Opinion
July 3, 1941.
1. MORTGAGES AND DEEDS OF TRUST: Equity: Good Faith of Mortgagees. Where note holders had acquired through a foreclosure sale property covered by a deed of trust pledged to secure the notes, which property included a park adjacent to which were lots which had been purchased with the understanding that the park should be maintained for the benefit of the lot owners, the rights of such note holders to strictly enforce the terms of the deed of trust depend in equity to some extent upon their own knowledge of all conditions and their good faith under the circumstances.
2. APPEAL AND ERROR: Equity: New Evidence. Where it appeared that a great injustice had been done lot owners who purchased lots adjacent to a park with the understanding that the park should be maintained for the lot owners, and where it appeared that the depositions of two of the plaintiffs, tendered when a motion to set aside the submission of the case was overruled, indicated that they had knowledge which might be material on the issue of estoppel against asserting their rights under a deed of trust covering the park, and on other issues, a remand for a new trial may be made to avoid closing the door to substantial justice.
Appeal from Osage Circuit Court. — Hon. Ransom A. Breuer, Judge.
REVERSED AND REMANDED.
W.H. Sapp, Wm. L. Nelson, Jr., Sullivan, Reeder, Finley Gaines and Ralph T. Finley for appellants.
(1) The fifteen-acre park in controversy having been platted, laid out and made plainly visible on the ground, and lots sold with reference thereto, including an interest in such park, prior to November 15, 1923, all to the knowledge of the holders of the trustee and note holders under the pledge agreement of November 15, 1923, the said deed of trust never became a prior lien on said park as against the defendants and their predecessors in title. (a) The rights of the purchasers of lots arose in the park even though no express grant of the park was made by deed, since the park was laid out on the ground and a reasonable convenience for use in connection with the lots, enhancing the selling price of the lots. Greisinger v. Klinhardt, 321 Mo. 186; Gertsley v. Globe Wernecke Co., 340 Ill. 270, 172 N.E. 829; Gray v. Loud Sons Lbr. Co., 128 Mich. 427, 87 N.E. 376; Smith v. Heath, 102 Ill. 130; 18 C.J. 63, 64, 65; 19 C.J. 935, sec. 138; Hawkins v. Hendricks, 247 Ill. 517, 93 N.E. 428; Perkins v. Fielding, 119 Mo. 149; Missouri P. L. Co. v. Thomas, 102 S.W.2d 564; 87 A.L.R. 1520. (b) The note holders under the deed of trust and pledge agreement of November 15, 1923, and their trustee, and all persons claiming under them, from the terms of the pledge agreement, the plan of development, and the plat attached to said pledge agreement, had actual notice of the setting aside of the park for the use of purchasers of lots, or had notice of such facts as put them on inquiry as to the rights of the defendants and their predecessors in title. Marshall v. Hill, 246 Mo. 1; Gross v. Watts, 206 Mo. 373; Sicher v. Rambousek, 193 Mo. 113; Beach v. Lynn, 299 Mo. 127; Caruthersville v. Huffman, 262 Mo. 367; St. Louis v. Koch, 335 Mo. 991; K.C. Northern Railroad Co. v. Baker, 183 Mo. 312; Bacon v. Onset Bay Grove Assn., 241 Mass. 417, 136 N.E. 813. (2) Under all the evidence, the parties to the deed of trust and pledge agreement of November 15, 1923, and the plaintiffs were parties to the plan of development of the Park Hill additions according to the plat attached to said pledge agreement and used by John A. Stewart in the sale of lots, and the plaintiffs are estopped to claim that the park in controversy is not a permanent, private park for the benefit of the defendants as owners of lots in said additions. Smith v. Heath, 102 Ill. 130; Boone v. Clark, 129 Ill. 466, 21 N.E. 850; Ridley v. Mayer, 230 Ala. 517, 161 So. 526; Gertsley v. Globe Wernecke Co., 340 Ill. 270, 172 N.E. 829; Greisinger v. Klinhardt, 321 Mo. 186; Oney v. West Buena Vista Land Co., 104 Va. 580, 52 S.E. 343; Cihak v. Kleke, 117 Ill. 643, 7 N.E. 111; Bondy v. Samuels, 333 Ill. 535, 165 N.E. 181; 1 Wiltsie on Mortgage Foreclosure (4 Ed.), sec. 207. (3) The plaintiffs are estopped to claim title to the park in controversy because their trustee and the note holders, including the plaintiffs, received and accepted from time to time a part of the purchase price of lots sold, with knowledge that said lots had been sold at an enhanced price on account of agreement by Stewart to sell an interest in the park with each lot. Hector v. Mann, 225 Mo. 228; Austin v. Loring, 63 Mo. 19; Nanson v. Jacob, 93 Mo. 331; Clyburn v. McLaughlin, 106 Mo. 521; Proctor v. Vance, 220 Mo. 104; Milan Bank v. Richmond, 280 Mo. 30; Barnett v. Smart, 158 Mo. 167. (4) It is undisputed that the trustee and note holders under the deed of trust and pledge agreement of November 15, 1923, voluntarily released lots sold by Stewart and collateral representing lots sold, to the value in excess of $32,500, all of which was released without consideration, with full knowledge on the part of said trustee and note holders of the rights of parties who had purchased lots in Park Hill additions with an interest in the park, and by reason of said facts the $36,000 note and deed of trust were in equity paid in full long before the foreclosure under which the plaintiffs claim. (a) If the park in controversy was subject to the deed of trust of November 15, 1923, then as lots were sold equities arose in the purchasers which made their lots only secondarily liable, and lots thereafter released by the trustee and note holders could not be released without consideration. If so released, as to the lots secondarily liable, then the mortgage debt must be credited with the value of the property released. 41 C.J. 762-763, 769, secs. 842-843, 860; Cohn v. Souders, 175 Mo. 455; Davis v. Priggott, 56 N.J. Eq. 634, 39 A. 698; Beardsley v. Empire Trust Co., 96 N.J. Eq. 212, 124 A. 457; Boone v. Clark, 129 Ill. 466; 1 Wiltsie on Mortgages (4 Ed.), sec. 207; 2 Jones on Mortgages (8 Ed.), sec. 906. (b) Under the pledge agreement and plan of development, whereby payments were required to be made by Stewart upon securing the release of lots sold, the note holders had no right to release any of the security of the deed of trust without consideration. The provision for payment of part of the purchase price was likewise for the benefit of the purchasers of lots. 2 Jones on Mortgages (8 Ed.), sec. 895; Ventnor Realty Co. v. Development Co., 79 N.J. Eq. 103; Smith v. Heath, 102 Ill. 130; Consolidated Development Co. v. Ortega Co., 158 So. 94; Barley v. Inman, 105 Fla. 1; Houtz v. Beeman Inv. Corp., 44 P.2d 660. (5) The silence of the note holders and their trustee and their failure to deny the right of Stewart to sell lots with an interest in the park until long after practically all of the security was depleted constituted a fraud in equity and estops the plaintiffs from claiming said park as against the defendants. Hill v. Epley, 31 Pa. 331; Sumner v. Seaton, 19 A. 884; Perry v. Hall, 75 Mo. 503; State ex inf. v. Mo. Utilities Co., 339 Mo. 385. (6) The plaintiffs are not innocent or bona fide purchasers of the park in controversy. (a) The plaintiffs had actual and constructive notice of the equities of the defendants in the park and streets in controversy. Hickman v. Green, 123 Mo. 165; Simpson v. Van Laningham, 267 Mo. 286; Luker v. Moffett, 327 Mo. 929; Drey v. Doyle, 9 Mo. 459; Cooper v. Newell, 263 Mo. 190; Waddington v. Lane, 202 Mo. 387; Musick v. Barney, 49 Mo. 458. (b) The failure of the plaintiffs to take the stand and deny the charges in the defendants' answer and cross bill and to deny the knowledge which the facts and circumstances show they had was, in effect, a confession that they had all the knowledge charged. Cooper v. Newell, 263 Mo. 197; Barber v. Nunn, 275 Mo. 565; Baker v. C.B. Q. Ry. Co., 327 Mo. 986; Schooler v. Schooler, 258 Mo. 83; Conn. Mut. Life Ins. Co. v. Smith, 117 Mo. 261. (c) The possession and use of the park by the lot owners was in itself sufficient to charge the plaintiffs with notice of the equities of the defendants. Jones v. Nichols, 280 Mo. 653; Martin v. Jones, 72 Mo. 23; Davis v. Wood, 161 Mo. 17; Sanford v. Kern, 223 Mo. 616; Toland v. Corey, 6 Utah, 392, 24 P. 190; Randolph v. Wheeler, 182 Mo. 145. (d) The plaintiffs were not only parties to the pledge agreement of November 15, 1923, and claim under it, but the $1000 notes held by them referred to the pledge agreement and by such reference made it a part of the notes, by which on purchase of the notes, the plaintiffs became charged with all the facts contained in the pledge agreement and the plat attached thereto. Neither were the note holders holders of the $36,000 note without notice. Reetz v. Pontiac Realty Co., 316 Mo. 1257; Globe Ind. Co. v. Trust Co., 226 Mo. App. 92. (e) Both the trustee's deed under which the plaintiffs claim and the deed from the Boone County Trust Company to the plaintiffs convey only the interest of the trustee and the Boone County Trust Company and are in effect only quitclaim deeds. The deed of trust of November 15, 1923, does not afford the plaintiffs a staff in the nature of a warranty deed, because whatever rights the plaintiffs acquired to such deed of trust was by virtue of the pledge agreement which gave them full knowledge of all the facts as to the plan of development. Ridings v. Hamilton Savs. Bank, 281 Mo. 288; 21 C.J. 1179-1183; Dee v. Nachbar, 207 Mo. 680; Brown v. Patterson, 224 Mo. 639; City of Hardin v. Cunningham, 285 Mo. 457. (7) A sale under a deed of trust where debt is paid is a nullity and the purchaser thereunder acquires no title. Verdon v. Silvara, 308 Mo. 607; Baker v. Halligan, 75 Mo. 435; Wells v. Estes, 154 Mo. 291. (8) The undisputed evidence shows that Stewart, the mortgagor, made the plat of Park Hill, showing the park, more than one year before the date of the deed of trust and pledge agreement of November 15, 1923, and sold lots thereby and established the park as a community park for the benefit of the lots owners; that the purchasers of lots both prior and subsequent to November 15, 1923, have paid for the park in connection with the purchase of their lots, and have been in continuous adverse possession thereof since the first sale of lots 1922, and the court erred in failing to decree title in the defendants on this ground alone. Martin v. Jones, 72 Mo. 23; Davis v. Wood, 161 Mo. 17; Sanford v. Kern, 223 Mo. 616; Allen v. Mansfield, 108 Mo. 343; Ridgeway v. Holliday, 59 Mo. 444; Miller v. Rosenberger, 144 Mo. 292; Parkey v. Veatch, 68 Mo. App. 67; 2 C.J.S. 650-651. (9) The plaintiffs are estopped by their own conduct and by the conduct of their trustee, Boone County Trust Company. (a) They are stopped because they stood by and permitted third parties to purchase lots at an enhanced value because of the presence of the park and Stewart's agreement to make it a permanent, private park, when they knew such third parties thought they were acquiring an interest in such park. Perry v. Hall, 75 Mo. 503; State ex inf. v. Mo. Utilities Co., 339 Mo. 385; Sumner v. Seaton, 19 A. 884; Hill v. Epley, 3 1 Pa. 331. (b) The note and deed of trust of November 15, 1923, matured, as did also the $1000 notes, on November 15, 1928, after which time the note holders had a right of entry and also a right to foreclose, but they preferred to wait and let Stewart continue to sell lots and allow lot purchasers to continue to buy lots and make improvements for nearly eight years beyond maturity and after Stewart was dead and could not testify as to their knowledge, all of which constitutes laches barring recovery by the plaintiffs. Price v. Boyle, 287 Mo. 257; Stevenson v. Saline County, 65 Mo. 425; Breit v. Bowland, 321 Mo. App. 433; Troll v. St. Louis, 257 Mo. 635; Masterson v. Railroad, 72 Mo. 342; McShane v. Moberly, 79 Mo. 41. (c) The officers of the Boone County Trust Company, trustee, repeatedly encouraged purchasers to purchase lots from Stewart and led them to believe the park was a permanent park, by which conduct the plaintiffs are estopped to claim title to the park. This estops the plaintiffs. Guy v. Woolridge, 226 S.W. 12. (10) So far as the purchasers of lots are concerned, the Boone County Trust Company, trustee under the deed of trust and pledge agreement, was the agent of the note holders under said pledge agreement, and notice to the Trust Company was notice to the plaintiffs and other note holders. 3 C.J.S. 201; Butler Bldg. Co. v. Dunsworth, 146 Mo. 361; 96 A.L.R. 1233; 2 Jones on Bonds Bond Securities (4 Ed.), sec. 1044; 1 Jones on Mortgages (8 Ed.), sec. 692; Coe v. N.J., M. Ry. Co., 34 N.J. Eq. 266. (11) The trial court erred in overruling the motion of the defendants to set aside the submission and reopen the cause for additional testimony. Gross v. Watts, 206 Mo. 373; Buck v. Buck, 267 Mo. 644; St. Louis Public Schools v. Risley, 40 Mo. 356; Waters v. Gallenmore, 41 S.W.2d 870. The depositions of the plaintiffs were admissible as declarations or admissions against interest, even if the plaintiffs were in court at the time of the offer. Mortons v. McMahon, 334 Mo. 175; McCoslin v. Mullins, 17 S.W.2d 684; Heyde v. Patten, 39 S.W.2d 813; Wilson v. Salisbury, 167 Mo. App. 191. Clark, Boggs, Peterson Becker and Howard B. Lang, Jr., for respondents.
(1) The judgment herein being based upon the chancellor's finding upon the facts that appellants established no equitable title which would defeat respondents' legal title, this court will defer to the chancellor's findings on the facts and the judgment should be affirmed. Keller v. Lewis County, 134 S.W.2d 48. (2) Respondents' title must be sustained because it is derived under the foreclosure of a mortgage given to secure a negotiable instrument held by bona fide purchasers for value, without knowledge of any rights of the appellants. (a) The thirty-six $1000 bonds issued under and secured by the pledge agreement are negotiable instruments. Sec. 2630, R.S. 1929; 14 A.L.R. 1126; 33 A.L.R. 1174; 37 A.L.R. 655; 61 A.L.R. 815; 104 A.L.R. 1378; Peopeke v. Paine, 253 Mich. 636, 235 N.W. 871, 75 A.L.R. 1205; Merchants' Natl. Bank v. Detroit Trust Co., 258 Mich. 526, 242 N.W. 739, 85 A.L.R. 350; Pflueger v. Broadway Trust Savs. Bank, 184 N.E. 319; Muste v. Groagein, 281 P. 1022; Natl. Bond Inv. Co. v. Lanners, 253 Ill. App. 262; Ferring v. Verwey, 229 N.W. 46; Utah Lake I. Railroad Co. v. Allen, 64 Utah, 511, 231 P. 818, 37 A.L.R. 651; Gerrish v. Atlantic Ice Coal Co., 80 F.2d 649; Reitz v. Pontiac Realty Co., 316 Mo. 1257, 293 S.W. 382; Globe Indemnity Co. v. Miss. Valley Merchants' State Trust Co., 226 Mo. App. 92, 41 S.W.2d 962; Cass Avenue Bank v. Greenwald, 224 Mo. App. 344, 29 S.W.2d 209; Hunt v. Dean, 72 S.W.2d 831; Morgan v. Mulcahey, 298 S.W. 242. (b) The $36,000 note is a negotiable instrument, negotiated for value and without notice of any equities on the part of the defendants, and plaintiffs acquired their title under the foreclosure of the mortgage securing this note. 10 C.J.S., sec. 322, p. 814; 8 Am. Jur., sec. 388, p. 123; Downs v. Horton, 209 S.W. 595, affirmed 287 Mo. 414, 230 S.W. 103; Reeves v. Letts, 143 Mo. App. 196, 128 S.W. 246; McMurray v. McMurray, 258 Mo. 405, 167 S.W. 513; Hellweg v. Bush, 228 Mo. App. 876, 74 S.W.2d 89; Morgan v. Mulcahey, 298 S.W. 242; 75 A.L.R. 1210. (3) The holders of the $1000 bonds are bona fide purchasers for value and acquired the security securing the same free from unknown claims of the defendants, even though it may be held they are not negotiable instruments. 4 Am. Jur., secs. 111, 117, pp. 317, 322; 8 Am. Jur., sec. 339, p. 74; Am. Law Inst., Restatement, Contracts, sec. 174; Brooks v. Greil Bros. Co., 192 Ala. 235, 68 So. 874; Wood v. Sparks, 42 S.W.2d 142. (a) The fact that the consolidated plat was attached to the trust agreement is not sufficient to charge the bondholders with notice of the agreement of Stewart with purchasers of lots. Laughlin v. Findlay, 324 Mo. 1021, 25 S.W.2d 464. (b) The bondholders had knowledge of no other facts which would constitute notice of any equity in the lot owners. (c) Notice to the trust company does not constitute notice to the bondholders. 4 Am. Jur., sec. 105, p. 312. (4) The bondholders were not partners and parties to the plan of the development of the Park Hill additions. Greisinger v. Klinhardt, 321 Mo. 186, 9 S.W.2d 978; Smith v. Heath, 102 Ill. 130; Boone v. Clark, 129 Ill. 466, 21 N.E. 850, 5 L.R.A. 276. (5) The deed of trust on the fifteen-acre tract was not released by the release of collateral by the bondholders. 2 Jones on Mortgages (8 Ed.), sec. 894, p. 229; 41 C.J., sec. 836; Boone v. Clark, 129 Ill. 466, 21 N.E. 850, 5 L.R.A. 276; Ocean County Natl. Bank v. Ellor Sons, 116 N.J. Eq. 287, 173 A. 138. (a) The bondholders had no actual knowledge of any equitable right of the property owners at the time the collateral was released. McMurray v. McMurray, 258 Mo. 405, 167 S.W. 514; Hellweg v. Bush, 228 Mo. App. 876, 74 S.W.2d 89; Boone v. Clark, 129 Ill. 466, 21 N.E. 850, 5 L.R.A. 276; 41 C.J. 860, p. 769; Cohn v. Souders, 175 Mo. 455, 75 S.W. 413. (b) Knowledge possessed by the trustee at the time the collateral was released cannot be charged to the bondholders. Hunter v. Hunter, 327 Mo. 817, 39 S.W.2d 359; St. Charles Bridge Co. v. Union Elec. L. P. Co., 216 Mo. App. 385, 268 S.W. 404; Wright v. Great Eastern Casualty Co., 229 S.W. 440. (c) Stewart's newspaper publications cannot be held to give the bondholders notice of Stewart's oral agreements. 10 C.J.S., sec. 332, p. 833; 8 Am. Jur., sec. 392, p. 127. (d) The failure of respondents to testify raises no inference of their knowledge of the facts charged against them in their admitted answer and cross bill. McMurray v. McMurray, 258 Mo. 405, 167 S.W. 513; Hellweg v. Bush, 228 Mo. App. 876, 74 S.W.2d 89. (6) The record discloses no facts which would estop the bondholders from foreclosing the mortgage on the fifteen-acre tract given to secure their bonds. Grafeman Dairy Co. v. Northwestern Bank, 209 Mo. 311, 235 S.W. 435; Crismond v. Kendrick, 325 Mo. 619, 29 S.W.2d 1100; Commerce Trust Co. v. Keck, 283 Mo. 209, 223 S.W. 1057; Noell v. Remmert, 326 Mo. 148, 30 S.W.2d 1009; Dunn v. White, 63 Mo. 181; Key v. Jennings, 66 Mo. 356. (7) Appellants' loss having been caused by their own carelessness and trustfulness of Stewart, they cannot require the bondholders, who are innocent of any negligent wrongdoing, to suffer their loss. C.I.T. Corporation v. Hume, 48 S.W.2d 154; Klebba v. Struempf, 224 Mo. App. 193, 23 S.W.2d 205. (8) The court did not err in refusing to sustain the motion to reopen the case. 64 C.J., p. 1205; Newell v. Wagner Electric Mfg. Co., 318 Mo. 1031, 4 S.W.2d 1072; Ricketts v. Finkelston, 211 S.W. 391; Ford-Davis Mfg. Co. v. Maggee, 233 S.W. 237.
This is an action to determine title to land in Boone County. The venue was changed to Osage County, where judgment went for plaintiffs, and defendants appealed. We heretofore handed down an opinion in this cause reversing and remanding, but a rehearing was ordered, additional briefs filed and the cause reargued.
The land involved lies within the city of Columbia; consists of about 15 acres, and is referred to as the park. The common source of title was John A. Stewart, deceased. Plaintiffs claim title as the grantees of the purchaser at a foreclosure sale (May 16, 1936) of a deed of trust executed by Stewart and wife November 15, 1923. Defendants, A.A. Millard, Walter, and Epple are trustees under a trust instrument executed by Stewart. The Duffords, [356] the Brattons, and Alice B. Millard are defendants individually and as representing a class likewise affected.
Park Hill additions, Nos. 1, 2, and 3, and the park are frequently referred to in the record, and to better appreciate the situation, we here reproduce an exhibit as follows:
Park Hill addition No. 1 is composed of lots 1-23; No. 2 of lots 24-100; and No. 3 of lots 101-150. The 15 acre park, the land involved, is the boot shape area.
The petition is conventional in form, except the allegations as to the classes represented among the defendants. These classes have reference to the lot owners in the respective additions who claim, in effect, to be the beneficial owners in common of the park. The answer pleads equitable ownership, estoppel, payment of the obligations secured by the deed of trust foreclosed, adverse possession, and laches. Defendants, in a cross bill, ask that title to the park be determined and adjudged in them as their interests appear, and that the deed under which plaintiffs claim be declared null and void.
Defendants, appellants here, make several separate assignments, but these may be grouped under estoppel, adverse possession, and premature foreclosure. Also, it is claimed that error was committed in refusing to reopen the case for further evidence.
The plat of Park Hill addition No. 1 was filed for record October 17, 1922; No. 2, September 30, 1924; and No. 3, November 2, 1925. Exhibit A is a consolidation [357] of the three additions and the park which was not a part of either addition, so far as was shown by the plats recorded. In late 1921, or early 1922, Stewart had the area included in the three additions and the park, surveyed and a plat (in form as exhibit A, except legend) made. Some lots in additions 2 and 3 were sold before the plats thereof were executed and filed, and those to whom lots had been sold joined in the execution of the respective plats.
November 15, 1923, prior to filing plats of additions 2 and 3, Stewart and wife executed a seven per cent note for $36,000, due in 5 years, and payable to themselves and endorsed it in blank and delivered it to the Boone County Trust Company. To secure this note, they, on same date, executed a deed of trust to the trust company as trustee on the area embraced in additions 2 and 3, and the park, except lots 24, 26, and 30 in addition 2, and lots 104, 105 and 106 in addition 3, which lots had been sold prior thereto. "The holder or holders" of the $36,000 note were designated in the deed of trust as the "party of the third part." The description in the deed of trust was by metes and bounds and without reference to either addition or the park. On the same date, November 15, 1923, the Stewarts executed 36 seven per cent notes (hereinafter referred to as bonds) for $1,000 each, due in 5 years, payable to bearer, interest payable annually, and at the same time they executed what is called, in the record, the pledge agreement. In the pledge agreement the Stewarts were "parties of the first part;" the trust company was "party of the second part" and designated as trustee; "the holder or holders" of the 36 bonds were "parties of the third part." By the terms of the pledge agreement the $36,000 note, secured by the deed of trust, was pledged as collateral to secure the 36 bonds. Other collateral was required to be pledged by Stewart under this pledge agreement which was contemporaneous with the deed of trust. The trust company did not advance any money on the notes to the Stewarts; the 36 bonds were sold and John A. Stewart received the proceeds. Exhibit A was attached to the pledge agreement as a part thereof. Second party, the trust company, was to say when plats were to be recorded as to additions 2 and 3 on each side of the park.
The pledge agreement recites that the Stewarts desired to develop the area (40 acres) shown on Exhibit A "as a residential section of the city of Columbia," and that a deposit with the trust company of $1,000 in money or collateral, to be approved by the trust company, would secure the release from the lien of the deed of trust of any lot in addition 2 between Broadway and Crestmere avenue, and that a like deposit of $500, cash or collateral, would release any other lot.
The whole area shown on Exhibit A was referred to by Stewart as Park Hill. Stewart advertised extensively in the local papers and otherwise; sold lots at private sale and at public auction; told purchasers and prospective purchasers face to face and in the press that the park would belong to the lot owners; would be a community park; that the ownership of a lot carried with it the ownership of a 1/150 interest in the park, and that from the purchase price of each lot there would be deposited $100 "into a perpetual park care fund," which would total $15,000. The park feature was attractive and admittedly enhanced the sale price of lots. The park as a sales force can better be appreciated from the evidence of R.E. Curtis, dean of the School of Business and Public Administration, University of Missouri. Mr. Curtis, of the park, testified:
"I have been in and about the park frequently since I moved to Columbia. There have been no changes in the boundaries of the park during that period, to my knowledge. There are trees in the park. The park extends along the course of a stream from Broadway to Garth avenue in the vicinity of Stewart road. There are trees along that stream from within about one hundred yards of Broadway clear through to the other end of the park. They spread out some distance from the stream at the lower end, and at other spots along there. The stream is a meandering stream, and there are many trees, valuable shade trees. There is a large elm tree at the very edge of Broadway, one of the largest in the city, I believe. It is an elm, but there are many oaks in the park, many kinds of trees. There is supposed to be a spring somewhere near the north end of the park. It is along the slope down from East Parkway at about the intersection of Crestmere. At the south end of that park area, there is a line of dense forest along there, along Stewart road. There is a steep slope northward from Stewart road, that is natural woods. It seems not to have been cleared out at all. The park is sightly. It is one of the [358] most sightly strips of land in the vicinity. This beauty was an inducement to me to buy a lot facing on that park. I would not have bought at all in the Park Hill if it had not been for this park."
Some cash and considerable collateral, derived from the sale of lots, were turned over by Stewart to the trust company as provided in the pledge agreement, but in some instances lots were sold and no deposit made. How many times such occurred does not appear, but all lots sold were released from the deed of trust. On three occasions, the trust company, by written direction (called an indenture) of all of the bondholders (including plaintiffs, J.P. and W.J. Hetzler) released back to Stewart collateral deposited. These releases were $13,500 on October 26, 1925; $10,000 on November 15, 1926; and $9,000 on November 12, 1927, a total of $32,500. The release indentures recited that the remaining real estate not then released from the deed of trust was ample to secure the bonds, and the release indenture of November 12, 1927, the third and last one, recited that there yet remained under the lien of the deed of trust 34 lots in Park Hill No. 2, and 29 lots in Park Hill No. 3, of the value of $1,000 each, and "fifteen acres of park" of the value of $25,000. There was a paragraph in the third release indenture whereby the Stewarts promised that thereafter, upon the sale of a lot, $1,000 in cash or collateral would be deposited with the trust company, regardless of what lot was sold. This was not done, but if it had been, the debt would have been paid. Each of the release indentures stated that it was binding on "the undersigned holders of said notes (the 36 bonds) and their assigns, administrators, executors, and legal representatives."
The lot purchasers generally knew that there was a deed of trust on the lots in additions Nos. 2 and 3, but it was not generally known among them that the same deed of trust, by its terms, covered the park and its adjacent streets, East Parkway and West Parkway. While Stewart told lot purchasers that the purchase of a lot carried a 1/150 interest in the park, there was no mention of such in the deeds executed by the Stewarts. Finally, it got noised about that there was a deed of trust on the park, and John A. Epple, who contemplated the purchase of 15 lots, went (October, 1930) to see S.F. Conley, secretary of the trust company and its trust officer. Conley, in effect, told Epple that the bondholders were well secured, independent of the park, and urged him, according to Epple, to go ahead and purchase the lots, and he did. Conley suggested to Epple that the lot purchasers "had better take the title (to the park) out of Stewart," and this was done October 3, 1931. On that date Stewart and wife conveyed the park, including the streets, East Parkway and West Parkway, to Epple, R.R. Walter, and himself as trustees, "to hold and maintain perpetually as a private park for the use, benefit and enjoyment of the owners of the lots in Park Hill addition No. 1, Park Hill addition No. 2, and Park Hill addition No. 3, to the city of Columbia, Missouri, and for the use, benefit and enjoyment of all persons living within the boundaries of said additions, whether as owners or tenants, said park to be known as `John A. Stewart Park,'" and the deed provided a plan for upkeep, maintenance, etc., and also provided for the succession of the trustees. After the conveyance of the park, all money derived from the sale of lots was applied to the payment of the bonds.
From November 15, 1923, date of the $36,000 note, deed of trust, the 36 bonds, and the pledge agreement, to November 15, 1928, maturity date of these notes, Stewart sold 55 lots in addition No. 2, and 24 in addition No. 3, and at the time of his death (April 8, 1936), and at time of foreclosure (May 16, 1936) all lots had been sold except lots 42, 44, 48, 78, 79, 87, 88, and 89 in addition 2, and the value of the lots sold prior to foreclosure was at least $125,000.
In a few days after Stewart's death, the Boone County Trust Company, trustee in the deed of trust, securing the $36,000 note, resigned and Harold Duncan, its teller, was appointed substitute trustee, and proceeded to publish foreclosure notice. At the time of foreclosure 15 bonds remained unpaid, and the amount due on each was $650. May 14, 1936, the holders of these bonds made a written request of the trust company to bid for them, at the foreclosure sale, up to $11,900, but to buy in for less if able to do so. The trust company bought for them at the foreclosure sale on a bid of $10,000, and the substitute trustee conveyed to it lots 42, 44, 48, 78, 79, 87, 88, 89, and the park area, including the streets, East Parkway and West Parkway. January 27, 1937, the trust company conveyed [359] to plaintiffs all the property conveyed to it by the substitute trustee, except lots 79, 87, 88 and 89, sold by the trust company subsequent to foreclosure, and this cause was filed December 1, 1937.
In the prior opinion we ruled all assignments adverse to defendants, except on the question of premature foreclosure, and reversed the judgment and remanded the cause on the ground that the foreclosure in a little more than a month after Stewart's death was in violation of Sec. 140, R.S. 1939, 1 Ann. Stat., p. 88. Neither side filed motion for rehearing, but each filed motion to modify. Plaintiffs asked that the ruling that the foreclosure was premature be stricken from the opinion and the judgment affirmed. Defendants asked correction of an erroneous statement of a minor fact, and that the opinion be modified to reverse and remand with direction "to enter a decree vesting title to the park in the defendants." The court of its own motion ordered rehearing, and, as stated, additional briefs were filed and the cause reargued.
As the record stood when the cause was first submitted, the evidence of plaintiffs, J.P. Hetzler and Hays, was not in the record. Neither of the plaintiffs testified at the trial, but defendants took the depositions of J.P. Hetzler and Hays, but failed to introduce these depositions. The trial closed July 7, 1938, and the cause was submitted and taken under advisement. August 19th, defendants filed motion to reopen for additional evidence. In the motion it was stated that at the trial defendants inadvertently overlooked offering the depositions. The court stated that the motion would be sustained. Thereupon counsel for plaintiff said: "I think it is improper to permit them to use these depositions when the plaintiffs were in court" (present at the trial). The court then said: "Well, if that is the situation, I think it is improper and unfair to permit you to use the depositions, and I will overrule the motion." As we read the record at the first submission, we stated that plaintiffs did not introduce the depositions in support of the motion to reopen. The depositions were not printed in the abstract and were not before us. After rehearing was ordered, plaintiffs filed supplemental abstract bringing up the evidence of plaintiffs, J.P. Hetzler and Hays in the depositions, and plaintiffs' counsel say that these depositions were "offered in evidence" by defendants "upon their motion to reopen."
In the prior opinion we stated that it was plain that a grave injustice had been done to the lot purchasers respecting the park, and that it would appear from the motion to reopen that plaintiffs knew more about the park than the record (then) disclosed, and on oral argument on rehearing it was frankly admitted by counsel for plaintiffs that an injustice had been done the lot purchasers. It is also stated by them that if their position be correct, they have the right to close up the streets (East Parkway and West Parkway) in front of all the lots fronting on the park. They offer, however, to waive this right. The question of whether plaintiffs can enforce so strictly to the letter the mortgage given as collateral to the pledge agreement depends in equity to some extent upon their own knowledge of all conditions and their good faith under the circumstances. It appears from the depositions of plaintiffs, J.P. Hetzler and Hays, that they did know a great deal about the park. It appears from Hetzler's deposition that he is a director of the trustee, Boone County Trust Company, and has been for 6 or 8 years; that he has resided in Columbia for 35 or 40 years; that he was familiar with the Park Hill additions and the park. The deposition of plaintiff Hays discloses that he too was familiar with the Park Hill additions and the park and had been for many years. There is nothing in the record to show what plaintiff, W.J. Hetzler, knew about the additions and the park, but it is apparent that the park and Stewart's representation that it would belong to the lot purchasers received the widest publicity in Columbia for quite a few years after November 15, 1923.
We do not think that defendants have developed as fully as they may the defense that plaintiffs, when they purchased the bonds they held at the time of the foreclosure, knew of the representations made by Stewart as to the ownership of the park, and were familiar with the physical situation of the Park Hill additions and the park, or had such information as to put a reasonably prudent person to inquiry. The cause is in equity, a court of conscience. It stands conceded that a grave injustice has been done to the lot purchasers. That wrong should be redressed if it can be. A remand may be made to avoid closing the door to substantial justice, Jensen v. Wilson Township, 346 Mo. 1199, 145 S.W.2d 372, l.c. 375, and cases there cited, and we think [360] that such should be done in the present case. On a retrial all questions will be open; none will be foreclosed by our former ruling. Further development on the question of plaintiffs' knowledge as to Stewart's representations about the park may affect other questions urged herein, such as common-law dedication and estoppel.
The judgment should be reversed and the cause remanded, and it is so ordered. Hyde, C., concurs; Dalton, C., not sitting.
The foregoing opinion by BRADLEY, C., is adopted as the opinion of the court. All the judges concur.