 234 Mo. 144, 136 S.W. 411. Undoubtedly the appellant's action is one to redeem. He asks to have the absolute deed declared to be a mortgage and specifically asks the court to find that he is entitled to redeem. And, if he is not entitled to redeem certainly he is not entitled to any relief whatever. The theory of redemption is just compensation (John Hancock Mut. Life Ins. Co. v. Howard (Tex.), 85 S.W.2d 986) and if under the facts as found by the court, and to which we defer, the plaintiff is compensated we cannot see how he can complain. The trial court has some discretion in fixing the terms upon which it will decree redemption. Hannah v. Davis, 112 Mo. 599, 20 S.W. 686.
In the first place, as to the appellant's indebtedness the court found that he owed Senator Terry $6,668.55. In his argument the appellant states that on June 29, 1932, the total indebtedness was $4,085.53. The appellant as a fact admitted that the account filed by Mrs. Terry was true and correct. His only objection is that he is not chargeable with items accruing after June 1932, the date of the conveyance to Kay. That is probably true as to labor and even improvements. 2 Glenn, Mortgages, Sec. 218. But he is liable for the principal debt and taxes. 2 Jones, Mortgages, Secs. 1376, 1381. Those items alone total $5,680.95 and are admitted as having been paid. While it does not appear from the record what the additional item of $987.60 consists of it could well be interest from 1927, or 1932. Hannah v. Davis, supra.
Mrs. Terry was bound to account for the rents and profits, if the deed is a mortgage, but there were none and there is no evidence that there were. Annotation 46 A.L.R. 138; Turner v. Johnson, supra; Baker v. Cunningham, 162 Mo. 134, 62 S.W. 445. $1,307.80 was received as income; $1,300.00 of this sum was from the sale of timber, and Mrs. Terry accounted for that and it should be allowed as a credit. The uncontradicted evidence is that $1,300.00 was a fair and reasonable price for the timber.
The appellant insists that the value of the land at the time of its sale was $8,200.00. That was the testimony of one of his witnesses. Others of his witnesses placed a lower value on the land. And Mrs. Terry's witnesses all valued the land at from $5,500.00 down to $3,500.00 and so there was evidence that the debts exceeded the value of the land. There was also evidence that the removal of the timber had not lessened the value of the land since the timber had been paid for. In other words, there was a sharp conflict in the evidence as to the value of the land. But, regardless of its actual value in 1932, if it is worth $15,000.00 as alleged in the appellant's petition or $8,200.00 as testified by one of his witnesses we cannot see how he is injured if his debt is paid and he receives the land.
Mrs. Terry filed an answer, sufficiently broad in its scope to respond to the suit both individually and in her representative capacity, and the appellant without objection filed a reply to the answer, consequently he is in no position to object to it or the matters raised by it. Younger v. Evers, 333 Mo. 931, 64 S.W. [603] 2d 936. Admittedly she was the owner of the land as well as the widow and personal representative of Senator Terry and, of course, interested in the litigation both personally and in her representative capacity and, in the court's discretion, entitled to intervene in the action. 39 Am. Jur., Sec. 67, p. 939; 47 C.J., Secs. 197-207; Wegenka v. St. Joseph (Mo. App.), 212 S.W. 71. Mrs. Terry has submitted herself, individually and in her representative capacity, to the court's jurisdiction; she has tendered a deed to the land in question as well as the original note and deed of trust and we have no doubt but that in either or any capacity she and the estate are bound by the court's decree. The consequence is that we encounter no difficulty in the fact that, originally, she may not have been a party to the suit personally or in the fact that she had become the owner of the land prior to the institution of the suit. The appellant sought to redeem the land, the respondent individually and in her representative capacity entered into the litigation and agreed to subject herself and her property to the test of the appellant's cause and abide by the court's decree. The court was entitled to take both parties at their word and determine the whole controversy. 1 Glenn, Mortgages, Sec. 54, p. 360; Reynolds v. Reynolds, supra.
This is an equity proceeding and the assessment of the costs against the plaintiff was a matter within the trial court's discretion, in which we find no abuse, even though the appellant was the successful party as far as his substantive cause of action is concerned. Turner v. Johnson, supra; Mo. R.S.A., Secs. 1408-1409.
It does not appear from the record that the appellant was given credit for the $1,307.80 income from the sale of the timber against the indebtedness of $6,668.55. The judgment is remanded with directions to allow a credit of $1,307.80 against the total indebtedness of $6,668.55. Otherwise the judgment is affirmed. Westhues and Bohling, CC., concur.
The foregoing opinion by BARRETT, C., is adopted as the opinion of the court. All the judges concur.