author: RAILEY, C. BROWN, C.

text:
    PASCAL W. OLDHAM et al., Appellants, v. HARVEY E. WADE et al., Appellants.
    In Banc,
    February 2, 1918.
    1. FRAUDULENT CONVEYANCE: Wife to Hurband: Solvency. The term solvency, in its application to dealings between husband and wife, in which she attempted to convey to him all her property which might have been reached by execution under plaintiff’s judgment against her, implies her then ability to pay all her debts out of her estate and also such condition of her property that it may be reached and subjected by process of law, without her consent, to the payment of her debts. .
    2. -:-: Insolvency. A deed from a wife, a judgment debtor, to her husband, by which she attempted to convey to “him $5600 worth of real estate, for $1200 in cash and his note for $2700, and by which she was left legally insolvent, was fraudulent, for it was a joint attempt to render her legally insolvent, by placing her said real estate, liable to execution on the day of said pretended sale, beyond the reach of her creditors.
    3. -:-: Estoppel, The indorsement by the judgment creditor of the note given by the husband to his wife in payment for her land, first indorsed to him by the husband and then indorsed by said creditor to the wife, as a mere conduit, without any knowledge on the creditor’s part that the husband was having the note indorsed to his wife as part payment for her land, did not estop said creditor to pursue the land as having been conveyed by the wife to her husband to defeat the payment of the judgment.
    4. -: Sheriff’s Deed: Regular on Face. A sheriff’s deed, executed to the purchaser at the execution sale made in pursuance to a valid judgment and levy, which affirmatively recites all necessary facts in respect to the levy as well as other matters, and read in evidence without objection, will not be held to be void or voidable.
    5. -: Res Adjudicata: Innocent Purchaser: Separate Transactions. The purchase by a husband from his wife of lots in Kansas City, and a purchase two years later of land in Pettis County of land which she had then inherited but did not own at the time the lots were purchased, were not a single transaction, but separate and distinct deals; and a holding by the circuit court of Jackson the lots, without notice that the purchase money was unpaid, was County that the husband was an innocent purchaser for value of not res adjudicata in respect to the purchase of the land in Pettis County.

      6. -: Selling Land Under Execution Before Eraud Is Established. The holder of a judgment may sue out execution, have it levied on the debtor’s land (other than his homestead), have the sheriff sell the same, buy it in for a small sum, and then bring suit in equity to have a prior conveyance of the debtor set aside as made in fraud of his creditors. While this method of procedure has often been criticised by the Supreme Court as harsh and unfair to the debtor, and as encouraging speculation in litigation by the creditor, its legality has uniformly been upheld; and if this method of procedure is to be declared illegal, it must be done by the Legislature, ánd not by judicial construction.
    7. -: -: Lien on Land Sold: Inadequacy of Consideration. The judgment debtor, who has been endeavoring to defeat her creditor in the collection of his judgment ever since its rendition and who announced at the execution sale that the purchaser would acquire no title, is in no position to urge that the sale should be set aside for inadequacy of consideration. The creditor, who caused the land to be sold under his judgment, and having received a sheriff’s deed brought suit to have a prior conveyance made by the debtor to her husband set aside as made in fraud, of her creditors, is entitled, having established the fraud, to the land itself, and not merely to a lien on the land, although the land was worth $5.000 and was sold to him for $100, and the original judgment was for $748.20.
    Appeal from Pettis Circuit Court. — Hon. Hopkins B. ' Chain, Judge.
    Reversed and remanded (with directions).

      Charles E. Yeater for plaintiffs.
    (1) The sheriff in his deeds recites due levy and advertisement and in any case of a sheriff’s sale of land under execution the return of the sheriff cuts no figure whatever, and it is not necessary to the validity of the purchase that he make a correct return or any return whatever, and the omission of the sheriff in his return on the execution to describe in detail the property levied on, or a return contradictory of his deed, does not affect the validity of his deed aforesaid or the title of plaintiffs thereunder. Simmons v. Affolter, 254 Mo. 173; Bray v. Marshall, 75 Mo. 329; Buchanan v. Tracy, 45 Mo. 438. (2) Mere inadequacy of price alone, except in rare cases, will not vitiate an execution sale, but even if such inadequacy alone raises a presumption of fraud, that presumption is rebutted here where the inadequacy was due to the fraudulent conveyance by defendants to defeat creditors of the property sold, and was further due to the fact that the attorney for defendants was present when the sheriff’s sale was cried and warned all bidders that Mr. "Wade and not the execution creditor owned the land. Mangold v. Bacon, 229 Mo. 479; Martin v. Castle, 193 Mo. 184; Knoop v. Kelsey, 121 Mo. 649; Mangold v. Bacon, 237 Mo. 520; Bradshaw v. Halpin, 180 Mo. 672; Rinehart v. Long, 95 Mo. 401. (3) The plaintiffs agreed that the trial court, after declaring the conveyance from Mrs. Wade to her husband of her share in her father’s land and the subsequent deed to Poster were fraudulent and void, and after denying defendants’ claim that the sheriff’s deed was invalid, erred in setting aside such deed because plaintiffs did not attack the fraudulent transfer in equity first and because of inadequacy in the bid, but further contend that the judgment should have annulled such fraudulent conveyances and vested title in the plaintiffs. Garrett v. Wagner, 125 Mo. 463; Welch v. Mann, 193 Mo. 326; Ryland v. Callison, 54 Mo. 513; Zoll v. Soper, 75 Mo. 461. (4) Since defendants admit the land was worth from $4500 to $5000 and the lots $600 and that they were exchanged for a $2700 note and $1200 paid in small amounts during a period of several years, which was from $1200 to $1700 less than the land was worth and enough to largely pay plaintiffs’ judgment, the law subjects such excess to a trust for the use of creditors for whose benefit a lien can be declared on the land in such cases as this, and so it was expressly ruled in Bank v. Winn, 132 Mo. 89. (5) The court did not err in setting aside the deeds in question as fraudulent to creditors. (6) The question whether Mr. Wade knew that the purchase price of lots had been paid was not res adjudicata at the trial in Jackson County, because the record of the judgment entry shows that the plaintiffs took a nonsuit without leave as to him, after a declaration of law by the court. sitting as a jury, and dismissed the second count of their petition so as to enable them to raise the issue in a subsequent suit. Sec. 1980, R. S. 1909; Wood v. Nortman, 85 Mo. 304; McClure v. Campbell, 148 Mo. 112; Weithaupt v. St. Louis, 158 Mo. 659; Carter v. O’Neil, 102 Mo. App. 391. Mr. Wade is privy in estate to Mrs. Wade and is bound by the judgment in the Jackson County suit. Cooley v. Warren, 53 Mo. 166; State ex rel. v. St. Louis, 145 Mo. 552; Carthage ex rel. v. Wessner, 116 Mo. App. 121; Crispen v. Hanavan, 50 Mo. 418; Young v. Byrd, 124 Mo. 590. (7) Courts scrutinize closely and with suspicion conveyances between husband and wife where creditors are concerned. Cole v. Cole, 231 Mo. 255; • Ice Co. v. Kuhlman, 238 Mo. 697; Benne v. Schnecko, 100 Mo. 257; Gruner v. Scholz, 154 Mo. 415; Bank v. Fry, 216 Mo. 45. A clear sweep of all of grantor’s property raises a presumption of fraud, particularly in this case, where a wife conveys all her visible real property to her husband in exchange for invisible property. Gordon v. Ritenour, 87 Mo. 60; Segers Sons v. Thomas Bros., 107 Mo. 635. Every person is presumed to intend the necessary consequences of his acts, and if they necessarily delay, hinder or defraud creditors then the law presumes they were done with a fraudulent intent; but in this case where the husband and wife knew of the latter’s indebtedness, and the wife conveyed all her visible landed property to her husband for alleged invisible property, namely a note for $2700 and $1200 cash, which latter both admit was not paid at the time nor all of it paid for several years, some of it not being paid until after this suit was filed, and the wife thinking some of it still unpaid at the trial, the presumption of fraud is conclusive. Bank v. Buck, 123 Mo. 154; Tootle & Co. v. Lysaght & Co., 65 Mo. App. 142. Mrs. Wade was a judgment debtor and her intent was to hasten to convey the Pettis County land out of her name for fear plaintiff's would discover and levy on it, which she did two months and twelve days after she inherited it from her father, and her husband knew of that fact and although he may have paid full value for the land such knowledge of his wife’s intent renders the transfer fraudulent and void as to creditors. Sexton v. Anderson, 95 Mo. 379; Gustv. Hoppe, 201 Mo. 300; Kurtz v. Troll, 175 Mo. 506. Mrs. Wade’s admission that the cash part of the consideration was not paid for years, some of it after this case was begun, and some still unpaid -in her judgment at the trial of this case, renders the transfer fraudulent and void to plaintiffs as judgment creditors. Dougherty v. Cooper, 77 Mo. 532; Kurtz v. Troll, 175 Mo. 511. At the least Mr. Wade knew enough of his wife’s circumstances to put him on inquiry when he knew she was making a clean sweep of all her visible property in exchange for invisible property of less value, and inquiry would have disclosed her object if he did not know it, and his failure to make inquiry charges him with notice of the fraud. Rupe v. Alkire, 77 Mo. 641; Roan v. Winn, 93 Mo. 511; Leavitt v. La Force, 71 Mo. 356; Bank ex rel. v. Purcell, 131 Mo.' 317; Adams v. Gossom, 228 Mo. 583.

      A. W. Gray and G. W. Barnett for defendants.
    (1) The deed from the sheriff of Pettis County to the land in question, and under which plaintiffs claim title, is absolutely void and conveys no title to plaintiffs for the reason that there was no levy on the land in question under the execution issued from the circuit court of Jackson County. The return of the sheriff on the execution under which the sale to plaintiffs was made does not show that this or any other land was seized or levied upon; no property is described. While a levy may be made without the officer going upon the land, yet a description of the land seized must be indorsed on the writ by the officer, showing what land has been seized and appropriated for the debt. Duncan v. Matney, 29 Mo. 368; 17 Cyc. 1092. The return must describe the land with as much certainty as a deed. Henry v. Mitchell, 32 Mo. 512. The judgment being in another county, was not a lien on the land in Pettis County, and- hence the validity of the sale depends upon a valid levy. Sec. 2124, R. S. 1909. But plaintiffs, recognizing that the return did not show a proper levy upon the land, sought to cure this by asking leave to amend the return on the trial in the Pettis County Court. Whether the trial court did or did not permit the amendment is not quite clear, but it is immaterial whether the court permitted an amendment or not, as the trial court in this case had no jurisdiction over the execution which was issued from the Jackson County Circuit Court. If the amendment could be allowed at all, it could only be done by permission of the Jackson - County Circuit Court, from which the execution issued. Sec. 1861, R. S. 1900; Bunton v. Adams, 65 Mo. App. 6; State ex rel. v. Rayburn, 22 Mo. App. 303. (2) The plaintiffs acquired no title under the sheriff’s deed for the further reason that the price paid, one hundred dollars, for a farm worth about forty-five hundred dollars, was so inadequate as to outrage the conscience and shock the moral sense. This alone is sufficient ground for setting aside the sale and declaring that the plaintiffs had no title thereunder. Mangold v. Bacon, 237 Mo. 496; Guinn v. Donnell, 201 Mo. 173. The court therefore did not err in setting aside the deed to plaintiffs, but did err in charging the defendant Harvey E. Wade’s land with the judgment and costs rendered in the circuit court of Jackson County against defendant Lucile Wade, for the reason that this is not a suit to collect this judgment, but is to recover the land, based upon an alleged valid title. Neither party asked the relief granted by the trial court, and both parties are repudiating any such relief. The plaintiffs do not ask a lien on said land for their judgment, and are appealing from .the judgment of the lower court in granting such relief. Defendant Wade does not ask any such relief, but this is a suit where both parties are claiming title to the land, and it is a suit for the land and not for the money. (3) In a case of this kind, the plaintiffs must recover the land or nothing. They cannot recover on their Jackson County judgment in this form of action, and have it declared a lien on the land. Garrett v. Wagner, 125 Mo. 450. (4) While it is true that when a court of equity once acquires jurisdiction for any purpose, it will retain such jurisdiction for the purpose of doing complete justice, yet the relief granted must be authorized by the pleadings. 16 Cyc. 107; Waldron v. „ Harvey, 54 W. Va. 608. The court cannot decree against the defendants and at the same time dismiss plaintiff’s bill. Scofield v. Peck, 182 Mass. 121. That in effect is what the court has done in this case. The plaintiff cannot recover on a ground foreign to the bill. McKnight v. Bright, 2 Mo. 110. (5) The court erred in setting aside the deed to defendant Harvey E. Wade under which he acquired title to the Pettis County land. Under the undisputed testimony he was an innocent purchaser for value; before Mrs. Wade was sued in the circuit court of Jackson County, on the note on which the judgment was rendejed against her, defendant Harvey E. Wade had contracted for the land in question, and had paid the purchase price, being twelve hundred dollars in cash and the assignment of a twenty-seven-hundred-dollar note secured by a mortgage, to Mrs. Wade. At the time he paid the purchase price he had no knowledge of any debt owing to the plaintiff from his wife. Mr. Wade testified to this, Mrs. Wade testified to this, and the plantiff, Oldham, on two different occasions, namely, in his deposition and at the trial in the Jackson County Circuit Court, testified that the defendant, Harvey E. Wade, knew nothing about this indebtedness. Therefore, we say that the uncontradicted evidence is that the defendant, Harvey E. Wade, was an innocent purchaser for value of this land, and the court erred in setting aside the deed to him and in charging the land with a judgment obtained against his wife. (6) Even if the sale from Mrs. Wade to her husband were fraudulent, the plaintiff was a party to the fraudulent transaction. The evidence clearly and conclusively shows that' when Mr. Oldham took the note which he says he took for the purchase price of the lots in Kansas City, he agreed to keep secret from Mr. Wade the fact that the lots were not paid for, because Mrs. Wade did not want her husband to know that they were not paid for, and upon the evidence of plaintiff himself it is conclusively proved by his own testimony, repeated on two different occasions, that Mr. Wade knew nothing of the claim against his wife for the unpaid purchase price of the lots until long after the suit was brought in Kansas City on the note, and that plaintiff agreed to say nothing about the lots not being paid for. He thus, by his own acts, enabled Mrs. Wade to dispose of the property so that the purchaser would be an innocent purchaser; and he further agreed to take her note and waive any lien upon the property for the purchase price, and this waiver and estoppel goes as to all property that Mrs. Wade might have. This general waiver would apply to all transfers. Nixon v. Ins. Co., 68 Mo. App. 251. (7) Further, the evidence shows that this Pettis County land was partly paid for by a twenty-seven-hundred-dollar note transferred from Mr. Wade to Mrs. Wade, and the plaintiff assisted in bringing about this transaction,- that the note was indorsed to Oldham and by bim indorsed to Mrs. Wade, for the purpose of changing the title to the twenty-seven-hundred-dollar note, and that the plaintiff knew the purpose for which the title to this note was being transferred from Harvey E. Wade, to his wife, Mrs. Lueile Wade, and that he, Oldham, acted as the conduit through which it passed, and for this reason he is estopped from complaining of the sale. (8) The question is res ad judicata as to whether Mr. Wade knew that the purchase price for the Kansas City lots, for which the note was given, had been paid, at the time he bought the lots, as that was the issue in the case at Kansas City, in the Jackson County Circuit Court, when it was attempted to enforce a lien against these lots in the hands of Mr. Wade,
   RAILEY, C.

The petition in this ease was lost from the files, hut it is agreed that its allegations duly set forth facts, charging that Lucile Wade fraudulently disposed of certain land lying in Pettis County, Missouri, and. described in the petition, to her husband, Harvey E. Wade, by means of a deed first made by the Wades to Roy Underwood, who afterwards conveyed the property to defendant Harvey E. Wade, who after-wards conveyed the same to Foster, who incumbered the same with a fraudulent mortgage for four thousand dollars, securing a note for that sum to defendant Wade, in which said mortgage or deed of trust George Barnett, Jr., was trustee. The petition also charged that plaintiffs were judgment creditors of defendant Lucile Wade; that after said fraudulent conveyance, the sheriff of Pettis County aforesaid levied upon said real estate and sold the same to plaintiffs under an execution. The petition prayed that all the title to said real estate in defendants be divested ffrom them and invested in plaintiffs; and also prayed for a decree to quiet title against the claims of defendants.

The answer contains a general denial, except in respect to those matters admitted to be true. It admits the conveyances described in the petition, denies they were fraudulent, and alleges other defenses which will be considered hereafter.

The answer charges that the sale under execution to plaintiffs was fraudulent; that the Pettis land was worth $4500 and plaintiffs only paid $100 for same; that said execution sale was void, etc. They ask to have the sheriff’s deed to plaintiffs set aside and can-celled, and that defendant H. E. Wade be decreed the owner of said land, etc.

The reply is a general denial of the new matter in the answer.

The trial court found that Mrs. Wade was the owner in fee of the real estate in controversy, subject to an equity lien for the full amount of plaintiffs’ judgment and costs. ^

Cross-appeals were taken by both plaintiffs and defendants.

This case presents some complex questions, which are difficult of proper solution. If, upon an examination of the record we should find that it is free from fraud upon the part of defendants, our conclusion as the disposition of the case would not be attended with any difficulty, but on the other hand, if we should conclude, that the charges of fraud lodged by plaintiffs in the complaint are well founded, and sustained by the evidence, the question, as to hoiv a court of equity, on the record before us, should frame its decree based upon such facts, is not so easy of solution.

I. Have the plaintiffs, by the evidence, sustained the charges of fraud made against defendants in regard to the disposition of the Pettis County land? bt may not be deemed inappropriate, at the outset, to state some general principles of law, applicable to this class of cases. Section 2881, Revised Statutes 1909, which is the same as Section 3398, Revised Statutes 1899, reads as follows.:

“Every conveyance ... of any estate or - interest in lands . . . made or contrived with the intent to hinder, delay or. defraud creditors of their lawful actions, damages; forfeitures, debts or demands . . . shall be from henceforth deemed and taken, as against said creditors and purchasers, prior and subsequent, to be clearly and utterly void.

Section 2886, Revised Statutes 1909, provides that:

“This article shall not extend to any estate or interest in any lands . . . which shall be upon valuable consideration, and bona-fide and lawfully conveyed; nor shall it be construed to avoid any deed, as against any subsequent bona-fide purchaser from the grantee for valuable consideration, and without any notice of fraud. ’ ’

In construing the provisions of above statute, in the leading ease of Burgert v. Borchert, 59 Mo. l. c. 83-4, Judge Sherwood, very forcefully announces the following principles of law, applicable thereto:

“While it is undoubtedly true as a general legal proposition that ‘fraud is not to be presumed, but must be proved by the party alleging it,’ yet it is equally true, that fraud is seldom capable of direct proof, but for the most part has to be established by a number and variety of circumstances, which, although apparently trivial and unimportant, when considered singly, afford, when combined together, the most irrefragable and convincing proof of a fraudulent design.”

Since the enactment of Section 8304, Revised Statutes 1909, known as the Married Woman’s Act of 1889, husband and wife have had the legal right to deal with each other in buying and selling land, as though she were a feme sole, where the conveyance is made in good faith and without fraud. But, as we recently announced, in the case of Barrett v. Foote, 187 S. W. l. c. 70:

“In dealings between father and son, as between husband and wife, where the rights of creditors are involved, their acts should be closely scrutinized. [Bank v. Fry, 216 Mo. l. c. 45, 115 S. W. 439; Cole v. Cole, 231 Mo. 236, 132 S. W. 734; Ice & Cold Storage Co. v. Kuhlmann, 238 Mo. l. c. 697, 698, 142 S. W. 253.] ”

In regard to the question of the debtor’s solvency, in considering cases of this character, we stated the law clearly in Eddy v. Baldwin, 32 Mo. l. c. 374, as follows:

“The law is practical and looks to the attainment of practical results; and a solvency which it cannot employ in the payment of the debt of an unwilling debtor, is certainly not distinguishable by any valuable difference from insolvency. The term solvency in its application to eases like this, implies as well the present ability of the debtor to pay out of his estate all of his debts, as also such attitude of his property as that it may be reached and subjected by process of law, without his consent, to the payment of such debts.”

The above principle of law is sustained by many subsequent decisions of this court, which will be found collated in Barrett v. Foote, 187 S. W. l. c. 69. It is well to remember this principle of law, in construing the result of the dealings between, defendant Wade and his wife, in which she attempted to convey to her husband all her property which might have been reached on execution under plaintiffs’ judgment against her. Other important principles of law, applicable to the case, will be referred to and considered later. Keeping in mind the above principles of jurisprudence, we will turn to the evidence and consider the charges of fraud made against defendants.

The plaintiffs were owners of Lots 43 and 44 of Oldham’s Addition to Kansas City, Missouri; and on January 28, 1905, sold to Mrs. Wade the above lots for $600, and took her note for said amount, due on or before two years from said date. Her husband was then absent from the State. No mortgage or deed of trust was taken to secure said note, nor was any vendor’s lien reserved. The lots were conveyed to Mrs. Wade by deed, dated January 28, 1905. On June 14, 1905, Wade and wife conveyed said lots to Mrs. Randall, and the latter, on the same day, conveyed' the same to Mr. Wade. Mrs. Randall paid no consideration for the lots, but was simply the conduit for transferring the title from Mrs. Wade to her husband.

Mr. Wade testified that he returned from South America about the 13th or 14th of February, 1905; that his wfife told him about having bought the lots; that he brought with him $800 in currency, which was placed in the bureau drawer; that he owed his wife $800 for money formerly borrowed from her. He says that shortly after his return home, Pascal W. Oldham came to his house to collect the $600 for the lots, and that his. wife took $600 of the money in the bureau drawer to pay Oldham. She was afterwards sued upon the above note and a personal judgment rendered against her on March 10, 1909; for $748.20.

Defendants, in their brief, in speaking of said suit, say: “The suit against Mrs. Wade in Jackson County was filed on July 16, 1907, and on July 20th, four days thereafter, Mr. Wade purchased this land from his wife.”

The land referred to is the real estate now in controversy.

The writ of summons in the above suit was dated July 16, 1907. We are satisfied from the testimony that both Mr. and Mrs. Wade, when the suit was brought against her in Jackson County, Missouri, on July 16, 1907, knew before she attempted to sell the land in controversy to her husband on July 20, 1907, that Mrs. Wade was being sued on the $600 note. After the above suit was brought, Wade was joined as a co-defendant and a vendor’s lien sought against said lots. He claimed to be an innocent purchaser of said lots, for value, and without notice that his wife was indebted to plaintiffs for same. The trial court sustained his contention, the cause was dismissed as to him, and a personal judgment rendered against his wife, as aforesaid. The question as to whether Mr. Wade was an innocent purchaser for value of the land in controversy, was not an issue in the Jackson County litigation.

Let us return to the 20th of July, 1907, when Mr. Wade claims to have purchased from his wife the land involved herein, and ascertain how matters then stood.

H. E. Wade was not only the husband of Lucile Wade, but the latter largely depended upon him for advice in regard to business matters. She testified upon this subject, as follows:

“I don’t know whether I could very intelligently explain to the court about my sale of these two Kansas City lots to Mr. Wade, and also this Pettis County land and about what I received in exchange for them, or not. I know so little about it, and I left those things principally to him, to Mr. Wade, and I have always kinda relied on his judgment in everything.” (Italics ours.)

After the Jackson County suit was commenced against Mrs. Wade, on July 16, 1907, it is evident that both the Wades realized, if judgment went against tlie wife, her interest in her father’s estate in Pettis County, including the land in controversy, would be liable under execution for the payment of plaintiffs’ demand, should judgment be rendered thereon. We are satisfied from all the facts in the case, that they then conceived the idea of placing the property in controversy beyond the reach of plaintiffs, as creditors, and, hence, pursued the course of having it conveyed to her husband, in order that he might have the title vested in- the name of an innocent purchaser, if possible.

It was admitted at the trial, that D. W. Hainline— the father of Mrs. Wade — was the owner of the land in controversy, and that he died on the 8th day of May, 1907. The property of Hainline- was partitioned and the land in litigation here became the property of Mrs. Wade. Both Wade and his wife, as soon as plaintiffs sued, moved promptly, and within four days, to place her interest in said land, in the name of some other person, to avoid the payment of a prospective judgment, should one be rendered against her.

The Wades both claim that the husband owed the wife $800 for borrowed money. The husband testified, that: “A fair market value of this land at the time 1 bought it was five thousand dollars.” That is to say, he owed his wife $800 and got land from her of the market value of $5000, making the total value of the assets of the wife,-before the sale to the husband, $5800. Her interest in the land could be levied on and sold under execution. She and her husband by the deal aforesaid, attempted to render her legally insolvent, so that none of her property could be subjected to plain-. tiffs’ demands. Both the Wades claim that the husband was to pay $1200 in cash and the $2700 note, making $3900, for the lots, worth $600, and the land in controversy, worth $5000. In other words, they attempted to place her $5600 worth of real estate beyond the reach of her creditors, and to pay her in personal property, which they claim was worth $3900, therefor. If the sale from the wife to the husband, of the land in controversy, should stand, it would leave the wife legally insolvent, although she had real estate liable to execution worth $5000, the day of said alleged sale.

The. defendants failed to produce the $4000 note which Wade claimed to have taken from Foster in 1910. They failed, to produce the $2700 note, although notified to have the same at the trial. They produced no checks, showing when any part of the $1200, or the $2700 note were paid, if at all. The husband testified on this subject, as follows:

J‘Q. How would you pay her this money? (Speaking of his wife) A. I would .give her a cheek for a certain amount of money for a certain amount, twenty-five dollars or fifty dollars at a time. I never paid her the twelve hundred dollars at one time; it was paid in twenty-five, fifty or a hundred dollars, in installments, as she wanted it; when she wanted it and I had it; and I would take credit on the note.”

He said he could not tell what proportion of the $1200 he paid in cash, and what proportion in checks.

Mrs. Wade testified that out of the $2700 she paid a debt of $1100, but refused to give the name of the person to whom she claims to have paid- the money. Mrs. Wade further testified as follows:

“The twelve hundred dollars that he gave me, he did not give it all to me personally in cash or checks. He sent part of it when he was away from home He would keep up part of the household expenses. I expect it is three years, maybe, before Mr. Wade completed the payment of that twelve hundred dollars after he commenced making monthly payments.”

The testimony of the Wades is contradictory, indefinite and uncertain. The overwhelming evidence in the record convicts them of clean cut fraud. We are of the opinion that Foster is a mere figure-head in this litigation, and came into the transactions long after the plaintiffs had acquired and recorded their deed from the sheriff, for the land in question. Plaintiffs’ deed was properly acknowledged and recorded on December 29, 1909. The deed to Foster, from the Wades, is dated July 2, 1910.

Without the slighest hesitation we have reached the conclusion, that as to plaintiffs, who are and were judgment creditors of defendant Lucile Wade, the conveyance from the latter and husband on July 20, 1907, to Roy Underwood, for the land in question; and the deed from Roy Underwood, to Harvey E. Wade, dated July 20, 1907, purporting to convey said land; and the deed from Wade and wife to Foster, dated July 2, 1910, conveying said real estate, as well as the deed of trust, executed by defendant Foster, to defendant Barnett, executed on the 2nd day of July, 19Í0, are each and all utterly void and of no effect.

II. The doctrine of estoppel, sought to be pleaded against plaintiffs, on account of Pascal M. Oldham having indorsed the $2700 note, is without merit. He was never the owner of said note, and if Mr. Wade indorsed no^e Oldham and had him, as a mere conduit, indorse the same to Mrs. Wade, it would not operate as an estoppel against plaintiffs in this case, for the obvious reason that it is neither claimed nor shown that Oldham had any knowledge that Wade was having this note indorsed to Mrs. Wade as part payment of her interest in her father’s estate.

At the instance of defendants, Pascal M. Oldham testified as follows:

‘.‘Mrs. Wade told me, when she gave me the note, she would get some money from her father’s' estate. She told me her father was still alive, and she would have an interest in his estate, and that she expected to pay me out of that. I did not know anything about what the estate was.”

Defendants have signally failed to show that Old-ham, when he indorsed the $2700 note to Mrs. Wade, had any notice, or information, that Wade was transferring to her said note, as part payment for her interest in her father’s estate. This plea of estoppel is therefore without merit.

III. This brings us to the question as to whether the sheriff’s deed or deeds to plaintiffs for the land in controversy are void or voidable. Defendants contend, that the return of the sheriff, on the Jackson County execution, under which said land was sold to plaintiffs, does not show that any land was seized or levied upon.

In the reply brief of defendants, it is said: “We concede that an abstract of lévy by the sheriff of Pettis County, Missouri, was filed for record in the recorder’s office in Pettis County, prior to the sheriff’s sale and sheriff’s deed.”

This was through oversight omitted from the abstract. Both the deeds, executed to plaintiffs, for the land in controversy, under said execution sale, affirmatively recite all the necessary facts, in respect to the levy, as well as all other matters, and were read in evidence without objection.

Under the former rulings of this court, the above contention is not well founded. [Simmons v. Affolter and Cowan, 254 Mo. l. c. 173-4; Bray v. Marshall, 75 Mo. l. c. 329; Buchanan v. Tracy, 45 Mo. l. c. 438-9.]

IV. Defendants insist that, because the circuit court of Jackson County found that Mr. Wade was an innocent purchaser for value of the two Kansas City lots and purchased the same from his wife without notice that the purchase money was unpaid, foregoing was res adjudicata in respect to the purchase of the land in question, as, they claim, the purchase of the two lots and real estate in controversy was a single transaction. When Mrs. Wade bought the lots in January, 1905, and conveyed the same through Mrs. Eandall to her husband in June, 1905, D. W. Hainline was still alive, and .did not die until May 8, 1907. Mrs. Wade had no interest in her father’s estate to sell in 1905. We are further satisfied from the evidence that these were separate and distinct deals, both of which were managed by H. E. Wade. He got possession of the lots and beat the plaintiffs ont of their vendor’s lien, and attempted to take over his wife’s interest in the Pettis Connty land, to defeat the plaintiffs in the collection of their demand, should judgment go in their favor.

This contention is likewise without merit.

Y. Defendants, in their brief, assert that: “In a case of this kind, the plaintiffs must recover the land or nothing. They cannot recover on their Jackson County judgment in this form of action, and have it declared a lien on the land.”

On the other hand, the plaintiffs claim they are entitled to the land in controversy, because the proceedings which they inaugurated, in uncovering the fraud of defendants, and asking to have them divested of the title to said land and the same vested in the plaintiffs, are in full accord with the former rules of procedure in this State.

The statutes heretofore quoted in respect to fraudulent conveyances have been in existence in this State for more than seventy years. During that period, commencing with 1856, numerous cases have come to this court, in which the judgment creditor pursued the same course as did the plaintiffs in this action. That is too say, he obtained his judgment, sued out execution, levied on the debtor’s property, sold the same, bought it in for a small sum, and then brought suit in equity to set aside the fraudulent conveyances, and to divest the fraudulent grantee of the title, etc. While this method of procedure was sometimes criticised by this court as being harsh and unfair to the debtor, its legality has been recognized up to the most recent utterances of this court, and yet the Legislature permitted the above statutes, thus construed, to remain in full force and effect during all that period, without undertaking to modify the same or to regulate the proceedings thereunder for the benefit of fraudulent grantors. If the statutes and proceedings thereunder operate to the disadvantage of fraudulent grantors, and a change in this respect is desired, relief must come through the General Assembly, and not by judicial construction. Among the many cases in this court sustaining the course pursued by plaintiffs here may be mentioned the following: Eddy v. Baldwin, 23 Mo. 588; Rankin v. Harper, 23 Mo. 579; Dunnica v. Coy, 24 Mo. 167; Bobb v. Woodward, 50 Mo. 95; Lionberger v. Baker, 88 Mo. 447; Rinehart v. Long, 95 Mo. 396; Slattery v. Jones, 96 Mo. 216; Eneberg v. Carter, 98 Mo. 647; Garrett v. Wagner, 125 Mo. 450; Halstead v. Mustion, 166 Mo. 488; Bradshaw v. Halpin, 180 Mo. 666.

In 1872, in the case of Bobb v. Woodward, supra, Judge Bliss, in discussing the questions under consideration, on pages 101-2, said:

“There is little doubt that the interest of both debtors and creditors would be better subserved if, in all these resulting trusts, the creditor were required to ascertain by judicial decision the actual interest of the debtor in the property, before offering it for sale. The charge of fraud presupposes a doubt whether any such trust exists; and if the property is sold before the doubt is solved, it necessarily follows that the purchase is subject to all the uncertainty of a gambling adventure. All our observation shows that such interest are bid off at a nominal sum, and while the debt- or is stripped, the creditor receives nothing. Yet, as the law exists, the creditor may at once proceed to sell the debtor’s interest, leaving it to the purchaser to ascertain as he may what that interest is; or he may first, by a proceeding in equity, ascertain the existence or extent of the interest, and sell it when so ascertained. That the latter is the better course is no reason, however, why the former may not be pursued. ’ ’

In 1885, Judge Black, in Lionberger v. Baker, 88 Mo. l. c. 455-6, said:

“Where a debtor conveys his land in fraud of creditors, the creditor may institute his suit to set aside the fraudulent deed and subject the land to the payment of the debt by thus first ascertaining the interest of the debtor therein, or he may sell the land under execution before the ascertainment of the debtor’s interest, and then set aside the fraudulent deed. The purchaser at the execution sale will occupy the same position as if he were the creditor. It is to be regretted that the former course is not more frequently pursued, and thereby avoid the sacrifice of' property and speculation attending such execution sales, of which this case is no exception; but the right of the creditor to pursue either course is well established in this State. [Bobb v. Woodward, 50 Mo. 95; Ryland v. Callison, 54 Mo. 513; Zoll v. Soper, 75 Mo. 460.]”

In Welch v. Mann, 193 Mo. l. c. 326, where it was not necessary to a decision of the case, it was said the judgment creditor had the legal right to pursue the course which plaintiffs did here. The author of the opinion, however, ventured to recommend the modern practice, under which, the creditor should first go into a court of equity and establish the fraud before levying upon and selling the fraudulent grantor’s property. This opinion was promulgated in 1905, and still - the Legislature saw fit to let the statute remain as it is.

In Spindle v. Hyde, 247 Mo. l. c. 52-3, Judge Lamm again criticised the course pursued by plaintiffs here, but in express terms recognised their right to maintain this hind of an action.

In the recent case of Barrett v. Foote, 187 S. W. l. c. 71, where plaintiff resorted to equity first, we said:

“The plaintiff did not levy upon and buy in said land, as he could have done, but is pursuing the course, commended by this court, of having the land in the hands of the son subjected to the payment of his demand. ’ ’

Since 1856, up to the present time, we have recognized the right of a judgment creditor to proceed as plaintiffs have done in this case, with a single exception.

In Woodard v. Mastin, 106 Mo. l. c. 361, Judge Thomas, in his opinion, conceded the law of this State to be as plaintiffs herein claim, and said by way of citation, that: “Inadequacy of consideration is no defense to a. title obtained by plaintiff at a sheriff’s sale, where this result was due to the efforts of the defendants to place their property beyond the reach of their creditors.”

After thus stating the law, he proceeded, upon pages 361-2, as follows:

“Thus far we have had but little trouble in reaching conclusions, but the contemplation of the results to flow from a decree granting plaintiff all the relief he seeks gives us pause. The plaintiff bought the land at a public sale for $50, but we do not lose sight of the fact that, if he fails in this case, he loses all his debt, which now amounts to about $2500. He is entitled to some relief, but what? is the question. If we order'the circuit court to set aside the fraudulent deeds, vest the title to the property in plaintiff and order an account taken of the rents and profits of the land since 1884, now seven years, plaintiff would probably get more than twenty times his debt, costs and expenses of this litigation. While the bill in this case seeks to set aside deeds and vest the title in plaintiff, we have come to the conclusion that we are not bound to grant relief in the exact form in which it is sought, but that we can fix conditions upon which we grant relief conformable to-the facts alleged and proved.”

The judgment, as modified, reads as follows:

“On plaintiff’s motion, the judgment in this case is modified so as to direct the circuit court to take an account of the amount due plaintiff on his judgment, together with the costs of the original suit and this suit, including the costs of the sheriff’s sale, to plaintiff, and also the amount of expenses to which plaintiff has been put in this case, including a reasonable attorney’s fee and fees for printing the record, abstract and brief for this court, and for necessary time lost and traveling expenses in preparing for and attending the trial, declare the total sum thus found a lien on the real estate in dispute, and order its sale for the payment of the same. All concur.”

When it is remembered, that the creditor frequently has but little left, after paying his counsel and other expenses, where he seeks to charge the property of the fraudulent grantor with the payment of his debt, the above judgment seems plausible, if the court had the legal right to enter it, as it made the creditor whole, but the same division of this court, in the later ease of Garrett v. Wagner, 125 Mo. l. c. 463-4, speaking through Judge Sherwood, in terms, overruled the above case, and so far as we are advised, no other court, except the one from which this appeal was taken, has attempted to follow the above ruling in Woodard v. Mastín, supra.

Upon a full consideration of this question, we are of the opinion that the course pursued by plaintiffs in this case is justified under our statute and the former rulings of this court. Unless the sheriff’s deed to plaintiffs for the land in controversy should be set aside and cancelled upon some equitable ground not yet stated, the plaintiffs are entitled to a decree divesting defendants of the title to said land, vesting the same in plaintiffs, and declaring the latter to be the legal owners thereof.

VI. The defendants are asserting in this court that plaintiffs are entitled to the land in controversy or nothing. They appealed from a judgment giving the plaintiffs a lien on the land for their debt and costs. The plaintiffs are here insisting that, on account of defendants’ fraud, they are entitled to said land and ask a decree accordingly. They appealed from a judgment giving them a lien on the land for their debt and costs. The only additional ground urged by defendants for sustaining their contention, and deciding the case adversely to plaintiffs, is based upon the fact that property worth $5000 was sold and bought in by them for $100.

We have found that defendants fraudulently attempted to place their property beyond the reach of their creditors. We learn from the record that their counsel at the sale under execution announced to those present that H. E. Wade owned the property in controversy, and that whoever purchased the same would buy it subject to his claim. They stand before us on the cold proposition that they were guilty of no fraud and that plaintiffs are not entitled to recover. Having failed in their defense on the merits of the controversy, they have no standing in a court of equity. The plaintiffs have pursued the remedy left open to them under the laws of this State successfully, and are entitled to a decree vesting in them the title to the land in litigation.

Judge Leonard, in Rankin v. Harper, 23 Mo. l. c. 586-7, said: “It ill-becomes the parties to the fraud, after they have been detected and foiled in their attempt, to complain of the sacrifice of property incident to such sales. These sacrifices are perhaps fully compensated for by their practical teachings, that, after all, ‘honesty is the best policy.’ ”

In Rinehart v. Long, 95 Mo. l. c. 401, Judge Black, in discussing this question in a case fraud was sbown, and notice given at the salé that the debtor had no title to the property, said: “Inadequacy of consideration is no defense to this action, under such circumstances.”

The case of Bradshaw v. Halpin, 180 Mo. l. c. 672, was a proceeding similar to the one at bar. The debt- or was found guilty of fraud. His property, worth $1250, was sold under execution, and the purchaser bought the same for $50. The latter sued in equity to set aside the fraudulent conveyances. Defendants insisted that the bill should be dismissed because of the inadequacy of the consideration.

In the case before us, the Wades acquired plaintiffs’ two lots without paying for them. They have been endeavoring to defeat plaintiffs in the collection of their judgment ever since its rendition. They are in no position, after the fraud attempted to be perpetrated on plaintiffs, and after announcing at the sale that the purchaser would acquire no title, to urge, at our hands, that the sale should be set aside for inadequacy of consideration.

VII. Upon a full consideration of the whole case, we are of the opinion, that plaintiffs should be decreed to be the owners of the land in controversy.

We accordingly reverse and remand the cause to the circuit court of Pettis County, Missouri, with directions, to set aside and cancel the decree heretofore en-^ere<^ this cause > to enter a new decree finding the issues in favor of plaintiffs, setting aside, as fraudulent, the conveyances of the real estate in' controversy, from Wade and wife to Underwood; from the latter to H. E. Wade; from the latter and wife to Foster, and the deed of trust from Foster to defendant Barnett. Also in said decree to divest said defendants and each of them of all right, title and'interest in said real estate and to vest the title to same in the plaintiffs; also to decree the legal title to said land to be in plaintiffs; to enter in their behalf a judgment for the costs of this suit, and to grant said plaintiffs any other relief, which may be necessary to carry into effect this decree, not inconsistent with the views herein expressed'.

BROWN, C.

I concur in the result at which my brother Commissioner has arrived in the foregoing opinion. I do not, however, understand it to hold that in cases in which the judgment creditor has become the purchaser of lands alleged to have been fraudulently conveyed by his debtor, and seeks in a court of equity a decree on that ground in aid of his legal title under the statute relating to fraudulent conveyances, the court may not impose such conditions as are fair and equitable in the particular case and fully accomplish the object of the Legislature.

PER CURIAM. — The foregoing opinion of Railey, C., is adopted as the opinion of the Court in Banc. All concur except Bond and Faris, JJ., who dissent; Bond, J., is of opinion the judgment of the lower court should be affirmed.


source: Caselaw Access Project

author: WOODSON, J.

license: Public Domain

text:
    THE STATE ex rel. SAMUEL J. DOUGLAS v. LOUIS F. TUNE et al., Constituting Board of Complaint of City of St. Louis.
    In Banc,
    February 2, 1918.
    1. JURISDICTION: Mandamus: Collateral Proceeding. The Supreme Court will not entertain jurisdiction in any cause involving the issuance of an original writ over which any one of the courts of appeals has jurisdiction.
    2. -: -: -: Production of Letter for Use in Libel Suit. Relator, an employee of the city, being informed that a letter had been filed with the Board of Complaint, which by the city charter has authority to receive complaints against city employees and to recommend to the proper authorities such action as is deemed proper, brought suit for libel against the writers of the letter, and applied to the board to permit him to inspect the letter and make a copy of it for use in his libel suit, and being denied, brings his mandamus suit to compel the board to permit him to make such inspection and copy. Held, that, no reason being disclosed why the proceeding was not brought in the Court of Appeals, which under the Constitution has the same authority as does the Supreme Court to issue a writ of mandamus in a collateral proceeding to the libel suit whose subject-matter or the amount involved is not revealed by the application, the alternative writ is dismissed for want of jurisdiction.
    Mandamus.
    Writ denied.

      Douglas W. Robert for relator.

      Charles E. Danes and Everett Paul Griffin for respondents.
   WOODSON, J.

Counsel for relator has made a terse and clear statement of this ease in his brief. It reads as follows:

“This is an original proceeding by mandamus to compel the members of the Board of Complaint in the City of St. Louis to allow the relator, or his agent or attorney, to inspect and "make a copy of the letter written November 29, 1916, by Lawrence McDaniel and George E. Thomas, in which libelous statements were made against the relator, who is an employee of the city of St. Louis, in the Sewer Department.
“The Board of Complaint was created by the Charter of the city of St. Louis, and by that authority it receives complaints against officers and employees of the city. It is authorized to examine these complaints and to recommend to the proper authorities such action as it deems advisable.
“The relator being informed of this letter and generally as to its contents, demanded that the Board of Complaint permit him to inspect it and make a copy of it. This was refused. The relator had filed a suit for libel against the writers of the letter, he gave notice to take depositions, and also sued out a subpoena duces tecum, directed to the secretary of the board, which required him to produce the letter before the Commissioner. This subpoena was quashed by the circuit court on motion of the witness. Since that time the members of the Complaint Board have refused to permit the relator or his attorney to examine and make a copy of said letter and this action is for the purpose of compelling them to do so.”

There is no reason disclosed in this record why this proceeding was not brought in the St. Louis Court of Appeals. That court has, under section 12 of article 6 of the Constitution, the same authority to issue writs of mandamus that this court has under section 3 of the same article, unless otherwise limited by other provisions of the Constitution. That there is no such limitation in this case there can be no question, for the reason that neither the subject-matter of the libel suit mentioned, nor the amount involved therein is involved in this case. This is a collateral proceeding to that action, merely involving the right of the relator to compel the Board of Complaint to produce the letter mentioned for his inspection and use it as evidence in said libel suit.

So, in accordance with the rule heretofore announced by this court, to the effect that it will not entertain jurisdiction in any cause involving the issuance of an. original writ over which any one of the courts of appeals has jurisdiction, the alternative writ of mandamus heretofore issued is quashed, and this proceeding is dismissed.

All concur.


author: BROWN, C.

text:
    MINNIE T. BOLIN, Appellant, v. TYROL INVESTMENT COMPANY.
    In Banc,
    February 2, 1918.
    1. CONVEYANCES: Restrictive Covenants: Consistent Incumbrances. Restrictive covenants contained in conveyances are in tbe nature of easements reserved by tbe grantor in tbe lands conveyed, appurtenant to bis other lands. Tbey are easements running with tbe land, and as sucb are incumbrances consistent with the passing of the fee by the -conveyance in which they are reserved. -
    2. -: -: Must Be Clearly Expressed. Restrictive covenants, being in derogation of tbe fee conveyed by the deed, are not to be extended by implication to include anything not clearly expressed in them. If reasonable and substantial doubt is raised by tbe words employed in tbe restrictive covenant, it must be resolved against tbe grantor. To be operative tbe restriction must be plainly written in tbe grant.
    3. -: -: Apartment House: Six Dwellings. Where tbe restrictive covenant forbade tbe grantee or any one claiming by, through or under him to construct or allow to be constructed “any dwelling bouse less than two stories in height” or “more than one sucb dwelling on each fifty-feet front of said lot,” it did not prohibit tbe construction of an “apartment house” three stories high, with a single entrance in the middle of tbe front elevation, opening into a common ball, from which access is had to each suite or apartment, of which there are three on each side, there being no porches or other structures on the outside indicating the different apartments, and the lot having a frontage of two hundred feet. Said “apartment house” is not six dwelling houses, but comes within the definition of a “house,” which is, "a structure fixed in place and intended for the private occupation of a family or families;” and being one house, and the words "apartment” or “apartment house” not being found in the restrictive covenant, the construction of the said “apartment house” cannot be enjoined.
    Appeal from St. Louis City Circuit Court. — Hon. J. Hugo Grimm, Judge.
    Affirmed.

      A. M. Frumberg and A. R. Russell for appellant.
    (1) The erection of an apartment, consisting of six separate family dwellings, is violative of a restriction that not more than one dwelling sliall be erected on a specified tract. Sanders v. Dixon, 114 Mo. App. 239; Thompson v. Langan, 154 S. W. 808. (2) An apartment house is a number of dwellings, and the erection of such a building is a violation of a restriction against the erection of more than one dwelling. Sanders v. Dixon, 114 Mo. App. 229; Thompson v. Langan, 172 Mo. App. 64; Bolin v. Tyrol Investment Co., 178 Mo. App. 1; Schadt v. Brill, 173 Mich. 647; Harris v. Boraback, 137 Mich. 292; Bodgers v. Hosegood, 2 Ch. 388; Kingston v. Busch, 142 N. W. 754; Bagnall v. Young, 151 Mich. 69.

      Ephrim Gapian and Rassieur, Rammerer $ Rassieur for respondent.
    (1) Bestrictive covenants being in derogation of the right to the unrestricted use of property are to be construed strictly against the parties seeking to enforce them, and they will not be extended by implication to include anything not plainly prohibited. Zinn v. Sidler, 268 Mo. 689; Kitchen v. Hawley, 150 Mo. App. 503; Pank v. Eaton, 115 Mo. App. 176; Hartman v. Wells, 257 111. 167. Where the grantor enters into detail, specifying certain matters as prohibited, it is to be presumed, if nothing to the contrary appears, that buildings of a character not thus excluded are intended as a proper use of the property. All doubts, are to be resolved in favor of the free and untrammeled use of the property and. against restrictions. Underwood v. Herman, 82 N. J. Eq. 353; Kitchen v. Hawley, 150 Mo. App. 447, 503; Hutchinson v. Ulrich, 145 111. 336; Hunt v. Held, 90 Ohio St. 280; St. Andrew’s Appeal, 67 Pa. 512. (2) Restrictions as to construction and restrictions as to user are different and distinct, and a restriction against a plural structure will not be construed to prohibit a plural use of a single structure unless such intention is clearly expressed. Hamnett v. Born, 247 Pa. 418; Arnoff v. Williams, 113 N. E. (Ohio) 661; Pank v. Eaton, 115 Mo. App. 176; Land Co. v. Inv. Co., 169 Mo. App. 723; Dutch Church v. Bldg. Co., 214 N. Y. 268. (3) Where the restriction has reference only to the construction of. a permitted structure and the language employed describes the building which may be erected in terms which have a general significance and the restriction makes no reference to the use of the structure, then the terms employed will be given their usual and ordinary meaning. Pank v. Eaton, 115 Mo. App. 176; Kitchen v. Hawley, 150 Mo. App. 503; Hamnett v. Born, 247 Pa. 418; Hutchinson v. Ulrich, 145 111. 336. And a narrow and restricted meaning will not be given unless such intention is clearly expressed in the deed. McMurty v. Phillips, 103 Ky. 308; Arnoff v. Williams, 113 N. E. (Ohio) 661; Fortesque v. Carroll, 76 N. J. Eq. 583. (4) The term “dwelling house” is a general term merely descriptive of a structure suitable for human habitation, irrespective of how it may be occupied, and one dwelling house may be so constructed as to contain separate apartments, each of which may constitute a dwelling, yet' the whole be in fact but one structure. Berry on Restrictions, sec. 95; Johnson v. Jones, 244 Pa. 389; Dutch Church v. Bldg. Co., 214 N. Y. 268. An apartment house is a “dwelling house” and does not violate a restriction prohibiting the erection of more than one dwelling house on a single lot. Hamnett v. Born, 247 Pa. 418; Arnoff v. Williams, 113 N. E. (Ohio) 661; Sonn v. Heilberg, 38 App. Div. 515, 56 N. Y. Supp. 341; Holt v. Fleisehman, 75 App. Div. 593, 78 N. Y. Supp. 647; Bates v. Logeling, 137 App. Div. 578, 122 N. Y. Supp. 251; Stone v. Pillsbury, 167 Mass. 332; Hutchinson v. Ulrich, 145 111. 336.
   BROWN, C.

This suit was brought to the June term, 1910, of the circuit court for the city of St. Louis for the purpose of obtaining an injunction restraining the defendant from erecting an apartment house on Lot Fifteen in Block 3810 of Chamberlain Park, a subdivision of the city of St. Louis. The lot is on the southwest corner of Etzel and Belt avenues, on each of which is a frontage of about two hundred feet. The house which defendant proposed to build is a handsome structure to cost between $25,000 and $30,000. It is to be three stories in height, with a single entrance in the middle of the front elevation, opening into a common hall, from which access is had to each suite or apartment, of which there are three on each side, each occupying the entire floor on that side. There are no porches or other structures on the outside indicating the different apartments. In short, the words “apartment house” used in the petition properly described it.

One Chamberlain, being the owner of the land in 1887, laid out the subdivision by statutory plat. The Western Realty Company, having acquired it, conveyed Block 3810 to John. Jackson by deed dated October 5, 1887, in which it was expressly provided that neither the said grantee, nor anyone claiming by, through or under him, prior to the 31st day of December:

“1. Shall construct or allow to be constructed in the premises above, described any dwelling house less than two stories in height.
“2. Shall construct or allow to he constructed more than one such dwelling on each fifty-feet front of said lot.
“3. Shall construct or allow to he constructed thereon any dwelling to cost less than four thousand dollars in cash, nor locate or erect such dwelling nearer than thirty feet to the line of the street on which such dwelling fronts.
“4. Shall construct or allow to be constructed any stable, shed or outhouse nearer to any public driveway than one hundred feet.
“5. Shall construct or allow to be constructed or erected or to exist any nuisance or any livery stable or manufacturing establishment of any kind on said premises.
“6. Shall construct • or allow to be constructed, used or occupied any grocery store, bar room or business place for the bargain and sale of any kind of merchandise on said premises.
“To have and to hold the premises hereby conveyed, subject to the exceptions, reservations, conditions and reversions aforesaid.”

Both plaintiff and defendant claim by mesne conveyances through Jackson.

The sole question presented by the parties in this court is whether the erection of the building described would be a violation of any of the restrictive covenants of the deed.

Covenants of this character expressed in deeds of conveyance of lands are m the nature of easements reserved by the grantor in the lands conveyed, appurtenant to his other lands. [Improvement Co. v. Tower’s Exr., 158 Mo. 282; King v. Trust Co., 226 Mo. 351.] In these cases we called it “an easement, running with the land.” It is, as such, an incumbrance consistent with the passing of the fee by the conveyance in which it is .reserved. The curious will find this subject interestingly discussed, with reference to many authorities with which it is unnecessary to incumber this record, in sections four and five of Berry’s “Restrictions on the Use of Real Property.” It is useless to waste words in demonstrating that such easements are usually reserved by the grantor in the hope that, they will prove valuable to him in the disposition of his land. Being in derogation of the fee conveyed by the deed, such covenants will not be extended by implication to include anything not clearly expressed in them. [Zinn v. Sidler, 268 Mo. 680; Kitchen v. Hawley, 150 Mo. App. 497; Hutchinson v. Ulrich, 145 Ill. 336; Hartman v. Wells, 257 Ill. 167, 172; Hamnett v. Born, 247 Pa. St. 418; Johnson v. Jones, 244 Pa. St. 386.] The words “clearly expressed,” as used by this and other courts, have no significance unless they mean that if a reasonable and substantial doubt is raised by the words employed in the covenant it must be resolved against the - grantor. [Stone v. Pillsbury, 167 Mass. 332, and cases cited; Johnson v. Jones, supra; Grooms v. Morrison, 249 Mo. 544; Linville v. Greer, 165 Mo. 380.] It is only by such construction that such titles' can be made certain, so that the use of lands conveyed in fee shall not depend upon the diverse opinions of judges as to the minds of the parties to the grant, but restrictions thereon shall appear plainly written in the grant.

This subdivision was platted in May, 1887. On October 5, 1887, the Western Realty Company had acquired it, and on that date conveyed Block 3810 to John Jackson, with the restrictions we have quoted. This was an important transaction, involving, according to the evidence, between two and three thousand feet of the frontage of the subdivision on Bartmer and E-tzel avenues. These restrictions were evolved from the desire of the Realty Company to sell and of Jackson to buy. The Company was, so to speak, walking on the top rail of the fence which divided profit from loss — the hoped for advantage to his other lands from the restrictions he might impose, and the loss of the bargain he was making — with only his pen for a balance, and it behooved him to use it carefully to save himself from falling on the wrong side. Mr. Jackson’s ¡interest did not lie with his, for restrictions would do him no good. He could create them by his own deeds should he so desire. The result was that the Realty Company, if it ever had the idea of making Block 3810 an exclusive residence district, as charged in the petition and argued at bar, abandoned it, and placed in the deed nothing which could, by any logical stretch of the imagination, be construed into such a restriction. On the contrary, he proceeded, in express terms, to enumerate other structures which he desired to exclude. These were livery stables, manufacturing establishments, grocery stores, bar rooms, and business places for the bargain and sale of merchandise. By the operation of the good old maxim expressio unius est exclusio alterius he excluded all other structures than those mentioned from the category of his restrictive easements. Purchasers under that deed might erect office buildings, hospitals, hotels, boarding houses, churches, homes for the aged and for abandoned infants, and many other structures intended to be used for purposes of business or charity not included in his list. Apartment houses áre not referred to unless they come within the description “dwelling house.” We gather from the instrument that all these matters were in the minds of the parties when the Jackson deed was made, and that the extent to which the new enterprise was to be incumbered with these restrictions was discussed and determined. The argument of the appellant in this case seems to be founded, to a great extent, upon the ideal which it is assumed the founder of Chamberlain Park and the Western Realty Company had in mind when he conceived the enterprise, and not upon the shattered fragments which survived this sale. With the first we have nothing to do. We are only concerned with the last.

The first restrictive clause in the deed refers to the construction of any “dwelling house” on the premises described less than two stories in height. With this clause we have nothing to do except to use the word “house” therein contained in explanation of the meaning of the adjective “such” in the second clause, which shows that it refers to the word house as already used, so that the clause reads in effect “shall construct or allow to be constructed more than one such dwelling house on each fifty front of said lot.” This is the clause upon which the appellant depends to maintain her suit. If it is not a dwelling house there is no restriction; if it is a dwelling house it is expressly permitted ; only on. the theory that it is six dwelling houses can she maintain her suit.

The building, according to the testimony, in handsome and expensive, each apartment of the six which it contains costing more than the $4000, specified as the minimum cost of an entire'house. That it conforms to the building line established is admitted. The only contention upon which appellant rests her case is that each apartment in this house is a “house” within the meaning of the second clause of the restrictions. This implies the absurdity that one house, if it be an apartment house, is six houses, and does mortal violence to the dictionary definition of the word in which all the lexicographers of our language seem to agree, so that we will quote from the International, which is, we believe, authority. So far as it defines “house” as a structure it is as follows: “A structure intended or used for human habitation; esp., a human habitation which is fixed in place and is intended for the private occupation of a family or families.” This definition is supported by many judicial authorities, some of which refer to the very question before us. Among the latter are the following: Reformed Church v. Building Co., 214 N. Y. 268; Hamnett v. Born, supra; Bates v. Logeling, 137 N. Y. App. Div. 578; Johnson v. Jones, supra; Arnoff v. Williams, 113 N. E. (Ohio) 661; Hutchinson v. Ulrich, supra; Stone v. Pillsbury, supra.

The appellant cites us to Sanders v. Dixon, 114 Mo. App. 229, and Thompson v. Langan, 172 Mo. App. 64, as sustaining her contention, as well as to this case, which is reported in 178 Mo. App. 1, and certified to this court on the ground of conflict with the decisions of this court in Grooms v. Morrison, supra, and Linville v. Greer, supra. In the Sanders case the meaning of the word “house” was not involved, nor used in the covenants. So far as either of those cases conflict with the conclusion at which we have arrived, we do not follow them. Nor do we incline to the doctrine of the Michigan Supreme Court as expressed in the cases cited by appellant, beginning with and following Harris v. Roraback, 137 Mich. 292. We consider them, in their application to the deed before us, as clearly against the great weight of authority in other States, as expressed in cases we have already cited, in which precisely the same question now before us was in issue and decided. We will not refrain, however, from referring to the exact question decided in some of these cases. In Schadt v. Brill, 173 Mich. 647, the restriction prohibited the construction of a “store, factory or building, other than a dwelling house” upon the premises, and that the premises should be used for residence purposes only. The court held that a double house or flat was not a dwelling house within the meaning of the restriction. In that respect it is an authority directly in respondent’s favor. If this building is not six dwelling houses it does not come within the restriction. In Bagnall v. Young, 151 Mich. 69, the condition in the deed was “that nothing but a two-story dwelling house, costing not less than twenty-five hundred dollars . . . shall be erected on said lots.” The court held this restriction to be violated for reasons stated in Harris v. Roraback, supra, by the erection of a double two-story house. The covenant was held to mean that “no house except one planned and designed for a single dwelling should be erected” In all these cases the covenant or condition prohibited the construction on the land of any building other than a dwelling house, and the court held that a double house or flat did not come within that description. In the case before us all other structures except the few especially prohibited are clearly permissible.

In this comment we do not intend to express our approval of the doctrine announced by the Michigan court in these cases, but only to direct attention to the inapplicability of its reasoning to this case.

The judgment of the circuit court for the city of St. Louis is affirmed.

PER CURIAM. — The foregoing opinion of Brown, C., is adopted as the opinion of the Court in Banc.

Bond, Faris, Woodson and Williams, JJ., concur; Graves, C. J., Walker and Blair, JJ., dissent.


author: RAILEY, C. WILLIAMS, J.

text:
    EDWIN LONG, Appellant, v. PETER T. MASON, DAVID SHAFER et al.
    In Banc,
    February 2, 1918.
    1. NEGOTIABLE NOTE: Surety: Parol Evidence. Before the adoption of the present Negotiable Instrument Law parol evidence was, and since its adoption is, admissible to show that an ostensible maker signed the note as surety.
    2. -: -: Release of Mortgage: Negotiable Instrument Law. If the payee took' a mortgage on real estate or' personal property as collateral security for the payment of the note, and released such collateral without the assent of the surety, the latter was thereby released from his obligation to the payee to the extent of the value of the property released. And since the payee should not be considered “a holder in due course” within the meaning of the Negotiable Instrument Law, the liability of the surety is not controlled by that law, but the note is subject to the same defenses as if it were non-negotiable.
    3. -: -: -: Equitable Subrogation. Accommodation makers are, entitled, in an action by the payee upon a negotiable promissory note, signed by them and in addition secured by the maker’s deed of trust on land, to show that as between them and the maker they were sureties; and even though it be true that under the Negotiable Instrument Law they are absolutely liable to the payee and that said law applies to the case, yet, that law does not cut off their right of equitable subrogation, and they can set up as a defense that the deed of trust was released without their assent and the land sold by the mortgagor, and that if its value had been credited on the note it would thereby have been extinguished; or, instead of pleading such equitable subrogation as a defense and asserting their non-liability because of such extinguishment of the note, they may pay it and maintain an independent action against the payee for the amount of their loss arising from the release of the mortgage without their consent. But the Negotiable Instrument Law does not apply to such case, because the suit is brought by the payee himself, and he is not therefore “a holder in due course” and the rights of the parties were in no wise changed by that act, but are determined by the law existent independently of it.
    Appeal from Texas Circuit Court. — lion. L. B. Wood-side, Judge.
    Affirmed.

      C. C. Bland and Holmes & Holmes for appellant.
    (1) Plaintiff was a holder for value of the note (Sec. 9998, R. S. 1909), and the defendants having signed the same as makers were primarily liable thereon (See. 10161, R. S. 1909), and their engagement to pay it according to its tenor was absolute (Secs. 10161 and 10030, R. S. Í909). McCarty v. Smith, 97 Pac. (Utah) 329; Vanderford v. Bank, 105 Md. 164, 10 L. R. A. 129, 66 Atl. 47; West v. Stubblefield, 17 App. Cases, (D. C), 283; Trust Co. v. McGinty, 212 Mass. 205. (2) Parol evidence was inadmissible to show that the defendants signed the note as sureties or accommodation makers. Bank v. Douglas, 161 S. W. 608; Lane v. Hyder, 163 Mo. App. 692. (3) The note could only he discharged by one of four ways specified by Sec. 10089, R. S. 1909. Lane v. Hyder, 163 Mo. App. 692; Bank v. Douglass, 161 S. W. 608. The statute excludes every method of discharge of this character of instrument other than those specifically stated in Sec. 10089, R. S. 1909. 2 Sutherland, Statutory Construction (Lewis’s 2 Ed.), p. 916, sec. 491; State v. Mills, 161 Mo. App. 179; State v. Eckhart, 232 Mo. 49, 133 S. W. 321; State v. Fisher, 119 Mo. 351; Ex parte Mansell, 237 Mo. 304; Bradley Co. v. Higborn, 56 Wash. 628; McGrinty v» Trust Go., 212 Mass. 205. (4) Though the defendants did sign the note as accommodation makers, and Long, the payee, had knowledge of that fact, yet they were primarily and absolutely- liable thereon. Sec. 10000, R. S.,1909; Ranse v. Wooten, 140 N. G. 557, 111 Am. St. Rep. 875; Cellers v. Meachem, 49 Ore. 186; Vanderford v. Bank, 105 Md. 164.

      Hiett & Scott and Lamar, Lamar & Lamar for respondents.
    (1) The Negotiable Instruments Law, adopted in in the various States, was to codify the law as it then was, except in cases where a conflict' existed. Where there wás no conflict, the law made no change. Bunker on Negotiable Instruments, pp.' 1 to 21; Brannan on Negotiable Instruments (2 Ed.), pp. 190, 203, 223, 3, 7; Selover on Negotiable Instruments (2 Ed.), p. 7; Ogden on Negotiable Instruments, p. 6, sec. 8; p. 253, p. 256; Brannan on Negotiable Instruments (2 Ed.), sec. 196. (2) The Law Merchant is a part of the common law, and of the law of this State. 7 Cyc. 520-522; Stagg v. Linnenfelter, 59 Mo. 336. (3) In the absence of any provision of the Negotiable Instrument Law, the Law Merchant governs. R. S. 1909, sec. 10165. Codes, which condense and reaffirm in general the rules of the common law, do not repeal the exceptions to these general rules, and no change is to be presumed unless by the most imperative implication. The rule of expressio unius invoked by appellant is not applied to codifying statutes. Brannan on Neg. Ins. (2 Ed.), p. 190; 10 Tale Law Journal, p. 84 (article by Prof. Brewster, member of commission that framed Neg. Ins. Law); Sutherland on Stat. Cons., sec. 156; English on Interpretation of Stat., sec. 127, 205. (4) There is a marked distinction between a holder and a holder in due course. Holder means a payee in possession; a holder in due course is defined by Sec. 10022, R. S. 1909. Long, the payee in the note, is not a holder in due' course, because it was never negotiated to him, but he is simply a holder whose rights are clearly defined by section 1Ó028. It is apparent from this that all defenses are open to repondents that would be open if the note were nonnegotiable. The Negotiable Instrument Law has no application to non-negotiable instruments, and they are not governed by the statute. Crawford on Negotiable Instruments (2 Ed.), p. 5, note A; Bunker on Negotiable Instruments, p. 23 note 1; Brannan on Negotiable Instruments (2 Ed.), p. 1, note 1; Selover on Negotiable Instruments, par. 2; Westburg v. Lbr. Co., 94 N. W. (Wis.) 574. This being true, the common law, or law merchant, would regulate the rights of the parties as to all non-negotiable instruments in this State. Under section 10028, in the hands of any other than a holder in due course, the rights of the parties are the same as though the instrument were non-negotiable; hence it unquestionably follows that as between maker and payee before a note has passed into the hands of a third party in due course, it is open to all the defenses between maker and payee that it ever was, or that a nonnegotiable note is. (5) Section 10089, stating how a negotiable instrument may be discharged, refers to the instrument itself, and not to the discharge or release of a party. Section 10092 expressly provides a different method, whereby a party may be discharged. Ogden on Negotiable Instruments, p. 123, sec. 130; Bunker on Negotiable Instruments, p. Ill, and note. Any defense is valid as between the immediate parties that would be valid in an ordinary contract. As between the immediate parties on a bill or note, no question arises whether the defense is absolute and is inherent in the instrument itself, or whether it is personal, raising-equities between the parties. Ogden on Negotiable Instruments, sec. 142, p. 132. (6) As between the immediate parties, it is competent for defendant to show that he is an accommodation maker, and to set up any equities that may be set up under the law merchant or common law. Crawford on Negotiable Instruments, p. 35, sec. 54, note A; Crawford on Negotiable Instruments, p. 58, sec. 97, note- A; Ogden on Negotiable Instruments, sec. 142, p. 132'; Daniels on Negotiable Instruments (6 Ed.), p. 1477, sec. 1312; Selover on Negotiable Instruments (2 Ed.), p. 325; Brannan on Negotiable Instruments (2 Ed.), p. 117, and note; Fullerton Lbr. Co. v. Snouffer, 117 N. W. (Iowa) 50; Haddock v. Haddock, 85 N. E. (N. Y.) 686; Bank v. Barbour, 149 N. W. (Wis.) 767; Bank v. Edwards, 243 Mo. 563. (7) The testimony shows that Long knew that Mason was the maker for value, and received the whole consideration. The deed of trust recites on its face that Mason is to pay this debt. Giving the note and deed of trust were contemporaneous acts, and they will be construed togther. Brownlee v. Arnold, 60 Mo. 79. (8) To allow to payee of a negotiable note, knowing the relation of the parties to the note and their liability thereon knowing that only one, of such parties is a maker for value and that the others are makers without value, to take from the only one who is a maker for value, knowing him to 'be such, collateral security for such note and then improperly dispose of such security or permit the principal debtor so to do, and thereby deprive the makers without value*of the right to be subrogated, has always been considered so unjust and inequitable as to be condemned by the. courts of every civilized land. Ferguson v. Turner, 7 Mo. 497; Lake-nan v. Trust Co., 147 Mo. App. 485; Colebrook, Collateral Securities (2 Ed.), sec. 209, p. 382, and sec. 212, p. 328; 27 Eng. & Am. Eney. Law (2 Ed.),p. 516. (9) The Negotiable Instrument Law makes no provision for the payee of a note to take collateral security. Now in the event the payee does so do, by what law will we determine the duties and liabilities of such payee as to such security? Evidently not by the Negotiable Instrument Law, because it makes no provisions. Certainly by the lex loci contractus. Houghtaling v. Ball, 19 Mo. 84; Sal-lee v.- Chandler, 26 Mo. 124; State ex rel. v. Cunningham, 6 Mo. App. 263; Roach v. Foundry, 21 Mo. App. 118; Thompson v. Ins. Co., 169 Mo. 12; McKinstrey v. Railroad, 153 M*o. App. 546; 7 Cyc. 637. (10) That the payee of the note having a specific lien on the property of the principal debtor and voluntarily surrenders the lien or loses it by his own negligence the sureties will be discharged to the extent of the value of the lien so discharged or lost has been the declared law of this State ever since 1841. Ferguson v. Turner, 7 Mo. 497; Lakenan v. Trust Co., 147 Mo. App. 485. This was also the Common Law. 27 Eng. & Am. Ency. Law (2 Ed.), p. 516; Colebrooke on Collateral Securities (2 Ed.), sec. 209, p. 382; 3 Kent (13 Ed.), see. 124, p. 195, and English cases cited in Note E. (11) Parol testimony is admissible to show who is principal and who is surety to a note. Garrett v. Ferguson, 9 Mo. 125; Bank v. Wright, 53 Mo. 153; Hardester v. Tate, 85 Mo. App. 624; Ins. Co. v. Broyles, 78 Mo. App. 364.
   RAILEY, C.

The case was certified to this court by the Springfield Court of Appeals, in an opinion by Judge Farrington, concurred in by Robertson, P. J. Judge Sturgis dissented, in a separate opinion. The cause was certified upon the ground that the majority opinion is in conflict with Bank of Senath v. Douglass, 178 Mo. App. 664 (by St. Louis Court of Appeals), and Lane v. Hyder, 163 Mo. App. 688 (by Kansas City Court of Appeals).

The complaint alleges, that on March 25, 1910, defendants, by their joint and several promissory note, a copy of which is filed with petition, promised for value received to pay plaintiff or order the sum of four thousand dollars, one year after the date thereof, with interest from date, at the rate of eight per cent per annum, and if the interest be not paid annually to become' as principal and bear the same rate of interest; that on May 16, 1911, defendants paid on said note $200, and on August 6, 1912, they paid thereon the sum of $595.16, which two payments were credited on said note and discharged all the interest that had accrued and was due on said note to July 24, 1912, leaving the whole of the principal of .same $4000 due on said note.

It is further alleged that, to secure the payment of said note, Peter T. Mason, one of the makers thereof, executed and delivered to plaintiff his deed of trust on lands in Texas County, Missouri, and that since the commencement of this action, plaintiff, on April 4, 1914, caused said deed of trust to he foreclosed, and the same was sold to the highest bidder for $3500; that the costs of said foreclosure amounted to $55.50: that the net amount credited on said note, by virtue of said sale, on April 4, 1914, was $3444.50 leaving a balance due on said note of $1091.61, which, with interest from April 4, 1914, at the rate of eight per cent per annum, is still due plaintiff, etc.

answer of defendants admits that they signed the note sued on in this cause. They allege that defendant, Peter T. Mason, applied to plaintiff for a loan of $4000, executed and delivered the note sued on, and that the other defendants signed said note solely for the accommodation of said Mason; .that the latter received all of the consideration from plaintiff for said note and that neither of the other defendants received any part of the consideration for said note, all of which was known to and understood by the plaintiff, Edwin Long, at the time he accepted the note; that, on the date of the execution of said note, aud as other and additional security thereto, said Mason and wife executed and delivered their deed of trust, by which they conveyed to J. H. Smith, as trustee for plaintiff, about 184.39 acres of land in Texas County, dt scribed in the answer. They further allege, that the above land was of sufficient value to fully secure the payment of said note, and the interest thereon; that they would not have signed or executed said note as securities or joint makers, if they had not known that said deed of trust had been given to plaintiff. They aver that on March 16, 1912, Mason and wife sold and conveyed about 57.15 acres of land ' aforesaid, described in the answer, to one Helton for $2000; that plaintiff released said last described land from the lien of said deed of trust, and only applied on the above note a credit of $595.16; that the release of said land by plaintiff from the lien aforesaid was without the knowledge or consent if these defendants. The answer avers that said deed of trust inured in equity to their benefit, and became in equity security to them for any amount which they might. be required to pay on said note; that the $2000 aforesaid, with the net amount received from the sale of the remaining land in said deed of trust, was and is sufficient to pay off and fully discharge the note sued on; that the land aforesaid, sold to Helton, was worth $2000. They allege that, in equity and good conscience, by reason of the facts aforesaid, they should be released from the payment of said note. They ask that an accounting be had, and that the $2000 aforesaid, should be credited on said note, and for such relief as to the court may seem just and proper in the premises.

Plaintiff demurred to above answer, on the ground that is sets up no legal or equitable defense •*. ' — ’ to the note sued on. The demurrer was overruled.

On June 18, 1914, plaintiff dismissed as to Peter T. Mason, for the reason that he had not been served with process.

It does not appear from the abstract of record that any refly was filed to the above answer, nor was the case tried by plaintiff as though a reply had been filed. On the contrary, plaintiff objected to any evidence in the case on the part of defendants for the reason that the answer sets up no legal or equitable defense to the note sued on. Various objections were made by plaintiff to all the testimony offered by defendants, and the witnesses of the latter were not cross-examined by plaintiff’s counsel during the progress of the trial.

The testimony introduced by defendants, without s^°PPin8’ ^ere 1° consider the competency, etc., of same, sustained the allegations oP the answer.

The case was tried before the court without a jury, and the only declaration of law asked, was by the plaintiff, as follows:

“The court declares the law to be that under the evidence the issues should be found for the plaintiff and his damages assessed at the balance due on the note sued on.” This declaration of law was refused, the plaintiff offered no evidence in rebuttal, the trial court found the issues in favor of the defendants and rendered judgment accordingly. Plaintiff filed his motion for a new trial in due time,- which was overruled, the cause appealed by him to the Springfield Court of Appeals, and by the latter certified to this court as heretofore stated.

I. It is conceded by counsel for appellant, in their reply brief filed in the Springfield Court of Appeals, at pages two and three, that prior to the adopti°n of the present Negotiable Instrument Law, parol evidence was admissible to show that an obtensible maker signed the note as surety.

“Also, that if the payee took a mortgage on real or personal property as collateral security for the payment of the note, and released such collateral without the assent of the surety, the latter was thereby released from his obligation to the extent of the value of the property released.”

The above statement of the law, as it formerly existed, is sustained by many rulings of this court, as well as those of the Courts of Appeals, some of which are as follows: Ferguson v. Turner, 7 Mo. 497; Rice v. Morton, 19 Mo. 263; Furnold v. Bank of the State of Missouri, 44 Mo. 336; Harrison v. Phillips, 46 Mo. 520; Berthold, Admx. of Sarpy, v. Berthold, 46 Mo. 557; Allison v. Sutherlin, 50 Mo. 274; Fulkerson v. Brownlee, 69 Mo. 371; May v. Burk, 80 Mo. 675; Ferguson’s Admr. v. Carson’s Admr., 86 Mo. 673; Benne v. Schnecko, 100 Mo. 250; The State Bank of St. Louis v Bartle, 114 Mo. 276; George v. Somerville, 153 Mo. 7; Burrus v Cook, 215 Mo. 496; Havlin v. Continental Nat. Bank, 253 Mo. 292; People’s Bank of Ava v. Baker, 193 S. W. (Mo. App.) l. c. 632-3; Van Hoose v. Machinery Co., 169 Mo. App. l. c. 63; Petty v. Tucker, 166 Mo. App. l. c. 101; Lakenan v. Trust Co., 147 Mo. App. 48.

Keeping in mind the above principles founded upon both equity and justice, let us proceed to consider the case from appellant’s view point.

II. The uncontroverted answer, as well as the oral testimony adduced at the trial, shows that all the other defendants were accommodation makers for the benefit of Peter T. Mason. Section 10000, Revised Statutes 1909, cited by appellant, reads as follows:

“An accommodation party is one who has signed the instrument as a maker, drawer, acceptor, or endorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party. ’ ’

It may be conceded, for the sake of the argument, that plaintiff is the holder of the note sued on for value, as contemplated by Section 9998, Revised Statutes 1909, relied upon; that as respondents signed said note as makers, they are primarily liable thereon, under the provisions of Section 10161, Revised Statutes 1909, cited by counsel for appellant. Let it also be conceded, that the engagement of respondents to pay the note according to its. tenor and effect was absolute, under the provisions of Sections 1Q030 and 10161, Revised Statutes 1909, cited and relied upon by appellant. What then is the status of the respective parties before the court? As between plaintiff and these respondents, the latter are absolutely liable as accommodation makers, but it is equally true that as between Peter T. Mason and these respondents, the. latter occupy the position of sureties. While the uncontroverted allegations of the answer, and the oral testimony offered and received in support of same, may not be competent to relieve respondents from the position of accommodation makers of said note, yet, such evidence was -clearly admissible for the purpose of showing the- relationship between Mason and the respondents, in order that the latter might assert their equities under the law of subrogation, if it could be legally done in this case.

Upon a careful consideration of our Negotiable Instrument Law (Chap. 86, R. S. 1909), we are of the opinion that it does not undertake to cut off the right of equitable subrogation under the' facts presented in the answer of defendants. The latter are either entitled to assert such rights, in the present litigation, as an equitable extinguishment of plaintiff’s demand, or to pay the note and to maintain an independent action against the plaintiff, under the equitable principles of subrogation, clearly recognized in the array of authorities heretofore cited.

In the recent case of Havlin v. Continental Nat. Bank, 253 Mo. 292, the plaintiff, an accommodation indorser of two promissory notes, recognizing his absolute liability thereon, paid the same. Certain stock was deposited as collateral security with the payee of said notes. The latter sold the stock to an innocent purchaser, and credited the amount of the sale on notes not indorsed by plaintiff. The maker sued the payee for an accounting, alleging that the sale of the stock was illegal, and ‘ recovered in that suit, and the amount of all the notes was credited to the payee, and a surplus was adjudged to belong to the maker, and it was held that plaintiff could recover from the payee the amount of money paid by him, as the debt was twice paid.

The defendants, however, in the case at bar, have seen fit to set up their equitable counterclaim, or cross-action of subrogation, in bar -of plaintiff’s right of recovery. The assertion of this right is not in conflict with any provision of the Negotiable Instrument Law, but on the contrary, proceeds upon the theory that respondents owe plaintiff the amount due on said note and have an equitable claim of subrogation against him, for the loss they have sustained by reason of the release to Helton of the 57 acres of land from said deed of trust, which should have been held for their benefit, as security for his indebtedness.

Section 1806, Eevised Statutes 1909, provides, that: “The answer of the defendant shall contain: First, . . . second, a statement of any new matter constituting a defense or counterclaim, in ordinary and concise language, without repetition.”

Section 1807, Eevised Statutes 1909, reads as follows :

“The counterclaim mentioned in the last section must he one existing in favor of a' defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action: First, a cause of action arising out of The contract or transaction set forth in the petition as the foundation of the plaintiff’s claim, or connected with the subject of the action; second, in an action arising on contract, any other cause of-action arising also on contract, and existing at the commencement of the action. The defendant may set forth by answer as many defenses and counterclaims as he may have, whether they be such as have been heretofore denominated legal or equitable, or both. They must each be separately stated, in such manner that they may be intelligibly distinguished, and refer to the cause of action which they are intended to answer.”

The first clause of the last mentioned section, in express terms, provides for the enforcement of an equitable counterclaim, based upon the facts pleaded in the answer.

"We are therefore of the opinion, that the facts as alleged in defendant’s answer are sustained by- the pleadings as well as the oral evidence offered at the trial. The conclusion reached by the Springfield Court of Appeals, in affirming the ease, regardless of the reasons assigned therefor, meets with our approval.

The judgment of the trial court is accordingly affirmed.

Brown, C., concurs.

PER CURIAM. — The foregoing opinion of Railet, C., is adopted as the opinion of Court in Banc.

Williams, J., concurs in a separate opinion in which- Graves, G. J., and Blair and Walker, JJ., concur; Faris, J., concurs in the result; Bond, J., dissents, and concurs in the views expressed by Sturgis, J., in Long v. Shafer, 185 Mo. App. l. c. 654; Woodson, J., not sitting.

WILLIAMS, J.

(concurring)- — -I concur in Paragraph One and in the result of the majority opinion, hut am unable to agree with the reasons set forth in Paragraph Two thereof.

I am of the opinion that respondents’ liability on the note is controlled-by law other that than contained in the Negotiable Instrument Act.

Appellant, the payee, should not be considered as “a holder in due course” within the meaning of the Negotiable Instrument Act. [Sec. 10022, R. S. 1909; 3 R. C. L., par. 238, page 1032; Vander Ploeg v. Van Zuuk, 135 Iowa, 350; Long v. Shafer (this case in the Springfield Court of Appeals), 185 Mo. App. 641, l. c. 648.]

Since then the appellant, the payee, is a holder other than in due course, the note is “ subject to the same defenses as if it were non-negotiable.” [Sec. 10028, R. S. 1909.]

Prom the foregoing it follows that the right of the parties under the present situation are in no manner changed by the provisions of the Negotiable Instrument Act and that the respondents, under the authorities cited in Paragraph One of the majority opinion, .are released from further liability on the note.

Graves, C. J., Walker and Blair, JJ., concur herein.