Borgess Investment Co. v. Vette

44 S.W. 754, 142 Mo. 560, 1898 Mo. LEXIS 189

• Court: Supreme Court of Missouri
• Decided: February 16, 1898
• Status: Published

Opinion

Burgess, J.

This action was begun by plaintiff in the circuit court of the city of St. Louis to enjoin and restrain the defendants from selling, under a power of sale in a deed of trust given to secure the payment of a promissory note, certain real property in that city.

A temporary injunction was granted, which upon final hearing was dissolved, plaintiff’s bill dismissed, and judgment rendered against it for costs.

From the judgment plaintiff appeals.

The petition averred that plaintiff owned a certain lot of ground in the city of St. Louis, which it acquired on January 23, 1894, from Louis Berneso and others, who acquired it in February, 1893, from Wm. J. McGrade, to whom it had been conveyed on February 1, 1893, by one Josephine Wellington. That Josephine Wellington was the owner of said property on October 25, 1892, on which day she executed a deed of trust thereon to J. V. Boucher, as trustee, to secure to Alonzo K. Florida, payment of her notes of even date, being one principal note of $5,000, payable in two years, and one principal note for $3,000, payable in six months after date; one semi-annual interest note for $240, payable in six months, and three semi-annual interest notes of $150 each, payable in twelve to twenty-four months after date, said deed of trust being duly recorded in the recorder’s office of the city of St. Louis. That on January 14, 1893, Alonzo K. Florida, being then the holder and owner of said notes, conjointly with J. V. Boucher, the trustee in the deed, for value made to Josephine Wellington a deed of release and quitclaim whereby they discharged the property from the lien of said deed, which deed of release was also duly recorded, whereby any lien of said deed of trust was alleged to have been fully released. That the defendant, Vette, notwithstanding such release, claims to be the owner and holder of one of said promissory notes, of $3,000, and to be entitled to a lien therefor on said realty, and has procured the appointment of his codefendant, John W. Dryden, as trustee, with the powers conferred by said deed of trust. That said Dryden is advertising the property .under said deed of trust for sale on February 1, 1895; that said Dryden, notwithstanding his appointment by the court, has no right in said real estate, and said Vette is not legally nor equitably entitled to have it sold under said deed; but that, never-less, the defendants are about to make such sale for the purpose of satisfying said $3,000 note, and to deliver a deed at said sale which will be prima facie proof of the recitals therein, and will thus create a cloud upon plaintiff’s title to the property, inasmuch as there is nothing upon the records of said city to show that said Vette is not the owner of said note. That said Vette and Dryden have custody and possession of said deed of trust and of the $3,000 note, but are not in fact the owners thereof, as the same have been paid and satisfied. Plaintiff prayed that defendants might be enjoined from advertising or selling said property, or executing any deed of sale; that the defendants be required to surrender the deed and note for cancellation, to be declared null and void, and for a temporary injunction pending the suit.

On October 7, 1895, defendants entered their voluntary appearance to the cause, and filed their answer and motion to dissolve the injunction, wherein they admitted that defendant Vette was the holder of the $3,000 note, and that defendant Dryden was appointed and acting as trustee under the deed of trust in question, and all other allegations of the petition were denied. Affirmatively the answer set forth that defendant acquired the note from the legal holder, before maturity, for value, in good faith, without notice of any supposed equities; and that if any releases of the deed of trust were entered on the records, the same are illegal, as not having been joined in, or authorized by, defendant Vette, the legal holder of the note and deed of trust; that the whole amount of said notéis still due and secured by said deed.

Florida originally owned the property described in the petition and on the same day that the deed of trust in question was executed by Josephine Wellington he conveyed it to her.

On the trial plaintiff showed title to the property to be in it, and also read in evidence the deed of trust which was held by defendant Vette. Also the deed of release, made by Florida and J. V. Boucher, trustee, dated January 14,1893, and recorded January 27,1893.

For the defendants, defendant Vette was called as a witness. Plaintiff objected to his competency. The attention of the trial court was called to the fact that plaintiff had made him a competent .witness by examining him, by way of deposition, in this case. This was admitted by plaintiff, but it was claimed that plaintiff had not'offered this deposition, and that in taking the same plaintiff had avoided asking the witness questions concerning this particular deed of trust and note held by Yette. The court overruled plaintiff’s objection. The deposition in question was not called for nor read, and the witness testified, in substance, that he was examined as a witness in a deposition taken by Mr. Eliot, attorney for plaintiff, and in that deposition was asked by Mr. Eliot concerning dealings with Florida for some years preceding his death. He identified a paid check of $2,640, dated November 4, 1892, which on that day he paid to Alonzo K. Florida for the $3,000 note in question, he having dealt with Florida for years. This check was in the usual form, on the National Bank of the Republic, St. Louis, signed by Yette, payable to'A. K. Florida, indorsed by the latter, and cleared by the St. Louis Clearing House on November 5, 1892.

Yette received the recorder’s card for the deed of trust and the $3,000 note contemporaneously with the delivery of the check. It took about three weeks to have a deed recorded. He had held the note ever since, and for a while had it in bank for collection. He never knew that a deed of release had been made, and had the note in his possession at that time.

Witness did not remember whether he received an abstract of title at the same time. Florida was in the habit of delivering an abstract, and then, later on, borrowing it, in connection with an effort to sell the deed of trust. None of the other notes were received by witness. He did not know Josephine Wellington. He bought the note on the strength of Florida’s statement. Florida usually wanted cash, and whenever he had the cash in his office he would pay it in that form. Until asked to look it up carefully, he was under the impression that this was a cash payment. He always ■charged Florida a discount. If Florida had a piece of paper he would bring it in, and either discount the whole of it, or say he wanted so much money. There was no other understanding of any kind about it. If he had known anything of an attempted release, he would have stopped it very quickly. Florida has paid him higher discounts than this. Witness identified a number of cheeks which Florida paid him from time to time, and explained that they were for different loans and indebtedness. Witness had a lot of Florida’s paper, and the latter would come in and take up the notes and securities as they came due. He both loaned him money and bought paper from him. Witness identified the so-called “debit book” kept by him during a time when he had a brief partnership with his brother, C. W. Yette. The book was kept in his business. He sometimes wrote in it, but chiefly the bookkeeper. The pages of the book were divided into columns, containing respectively the face value of the note, the amount paid therefor, the amount of discount deducted, name of party from whom purchased, and the purchaser. The entry in regard to the present transaction was made by the bookkeeper, Shortal.

Joseph M. Shortal, the bookkeeper of defendant Yette, thereupon testified that as such he entered this Florida transaction in Mr. Vette’s book. He also identified the check of $2,640, Florida’s indorsement thereon, and the cancellation upon payment. He fully identified the book in question as having been regularly kept in Mr. Vette’s business, and in which witness made most of the entries. The entry was offered in evidence, and received over plaintiff’s objection. Witness also explained the meaning of the different columns, and of the entries therein. The book was regularly kept in Mr. Vette’s business.

Defendants then offered in evidence the $3,000 note made by Josephine Wellington, and the indorsement of A. K. Florida, tó which plaintiff did not object. It was protested for non-payment on April 28, 1893, but the notary’s certificate of the protest was excluded on objection.

Defendants rested, and plaintiff in rebuttal proved that good real estate loans, at the date of this transaction, could have been had in the city of St. Louis at the rate of -six per cent per annum, and that Mr. Vette, when asked after Florida’s death how .he had acquired this note, had made the statement that he gave Florida $2,500 in cash for it, but had kept no record of it. The witness, Charles Hewitt, called by plaintiff to prove that Mrs. Wellington had not received full value for the note, admitted, on cross-examination, that Mr. Florida’s standing as a real estate dealer and agent in the city of St. Louis was good in October and- November, 1892; that he never heard anything against him, nor of anything wrong until he died by his own hand.

The first assignment of error is with respect to the ruling of the court in permitting the defendant to testify over the objection of plaintiff as a witness in his own behalf as to the acquisition of the note in question from A. K. Florida who was dead at the time of the trial. It is conceded by plaintiff that defendant was not disqualified as a witness for all purposes, and that he was competent to testify to any facts wit hin his knowledge touching the issues in the case which did not involve the terms of the transaction between himself and Florida, but that as to matters involved in such transaction he was not competent to testify. Unless the incompetency of defendant Vette to testify as to matters between himself and Florida which occurred at the time he acquired the note from him, was in some manner waived by plaintiff, it is perfectly clear that he was not competent to testify with respect thereto. (R. S. 1889, sec. 8918.) But it is contended by defendants that all objections as to his competency were waived by plaintiff when it took his deposition in this case. The deposition was not read on the trial, and it is claimed by plaintiff that in taking the same, plaintiff avoided asking the witness questions concerning this particular deed of trust and note held by him. But Vette testified on the trial in effect that in the deposition he was asked by the attorney for plaintiff concerning dealings with Florida for several years preceding his death, and that he identified the check for $2,640 dated November 4, 1892, which he on that day paid Florida for the note in question. It is said in Tomlinson v. Ellison, 104 Mo. 114: “The fact that plaintiff had taken defendant’s deposition in the same action amounted to a waiver of any alleged incompetency on his part.” While it was said in Ess v. Griffith, 139 Mo. 322, that “the statement of the legal principle quoted was not necessary to a decision of the case, and can only be regarded as the dictum of the judge who wrote the opinion,” it was ruled that where the deposition of a party to a suit, who was at the time incompetent to testify as a witness in his own behalf, was taken by the adverse party, that the question of his incompetency was by reason thereof waived, and that he then became a competent witness in his own. behalf in the trial oE the cause, whether the deposition was read on the triql or not. It was said: “Plaintiff had the right to examine defendant Pierce as a witness, but in doing so he waived the right to insist on excluding him when called by defendant. This would certainly be so as to all matters concerning which he was examined by plaintiff. He can not, in fairness, be allowed to assert his competency, if his evidence is found to be favorable, and deny it if found to be unfavorable.” In re Estate of Henry G. Soulard, 141 Mo. 642. “'A waiver of objection to competency made at one stage of the taking of testimony is a waiver during the whole progress of that proceeding.” Rap. Wit., sec. 178, and authorities cited in Ess case, supra. It would seem from these authorities and upon principle as well, that when plaintiff took the deposition of Vette and filed it in the cause, it thereby waived his ineompetency as a witness for all purposes, whether the deposition was read upon the trial or not.

Complaint is made by plaintiff of the action of the court in admitting in evidence over the company’s objection the so-called “debit book,” kept by defendant Vette in his business. Plaintiff insists that while books of account kept by a party himself or by his clerk are under some circumstances admissible in evidence in his behalf, they are not so admissible when the party himself is disqualified as a witness, unless the action is one for the recovery of a sum or balance due on account. Anchor Milling Company v. Walsh, 108 Mo. 277, was an action to recover over payments alleged to have been made by the plaintiff to the defendant. The facts, as stated by Black, J., who wrote the opinion of the court, were about as follows. Defendant had a contract with plaintiff whereby he was to receive a certain price for hauling wheat and flour to the mill and a certain price per barrel and sack for hauling flour and other mill products from the mill to other points Books were kept at the plaintiff’s warehouse showing the wheat and flour received and shipments made, and the amount of hauling done by defendant. The orders were entered in the shipping book by Timmons, the shipping clerk, or by Mr. Warren, who had a general supervision over all the business of the warehouse. The orders were then copied into a small hand book for the use of the foreman who delivered the articles to defendant’s teamsters, made a note of the fact and returned the book to the clerk, who made entries on the shipping book, showing, among other things, the delivery of the articles to defendant. Warren' testified that he always compared the orders with the book when made up, and then returned the orders to the mill office; that he knew the flour and other mill products were delivered to defendant from the information received from the small book, and in some cases from personal observation. These returned orders were lost or destroyed. Timmons, the shipping clerk, was not called as a witness. Under these facts, after an elaborate review of the authorities, it' was held that the shipping book should have been received in evidence. The court said: “An account book of original entries, fair on its face, and shown to have been kept in its usual course of business, is evidence, even in favor of the party by whom they are kept.” The same conclusion was reached in Robinson v. Smith, 111 Mo. 205, and in Seligman v. Rogers, 113 Mo. 642. The rule seems to be that when book entries are made by a party himself, or by his clerk, in the usual course of his business, being contemporaneous with the fact, they are admissible in evidence, and this we think is true even though the entry be made by the party himself, or may in some way extend to the title or ownership of the property. Vette’s incompetency as a witness being waived by plaintiff, he was competent to testify to the identity of the “debit book,” and when it was shown by Shortal, the bookkeeper of Yette, in connection therewith, that he entered the Florida transaction in the book, and identified it, our conclusion is that the “debit book” was properly admitted in evidence.

Another contention is that where issues in a case involve the bona ftdes of one in whose possession a promissory note remains, upon allegations to that effect traversed by the other party, the want of consideration in the making of the note, connected with circumstances of suspicion calculated to put the party upon inquiry as to equities, is material to the case, and especially is this so where the proceeding is one in equity, as in this case. It is well settled that when a negotiable promissory note is transferred before maturity, the presumption is that the transferee or assignee takes it in good faith and without notice on his part of secret claims or trusts attached thereto in favor of third parties, or that the note was without consideration. And where the note is secured by a deed of trust, as in the case at bar, the deed of trust passes with the transfer of the note, as incident thereto, free from any and all defenses except such as could be made against the note. ' Under such circumstances the holder is not affected by subsequent notice of the equities or defenses of other parties. Hagerman v. Sutton, 91 Mo. 519; Mayes v. Robinson, 93 Mo. 114; Fitzgerald v. Barker, 96 Mo. 661; Bank v. Rohrer, 138 Mo. 369. Nor will mere suspicion alone that the note is without consideration brought home to the transferee before he acquires the note be sufficient to defeat a recovery upon the note by him. Bad faith alone upon the part of the holder in taking the note will not defeat a recovery by him against the party thereto. Hamilton v. Barks, 63 Mo. 167; Goodman v. Simonds, 20 How. (U. S.) 343; Johnson v. McMurray, 72 Mo. 278; Mayes v. Robinson, 93 Mo. 114. And we see no reason in principle why the same rule should not apply when the proceeding is one in equity, and not an action at law upon the note.

There remains but one question to be disposed of which we think necessary to consider, and that is the effect of the release of the deed of trust by the trustee therein named, and Florida, the payee of the note, after he transferred it to Yette, upon the rights of plaintiff, the company being an innocent purchaser of the real property covered by the deed of trust after the recording of the release. It is claimed by plaintiff if the lien of a deed of trust is released by the trustee and the payee of a note, a presumption of authority and validity exists in favor of an innocent purchaser of the real property covered by such deed of trust who buys after the release is recorded, and that he who claims the deed of release to be void must prove the facts which result in that conclusion. Conceding this proposition to be true, that presumption was overcome when it was shown that Yette acquired the note for value from Florida before it became due, for the deed of trust by which its payment was.secured passed to Yette as incident to the note, and thereafter neither Florida, nor the trustee Boucher nor both of them together had any power or authority to release the deed of trust without his consent.

Therefore the execution of the release by the trustee' and Florida after Florida had sold the note to Vette was without authority and void. Lee v. Clark, 89 Mo. 553; Hagerman v. Sutton, 91 Mo. 533; Bank v. Frame, 112 Mo. 514; Feld v. Roanoke Inv. Co., 123 Mo. 603; Kelly v. Staed, 136 Mo. 430.

The result is that the judgment of the circuit court must be affirmed, and it is so ordered.

Gantt, P. J., and Shekwood, J., concur.