Veney v. Furth

REYNOLDS, P. J. (after stating the facts). — As this is a suit in equity we, an appellate court, as in duty hound, have gone over all the testimony in it, as abstracted by counsel for the appellants, and have set out the material parts of it. While in such a suit we are to weigh the testimony ourselves and determine the cause from our conclusions on that testimony, and are not bound by the finding on the evidence which has been made by the trial court, it is and always has been an established rule in all our appellate courts, to pay great deference to the conclusion arrived at by the trial judge on the facts. Obviously this is a correct rule of decision. ' He has before him the witnesses; he has heard what they have to say; has seen their manner in testifying, and that has everything to do in determining the credit to be given, for it is not always the spoken word that conveys the real truth. Pie has not only observed them but, as shown by the record in this case, has followed all of their testimony with great care. Not always satisfied with the testimony elicited from witnesses by counsel, but in an endeavor to arrive at the true facts in the case, the learned court in this case has questioned the witnesses himself. So that it is obvious that this case was tried with, very great care by not only a learned but by one of the most experienced trial judges in the State. We have no hesitation whatever, therefore, in applying the rule which we have before stated to its determination, namely, to accept the conclusion on the testimony ar — 703 — rived at by tliat court. With, that conclusion before us, as evidenced by the decree which he ordered entered and in the impression made upon ns by our own examination and consideration of the testimony, we see no reason to disturb the judgment of the trial court. That a gross fraud was attempted to be perpetrated upon these plaintiffs, is beyond question. The perpetrator of that attempted fraud in the first instance was G-eorge Dausman. But as usually happens in cases of this kind, Dausman could only succeed in perpetrating the fraud by the connivance and co-operation of others. He had that here, through G-ould and Haas. Fraud is established and chargeable to parties if, with the means of acquiring knowledge, they shut their eyes'to all the surrounding circumstances and, claiming that they did not know of the fraudulent acts, seek advantage to themselves through those acts. If courts of equity permitted this kind of a defense, they would surrender their great function of cutting through all devices and pretenses to prevent or overturn the fraud. It is said that the defendant Gould is a ,man who is ignorant of ordinary business transactions. His'testimony contradicts any such plea. He had been a conductor of a passenger train on one of the largest railroads of the country for many years, and it is not usual for men of simple minds and lacking in ordinary business knowledge and common sense to occupy such responsible positions long. As we read his testimony and as the trial court undoubtedly understood it, he had turned his money over to Dausman to loan on real estate in Kirkwood. That loan fell in, Daus-man collected it and, while he notified his customer, Gould, that he had collected the money, he never offered to pay it over to G-ould, but told him that he wanted to use the money himself. True that Gould says that Dausman told him he wanted to invest it again, but how? Not by reloaning, but by using it in — 704 — making repairs on a house and giving his own note for it and putting up as his collateral the note and deed of trust which he practically told Gould he did not own, for Gould swears that Dausman told him he was going to apply the $515 he had of Gould’s money to improving the property of plaintiffs. Conclusive evidence was before Gould that nearly three years after the execution of the deed of trust, Dausman had not himself raised the money for the purposes for which that note and deed of trust were given. The very fact that Dausman then had the papers was so against all business ideas, that Gould should have been put on his guard. The truth seems to be that Daus-man had converted this money of Gould’s to his own use and did not have it 'available to turn over to his customer, and that Gould, realizing this, did the best he could to extricate himself from the unfortunate dilemma in which he was placed. The only thing he could do was to take what Dausman offered him. That was Dausman’s own personal note secured by a pledge of the deed of trust and the notes which had been executed by these plaintiffs; and he took plaintiffs ’ deed of tlust and notes “as collateral” to Dausman’s own note, those notes then almost due, nearly three years old, and still in the hands of Dausman, the trustee, the improvements not made. Gould himself admits that he knew that this was a building loan; that the money was to be used for the improvement of the property; that Dausman told him that he wanted to put this $515 into “the improvement of this property.” That was ample to have excited inquiry on the part of Gould as to whether the balance of the $1500 had gone into the improvement of the same property, and if not, where it was to come from. It certainly was sufficient to put Gould on inquiry as to whether Dausman, holding this note as a trustee for a specific purpose, had executed the trust up to that time, and was owner of the notes. We do not believe, reading all of the testi — 705 — mony in the case, that Mr. Gould was an innocent purchaser in this transaction to the extent of his acquisition of this deed of trust and of these notes, shielded by the innocence that is necessary to give one that character in a court of equity. Nor is his conduct after he had acquired this deed of trust and these notes as collateral consistent with fair dealing. Not that he himself acted. But the attorney in whose hands he placed those papers for collection, Mr. Barney Schwartz, did act. Mr. Schwartz was informed by Judge McDonald and by Mr. Wright that these plaintiffs had received nothing on account of this deed of trust. He was informed by Mrs. Yeney that Dausman had never furnished the money to make the improvements, nor rendered an account of his expenditures in connection with the improvement of the house. He knew that these attorneys and these plaintiffs were challenging the deed of trust and its notes. Without giving them any chance to protect themselves and prevent inter-' vention of another, he advertised these notes and deed of trust for sale and sold them to the defendant Haas. Every step in this transaction then, as far as Gould was connected with it personally or through his attorney, from its inception to the time of the sale of the collateral is surrounded with such facts and circumstances as inevitably leads ns to the conclusion that Gould knew of the infirmity of Dausman’s title to the deed of trust and of the notes which he purported to convey to him as collateral for his own note and as between Gould and these plantiffs it cannot stand for a moment’s inspection or the slightest scrutiny, and that after acquiring them, through his attorney, Mr. Schwartz, he endeavored to put them beyond the reach of plaintiffs by a sale to a pretended innocent party is clear. When we come to the relation of the defendant Haas to the matter, while there is not as much active — 706 — participation in the fraud attempted to be perpetrated on these plaintiffs as is shown in the acts of G-ould and his attorney and Dausman, Mr. Haas is in the position of any other man who, with all the means before him of acquiring information, blindly closes his eyes and is satisfied to find out as little as possible in connection with the transaction in order that he may occupy the position of an innocent purchaser for value and without notice. One who has the opportunity to know and inform himself is bound to do so. When he fails to do so he cannot use his failure and his pretended lack of knowledge and of .information and of participation as a club with which to strike down innocent parties and as a means of depriving those parties of their property and of their just rights. He says he has been in the business of buying deeds of trust for several years. When he is offered this one for $1500, pledged for $515, evidenced by a one day note, all he asks is whether the $515 note is genuine and whether the title of the maker of the deed of trust is good. He makes no inquiry as to the $1500 note, nor as to the right of Dausman to pledge it for his own note. Shuts his eyes as to all that, although as -a business man he surely knew that such a transaction was unusual. His claim of innocence is not borne out by the evidence of Mr. Schwartz, who said, in answer to a question by the court as to whether he had told Plaas that so far as Dausman was concerned, that the transaction was not square, that he “intimated it.” Mr. Schwartz and Mr. Haas occupied offices in the same building and seem to have been pretty well acquainted with each other for some time. Such an “intimation” should have been sufficient to a man of Mr. Haas’s occupation and experience. In other words, all of these parties here, except Mr. Furth, who was a substituted trustee and against whom there is no evidence of any kind of lack of good faith in the transaction, cannot be permitted by a court of equity to hold on to this deed of trust — 707 — and tlie notes and to derive any advantage from the alleged purchase of them which a court of equity will acknowledge. Counsel for appellants .claim that the petition is defective and fails to state a cause of action. We do not agree to this. Its facts may he defectively stated hut it states a cause of action and a good one, of which a court of equity will take cognizance. All of the testimony was before the trial court and is before us. Not a suggestion was made during the progress of the trial that any of the testimony offered was out of line with the averments of the petition in the case. Not a suggestion was made that the testimony offered in the case was not responsive to the issues tendered and, as said over and over again by our courts, following the direction of our statutes, these objections come too late when made in an appellate court. Counsel for appellants argue that it appears from respondents’ evidence that Dansman, in performing his contract, expended $256 on behalf of respondents, in clearing the title to their property, and that he unquestionably has a lien on the notes in his possession and this interest was capable of being pledged and that Could and his vendee, Haas, are undoubtedly entitled to this out of the note, regardless of the view the court may take of the claim for the whole of the $575. We are unable to satisfy ourselves on any view, of the evidence that the $1500 note is subject to any of these claims. We have before us the account which Daus-man rendered to respondents and are unable to identify, either from the account itself or by any evidence concerning it. any of the items in it as within the expenditures contemplated when the deed of trust and notes were executed. It is further urged that respondents should have offered to pay what was due, if this is a bill to redeem. Conceding, however, that it is not a bill to redeem but a suit to cancel the deed of trust and notes, counsel — 708 — for appellant urges that before the suit was brought respondents should have either paid or offered to pay any sum due, and that failing to give appellants an opportunity to accept or decline, they had needlessly mulcted appellants in the costs and expenses of the action. If we correctly comprehend the position of counsel, it is that a tender before suit, or in the petition, an offer to pay whatever was due, should have been made. Neither is necessary. In the first place, respondents never admitted that they owed anything. In the second place, even on the theory of appellants, that something was due, the amount was entirely a matter of conjecture, certainly of dispute. In the third place, and conclusively against this claim, this is a suit in equity. In the petition, after praying for specific relief, plaintiffs pray for “such other and further relief as may seem just and proper in the premises. Plaintiffs further aver and state that they will comply with all orders, judgments and decrees of the court and will pay such amounts, if any, as the court may order, adjudge and decree to be due the defendants or either of them.” This meets all the requirements of the case — that is, it is an offer to do equity. Neither a tender or plea of prior tender was necessary. [Whelan v. Reilly et al., 61 Mo. 565, l. c. 570; Kline v. Vogel, 90 Mo. 239, 1 S. W. 733, 2 S. W. 408.] In that case, at page 250, Judge Black, speaking for a majority of the court, says: “The petition shows a case where it is necessary to take an account of rents, taxes, repairs, etc., and contains an offer to pay whatever is due to Yogel. In such cases a tender before suit is not required, nor need the plaintiff bring any money into court until the amount due is ascertained. ’ ’ [See also Ailey v. Burnett, 134 Mo. 313, l. c. 320, 33 S. W. 1122, 35 S. W. 1137. and Carroll v. United Railways Co., 157 Mo. App. 247, l. c. 293, 137 S. W. 303, and cases there collated.] We see nothing from the record in this case, look — 709 — ing at tlie petition, looking at the pleadings, considering the testimony, to warrant ns in disturbing the finding of the trial court. Its judgment enjoining the sale under the deed of trust, cancelling that deed of trust and the notes, should be and is affirmed. Nor-toni and Allen, JJ., concur.