text:
    J. Douglas STREETT, Plaintiff-Respondent-Appellant, v. LACLEDE-CHRISTY COMPANY, a Corporation, Defendant-Appellant-Respondent.
    No. 51591.
    Supreme Court of Missouri, Division No. 1.
    Nov. 14, 1966.
    Motion for Rehearing or for Transfer to Court En Banc Denied Dec. 30, 1966.

      Lashly, Lashly, Rava, Hyndman & Rutherford, John H. Lashly, Paul B. Rava, Elihu M. Hyndman, St. Louis, for plaintiff-respondent-appellant.
    Coburn, Croft & Kohn, Thomas L. Croft, Alan C. Kohn, Terrence L. Croft, John R. McFarland, St. Louis, for defendant-appellant-respondent.
   HENRY J. WESTHUES, Special Commissioner.

This suit was based on an employment contract. It was filed in the Circuit Court of the City of St. Louis, Missouri. Plaintiff J. Douglas Streett, in Count I of his petition, stated that the defendant Laclede-Christy Company, a corporation, in June, 1954, employed plaintiff by written contract for a five-year period at a salary of $41,000 per year; that he was discharged on October 7, 1954. Plaintiff asked for a judgment of $177,050 on this first count.

In Count II, plaintiff stated that by the employment contract defendant agreed to pay plaintiff a bonus of $1,000 per year for the five years of his employment. He asked for a judgment for $5,000 on the second count.

The defendant filed a counterclaim asking for a judgment of $35,884.50 and punitive damages in the sum of $100,000 based on an alleged unauthorized expenditure of sums of money in willful violation of plaintiff’s duties. Defendant denied any liability under the contract, stating that the contract was void and that plaintiff’s discharge was justified because of his breach of duties. Defendant also claimed that plaintiff’s recovery should be reduced for the reason that he refused like employment offered to him by another company.

The case was tried before the Honorable William H. Killoren without the aid of a jury. It was submitted to Judge Kil-loren but was not decided prior to his retirement. By agreement, the case was assigned to Judge William E. Buder on the record as made .before Judge Killoren. Judge Buder entered a judgment against the defendant on plaintiff’s first count in the sum of $177,050 and a judgment in plaintiff’s favor on Count II in the sum of $5,000. A judgment was entered on defendant’s counterclaim in the amount of $25,884.50. A net judgment of $156,165.50 was entered in favor of plaintiff and against the defendant.

Defendant filed a motion for a new trial as did the plaintiff. Both motions were overruled and each party appealed to this court from the judgments entered by the trial court.

Defendant briefed four main points which are as follows:

“I. The decision below is reviewable by this court upon both the law and the evidence and without regard to the trial court’s findings since the trial court ruled on the basis of the transcript and did not actually hear the evidence.”
“II. The trial court erred in holding that plaintiff has a valid five-year contract as President, a Director, General Manager and Chief Operating Officer of Laclede-Christy at a salary of $41,000 per year.”
“III. The trial court erred by awarding defendant inadequate actual damages and by awarding no punitive damages for Streett’s intentional and wrongful acts in connection with his fighting the Porter offer, and the court erred in permitting Streett to recover on Counts I and II in view of the court’s finding that Streett had violated his fiduciary duties by conducting such a fight with corporate funds.”
“IV. The trial court erred in refusing to mitigate plaintiff’s damages under Count I.”

Defendant is correct in stating in his first point that this case is reviewable de novo by this court on the law and the evidence; further, that since the trial judge, the Honorable William E. Buder, did not hear the evidence, the rule of deference to the trial court’s finding of facts on disputed evidence is not applicable.

To rule on the other points, it is necessary to review the evidence.

Prior to 1951, the plaintiff was vice-president of Granite City Steel Company at a salary of $40,000 per year. He enjoyed a good reputation as a manager of large business enterprises. In the early part of 1951, the defendant corporation experienced difficulty with its president and general manager who had been employed by a written contract. The defendant terminated his employment and the plaintiff was hired at a salary of $41,000 per year. He was elected president and a director of the company. He became the owner of 1,000 shares of stock. The total number of shares outstanding was 265,815 at a par value of $5.00 per share.

Streett desired a written contract. However, the Board of Directors refused to enter into a written contract because the company had been required to pay salaries of former presidents after their employment had. been terminated. Plaintiff’s management of the defendant’s business proved to be satisfactory and he continued without a written contract until June, 1954. In the early part of that year, rumors were afloat which appeared in the press that the assets of the defendant company and the shares of stock were for sale. This situation had an adverse effect on the business of the company. Employees felt insecure and customers were alarmed. To quiet these rumors and to stabilize the situation, plaintiff was given a contract which is the subject matter of this lawsuit. At one of the meetings of the Board, certain stockbrokers were requested to discontinue their efforts to sell defendant’s business. Employees were assured that their employment was not in jeopardy. It was in these circumstances, which we have outlined very briefly, that the contract in question was executed.

It is defendant’s theory that under the state law, Sec. 351.315 and Sec. 351.360, V.A.M.S., and the bylaws of the company the Board of Directors could not legally contract to employ a president for five years; this, for the reason that the Board could not legally bind subsequent boards by any such contract.

Plaintiff contends that he was employed as general manager and that the Board had the legal authority to employ him as such.

In defendant’s reply brief, it is stated: “Plaintiff’s brief relies primarily on the proposition that a corporation may validly contract to hire a General Manager for five years at $41,000 a year. Such an argument is beside the point. Of course, there is no dispute that a corporation may hire a General Manager for five years at a salary of $41,000 a year. All the cases so hold and defendant did not contend to the contrary in its brief. But plaintiff is suing for a salary of $41,000 on a contract which specifically provides that that salary is to be paid to him, not as General Manager, but ‘for his services as Chief Operating Officer.’ Since plaintiff does not seriously dispute that the Chief Operating Officer of Laclede-Christy was the president, the question is the validity of a contract to employ a president for five years at a salary of $41,000 per year.”

In view of the statement by the defendant, we may reduce the issues to some extent and decide whether Streett was employed as a general manager or as president of the company. This question must be determined from the wording of the contract in the light of the circumstances existing at the time the contract was signed. Before we review the evidence on this point, let us see what is the status of a general manager of a corporation. In 19 C.J.S. Corporations § 756, p. 100, it is stated that “The office of general manager is of broader import than that of president. The fact that a person having an active conduct of the business of a corporation is also its president does not operate as a limitation on the powers usually exercised by its general agents or managers; his authority is not limited to that possessed by virtue of his office as president, but is incidental to the management of the business.”

The evidence disclosed beyond doubt that the Board of Directors of the defendant company was in dire need of a competent man to manage the affairs of the company. The defendant owned and operated a number of plants in various cities and states of the Union. The company had had difficulty in retaining a competent chief operating officer. As above stated, and we shall repeat it, at the time the contract was signed rumors of a change in the ownership of the business of defendant were current. It was shown that such rumors had demoralized the organization of the company. Employees felt insecure and customers were apprehensive about depending on orders for material being fulfilled. To quiet this unrest, plaintiff was given a written contract and employees were assured that their employment was not in jeopardy.

Now we shall consider portions of the contract material to the issues we are considering. In the contract, plaintiff was referred to as “Executive” and the defendant as “Laclede.” Omitting a number of preliminary statements, a portion of the contract reads:

“1. Laclede and its present Board of Directors hereby employ Executive as General Manager and Chief Operating Officer of Laclede for a period of five (5) years beginning on the first day of July 1954, and ending on the 30th day of June, 1959, and Executive agrees to remain as General Manager and Chief Operating Officer of Laclede for such period and to perform the duties of General Manager and Chief Operating Officer during such period and to perform such other duties as may be assigned to him from time to time by the Board of Directors of the Company as constituted during such period, it being the expectation and understanding of the parties hereto that at all times during the period of this agreement Executive will continue to act as Chief Operating Officer of Laclede.”

It may be argued that the employment of Streett as manager and chief operating officer was equivalent to contracting to employ him as president. However, the Board in preparing the contract had this question in mind. Note that the paragraph following the one above quoted reads, “2. Laclede and its present Board of Directors, insofar as they can bind succeeding Boards of Directors, hereby employ Executive as President of Laclede for a period of five (5) years, beginning on the first day of July, 1954, and ending on the 30th day of June, 1959, and Executive agrees to remain as President of Laclede for such period and to perform the duties of President during such period.”

A similar provision was made as to Streett’s being a member of the Board of Directors. With regard to plaintiffs duties and obligations, the contract provided as follows:

“4. Executive shall devote all of his time and services exclusively to the business of Laclede during the term of this agreement. Executive will not enter into or conduct any other business and will perform the duties of his offices, and those assigned to him by the Board of Directors of Laclede, with fidelity and to the best of his ability.”

It is our opinion that by the above provision of the contract, Streett bound himself to perform the duties of general manager and chief operating officer of the defendant company whether he was or was not elected president in any subsequent year. Streett also agreed not to engage in an other business during the five-year period. Such contracts are legal and may be enforced. In Re Paramount Publix Corporation, 2 Cir., 90 F.2d 441; Nikas v. Hindley, 99 Ga.App. 194, 108 S.E.2d 98.

It is evident that by the contract the Board did not prevent any subsequent Board of Directors from electing a new president, nor did the wording of the contract prevent the stockholders from electing a member of the Board in place of Streett. The provision of the contract as to employing Streett as manager and chief operating officer constituted the very heart of the agreement. The point is ruled against the defendant.

During the month of August, 1954, representatives of the H. K. Porter Company made overtures to purchase the stock of Laclede-Christy. The group controlling Porter finally, in September and October, took over or gained control of Laclede-Christy.

In a number of subpoints under the general assignment of Point Three, as above set out, defendant contended that Streett violated his fiduciary duties by using corporate funds in trying to prevent the Porter group from acquiring control of Laclede Christy. Specifically, defendant stated that neither Streett nor the Board of Directors had authority to expend corporate funds to purchase stock on behalf of the company; further, that Streett had no right to employ Wertheim & Company and Georgeson & Co. and a firm of lawyers to aid Streett to fight the Porter company in its attempt to gain control of Laclede-Christy.

The evidence showed that the employment of Streett by a written contract to be the manager of the company for five years and the request by the Board that further efforts by brokers to sell defendant’s business or shares of stock be discontinued had little effect. During the months of July, August, and early September, 1954, various offers were made to the Board to purchase the assets of the company; merger offers and offers to purchase the stock were also made. A number of these were not definite and the Board rejected all of them. A press release was made to the effect that Laclede was not for sale. This appeared in a stock journal.

The Mercantile Trust Company of St. Louis and Walter W. Shipley were co-trustees of certain trusts which held about one fourth of all Laclede stock. Mr. Ship-ley was also vice-president and a member of the Board of Directors of Laclede-Christy. H. K. Porter Company offered to purchase the shares of stock held by the Trust Company and Shipley and all of the shares of the defendant at $20 per share. This offer was conditioned that at least 80% of the shares be deposited with the Mercantile Trust Company by September 20, 1954. This offer was sent to all shareholders on August 19, 1954, by the Trust Company. With the offer, the stockholders were advised that the Trust Company was willing to accept the offer. Other conditions were made, such as that the defendant company should not acquire any of its own stock and that no dividend in excess of .25 per share be declared. Numerous shareholders deposited their shares so that by September 14 over 51% of the stock had been deposited with the Trust Company. The Porter offer had been amended requiring the stock to be deposited by September 14, instead of by September 20. This was done for the reason that the Board of Directors of defendant company had declared a dividend as of September 16. Even though 80% of the shares had not been deposited, the Porter Company nevertheless purchased the 51% deposited giving it control of the corporation.

The Porter group lost no time in taking over the management of the defendant’s business. Mr. Streett was asked when the new owners could take charge. The president of the Porter Company, a Mr. Thomas Mellon Evans, was told that he could attend the next Board meeting which would be held on September 23, 1954. On that day, five representatives of Porter appeared at the meeting. Mr. Evans demanded that all members of the Board, except Mr. Shipley, who had been active in supporting the Porter group in obtaining the stock, should resign. Their terms of office would not expire until the following April. Evans demanded the resignations without any condition attached. The members of the Board refused. On October 4, 1954, a compromise was reached. Porter agreed to offer the remaining stockholders of La-clede $18.75 per share. This was the same price Porter paid the members of the Board for their stock. Streett resigned as president and as a member of the Board with the reservation that his rights under the employment contract should not be prejudiced. On October 7, 1954, the old Board resigned (except Shipley) and the Porter group took over. Streett was notified on October 12, 1954, that his services by the defendant company were no longer needed as of October 7, 1954. Thereafter, three of the company plants were closed. By 1958, the Porter group had acquired 99% of the stock of Laclede-Christy and the company was dissolved and the assets were distributed. The record indicated that the owners of the stock received in the neighborhood of $28 per share. That was the demise of a corporation which had been a clay refractories industry for over 100 years.

We shall now review briefly the actions of the Board of Directors of Laclede and Streett with reference to the offers to purchase the business and the shares of stock of Laclede by various concerns, especially that of the Porter group. On August 9, 1954, at a meeting of the Board, a number of offers to purchase the assets of the company were considered. All were rejected. A motion was then made to the effect that the company was not for sale and no further offers should be entertained. This motion was unanimously carried which indicated that Mr. Shipley voted for the motion. Streett then gave a press release to the Wall Street Journal, stating that the company was not for sale. The employees were also notified of the action of the Board. On August 18, 1954, Mr. Shipley, who was then vice-president and treasurer of the defendant company, told Streett that the Porter group was interested in purchasing 80% of the stock of defendant. Streett discharged Shipley and informed him that he, Shipley, had voted in favor of the resolution that the company was not for sale. On the following day, August 19, 1954, all the stockholders were notified by the Mercantile Trust Company and Porter that the Porter group had offered $20 per share and that the trustees were willing to sell the stock held in trust.

On August 24, 1954, plaintiff Streett sent a letter to all shareholders advising them of the financial condition of the company. He stated in the letter that the net current assets of the company were $17.50 per share and that the net book value of fixed assets was $18.10 per share, or a total net book value of $35.60 per share. Streett also gave the shareholders information as to the general condition of the corporation. He informed the stockholders that he was giving them this information to aid them in making up their minds whether they wished to sell their stock.

On August 26, 1954, there was a special meeting of the Board at which Mr. Ship-ley resigned as vice-president and treasurer but not as a director. A dividend was declared. About this time, Mr. Streett changed his position with reference to the Porter offer. He testified that he had heard the Porter Company had taken over other corporations, had liquidated them and gained large profits; further, that the officers of the liquidated corporations had received ill treatment by the Porter group. Streett then sent a letter to the employees of Laclede informing them that he had investigated the Porter group and that he had made up his mind to fight the Porter offer. In this letter, he stated, “Since my last letter to you, I have further investigated the outfit and will do everything within my power to keep our group from falling into their hands.” Streett also sent a telegram to the shareholders advising them not to deposit their stock with the Mercantile Trust Company. Streett also sent a letter to the shareholders advising them of the information he had obtained about Porter and urged the shareholders not to sell their stock.

On August 27, 1954, Streett purchased, on behalf of the company, 2900 shares of Laclede stock from a brokerage house. The price paid ranged from 19⅞ to 20% per share for a total of $58,819.61. Sometime late in August or early September, 1954, Streett and William H. Armstrong, who was a member of the Board and also legal advisor to the company, went to New York. While there, they employed Wert-heim & Company. Streett testified that this company was employed to advise and assist in merger negotiations between Lac-lede and Hydraulic Press Brick Co. of St. Louis. However, one of the purposes of employing Wertheim was to prevent the Porter group from gaining control of Lac-lede-Christy. It was agreed that if Porter were defeated, Wertheim would be paid $25,000; if not, Wertheim would receive $15,000. Wertheim was paid $15,000 before Streett resigned as president of Lac-lede. This item of $15,000 and other such items are the basis of defendant’s counterclaim, such as $2,555.40 paid to a New York law firm and $3,000 to Georgeson & Co. The Armstrong law firm was paid $14,500, $5,500 of which defendant claims was for legal services in fighting the Porter group. Georgeson & Co. were proxy soliciting specialists. The above items were allowed and charged against the plaintiff by the trial court, except the amount paid to the Armstrong law firm. Let us concede for the purpose of this case that these items were paid out of corporate funds to fight the Porter offer. Defendant claims they were all paid without approval of the Board of Directors; further, defendant claims that even if approved, the Board had no authority to expend funds for the purpose of preventing the Porter group from gaining control of the corporation.

The actions taken by Streett and the Board of Directors in attempting to prevent the Porter group from taking over Laclede-Christy must be viewed in the light of the circumstances confronting them at the time. One of the factors to be taken into account is that the Porter offer was conditioned on the event that 80% of the stock should be deposited with the Mercantile Trust Company to make the offer binding on Porter; that fact indicated that Porter may have had in mind liquidation of the corporation. It was in evidence that the current assets about equaled the offer made by Porter. This would have made it a profitable transaction for the Porter group. We must add that the Porter group had liquidated a number of other companies after gaining control. We also take into account that Mr. Shipley, a vice-president, treasurer, and member of the board of Laclede, and a cotrustee of a large block of stock, was actively promoting the sale to Porter. This was true even though he had voted for the resolution that the company was not for sale.

In the circumstances, the officers and Board of Directors were justified in concluding that their company, which had been in operation for over 100 years, was in grave danger. Subsequent events confirmed that fear. The actions of the Board through the months of June, July, August, and the first part of September, 1954, clearly indicated that it was their policy not to sell but to keep the company as a going business. Many employees, officers, and shareholders were interested. It was the judgment of the Board that it was best to continue the company in its business. The actions of Streett, while not shown to have been approved by the minutes of the company, were nevertheless known to and approved by all of the members of the Board except Mr. Shipley.

Note some of the evidence in support of the theory that the Board of Directors deemed it to be the best policy to fight the Porter acquisition. Plaintiff Streett testified by deposition as follows:

“ ‘Question: Did you take up with the board of directors specifically the question as to your right to spend corporate funds to fight the Porter offer?
‘Answer: The board of directors specifically authorized me to employ at a fee a firm of New York consultants to fight this, specifically, to fight it, and that is authorizing the use of corporate money to fight this acquisition.
'Question: What firm do you refer to ?
‘Answer: Wertheim and Company.’”

Mr. J. LeBeau Christy, a member of the Board of Laclede-Christy, testified that his father had been president of the company many years ago; that the witness had been with the company for many years. With reference to the opposition of the members of the Board, with the exceptions of Mr. Shipley, to the Porter offer, he stated:

“A We were trying to preserve a going company, a company that had been operating for over a hundred years, and had some thousand or twelve hundred employees. Some of them had been with the company for many, many years, and we were trying to preserve that company and keep it a going company here for St. Louis and the employees that had been so faithful to it.”

The actions of Streett, as president and general manager, in fighting the Porter group were in good faith and in harmony with the policy adopted by the Board of Directors.

We rule that the expenditures made by Streett should not have been charged against him. We are supported in this ruling by the following authorities: Rosenfeld v. Fairchild Engine and Airplane Corp., 309 N.Y. 168, 128 N.E.2d 291, 293, 51 A.L.R.2d 860, where the court had this to say: “The rule which we adopt is simply this: In a contest over policy, as compared to a purely personal power contest, corporate directors have the right to make reasonable and proper expenditures, subject to the scrutiny of the courts when duly challenged, from the corporate treasury for the purpose of persuading the stockholders of the correctness of their position and soliciting their support for policies which the directors believe, in all good faith, are in the best interest of the corporation.” A similar ruling was made in the case of Hall v. Trans-Lux Daylight Picture Screen Corporation, 20 Del.Ch. 78, 171 A. 226. See also Insuranshares Corporation v. Northern Fiscal Corp., D.C., 35 F.Supp. 22, 1. c. 25[2], and Rascovor v. American Linseed Co., 2 Cir., 135 F. 341.

The stock transaction, that is, the purchase of the 2900 shares on behalf of the corporation, is particularly challenged by the defendant. The contention that the Board of Directors did not authorize the purchase, and even if it had the action would have been beyond its power, must be decided against the defendant. The Articles of Association of Laclede-Christy provided it could sell and purchase its own stock. The evidence did not show that the Board of Directors authorized Streett to purchase this stock. However, Streett acted in good faith and believed it was in the interest of the corporation. The trial court charged the sum of $4,444.61 on this item. This was based on the theory that at the time Streett purchased the stock, the market value was $18.75 per share and that Streett paid slightly more than $20 per share. The Porter group paid $20 per share and obtained over 51% of the stock at that price. Streett purchased the stock in question about the same time. This was considered a good buy. Note the evidence given in a deposition by Mr. Evans, President of the Porter Company, with reference to the purchase of the stock:

“ ‘Question: If my recollection is correct, if he bought it at $20 a share it would have been $58,000, is that correct?
‘Answer: I believe that is correct.
‘Question: If you had bought the stock through the Merchantile Trust Company you would have paid $58,000, is that correct ?
‘Answer: I believe that is correct.’ ”

Streett paid $58,819.16. The ultimate result was that the Porter group received the benefit of the shares purchased by Streett. We are unable to see wherein the corporation was damaged by this transaction. There being no damage, this item should not have been charged against Streett. In 19 C.J.S. Corporations, § 796a, p. 177, we note the following: “A corporation’s purchase of its own stock is within the control of the directors in the exercise of a sound judgment, and the directors in purchasing such stock for the corporation are not guilty of a breach of their fiduciary duty where the purchase is within the powers of the corporation, is made at a price not in excess of the market price, and does not cause legal harm to anyone.” Spiegel v. Beacon Participations, 297 Mass. 398, 8 N.E.2d 895.

The final point is whether the trial court erred in refusing to mitigate plaintiff’s damages. It is urged that Streett could have earned $41,000 per year at Scullin Steel where Streett was employed after his discharge by defendant. After Streett was discharged on October 7, 1954, a Mr. Judge, then president of Scullin Steel Company of St. Louis, called Streett for the purpose of employing him at Scul-lin Steel Company. Judge discussed with Streett the question of employment as an executive vice-president. Streett accepted the employment at a salary of $18,000 per year beginning January 17, 1955. Streett remained with the company until February 8, 1955, when he resigned. Defendant claims that if Streett had remained with Scullin Steel, it could be assumed, he would have been made president when Mr. Judge retired. Defendant also claimed that Streett would have had large stock option rights which would have enhanced his compensation to equal the salary he had received at Laclede-Christy.

The assumption that Streett would have become president of Scullin Steel and that he would have had an option on a large block of stock were both speculative and very uncertain. Judge testified that he did not discuss with Streett or anyone else the question of Streett’s succeeding Judge as president. Judge testified that Streett’s principal duties at Scullin were such as would relieve Judge of certain duties as president. As to the stock option, Judge’s evidence by deposition was as follows:

“‘Question: Was the subject of a written contract discussed with you?
‘Answer: No, not at that time, there was something came up later on about a stock option for Mr. Streett which was discussed by the Board of Directors and that was talked about in the Board and would have been — well, it got to the place where it would have been put to the stockholders for a vote because we never had any stock option in the company prior to that time, but that was never consummated when Mr. Streett left.’ ”

Streett testified that soon after he was employed by Scullin he learned that a Mr. Louis Wolfson was interested in gaining control of Scullin stock. Wolfson had made some efforts to get control of Lac-lede-Christy during 1954 before the Porter group took over the company. Streett testified that Wolfson was known as a man who liquidated corporations upon acquisition. Subsequent events justified Streett’s conclusion. Wolfson did obtain control of Scullin Steel.

Mr. Judge testified that the Universal-Marion Corporation, which company apparently was controlled by Wolfson, acquired enough stock to take over full control of the company. Note the evidence of Mr. Judge on this point:

“ ‘Question: Was that acquisition, made by the purchase of stock on the open market from the then stockholders ?
‘Answer: I think some of it was; in fact, I am pretty sure that there was one block of stock that was held in New York by some individual that they acquired, it was quite a large block of stock.
‘Question: Now, I have in mind the name of a man named Louis Wolfson, do you know him?
‘Answer: Y es, he is the man — he don’t appear as an officer of any of these companies, but he is the man that really has all of the money and the control of these companies.
‘Question: He is the one that bought it, in effect, is he, through a corporation that he owned?
‘Answer: Well, there was some sort of- — he had other people with him, that is something I couldn’t tell, it went into the hands of different individuals, not all to Mr. Wolfson, he had a certain amount of it, but there was other people, probably associates of his, that had large blocks of stock, I suppose that is done every day with these companies, these mergers.
‘Question: Now, following -the acquisition of the controlling interest in Scullin Steel Company by the Universal-Marion Company, did the Board of Directors change in terms of personnel?
‘Answer: It didn’t change any of the personnel until I retired in August, and then Mr. Pettus succeeded me as President, and I had been in the interim, be-twen April and August, made a member of their Board of Directors but just as soon as I retired, I resigned from the Board of Directors.immediately. I didnit stay on, so I don’t know anything about their inner workings at all.
‘Question: Do you know who is on the Board now?
‘MR. CROFT: Of what company?
‘MR. LASHLY: Oh, is there a Board ?
‘Answer: No, no Scullin Board any more, it is Universal-Marion Corporation with headquarters in Jacksonville, Florida.’ ”

So, Scullin Steel Company was, as Laclede-Christy had been, quietly laid to rest.

It is apparent that the position Streett had with Scullin Steel was not comparable to that he had had with Laclede-Christy. Compensation was much less, the rank or grade of position much inferior, and the permanency of the position was speculative. Streett was justified in resigning his position with Scullin Steel Company. Osadchuk v. Gordon, 251 Mass. 540, 146 N.E. 781.

In a case of this nature, the burden is on the defendant to show mitigation of damages. In the case before us, the weight of the evidence is on the side of the plaintiff. Rich v. Daily Creamery Co., 296 Mich. 270, 296 N.W. 253, 134 A.L.R. 232; Tenzer v. Gilmore, 114 Mo.App. 210, 89 S.W. 341.

In a memorandum opinion, the trial judge (Honorable William E. Buder) in this case, stated the rule of law applicable to the situation we have before us, citing authorities that support his conclusion. We quote a portion of his opinion: “It is the general rule that an employee who' is wrongfully discharged is not obliged to seek or accept other employment of a different or inferior kind in order to minimize the damage. Mitchell v. Lewensohn, [251 Wis. 424], 29 N.W.2d 748; Shiller [Schiller] v. Keuffel & Esser Company [21 Wis.2d 545], 124 N.W.2d 646. The aggrieved party is not compelled to enter into any type of employment, and is permitted to decline a position which will degrade or lower his calling or usual means of support. Canning v. Star Publishing Company [D.C.], 130 F.Supp. 697. The servant is free to accept employment or reject it according to his uncensored pleasure. McClelland v. Climax Hosiery Mills, [252 N.Y. 347], 169 N.E. 605. The question is whether plaintiff had used reasonable diligence and had done the best that he could under prevalent mercantile conditions and opportunities. Osadchuk v. Gordon, [251 Mass. 540], 146 N.E. 781.”

The judgment of the trial court for plaintiff and against the defendant on Count I of the petition in the sum of $177,050 and the judgment for plaintiff on Count II of the petition in the sum of $5,000 are hereby affirmed.

The judgment in favor of the defendant on its counterclaim against the plaintiff in the sum of $25,884.50 is hereby reversed.

The trial court is directed to enter a total judgment in favor of plaintiff and against the defendant in the sum of $182,050 as of the day of the original judgment.

It is so ordered.

PER CURIAM.

The foregoing opinion by HENRY J. WESTHUES, Special Commissioner, is adopted as the opinion of the court.

All of the Judges concur.


source: Caselaw Access Project

author: WELBORN, Commissioner.

license: Public Domain

text:
    William Blair HUGHES and Mary Elizabeth Mosby, Plaintiffs-Respondents, v. George D. SPENCE et al., Defendants-Appellants.
    No. 51583.
    Supremo Court of Missouri, Division No. 1.
    Nov. 14, 1966.
    Motion for Rehearing or to Transfer to Court En Banc Denied Dec. 12, 1966.
    Opinion Modified on Court’s Own Motion Dec. 12, 1966.

      McHaney, Billings & Welman, by William H. Billings, Kennett, for plaintiffs-respondents.
    Riddle, O’Herin & Newberry, Malden, for defendants-appellants, George D. Spence, Everett Braden, Mittie V. Spence.
   WELBORN, Commissioner.

This action began by a petition filed October 3, 1959, in the Pemiscot County Circuit Court by contingent remaindermen under a trust involving real estate situated in Dunklin County to cancel and annul 1930 judgments of that court, terminating the trust and vesting title to the real estate involved in the life beneficiary of the trust. Dr. E. L. Spence, named as party defendant because he claimed an interest in the land by conveyance from the life beneficiary, denied the invalidity of the prior judgments and filed a counterclaim, seeking to quiet title in himself. Plaintiffs, by their reply, sought to cancel the conveyances by which Spence claimed his title, and to quiet title in themselves, subject to the outstanding life estate. The trial court’s decree annulled the prior judgments insofar as they affected the plaintiffs, cancelled the conveyances to Spence insofar as they affected plaintiffs’ interests, and quieted title in plaintiffs, subject to the life estate of the beneficiary previously conveyed to Spence. Spence appealed from such judgment. Pending this appeal, Doctor Spence died. His successors, George D. Spence, Everett Braden and Mittie V. Spence, were substituted as parties appellant.

The 1930 Pemiscot County Circuit Court judgments here involved are the subject of a prior opinion of this court in Hughes v. Neely, Mo.Sup., 332 S.W.2d 1, decided January 11, 1960. The prior opinion affirmed a judgment of the Pemiscot County Circuit Court in an action brought by plaintiffs in the present case, annulling the 1930 judgments insofar as they affected the interests of plaintiffs in two tracts not here involved. Although his original answer in this case sought to sustain his claim on the basis of the 1930 judgments, defendant Spence subsequently amended his answer, basing his claim upon transactions to be more fully discussed below.

At the outset, we are confronted by a jurisdictional question raised by appellants. Although Doctor Spence invoked the jurisdiction of the Pemiscot County Circuit Court below, appellants now suggest that the action there was one affecting title to real estate within § 508.030, RSMo 1959, V.A.M.S., and that, since the real estate involved is situated in Dunklin County, the Pemiscot County Circuit Court lacked jurisdiction. Our jurisdiction of the appeal is clear, since the decree appealed from did determine title to real estate. Howell v. Reynolds, Mo.Sup., 249 S.W.2d 381, 383 [1-3]. However, we would, as appellants suggest, examine the jurisdiction of the court below to enter such judgment, even though the matter had been raised by the parties neither in that court nor here. Howell v. Reynolds, supra; March v. Gerstenschlager, Mo.Sup., 322 S.W.2d 743, 744 [1].

The 1930 actions had originated in Dunklin County and were taken to the Pemiscot County Circuit Court on a change of venue. Plaintiffs’ petition in the present action sought only the cancellation of the 1930 judgments. Therefore, the action was properly brought in Pemiscot County. § 526.090, RSMo 1959, V.A.M.S. Such venue was proper, although the judgment sought would have incidentally affected title to real estate situated in another county. Capitain v. Mississippi Valley Trust Co., 240 Mo. 484, 144 S.W. 466, 468 [1]; Capitain v. Mississippi Valley Trust Co., Mo.Sup., 177 S.W. 628, 632 [1].

By his counterclaim, defendant Spence asserted title to one forty-acre tract under a trustee’s deed upon foreclosure of a mortgage authorized by the trust instrument. Although he did not expressly so state in his counterclaim, he also claimed title to the other forty-acre tract even though the 1930 Pemiscot County Court judgments were void and he sought to quiet title in himself as to both tracts. Plaintiffs joined issue on the asserted title of Spence, asserting the invalidity, un-ther the trust instrument, of the mortgage through which Spence claimed title to the one tract and of the deed which he relied upon with respect to the other. Plaintiffs sought an affirmative declaration of their title as against Doctor Spence. As above stated, the court did quiet the title in favor of plaintiffs as against Spence, in addition to cancelling the 1930 judgments, in accordance with plaintiffs’ original petition.

In view of our prior construction of § 508.030 as jurisdictional and nonwaivable, we cannot avoid appellants here questioning the jurisdiction of the Pemiscot County Circuit Court to determine the quiet title issues which Doctor Spence injected into the action in the circuit court. The suggestion in Rice v. Griffith, 349 Mo. 373, 161 S.W.2d 220, that the limitation of § 508.030 might be waived was repudiated in Howell v. Reynolds, Mo.Sup., 249 S.W.2d 381, 384, and March v. Gerstenschlager, 322 S.W.2d 743, 744. However, the court, in Howell v. Reynolds, did characterize § 508.030 as a “venue” statute. It is such in the sense that upon the proper invocation of its power, the circuit court of one county may affect title to realty in another. Thus, a change of venue to another county is permissible in such actions. Henderson v. Henderson, 55 Mo. 534; Blanchard v. Dorman, 236 Mo. 416, 139 S.W. 395.

In Hewitt v. Price, 204 Mo. 31, 102 S.W. 647, plaintiff foreclosed a deed of trust on land in Newton County and purchased the property. He sued in the Jasper County Circuit Court for the deficiency between the sale price and the balance due on the indebtedness. A change of venue was taken to Barton County, where defendant filed a counterclaim attacking the validity of the trustee’s sale and seeking to set it aside on the grounds of fraud. On the appeal from an adverse judgment, plaintiff questioned the jurisdiction of the trial court to determine the matters raised by defendant’s counterclaim, contending that it sought the affirmative relief by which the title to real estate would be affected. The court upheld the authority of the Barton County Circuit Court to grant the relief requested by defendant in the counterclaim. The court referred to the counterclaim statute in effect at that time (§§ 604 and 605, RSMo 1899) and stated: “Our Code has made very liberal provisions respecting the settlement of controversies between litigants, and has made ample provision, where suits are brought, for the defendants by way of cross bill or counterclaim, to assert every right to which they may be entitled connected with the subject-matter of the cause of action alleged in the petition.” 102 S.W. 649-650.

In Howell v. Reynolds, 249 S.W.2d 381, in holding that, under § 508.030, the Circuit Court for the City of St. Louis lacked the authority under plaintiff’s petition seeking such relief to cancel a deed of trust on land in St. Louis County, the court stated (249 S.W.2d 384):

“We deem it necessary to state, however, that we do not hold that after an action, either transitory or local, is properly instituted in any county that the court may not thereafter acquire jurisdiction of title to real estate situate in another county if it becomes necessary under the issues thereafter arising so to do in order to determine and adjudicate the rights of all parties to the suit. Section 509.060 of the Civil Code clearly indicates that once jurisdiction of a controversy and the parties thereto has attached the court has jurisdiction to determine all properly pleaded phases thereof. See also Rice v. Griffith, 349 Mo. 373, 161 S.W.2d 220, and Robinson v. Field, 342 Mo. 778, 117 S.W.2d 308. Section 508.030, although mandatory as to the place of bringing an action affecting title to real estate, is, nevertheless, solely a venue statute. Henderson v. Shell Oil Co., 8 Cir., 173 F.2d 840. It does not restrict the trial and adjudication of defensive issues involving title to real estate to the county in which the real estate is situated. Neither does it restrict the general jurisdiction invested in circuit courts under the provisions of Article V, § 14, of the Constitution [V.A.M.S.]. Rice v. Griffith, supra.

These cases, in our opinion, support the conclusion that our counterclaim statute (§ 509.420, RSMol949) and the superseding rule (Civil Rule 55.45, V.A.M. R.) have, in effect, carved out an exception to the requirement of § 508.030. The result in Rice v. Griffith, supra, is consistent with such conclusion. On such basis, we conclude that, the action here involved having been properly brought in the Pemiscot County Circuit Court, its authority to make a full determination of the relevant issues presented by the counterclaim filed in the original action is not precluded by § 508.030.

Turning to the merits, plaintiffs in this case, William Blair Hughes and Mary Elizabeth Mosby, are the son and daughter of the defendant Margaret E. Hughes. Margaret E. Hughes is the daughter of James M. Douglass. In October, 1919, Douglass conveyed the two forty-acre tracts here involved as part of a 260-acre tract to his son, T. G. Douglass, as trustee for Margaret E. Hughes, the grantor reserving to himself a life estate. The conveyance to the trustee was “For the sole use and benefit of the said Margaret E. Hughes during her natural life and at her death to go direct to the heirs of her body.” James M. Douglass died in 1921, and by his will devised other lands, not here involved, to T. G. Douglass as trustee for Margaret during her life.

T. G. Douglass took over the property and managed it for five or six years as trustee. He then declined to act as trustee and J. Mott Douglass, named in the deed as successor trustee, also refused to act. On May 3, 1926, the Dunklin County Circuit Court, on ex parte application of Margaret, appointed her husband, J. B. Hughes, successor trustee. On January 15, 1929, the Dunklin County Circuit Court reaffirmed its appointment of J. B. Hughes as successor trustee and on January 21, 1929, the Dunklin County Probate Court also appointed Hughes successor trustee.

On April 1, 1929, J. B. Hughes as trustee and Margaret and J. B. Hughes executed a deed of trust on one of the forty-acre tracts here involved to Charles O. Bray, trustee for the Bank of Senath, to secure a note for $1,222.00. The forty-acre tract was described as the Southeast Quarter of the Northwest Quarter of Section 31, Township 18 North, Range 9 East, in Dunk-lin. We will refer to this tract as the “North Forty.”

On May 29, 1930, Margaret and J. B. Hughes filed suits in the Dunklin County Circuit Court, in which, on change of venue, the Pemiscot County Circuit Court, on July 31, 1930, entered its judgments, can-celling the trust conveyance of October, 1919, and decreeing that Margaret E. Hughes was the owner in fee simple of the lands therein described.

On December 24, 1930, J. B. and Margaret E. Hughes executed a deed of trust on the second forty-acre tract here involved to Henry M. McKay for the benefit of John T. McKay, John T. McKay, Jr., James H. Bradley, James H. Bradley, Jr., and Theo Robb. This deed of trust was given to secure three notes of Margaret and J. B. Hughes, totalling $1,294.35. The second forty-acre tract is described as the Northeast Quarter of the Southwest Quarter of Section 31, Township 18 North, Range 9 East, and will be referred to as the “South Forty.” On October 26, 1933, the Dunklin County Circuit Court rendered judgment in the amount of $777.98 against Margaret E. Hughes and J. B. Hughes on one of the notes secured by the deed of trust on the South Forty.

On April 20, 1934, Charles O. Bray as trustee of the deed of trust on the North Forty conveyed that tract to E. L. Spence after a foreclosure sale.

On September 8, 1934, three conveyances were executed. One by Margaret and J. B. Hughes was a quitclaim deed to E. L. Spence on the North Forty. The second was a quitclaim deed to E. L. Spence by the beneficiaries of the deed of trust on the South Forty. The deed recited that it was in release of the judgment in favor of the grantors against the Hugheses and in release of the deed of trust executed by the Hugheses. The third conveyance was a general warranty deed covering the South Forty from the Hugheses to E. L. Spence. Spence had been in possession of each forty-acre tract from the date of the conveyance to him of each and until the filing of this action on October 3, 1959.

William Blair Hughes and Mary Elizabeth Mosby, as contingent remaindermen under the 1919 trust conveyance, sought by their petition to set aside the 1930 Pemiscot County judgments insofar as they terminated their interests. William Blair, aged fifteen at that time, was a party defendant to the Pemiscot County proceedings, being represented by a guardian ad litem. Mary Elizabeth Mosby was born the year following the 1930 judgment. Margaret E. Hughes, their mother, was still living at the time of the filing of this action and the judgment herein.

Inasmuch as appellants do not attack that portion of the judgment in this case which set aside the 1930 Pemiscot County judgments, we need not detail the issues on that matter. Substantially they were the same as those presented in Hughes v. Neely, supra.

The issues presented on this appeal relate solely to the validity of the deed of trust and the trustee’s deed for the North Forty and the deed of trust and subsequent conveyances affecting the South Forty. Without express findings, the trial court set aside the trustee’s foreclosure deed to the North Forty on the basis of plaintiffs’ assertions that:

1. J. B. Hughes’s appointment as successor trustee was void.
2. The appointment of J. B. Hughes as successor trustee did not transfer the title from T. G. Douglass as trustee to Hughes as successor trustee.
3. The power to mortgage given T. G. Douglass in the trust deed was a personal power, exercisable only by him, and not by Hughes as successor trustee.
4. The deed of trust was not given to secure a loan “for the proper care and support” of Margaret, the only authority conferred by the trust.
5. The deed of trust was not supported by the written consent of Margaret, witnessed by two or more witnesses, as required by the trust instrument
6. The foreclosure sale and subsequent conveyance were void because of collusion between Spence and the trustee under the deed of trust.

The 1919 trust conveyance provided, with respect to the land here involved:

“To have and to hold said lands above described with all the privileges and appurtenances to the same belonging or in anywise there appertaining unto him, the said T. G. Douglass, his executors, administrators and successors in trust and confidence, however, for the uses and purposes as hereinafter set out and for none other, to-wit :

'“For the sole use and benefit of the said Margaret E. Hughes during her natural life and at her death to go direct to the heirs of her body, and in the event that the said Margaret E. Hughes should die leaving no children, heirs of her body, then the lands herein conveyed shall descend and go direct to the heirs and legal representatives of the said James M. Douglass, the donor herein, and should the said trustee herein named die before the said Margaret E. Hughes, his ward, or in any wise fail or refuse to act, then J. Mott Douglass of Kennett, Dunklin County, Missouri, shall take full charge of the trust herein and execute the same upon the same conditions and with the same restrictions as the same T. G. Douglass and in case the said J. Mott Douglass should die or fail or in anywise refuse to act, then such person as the Probate Court of Dunklin County, Missouri, shall appoint, shall take full charge of the trust herein conveyed and execute the same in strict accordance with its terms and conditions as herein stated during the lifetime of the said Margaret E. Hughes. The said T. G. Douglass to have active charge and control of the lands conveyed during the lifetime of the said Margaret E. Hughes and to receive the rent and profits and any issues arising from or growing out of and from said lands, and, after the payment of the regular annual taxes and repairs and necessary expenses for the proper upkeep and care of the said lands herein conveyed each year, and after deducting a reasonable compensation for his services as such trustee not to exceed 8% of the net income of the year, the said T. G. Douglass shall turn over and pay to the said Margaret E. Hughes the net annual income from the lands herein conveyed for her sole use and benefit from year to year during her natural life and in the event it should become necessary, in the judgment of the said T. G. Douglass to mortgage any part or all of the lands herein conveyed for the use and benefit of the said Margaret E. Hughes during her lifetime, the said T. G. Douglass is hereby authorized and by and with the written consent of the said Margaret E. Hughes and witnessed by two or more competent witnesses to mortgage such part of the real estate herein conveyed and to such amount as he shall deem necessary for the proper care and support of the said Margaret E. Hughes at the time.”

The allegation that the appointment of J. B. Hughes as successor trustee was void is based upon the contention that the appointment was not only as successor trustee under the inter vivos trust, but was also as successor trustee under the James M. Douglass testamentary trust. According to respondents, the circuit court could, as it did, appoint a successor trustee under the inter vivos trust ex parte, but the appointment under the testamentary trust required notice to all interested parties. Such notice not having been given, respondents assert that the entire proceedings were void.

We are here dealing only with the inter vivos trust. In view of the concession that a successor trustee may be appointed ex parte for such trust, we need not consider what might have been required for the testamentary trust. As to each of the trusts, the order of appointment of the successor trustee is clearly separable, and the appointment of the successor trustee under the inter vivos trust may stand. State ex rel. Wyandotte Lodge No. 35, I. O. O. F. v. Evans, 176 Mo. 310, 75 S.W. 914, 918; Edmondson v. Edmondson, Mo.App., 242 S.W.2d 730, 736 [9]; 49 C.J.S. Judgments § 450, p. 881; 30A Am.Jur., Judgments, § 20, p. 173. Henrioid v. Neusbaumer, 69 Mo. 96, cited by respondents, does not involve the question of partial invalidity of judgments.

The attack on the appointment of the successor trustee on the grounds that the court’s order recited that the children of Margaret Hughes had vested interests does not affect the validity of the appointment. The title was not an issue in the appointment proceedings. The action taken was not dependent upon the erroneous recital. See Gibson v. Sharp, 364 Mo. 1007, 270 S.W.2d 721, 723; State ex rel. Riggs v. Seehorn, 344 Mo. 186, 125 S.W.2d 851.

The trust deed conveyed the property to T. G. Douglass, “and unto his executors, administrators, and successors, in trust * * The order appointing Hughes successor trustee was sufficient to vest title to the trust property in him, although the order made no express provision to such effect. No conveyance from the prior trustee to his successor was required. Boone v. Wachovia Bank & Trust Co., 82 U.S.App.D.C. 317, 163 F.2d 809, 173 A.L.R. 1285, 1293 [14]; Bogert on Trusts, 2d ed., § 532, p. 423; Restatement of Trusts (2d), § 109, p. 240. Bogert (op. cited) does, as respondents state, cite Coffman v. Gates, 110 Mo.App. 475, 85 S.W. 657, as an exception to the general rule in its holding that the appointment of a successor trustee did not divest the title of the predecessor. However, the factual, situation in the Coffman case was far from that here involved. Trustees of a testamentary trust had been removed in Coffman. One of the testamentary trustees was also the holder of the legal title to a tract of land, one third in his own right and the remaining two thirds in accordance with the testamentary trust, and subject to the right of sale in the testamentary trustees. Insofar as that tract was concerned, the court held that the removal of the testamentary trustees and substitution of another did not have the effect of divesting the title of the record holder, the new testamentary trustee merely being substituted for the prior trustees insofar as the power of sale was concerned. In addition, the entire issue appears to have been relevant only to the question of whether or not an appeal from a decree in partition of the tract should abate upon the death of the substituted testamentary trustee. We do not consider the holding in the Coffman case determinative of the question here presented and follow the general rule above stated.

On the question of whether or not the power to mortgage the trust property was a personal power, to be exercised only by the original trustee and not by his successor, respondents point out that the trust deed specifically authorized T. G. Douglass to exercise such power, that T. G. Douglass was the brother of the beneficiary, that the power is an extraordinary one, and that these factors, along with the purpose for which the power could be exercised, showed “that the settlor of the trust reposed personal and special confidence in his son, T. G. Douglass, in connection with taking care of Margaret E. Hughes, to the exclusion of possible successors.”

The trust deed authorized the successor trustee to “execute the [trust] in strict accordance with the terms and conditions as herein stated * * Even if this language should be insufficient to authorize the successor trustee to exercise the power to mortgage given the original trustee, the successor would be deemed to have such power, unless the settlor manifested an intention that the power be exercised only by the original trustee (1 Restatement, Trusts, 2d, § 196, p. 431). According to the Restatement:

“In determining the intention of the settlor whether a power conferred by the terms of the trust should be exercised only by the trustee originally named, the following circumstances may be relevant: (1) the nature and extent of the power; (2) the time at which the power may be exercised; (3) the amount of discretion involved in the exercise of the power; (4) the purposes of the trust; (5) whether the original trustee is an individual or a corporation ; (6) whether the power is conferred upon the trustee by name; (7) the relationship of the original trustee to the settlor or the beneficiaries; (8) the relationship between settlor and beneficiaries.

“The trend of the decisions has been toward holding with increasing liberality that powers can be exercised by successor trustees, except where it appears by the terms of the trust that they should be exercised only by the trustees originally named.”

In this case, the power to mortgage was to be exercised for the benefit of the cestui whenever it should become necessary to provide funds for her proper care and support. The trust instrument clearly contemplated the necessity for successor trustees during the period of the trust, or Margaret’s lifetime. The settlor obviously desired that the purpose of the trust be accomplished throughout Margaret’s lifetime, and we perceive no intention that the exercise of the power to mortgage was to be limited to the trustee originally named.

In Williams v. Hund, 302 Mo. 451, 258 S.W. 703, cited by respondents, the power involved was clearly a personal power and the case actually involved the exercise of the power by the originally named trustee. Hazel v. Hagan, 47 Mo. 277, cited by respondents, did not involve the power of a successor trustee.

J. B. Hughes testified that the purpose of the loan from the Bank of Senath was to obtain funds to purchase “mules and farm equipment to farm the land or to furnish the sharecroppers with it.” Respondents’ position is that a loan for such purpose was beyond the authority of the trustee, who was authorized to mortgage the trust estate only to provide for Margaret’s proper care and support. Respondents state that the trustee was not authorized to engage in farming operations and was limited “to receiving and collecting the rents arising from the lands.” In our opinion, the power conferred upon the trustee was sufficient to authorize him to operate the farm directly or through sharecroppers. He was not limited to merely renting the land. He was to have “active charge and control of the lands * * The mode of the exercising of such authority was primarily for the trustee’s determination. The evidence showed that, at the time of the loan from the Bank of Senath, Margaret and her husband and son lived on the income derived from farming this and other land. The farming operation provided the family’s sole source of income. A loan to permit the operation of the farm which would provide income for Margaret was a loan for her proper care and support within the meaning of the trust deed.

The deed of trust was executed by J. B. Hughes as trustee for Margaret and by J. B. Hughes and Margaret individually. There was no evidence that Margaret had consented to the transaction in writing, attested by two or more competent witnesses, as the deed required. However, the object of the requirement was to assure the consent of Margaret to the mortgage transaction. Her execution of the deed of trust sufficiently evidenced her consent.

The final attack on the title to the North Forty is a charge that the purchase by Spence at the foreclosure of the deed of trust was the product of a collusive arrangement between Spence and the attorney for the trustee. The charge is that, by such arrangement, Spence was permitted a credit against his ostensible $1,150 bid at the foreclosure for tax judgments which Spence discharged, amounting to some $675.00. According to respondents, the agreement produced a sale at which a grossly inadequate consideration of $494.90 was actually paid for the land. The difficulty with this contention is that the evidence fails to show that the arrangement, if any, between Spence and the attorney for the trustee was in any respect aimed at chilling bidding. There is nothing to show that such arrangement was offered only to Spence and was not available to all potential bidders. The trustee had a right to cry the sale as free from encumbrances and to take bids on such basis. Field v. Brown, 207 Mo.App. 55, 229 S.W. 445, 447; Brown v. Bland, Mo.App., 229 S.W. 448, 451. Nor does the evidence support the conclusion that, if $494.90 was the actual sale price, it was so grossly inadequate as to call for rescission of the sale. The testimony as to the value of the land at the time of the sale ranged from $20 per acre to $200 per acre. The sale was in a depression period and the high value seems unlikely to have been accurate. In 1933, Doctor Spence purchased an eighty-acre farm with improvements in the vicinity of the North Forty for $2400.00. The North Forty had no improvements. In our opinion, the conclusion that the sale was for an inadequate consideration, induced by a collusive arrangement between the purchaser and the attorney for the trustee, could not stand.

As to the North Forty, we, therefore, conclude that Spence’s title was based upon the foreclosure of a valid deed of trust executed by the trustee in accordance with the power conferred by the trust instrument. There is no contention that the foreclosure did not terminate the contingent remainder interests of the plaintiffs in this action. The trial court should have quieted title to the North Forty in Spence as against the plaintiffs’ claims.

As for the South Forty, the situation is different. Appellants’ position is that the quitclaim deeds from the cestuis under the deed of trust and the warranty deed from Margaret and J. B. Hughes were in lieu of the foreclosure and were as effective as a deed under foreclosure might have been. This position, of course, assumes the continued validity of the trust. Appellants do not attempt to argue that the indebtedness which the deed of trust secured was for the proper care and support of Margaret, as the trust required. Their position is that Doctor Spence was a bona fide purchaser for value in the transactions in lieu of the foreclosure. The evidence showed that the indebtedness which the deed of trust secured was the fee of the attorneys who represented Margaret and J. B. Hughes in the Pemiscot County Circuit Court. J. B. Hughes testifed that the one thousand dollars consideration recited in the warranty deed from the Hugheses to Spence for the South Forty was, instead, paid by Spence directly to the attorneys in satisfaction of the Hugheses’ indebtedness to them. Having knowledge of the fact that the indebtedness was for attorneys’ fees, as he must have had since he paid the money directly to the attorneys as creditors of the Hughes-es, and being charged with knowledge of the limitation upon the borrowing power of the trustee under the trust, Spence’s knowledge was such as would require a reasonably intelligent and diligent person to inquire whether the trustee had committed a breach of the trust, and such inquiry, if pursued with reasonable intelligence and diligence would have given him knowledge that there had been a breach of trust, 2 Restatement, Trusts, 2d, § 297, comment a, p. 74. Here, considering the transaction as one under the trust, Spence could with reasonable inquiry have determined that the indebtedness involved was one to procure the destruction of the trust, not “for the proper care and support” of the beneficiary under the trust. In such circumstances, his claim that he must be considered as if he were a bona fide purchaser for value in a transaction involving the trust property fails. Having reached this conclusion, we do not consider the other theories advanced by respondents for invalidating Spence’s claim to the South Forty. The trial court correctly quieted title to plaintiffs in that tract.

The judgment of the trial court, insofar as it cancels and annuls, as to plaintiffs in this action, the 1930 judgment of the Pemi-scot County Court is affirmed. Insofar as it quiets title in plaintiffs and against appellants in the Northeast Quarter of the Southwest Quarter of Section 31, Township 18 North, Range 9 East, containing forty acres, more or less, the judgment is likewise affirmed. Insofar as the judgment affects the Southeast Quarter of the Northwest Quarter of Section 31, Township 18 North, Range 9 East, containing forty acres, more or less, the judgment is reversed and the cause remanded with direction to quiet title to said tract in appellants in accordance with the prayer of their counterclaim.

HOUSER and HIGGINS, CC., concur.

PER CURIAM:

The foregoing opinion by WELBORN, G, is adopted as the opinion of the Court.

All of the Judges concur.


author: HOLMAN, Presiding Judge.

text:
    T. W. VINEYARD, Guardian of the Person and Estate of Sarah Margaret Vineyard, Appellant, v. Steve VINEYARD et al., Respondents.
    No. 51965.
    Supreme Court of Missouri, Division No. 1.
    Dec. 30, 1966.
    Ronald J. Fuller, Rolla, for appellant.
    Claude T. Wood, Richland, for respondents.
   HOLMAN, Presiding Judge.

On October 4, 1963, Sarah Margaret Vineyard (hereinafter called Margaret) executed five warranty deeds by which she conveyed to certain of her relatives the five separate parcels of real estate owned by her. She reserved a life estate in each of those properties. Margaret was adjudged incompetent on October 22, 1964, and a brother, T. W. Vineyard, was appointed her guardian. The guardian thereafter filed this suit in which he sought to set aside three of the aforementioned deeds, alleging that Margaret executed the deeds as the result of undue influence exercised by defendants at a time when she did not have sufficient mental capacity to make said deeds. A trial resulted in a judgment for defendants and plaintiff duly appealed. Prior to the submission in this court Margaret died, and appropriate parties have been substituted as plaintiffs-appellants in place of the guardian. We will continue to refer to the guardian as plaintiff.

The five deeds executed by Margaret all conveyed property in or near Dixon, Missouri. In the three deeds here involved, “the home place” was conveyed to her niece, Myrtle Williams and husband Virgil, the “Raines house” to her nephew Charles Vineyard and his wife Grace, and the “flattop house” to her brother Steve Vineyard and his wife Belle. At the same time, the “apartment house” was conveyed to her brother Jesse and his wife Edna, and the “acreage land” to her brother, plaintiff T. W. Vineyard. This suit did not se.ek to set aside the deeds to Jesse and T. W.

Margaret was born and reared on a farm located about ten miles northeast of Dixon. She never married. She was 75 years old at the time the deeds were made. She lived at home with her mother until 1924 when her mother was drowned in a ferryboat accident. Shortly after her mother’s death Margaret went to St. Louis where for 22 years she worked as a cook in homes of wealthy people. In 1946 the wife of her brother George Vineyard died, and at George’s request, she came back to Dixon to keep house for him. They lived on George’s farm until 1956. At that time George sold the farm and built a new home in Dixon and they moved there. • George died on April 10, 1963, and left the bulk of his estate to Margaret, including the five pieces of property she conveyed on October 4, 1963. Her brother Jesse was the administrator w. w. a. of George’s estate. In June 1963, Margaret fell and sustained severe injuries to a knee. She was taken to Phelps County Memorial Hospital at Rolla where she remained until July 17, and was then admitted to the McFarland Nursing Home in Rolla where she remained until October 5, 1963.

After she returned home Margaret’s niece, Myrtle Williams, and her husband, lived with her for 70 days. Thereafter various relatives and others stayed with her from time to time, and sometime later she re-entered the nursing home where she was residing at the time of the trial.

In order to prove the facts surrounding the making of the deeds plaintiff called defendant Charlie Vineyard, Margaret’s nephew, as his first witness. Charlie testified that Margaret had mentioned to him a number of times that she wanted to make deeds to her real estate; that at her request he went to the recorder’s office in Waynes-ville and had the recorder copy the description of each of the five pieces of property on a paper, and he delivered this paper to Margaret; that when he went back later she had written on the paper the names of the persons to whom she wanted to deed each of the properties, and had also written directions for her will on another piece of paper; that she requested that he have someone prepare the deeds and will because she wanted to have that business taken care of before she left the nursing home as there was no one in Dixon who could prepare those instruments; that he went to Attorney E. E. Northern in Rolla and employed him to prepare the papers; that a few days later, October 4, he, Myrtle, and Virgil met Mr. Northern at Margaret’s room in the nursing home; that after the papers were executed Margaret delivered the deeds to him and he took them to Waynesville that afternoon and had them recorded because Mr. Northern had advised that they be recorded at once. He testified on cross-examination that Margaret’s home in Dixon was just across the alley from his home; that his sister Myrtle lived nearby and they frequently helped Margaret with her household duties. He stated that none of them ever tried to persuade Margaret to make the deeds; that it was entirely her idea; that in his opinion she was mentally competent at the time the deeds were executed.

The papers mentioned in Charlie’s testimony were admitted as exhibits at the trial. They show that Margaret wrote the name of the persons who were subsequently the grantees below each description that had been obtained from the recorder and signed her name thereunder. The directions for her will were written in her handwriting on another sheet of paper in the following language: “After all my funeral expense and bills are paid in full I want all of my cash to be divided equally among all my brothers — Steve, Jesse, Tom Vineyard. I also want Myrtle Williams to have all of my personal belongings and household furniture that is left in my home at the time of my death. I request that Charley Vineyard be the administrator, [signed] Margaret Vineyard.”

Plaintiff presented the testimony of a number of witnesses relating to Margaret’s mental capacity at or near the time the deeds were executed.

Dr. Earl Feind testified that he was one of the three doctors who attended the patients at the nursing home; that the record indicated that Margaret was senile and was forgetful and would become confused; that he saw her a number of times, including (according to the record) October 4, 1963, and when asked his opinion as to her mental capacity he said he doubted if she had the capacity to know her interest in property and to understand her act in executing a deed. However, on cross-examination he testified that Margaret was rational at times and that her mental condition would change and you “couldn’t tell her state of mind from hour to hour.”

Plaintiff also offered as a witness Barbara Clancy, a registered nurse, who was a supervisor at the nursing home. She testified that Margaret was always depressed and couldn’t carry on conversations with her; that she whispered to her that things were being stolen from her room, although the witness thought nothing was missing; that she would take linens from the linen cart; that Margaret had a toilet in her room, but when she went down the hall to the bathroom to take a bath she would always take her purse and sometimes some paper bags; that she would pour her fresh water into the toilet and then complain that she hadn’t received any drinking water; that on one occasion Margaret asked her if she had canned that bushel of peaches she had given her, but that the only peaches Margaret had received were three or four that someone brought to her in a sack; that she saw her on the early morning of October 4; that later someone advised her that they wanted her to witness some papers in Margaret’s room but that she refused to do so; that she was of the opinion that Margaret was of unsound mind although she didn’t know her exact condition at the time the deeds were signed.

Freda Campbell, a nurse’s aid at the nursing home, testified that Margaret couldn’t carry on a clear conversation; that she always kept her purse with her and had a bell in it which would jingle when someone moved it; that she protested when Margaret took linens off the cart but Margaret said she needed them. As will hereinafter appear, the court sustained an objection to the qualifications of this witness to express an opinion on Margaret’s mental condition.

Another nurse’s aid, Mrs. Jo Hudgens, gave testimony somewhat similar to Mrs. Campbell’s and was likewise not permitted to express an opinion on Margaret’s mental condition.

Plaintiff Tom Vineyard, a brother of Margaret, testified that Margaret had 32 nieces' and nephews, 24 of whom, because of the death of a parent, were her heirs. He stated that he had lived most of his life in Iowa but usually came back to Dixon once a year to visit; that he commenced to notice a change in Margaret after 1950; that he came back and visited her often while she was in the hospital and nursing home in 1963; that he returned to Iowa early in October and did not know about the deeds until someone sent him a clipping from the paper; that Margaret’s conversation “wandered”; that while in the nursing home she complained of seeing various individuals in her room who were hot there and said that two negroes were trying to get into her dresser. He expressed the opinion that she was not of sound mind on October 4, 1963. He further stated that he moved back to Dixon on December 6, 1963, and that Margaret told him, in regard to the deeds, “I’ve done wrong and I want you to break it up.” On cross-examination he testified that when he came back from Iowa he “wanted to get something started,” and had himself appointed as guardian so he “could bring this suit.”

Prior to the trial Margaret’s brother Jesse died, but his widow Edna testified. She gave instances of Margaret’s forgetfulness and confusion dating back to- 1956. She stated that after George died Margaret kept a club by the window because she thought someone had tried to break in her home; that when she thought someone was trying to break in she would pop sacks so they would think she had a gun; that when Margaret was in the hospital she said she could see a cornfield out the window, and a tree that George had set out; that in her opinion Margaret was of unsound mind on October 4, 1963. Edna also testified that she and her husband went with Myrtle and Charlie and talked with Attorney Eldridge in Waynesville about Margaret making deeds and he said he wouldn’t prepare the deeds; that later she heard Virgil Williams tell Jesse that Margaret wanted “to do some business” and, “I’m going to help her and this is the way I’ve got it planned out. I’m going to give Myrtle the home place, I’m gonna’ give Jesse the Baker place, and I’m gonna’ give Tom the acreage range out there, and I’m going to give Paul the flat-top house.”

On behalf of the defendants, Attorney Northern testified that he prepared the will and deeds from the directions Margaret had written on the papers which had been delivered to him; that on the morning of October 4 he met Charlie, Myrtle, and Virgil in Margaret’s room; that after visiting with Margaret for a time he mentioned to her that she could give the real estate to her relatives by will instead of deeding it to them; that she told him she understood that but that she wanted to make the deeds because certain of her relatives had been especially good to her, particularly Charlie, Virgil and Myrtle, and she felt closer to them than anyone else; that he then read each description to her from the deeds and she affirmed that she wanted that particular property to go to the named grantee; that the deeds were then executed; that he then read the will to her and she stated that that was the way she wanted her will; that a witness was then called and the will was executed; that at Margaret’s direction he then gave Myrtle her deed and the other deeds to Charlie and advised that the deeds be recorded at once; that in his opinion Margaret was of sound mind on the date the deeds were executed.

Mrs. Orletta Hogart testified by deposition that she was a registered nurse and was a part-time supervisor at the nursing home; that she gave Margaret medication and supervised her care; that she had conversations with Margaret almost every day that she worked (three days a week) ; that Margaret had a sense of humor, was proud of her family, and she enjoyed talking with her; that she was a cooperative patient and, in her opinion, Margaret’s memory was good and “she knew what she was doing.” This witness testified positively that Mrs. Clancy was not on duty at the nursing home on October 4, 1963.

Myrtle Williams testified, but her testimony is largely cumulative and is not particularly significant. She did state that she had worked in the home of her Uncle George on a number of occasions and that it had been decided before he died that she was eventually to have one of the pieces of property; that Margaret, before she became ill, had asked her to say which one she wanted but she refused to do so and told Margaret to choose the one she wanted her to have; that she never at any time requested that Margaret make a deed to her.

Myrtle’s husband, Virgil, did not testify because of his health. It appeared that he had suffered a heart attack a short time before the trial and was not able to be present.

Defendant Steve Vineyard testified that he saw his sister Margaret frequently and that her conversations were always normal; that he did not know anything about the deeds until after they had been recorded and that, in his opinion, Margaret was of sound mind in September and October 1963.

Margaret’s minister, Edwin E. Baur, testified that he visited her in the hospital and also in the nursing home, and that he saw her the next day after she came back to Dixon; that she was very interesting to talk with, and from his conversations with her he would say she was of sound mind. He further testified that Margaret later said to him, “I done something that’s going to cause some hard feelings in the family and I’m just 'as sorry as I can be. * * * I deeded my property away and I guess I didn’t know what I was doing.”

Defendants also presented the testimony of a number of lay witnesses who expressed the opinion that she was of sound mind at or near the time the deeds were executed. We will list these witnesses and state briefly their contacts with her. Clara Crider, widow of a Dixon physician, who had known Margaret since 1914 and talked with her in the spring before her injury and in the fall shortly after she returned to Dixon; Mary Matkin who spent a half day in Margaret’s home in October 1963; Graham Matkin who conversed with Margaret for four hours on November 15, 1963; Della Click of Rolla, who had known Margaret since she was a little girl and visited her a number of times at the nursing home; Nellie Copeland of Rolla who had known Margaret all of her life, and often visited her while in the hospital and nursing home in 1963, the last time being two or three days before she went back to Dixon. This witness also testified that she had a nephew who had stayed in the nursing home for a long time and that people stole things from his room and that someone had stolen a box of fruit from Margaret’s room. Virgil Copeland of Rolla, who talked with Margaret in the nursing home a number of times, the last time being two or three days before she left; Clarence M. Kennedy of Dixon, who visited with Margaret on October 5 and on October 15, 1963; Velma Green, a neighbor, who talked with Margaret on October 7, 1963, and every few days thereafter; Florence Vineyard, a sister-in-law of Margaret, who visited her often in the nursing home and the next day after she returned to Dixon; and Earl Groves who visited her at the hospital and nursing home and saw her a day or two after she returned to her home.

We will first consider the plaintiff’s contentions of error relating to the admission and exclusion of opinion evidence by lay witnesses. He says that the court erred in admitting the opinions of lay witnesses offered by defendants to the effect that Margaret was of sound mind because those witnesses did not detail sufficient facts upon which to base those opinions, or to show that they had sufficient opportunity to observe her. In considering similar contentions this court has said that “before a lay witness will be permitted to give his opinion that a person is of unsound mind, he must first detail the facts upon which he bases such opinion, but if he expresses an opinion that such person is of sound mind, he is not required to detail the facts upon which he founds his opinion. The reason for the rule is obvious. An opinion that a person is of unsound mind is based upon abnormal or unnatural acts and conduct of such person, while an opinion of soundness of mind is founded upon the absence of such acts and conduct.” Kaechelen v. Barringer, Mo.Sup., 19 S.W.2d 1033, 1037. In this instance all of the defendants’ lay witnesses had opportunities to observe and talk with Margaret at or near the time the deeds were executed. It is obvious that the court did not err in admitting their opinion testimony.

Plaintiff also contends that the court erred in ruling that the two nurse’s aids were not qualified to express an opinion that Margaret was of unsound mind. In considering the ruling as to Mrs. Campbell we note that she gave a number of unresponsive answers to the effect that Margaret was not of sound mind. Upon motion those answers were stricken. We have concluded that for the purposes of our decision herein we will disregard the fact that those answers were stricken and will consider that Mrs. Campbell gave opinion testimony to the effect that Margaret was not of sound mind. In view of that decision we need not determine the correctness of the trial court’s rulings in that regard. The contention that the court erred in precluding opinion testimony by Mrs. Hudgens is not before us for appellate review since plaintiff made no offer of proof as to what her testimony in that regard would have been. Thayer v. Sommer, Mo.Sup., 356 S.W.2d 72 [12].

In our consideration of the issues presented we should bear in mind that the cancellation of a deed “is the exercise ‘of the most extraordinary power of a court of equity, which ought not to be exercised except in a clear case,’ Lastofka et al. v. Lastofka, 339 Mo. 770, 99 S.W.2d 46, 1. c. 54, and the evidence to justify cancellation should be clear, cogent, and convincing.” Edinger v. Kratzer, Mo.Sup., 175 S.W.2d 807, 813. Plaintiff had the burden of proof to present evidence which, when tested by the applicable rules, was sufficient to require the cancellation of the deeds. “And where, as here, it is sought to set aside a voluntary deed because grantor lacked the mental capacity to execute a valid instrument of conveyance to his property, the burden is upon those who seek to have it set aside to establish that at the time of its execution grantor lacked such mental capacity. * * * The law differentiates between the mental capacity required of grantor making a deed as a part of the arms-length business transaction and the mental capacity required when grantor is receiving but the satisfaction of heart and mind which comes from benefitting those near and dear to him. In the latter instance if he has sufficient mental capacity to know the extent of his property, his relatives and their respective claims on his bounty, the demands of the law have been satisfied. * * * [and] mere proof of illnesses, or imperfect memory, or forgetfulness of names and persons, or old age with its attendant physical and intellectual weaknesses, or mental confusion, or arteriosclerosis, either singly or in combination, unless it further appears that grantor did not understand the nature of the instant transactions, and did not with such understanding voluntarily enter into and consummate the transactions, are insufficient to invalidate these deeds.” McCoy v. McCoy, 360 Mo. 199, 227 S.W.2d 698, 703, 704. Also, “[u]ndue influence, which is sufficient to warrant a court in holding a will or a deed invalid, must be such overpersuasion, coercion, force, or deception as breaks the will power of the testator or grantor and puts in its stead the will of another.” Shaw v. Butler, Mo.Sup., 78 S.W.2d 420, 428. “Appeals in equity cases such as this are heard de novo on the record as made below, the reviewing court determining the weight and value of the evidence, but usually deferring to the findings of the chancellor, especially where there is conflicting oral testimony involving credibility of witnesses, except when convinced that such findings are against the weight of the evidence.” Been v. Jolly, Mo.Sup., 247 S.W.2d 840, 853.

In deciding the case the trial court made detailed findings of fact and concluded that the evidence did not support the allegation of undue influence on the part of defendants, or the contention that the grantor was mentally incompetent at the time the deeds were executed, and hence that plaintiff had failed to sustain the burden of proof required for cancellation of the deeds.

After a careful review of all the evidence we have concluded that the weight of the evidence strongly supports the findings of the trial chancellor. We not only defer to his findings but have independently arrived at the same conclusions. We have stated in detail the evidence tending to support plaintiff’s contentions as well as that of defendants tending to refute those charges. It would be useless repetition to restate that evidence in discussing our decision. We will, however, refer to some items of evidence which appear to us to be particularly persuasive.

The strongest evidence presented by plaintiff was the testimony of Dr. Feind and that of the registered nurse, Mrs. Clancy. However, the doctor’s testimony is not convincing as to Margaret’s mental condition at the time the deeds were executed because he said she was rational at times and her condition would change from hour to hour. Also, as to Mrs. Clancy, there is testimony indicating that she may have been mistaken about being on duty on October 4, 1963.

On both the issue as to Margaret’s mental competency and that of undue influence, we think the following items (among others) strongly support the findings for defendants: (1) Mr. Northern, an experienced attorney, was with Margaret for some time on the morning the deeds were executed. He advised her concerning the situation and she told him the reason she wanted to make the deeds. It was his opinion that she was of sound mind at that time. (2) Margaret had previously (apparently while alone) written in her own handwriting (and signed) the names of the grantees of each parcel of property as well as directions concerning her will. (3) Mrs. Ho-gart, a registered nurse, was present immediately after the deeds were signed and she expressed the opinion that Margaret’s memory was good and “she knew what she was doing.” (4) Charlie, Steve, and Myrtle all denied making any request of Margaret to make the deeds, and (5) there was convincing testimony from thirteen relatives, neighbors, and friends that Margaret was of sound mind at or near the time the deeds were made.

There was no direct evidence of undue influence and we do not think the circumstantial evidence is sufficient to warrant an inference of such influence. “The mere opportunity to influence, * * * unsupported by evidence showing its actual existence, is not sufficient to invalidate a deed.” Walton v. Van Camp, Mo.Sup., 283 S.W.2d 493, 502. In one of his points plaintiff says that the evidence established that a fiduciary relationship existed between Margaret and defendants and hence a presumption of undue influence arose. In considering that contention we note that the existence of such a relationship was not alleged in plaintiff’s petition, and therefore the issue is not before us for review.

In considering the factual issues the cases cited in the briefs have not been of much assistance because each case must be decided upon its own facts and we seldom find two cases where the facts are substantially the same. In a number of respects the case of Cruwell v. Vaughn, Mo.Sup., 353 S.W.2d 616, tends to support the conclusions we have reached. We have examined the cases cited by plaintiff and,find that they are all distinguishable from the case at bar upon the factual situation involved.

The judgment is affirmed.

All concur.