Foege v. Woestendiek

OPINION.

REYNOLDS, P. J.

(after stating the facts as above.) — It is claimed by learned counsel for appellant that the respondent took the notes and deed of trust with full knowledge of all the facts in the case, and that on her own showing, she acquired her securities as the result of a fraudulent transaction. If this proposition is true, it would follow that plaintiff could not recover, but on a very careful consideration of the testimony we find nothing whatever to justify the conclusion reached by learned counsel for appellant. So far as the testimony shows, the respondent was an innocent and injured party, acting in entire good faith and without any suspicion, much less knowledge, of any fraud in it until long after she had made the loan, and until after the exposure of the transactions of Frederick in other matters, when she became suspicions as to whether she might not be a victim, and commenced the investigation which resulted in her discovering the fraud that had been perpetrated on her, when she promptly instituted this action.

It is further urged by those learned counsel that plaintiff does not come into court with clean hands, but was a party to the fraudulent transaction. We are at a loss to understand how appellant can take any such position in the face of the evidence in the case. As said above, plaintiff was the innocent and injured party and her hands clean from any fraud.

It is further urged that inasmuch as the answer alleges, and the court found, that the money advanced by the Edward K. Love Realty Company was a building loan, made on the faith of the notes and deed of trust actually executed by the Jessie Morris Company, and the money was actually expended in erecting improvements on the land covered by the deed of trust, that he who expects equity must do equity, and that the court should have ordered an accounting and have allowed defendant Woestendiek the difference between the value of the vacant ground and the value of the improvements. We find no such theory in the pleadings or advanced at the trial. We cannot consider it here. [Riggs v. Price, not officially reported but see 210 S. W. 420.]

It is further urged by those counsel that the court took the deposition of Frederick offered by plaintiff “subject to objection” and never ruled on the objection, and that this testimony was inadmissible and the action of the trial court, taking it “subject to objection,” is reversible error. It is true that it is the general rule that testimony should not be taken subject to objection and no ruling afterwards made thereon, but that rule does not apply here. The whole of Frederick’s deposition is incorporated in the abstract and is before us, so that,' irrespective of the action of the -learned trial court on it, that is as to whether he accepted it and finally held it admissible, or excluded it, it is in the record, subject to our examination in this, a suit in equity, and entitled to such consideration as we may conclude to give it, having in view the conviction of Frederick for a felony, which i fact is conceded, and which goes under the provision of section 6383, Revised Statutes 1909, not to his competency as a witness hut as to the credibility of his testimony.

The fifth and final point suggested by learned counsel for appellant‘is that the court having jurisdiction over the parties should have made an order or decree touching the $1000, being the difference between plaintiff’s notes and the funds held by defendant Woestendiek. We are unable to agree to this proposition. That was not a matter brought before the trial court. Nor do we here hold that Woestendiek is by this decree, shut off from any legal remedy on the notes he bought. That we do not here pass on.

Further attacking the finding of the trial court, it is urged that there was no evidence justifying the court in finding that A. H. Frederick and the Jessie Morris Realty & Investment Company were one and the same. There was evidence from one of the parties, as secretary, that he held one share of stock and did not know who owned the others but this witness, as well as two others, testified distinctly that the Jessie Morris Realty & Investment Company in point of fact was A. H. Frederick. The facts in evidence were sufficient to warrant this. A. H. Frederick kept but one set of books and those books contained not only his individual transactions and his transactions as a real estate agent but the transactions of the Jessie Morris Realty & Investment Company. This was sufficient to warrant the finding that Frederick and the Investment Company were one and the same.

The principle upon which this case was undoubtedly determined by the learned trial court is very thoroughly considered by our Supreme Court in the case of Southern Commericial Savings Bank v. Slattery’s Admr., 166 Mo. 620, 66 S. W. 1066. We think the principle decided and announced in that case not only applicable, but controlling here. Tbe same doctrine bad been long before then announced by onr Supreme Court in Hagerman v. Sutton, 91 Mo. 519, 4 S. W. 73. In that case it was beld that one purchasing a note secured by a mortgage, takes the latter as an incident to the note; and where the note is transferred before becoming due, the purchaser takes it ,|^ith all the presumptions in his favor of want of notice on his part, of any secret claims or trusts attached to the notes in favor of third persons, and the mortgage passes on the same footing as the note; that where one purchases a note in good faith, and before due, he cannot be affected by any. subsequent notice of claims of third. persons on the note. In line with the above cases there have been many decisions by our appellate courts. As one covering the matter very clearly and very applicable here, see Casner v. Schwartz, 198 Mo. App. 236, 201 S. W. 592, where it is held that when notes are fraudulently executed in triplicate with a deed of trust securing payment of the note, the one first negotiated will be considered the real note, entitled to priority in the lien of the deed of trust. A multitude of authorities are cited by the learned judge in that case and without repeating them here we refer to his decision.

It is true that Mr. Love and his clerk, Mr. Dudley, in rather vague testimony, undertook to place the inception of the transaction between them and Frederick in November or December, 1912, but when their evidence is tested, even in itself and in the light of the time that they made the first payment on this note and turned over the loan, it is very clear that Mr. Love, through whom defendant Woestendiek became owner of these notes, had not seriously entertained the proposition of Mr. Frederick to let him have money on the notes and deed of trust until January, 1913. The first money that he paid ' on them was paid on January 21, 1913, the final payment not having been made until July of that year. So that, in point of time, plaintiff here was the owner of the note first negotiated and that note and its interest notes will be considered the real notes and entitled to priority over the notes held by Woestendiek. So the learned circuit court held.

Our conclusion is, that the judgment of the circuit court is for the right party, is supported by sufficient evidence and should be sustained.

•That judgment is accordingly affirmed.

Allen aij|, Becher, JJ., concur.