Gerhardt v. Tucker

85 S.W. 552, 187 Mo. 46, 1905 Mo. LEXIS 246

• Court: Supreme Court of Missouri
• Decided: February 28, 1905
• Status: Published

Opinion

VALLIANT, J. —

This is a suit in equity in which plaintiff seeks to have a deed, absolute on its face, decreed to be a mortgage.

The contract in question was made between the plaintiff and one W. B. Tucker, since deceased. The suit is against Daniel M. Tucker, brother and only heir-at-law of decedent, and administrator of his estate.

The petition states that prior to the execution of the deed in question, the date of which was August 1, 1898, the plaintiff was indebted to one Barton in the sum of $7,000, secured by a deed of trust on the land; also to the Callaway County Bank in the sum of $2,000, to the Home Savings Bank $500, and to W. B. Tucker $450, which, with interest, made bis indebtedness $10,-000; that Tucker was surety on the notes held by the banks; that it was agreed between plaintiff and Tucker that, in consideration that Tucker would assume the payment of the Barton notes and the notes to the banks and the $450 due himself, “the plaintiff would execute to the said W. B. Tucker a mortgage on said real estate to indemnify him, the said W. B. Tucker, against loss for so assuming and paying said $10,000, so owing by plaintiff; that upon the repayment to said W. B. Tucker by plaintiff of all the amounts so paid by him for plaintiff, together with the- accrued interest thereon, that he, the said W. B. Tucker, would release said real estate from said mortgage and reconvey the same to plaintiff ; that plaintiff did, on the first day of August, 1898, in pursuance of said agreement, execute to said ~W. B. Tucker a warranty deed to said real estate, it being agreed and intended at the time between plaintiff and the said W. B. Tucker, that said warranty deed should be held and considered as a mortgage upon said real estate to secure the said W. B. Tucker the indebtedness aforesaid upon the terms and conditions aforesaid.”

The prayer of the petition is that an account be taken, showing the amount of plaintiff’s indebtedness, crediting him with rents, etc., and a balance struck, “ which said balance so found due as aforesaid, the plaintiff prays that he may be allowed to pay to defendants;” that upon such payment the defendant be required to reconvey the property to plaintiff or it be decreed to vest in him, " and if the plaintiff is not able to pay said balance so found against him that the same be declared a lien against said real estate” and it be sold and the proceeds paid to defendant to the amount of his debt and the balance to the plaintiff.

W. B. Tucker died in June, 1899.

At the trial the plaintiff introduced but one witness to prove the contract as alleged. That witness testified that at the request of the plaintiff he called on Mr. Tucker and made the proposal which finally resulted in the execution of this deed. Before going into the matter further, he was asked questions designed to ascertain in what capacity he was acting and for whom. In answer to such questions it came out that after the terms had been agreed upon orally, Mr. Tucker asked the witness to prepare the deed in accordance therewith, and that the witness did so, and afterwards rendered a bill against the estate for $10 for that service and it was paid. Then the defendant objected to the competency of the witness on the ground that as he was Mr. Tucker’s attorney in the matter, all that he might have learned from what his client said was confidential, and could not be disclosed on the witness stand.

After considerable discussion of the point, and the questions designed to bring out testimony as to the agreement were put in various forms and met with the some objection, then this question was asked: “What did Mr. Tucker instruct you with regard to what he did tell you, that is, with regard to you telling it to Mr. Gerhardt?” At this point the abstract says, p. 21: “To this question the defendant at the time objected, for-the reason that the question is with reference to a conversation with regard to this matter that was being transacted by the attorney for the plaintiff, and that makes it in the nature of a confidential communication. . . . The court ruled that this witness was not excluded by reason of his being agent for Mr. Gerhardt in this transaction; but as the attorney for Mr. Tucker, the ruling is that he is still incompetent.”

After that the witness was asked: “In what capacity were you acting, with regard to Mr. Gerhardt, in the transaction of this business?” Defendant objected on the ground that it asked for a conclusion. The objection was overruled and exception taken. The witness answered: “Mr. Gerhardt came to me and employed me, or asked me, as his agent to go to see Mr. W. B. Tucker, that he wanted to prefer him in this debt, that he was being sued— Q. Tell just what Mr. Gerhardt said to you and what you did. Tell the whole thing.” Defendant objected on the ground that it called for a self-serving statement, the objection was overruled and exception taken. Then this question by plaintiff: “Go ahead and state the whole transaction?” In answer to which without further objection he said substantially as follows: Mr. Gerhardt told me to see Mr. Tucker and tell him that he was being sued by the Callaway County Bank and that he owed some other debts, and that as Mr. Tucker had befriended him in the past and he thought he would in the future, when he got on his feet and in position to start in business again, therefore, he wanted to secure Mr. Tucker and give him a deed of trust to make him a preferred creditor. Mr. Tucker said: “I am sorry Charley is in debt, but, of course, if I can save him any money I want to do it.” Witness reported the result of the conversation to Gerhardt and made about three trips carrying to each what the other said. Finally Mr. Tucker agreed that he would assume the Barton notes, $7,000, which, with the notes held by the banks, on which he was already surety, and the amount of plaintiff’s debt to him, made $10,000, for which amount Gerhardt was to give Tucker a deed of trust. When they came to preparing the deed of trust, Tucker said he did not want a deed of trust, did not want the publicity of advertisement in a newspaper and did not want to have to foreclose; “and I told him that I would get Mr. Gerhardt to make a square deed to him for the property, until he was able to pay it off and get the property back and that when he was, then Mr. Tucker could make the property back to him. ’ ’ In conformity to that proposition, the deed in question was executed. When it came to making the deed, Gerhardt wanted it to include also a vacant lot on which was a mortgage of $2,000'; Tucker at first objected, because, he said, the lot was encumbered for more than it was worth, but finally consented to letting it go in, but would not agree to assume the debt on it; he did agree to assume the Barton debt. On cross-examination: “Q. Let me see if we understand each other. It was agreed by Mr. Tucker, was it, that he was to accept a general warranty deed, in the form this one is drawn in? A. Yes, sir. Q. And then it was further agreed that he would reconvey the property embraced in this deed to Mr. Gerhardt when Mr. Gerhardt paid him the different amounts of money which he had paid out. Is that the way of it? A. Yes, sir. Q. There was no definite time agreed on, though, was there, for that to be done ? A. No, sir, only when he was able to pay Mr. Tucker, Mr. Tucker was to reconvey to Mr. Gerhardt the property.”

Plaintiff’s wife testified that in February, 1899, at the request of her husband, she carried a note for $800 made by one Tompkins, to Mr. Tucker, and asked him to collect it, and give her $350 out of it, and apply the rest on the note of the Home Savings Bank on which he was surety. Mr. Tucker said he would apply it in that way. She went back after awhile to get the money, but Mr. Tucker told her he had not collected the note.

The rest of the plaintiff’s evidence related to the rents of the property. *

The deed in question was a general warranty deed from Gerhardt and wife to Tucker, conveying the property absolutely, subject only to the deeds of trust on it. There was no recital in it to the effect that the grantee assumed the payment of the debts mentioned in the deeds of trust.

Defendant’s testimony was to the effect that the deceased, Mr. Tucker, in his lifetime had paid off alL the notes referred to except the Cook note, which the administrator had since paid; that Gerhardt had been in the employ of the Tuckers five or six years, and on November 1, 1899, the defendant had a settlement with him, and paid him about $150, which was the amount the books showed was due him. At that time Gerhardt said he was out of employment, and defendant agreed to employ him longer, and kept him until April, 1900'; at the time of the settlement he made no reference to any claim on this property, and none was ever mentioned to defendant until this suit was brought; at one time after the settlement and after he had left defendant’s employ he said that he had an interest in the Tompkins note. The testimony for defendant also showed that on executing the deed in question Gerhardt and Tucker went to the insurance agent, and Gerhardt told the agent that he had sold the property to Tucker, and asked the agent to transfer the policies he held on the property to Tucker, and they were transferred. The agent testified that they were not transferred to Tucker as mortgagee, hut as owner.

The finding and judgment were for the defendant. The plaintiff appeals.

I. Appellant complains that the court erred in holding that his chief witness was incompetent because he was attorney for Tucker, while respondent contends that the witness’s whole testimony ought to have been excluded because, as the agent of Gerhardt, he conducted the negotiations and made the alleged contract, and since Tucker, the other party to the contract, is dead, this witness was incompetent to testify in Gerhardt’s behalf under section 4652, Revised Statutes 1899.

The appellant has no room to complain of the exclusion of the evidence because the adverse ruling as to him only excluded what the witness might have learned in confidence from Tucker after he had been employed by Tucker. But the evidence showed that there was no employment by Tucker until after the whole agreement was made and then the employment related only to the drawing of the deed. The witness was allowed to give his version of the whole transaction up to the drawing of the deed and there is no pretense that anything affecting the case occurred after that.

And the respondent has no ground of complaint because if he made any objection to the competency of the witness based on the statute, section 4652, the record before us does not show it. So far as we can gather from the abstract (which is all we have), the only objection made by respondent was on the ground that the witness was the attorney for Tucker and that, therefore, what he knew he acquired in professional confidence. The nearest the abstract comes to showing any objection on the ground of the witness’s relation to Gerhardt is on page 21, where he is referred to as the attorney for the plaintiff, which, in the light of the question to which the objection applies, indicates a possible typographical error or slip of the pen. The question in effect is, What did Tucket tell you to tell Mr. Gerhardt? There could he no violation of professional confidence for Mr. Gerhardt’s attorney to say what Mr. Tucker asked him to tell his own client. But the objection there made has no reference to the case covered by section 4652; it rests on the ground that it is a confidential communication to the plaintiff’s attorney, of which, of course, the defendant cannot complain.

If, therefore, the witness was incompetent on the ground that he was the agent of one of the parties and as such made the contract and the other party is now dead, the defendant cannot complain of the ruling of the court in admitting the evidence because he did not interpose that objection.

II. Equity jurisprudence was established, not to violate or override the common law, but to more effectually promote the ends of justice in cases where the common law, held within limits by its own unbending rules, was unable to administer complete justice. Courts exercising equity powers have found greatest pleasure in relieving the weak from the oppression of the strong under the strict terms of a contract made while the one was morally in the power of the other. Thus, at common law, a mortgagee’s title became absolute when the day of payment came and the debt was not paid. But equity soon found in that condition a cause to interfere, and required a fair foreclosure proceeding before the debtor could be entirely cut out. In so doing the court of equity did not violate the law, did not deprive the mortgagee of any real right that the contract gave him, but required the contract to be limited to the only purpose for which it was made, that was security for the debt. Whilst a mortgage in form and in terms transferred the title in the property to the mortgagee, yet on its face there was sufficient to show that it was not intended as a sale either in the present or in the future, but was intended as a security only, and as a security only the .equity court said it could be enforced. There was no difficulty in the case when the deed clearly expressed on its face that it was a mortgage, but cases arose in which, for reasons best known to the creditor and debtor, an absolute deed was given, with no written defeasance, yet with the distinct agreement between them that it was to be a mortgage only. When courts of equity came to deal with such cases there was a second barrier according to the letter of the law, to-wit, the Statute of Frauds, on the letter of which the creditor could stand and demand strict compliance with his contract. But in such case the court said to the creditor: the Statute of Frauds was designed to prevent fraud, not to promote it, and if the fact is that you took this deed, not as a purchaser, but as a creditor, to secure your debt, you commit a fraud in claiming to be a purchaser under it and you shall be held to the contract you really made, notwithstanding it is expressed in language that shows a different purpose. That is the particular principle in equity jurisprudence upon which this plaintiff seeks to build his case.

But courts of equity do not presume fraud, or conclude on slight evidence that one who stands on his contract as it is written is guilty of fraud. So far as presumption goes it sustains the integrity of the written contract. The law presumes when men have reduced their agreement to writing in solemn form that the writing expresses the real contract, and that presumption will prevail until it is overcome by proof so clear and convincing that no room is left for a reasonable doubt. That is the law as pronounced by this court in many cases, as may be seen by reference to the following and the cases therein cited. Jones v. Rush, 156 Mo. 364; Mulock v. Mulock, Id. 431; Reilly v. Cullen, 159 Mo. 322; Chance v. Jennings, Id. 544.

No particular formula of proof can be laid down as all-sufficient to sustain a case of this kind; every ease depends on its own circumstances, and the evidence to sustain it must be sufficient to convince the court beyond a reasonable doubt that the deed, judged in the light of its own surroundings at the time of its execution, was intended to be, not what it purports to be, but a mortgage. The evidence must not only be satisfactory as to its credibility, but unequivocal as to its terms and meaning, in which latter particular the evidence in this case was lacking.

The witness, who was an attorney at law, and who negotiated and concluded the whole business for the plaintiff as his agent and attorney, stated that the proposition he made to Tucker was that Tucker should assume the Barton notes, $7,000, which with the notes held by the banks on which he was surety, and the debt due himself, $450, amounted to $10,000, and that he was to be a preferred creditor and have a deed of trust. After two or three interviews, Tucker said he would not take a' deed of trust because he did not want the notoriety that would attend a foreclosure. Then the witness said that he would get Gerhardt to make a square deed, and when he was able to repay Tucker the amounts of the notes the latter would reconvey the property to him. Tucker was to pay out $10,000 and interest to take up Gerhardt’s notes, and when the latter got on his feet and able to resume business he was to refund Tucker for his outlays, and the latter was to reeonvey the property to him. If those were the terms of the verbal agreement, they indicate rather an agreement for a resale, than a mortgage, or at best they are of doubtful meaning.

There is no evidence to show that the property at the date of the deed in question was worth more than Tucker paid for it, or that it is worth more than that now. The plaintiff was insolvent when the deed was made, and the evidence does not show that he is now able to redeem the property even if the deed be decreed a mortgage. He makes no showing of either willingness or ability to redeem; on the contrary, in his petition he rather implies that he is not able to do so. After praying that an account be stated, showing the amount of his indebtedness under what he calls the mortgage, he prays, “And if the plaintiff is not able to pay said balance so found against him, that the same be declared a lien on said real estate” and that it be sold, and if it brings more than the amount found due to the defendant the surplus be paid to the plaintiff. His petition is rather in the nature of a bill to foreclose than one to redeem. He asks to have the land sold and if it should bring more than the so-called mortgage debt, he will be that much the gainer; if it should bring less, the defendant may carry the loss. Under the circumstances, even if the contract was as stated by the plaintiff’s witness, he could not maintain his suit until he showed a willingness and an ability to redeem, whereas he has shown only a willingness to experiment with the market. [Lipscomb v. Ins. Co., 138 Mo. 17; Axman v. Smith, 156 Mo. 286.]

The plaintiff’s evidence does not measure up to the standard which a court of equity requires when its jurisdiction is invoked to set aside a deed solemnly executed, and to give it a character totally different from that which the parties gave it. The plaintiff comes into court with one witness to prove a contract which he alleges was made for him by that witness as his agent with a man who is now dead. "We have passed the question of the competency of the witness, because the objection on that ground was not made, but we can not pass the fact that we have heard only one side of the story and we ought to weigh the testimony with great caution. Against the evidence of that witness is the deed itself, the highest evidence of the contract. The rule of law, so often declared, that the proof in such case must be clear and convincing beyond a reasonable doubt would have no force if we should allow the breath of one witness under the circumstances of this case to destroy this deed.

There is a total absence of proof of any fraud or unfairness on the part of Tucker. He went into the-transaction at the solicitation of the plaintiff who was threatened with suit, and who feared that if his property should be sold under the sheriff’s hammer it would bring but little and leave his debts unsatisfied, and by this • transaction the property was made to realize enough to extinguish all his debts. Now after Tucker is dead and cannot speak for himself, the court should receive with a good deal of caution evidence of the kind offered to upset his deed.

The chancellor had the correct view of the case. The judgment is affirmed.

All concur, except Marshall, J., not sitting.