Gaines v. Allen

Wagner, Judge, delivered the opinion of the court. Plaintiffs brought their suit in the Circuit Court to set aside a conveyance of real estate made under a power of sale in a mortgage, and praying to be allowed to redeem. On a hearing of the case, the deed of conveyance was set aside and the prayer granted. The plaintiffs are the heirs and representatives of the mortgagors, and it appears that in 1859, the mortgage was made to Horace Allen, one of the defendants, in consideration of a certain obligation made and executed by one' of the parties of the first part. The condition in the mortgage was, that if the maker of the note should pay or cause to be paid the note and interest thereon, when the same became dpe and payable, then the conveyance was to be void, otherwise, it was to remain in full force and effect, and the party of the first part or the marshal of the Kansas City Court .of Common Pleas, was empowered to proceed to sell the mortgaged property, or any part thereof, at public vendue to the highest bidder, for cash in hand, after giving thirty days’ notice of the time, place and terms of sale. And it was further provided that the said Allen, should, with the proceeds of the sale, pay, first the -expenses of the trust, and next, whatever might be in arrear and unpaid on the note, whether of principal, interest or damages, and the remainder, if any, was to be paid to the parties of the first part or their legal representatives. It appears that defendant Allen, vras a resident of the State of Ohio, and that Smith was his agent in Kansas City, that at the request of Smith, Hayden, who was the marshal of the Kansas City Court of Common Pleas, proceeded to execute the power conferred by the mortgage, by selling the land on [543] the 18th of April, 1862. At the sale, Smith became the purchaser for the sum of $3,600 and received a deed for the land. Smith, by deed dated June 24th, 1862, conveyed to Allen the same land for the recited consideration of $4,300. It is now contended, that neither Allen, the mortgagee, nor Smith his agent, held such relation to the mortgagors, as precluded either from buying at the sale made by Hayden, and that there are only two grounds on which it can be claimed that Allen was forbidden to buy ; first, that the mortgage gave him a power to sell, and second, that he was a trustee to dispose of and account for the proceeds of the sale made by Hayden. The question is now raised, that the mortgage did not give Allen, who was the party of the second part, a power to sell. It is true the deed gives the power to “the said party of the first part” or the marshal of the Kansas City Court of Common Pléas. There was no attempt made to reform the deed on the ground of mistake; but the court below obviously treated the recital “party of the first part” as a mere clerical error, and carried out what was the real intention of the parties. It was unnecessary to give the mortgagors the power to sell, for they already possessed that. All the subsequent recitals of the power given show unmistakeably that Allen, as the party of the second part, was the person to whom the power was given, and he is made the only person to receive and distribute the proceeds arising on a sale, and pay over any surplus that may exist to the íñortgagors. The rule of law is that an agreement cannot be varied by external evidence ; and that the parties are bound by the document which they have signed and accepted as their agreement, unless there be error on-the face of it, so obvious as to leave no doubt of the intention of the parties, without the assistance of external evidence. (Kerr on Fraud and Mistake, p. 417.) The principle is well illustrated by a case referred to in the King’s Bench, decided at an early day. A bond was executed with a condition that the bond was to be void, if a party did not pay a sum of money at a given day. The man who had given the bond, insisted upon a literal performance. He said, [544] the condition is, “if I do not pay, and I have not paid and therefore, the bond is void.” But the court said that it was an obvious error, and therefore that the “not” was to be rejected ; and the bond was to be void if the man did pay. (Anonymous in Bach vs. Proctor, 1 Dough, 384, per Buller J.) There was no question about going contrary to the intention. It was a question of construction. If such is the rule at law, there can be no question about its being resorted to in a court of equity. In the present case, the error is on the face of the instrument ; it is patent and does not require for its removal the assistance of external evidence. The sale to Smith was really a sale to Allen. The agent for collection possessed the same powers that his principal did. What is done by the agent, is done by the principal. If Allen could not purchase so as to cut off the equity of redemption, neither could Smith acting as his agent do so. It is not pretended that Smith paid any money to the marshal, when the sale was made. He credited the amount on Allen’s note. The expenses attending the sale were not paid. We are now brought to the further inquiry, could Allen by a neglect or refusal to execute the power, and devolving the trust upon marshal Hayden, absolve himself from his character of trustee, so as to acquire the absolute fee by buying in the property ? By the terms of the instrument, rightfully interpreted, Allen and Hayden were constituted for the purposes of making the sale, co-trustees, with an alternative power in each, to execute the trust. It is a familiar doctrine that one trustee cannot purchase at a sale, made by his co-trustees. If he does, his purchase may be avoided. Any other rule would lead to connivance and fraud. The mortgagee or trustee, might, when a favorable opportunity presented itself, abrogate his fiduciary character, in behalf of the other person named to sell, and reap an unconscionable advantage. It might be difficult to prove positive or active fraud, and therefore, the wisest policy is, to stop the temptation by placing upon it a total disability. But it was never intended, that [545] because Hayden exercised the naked power of sale vested in him, therefore Allen should cease to have any further connection with the trust, and be at liberty to act as any other disinterested person. The deed, after giving either Allen or Hayden the power to sell, provides, not that Hayden should do anything more, but that Allen should, with the proceeds, do what mortgagees or trustees ordinarily do, namely, pay the expenses of the trust, then satisfy the note and interest, and the remainder, if any, pay over to the mortgagors in the deed. It is manifest that he was regarded as the principal trustee throughout, in whom mainly the trust and confidence was reposed, and he cannot therefore be distinguished from the ordinary case of a mortgagee, with power to sell, and as such, clothed with all the rights and disabilities incident to that relation. That when under-such circumstances a mortgagee buys in the property at his own sale, the equity of redemption still subsists in the creditor, has long been an established principle in this court. (McNess vs. Swaney, 50 Mo., 388; Reddick vs. Gressman, 49 Mo., 389; Thornton vs. Irwin, 43 Mo., 153; Allen vs. Ransan, 44 Mo., 263.) Having reached this conclusion it is unnecessary to particularly examine the mass of testimony in reference to the value of the property, and the price at which it was sold. The allegations in the bill, of fraud on the part of Allen, were not sustained, and it was. no objection that ];e selected an unseasonable time, when property was greatly depressed in value, to make the sale. His debt was past due, and he had the right to coerce its payment, provided he resorted to no sinister or undue means. Rut for the reasons above stated, the sale under the circumstances did not deprive the creditor of the equity of redemption. The judgment therefore must be affirmed ; Judges Napton and Sherwood concur; Judges Vories and Hough not sitting.