author: BOND J.

text:
    MARY S. LIEBING v. MUTUAL LIFE INSURANCE COMPANY, Appellant.
    In Banc,
    December 12, 1918.
    1. CONTRACTS: Governed by Place of Consummation or Performance. Absent any contrary intention, the validity, obligation and interpretation of a contract relating to personal property are governed by the law of the place where it is made. But no contract is consummated until the final act essential to its obligation is performed; and if that final act is the acceptance of its terms by one of the parties in another state and they are there accepted, it is governed by the laws of that state. And if it appears on the face of the contract that its good-faith performance is to be in some jurisdiction other than that of the lex loci contractus, or that it is made with reference to the laws of such other jurisdiction, then the law of the place of performance governs.
    2. -: -: Insurance Loan Agreement: Non-forfeiture Statute. A loan agreement, made by the pledge of an insurance policy, is not subsidiary to the policy in the sense that the restrictions of the non-forfeiture statute (Sec. 6946, R. S. 1909) are as applicable to it as to the policy itself. Though the policy be a Missouri contract and suit is brought on it in this State, the loan agreement is governed by the laws of the state in which the final act essential to its obligation is consummated, or by the laws of the jurisdiction which it states shall govern; and if the loan agreement states that the policy may be cancelled upon failure to pay the loan, the insurance company, when sued on the policy by the beneficiary after the insur'ed’s death, should be permitted to show that, upon ' failure to pay the loan, it cancelled the policy in strict compliance with the terms of the loan agreement and in strict conformity to the laws of the state by which it was governed. [Following N. Y. Life Ins. Co. v. Head, 234 U. S. 148, and N. Y. Life Ins. Co. v. Dodge, 38 Sup. Ct. Rep. 337.]
    Appeal from St. Louis City Circuit Court. — Hon. Charles B, Davis, Judge,

      Reversed and remanded.

      Fordyce, Holliday é White for appellant; Frederick L. Allen of counsel.
    (1) The court erred in overruling the objection to the introduction of any evidence and the demurrers to the evidence offered at the close of plaintiff’s case and of the entire case; for this suit was based upon Sec. 7897, R. S. 1899, and said statute, if construed and applied so as to prevent the defendant from deducting the entire indebtedness on the policy from three-fourths of the net reserve, or so as to invalidate the loan agreement and pledge entered into between insured, plaintiff and defendant in this case., is unconstitutional and void in the following respects: (a) Because it denies to the defendant the equal protection of the laws guaranteed to it by the Fourteenth Amendment to the Constitution of the United States; (h) because it deprives the defendant of its liberty without due process of law as guaranteed to it by the Fourteenth Amendment to the Constitution of the United States; and (c) because it deprives the defendant of its property without due process of law as guaranteed to it by the Fourteenth Amendment to the Constitution of the United States. New York Life Ins. Co. v. Head, 234 U .S. 161,165; New York Life Ins. Co. v. Dodge, 38 Sup. Ct. Rep. 337; Allgeyer v. Louisiana, 165 U. S. 578; Scott v. McNeil, 154 U. S. 34; C., B. & Q. v. Chicago, 166 U. S. 226; Twining v. New Jersey, 211 U. S. 78; Brand v. Union Elev. R. Co., 238 II. S. 586. (2) The court-erred in excluding evidence as to the laws of New York. The evidence showed that the loan agreement and pledge were made in New York and that the foreclosure took place there; defendant had pleaded these facts in its answer and had pleaded the laws of New York; therefore, to refuse to permit proof of these laws was to deny full faith and credit to the public acts, records and judicial proceedings of the State of New York, in violation of Section 1 of Article 4 of the Constitution of the United States. New York Life Ins, Co. v. Head, 234 U, S, 149; New York Life Ins. Co, v. Dodge, -38 Sup. Ct. Rep. 337; Hartford Life Ins. Co. v. Barber, 38 S. C. Rep. '54; Supreme Counsel of Royal Arcanum v. Green, 237 U. S. 531; Tennent v. Union Central Life, 133 Mo. App. 351; Ruane v. Manhattan Life Ins. Co., 194 Mo. App. 222; Chouteau v. Allen, 70 Mo. 329; Bush v. Block, 193 Mo. App. 709; Ins. Co. v. Bank, 160 Ky. 538; Milliken v. Pratt, 125 Mass. 374; Smoot v. Judd, 161 Mo. 673; Lange v. N. Y. Life, 254 Mo. 488; Hauck v. Sharpe, 83 Mo. App. 385; Tremain v. Dyott, 161 Mo. App. 217, 221; Combes v. Knowlson, 193 Mo. App. 554; Machine Co. v. Tomlin, 174 Mo. App. 512; Tennent v. Union Central, 133 Mo. App. 345; Miller v. Tiffany, 1 Wall. 298, 310; Scudder v. Union Bank, 91 U. S. 406; Pritchard v. Norton, 106 U. S. 124, 136; Liverpool Co. v. Phenix, 129 U. S. 397, 447; Coghlan v. Railroad, 142 U. S. 101, 109; London Assur. v. Companhia, 167 U. S. 149, 160; Pinney v. Nelson, 183 U. S. 144; Bedford v. Eastern B. & L., 181 U. S. 227, 242; Int. Harvester v. McAdam, 142 Wis. 114; N. Y. Life v. Scheuer, 73 So. (Ala.) 409; Stone v. Old Colony, 212 Mass. 459; Hibernia Bank v. Lacombe, 84 N. Y. 367; Fidelity v. Harris, 94 Texas, 25; Wheeler v. Business Men’s Association, 247 Feb. 677. (3) The court erred in refusing to instruct that the defendant was entitled, under the Amendment of 1903, to deduct the entire indebtedness on this policy from three-fourths of the net reserve, and in so ruling denied to the defendant the equal protection of the laws and deprived defendant of its property without due process of law, in violation of Section 1 of the Fourteenth Amendment to the Constitution of the United States. Laws 1903, p. 208; Kaumerick v. Castleman, 21 Mo. App. 487; State v. Scheck, 238 Mo. 429; People v. State Board, 20 Colo. 220; Westerman v. Supreme Lodge, 196 Mo. 670; Rosenplanter v. Provident Sav. Life, 96 Fed. 721; Boswell v. Security Mutual, 119 N. Y. App. Div. 723.
    ■ James J. O’Donohoe for respondent.
    (1) The policy and loan agreement in this case are Missouri contracts, and being Missouri contracts, the statutes then in force in Missouri entered into and became part thereof, as much so as if copied therein. Liebing v. Ins. Co., 269 Mo. 509; New York Life v. Lodge, 246 IT. S. 357; Lukens v. Ins. Co., 269 Mo. 574; McKinney v. Ins. Co., 270 Mo. 305; Cravens v. Ins. Co., 148 Mo. 583; Horton v. Ins. Co., 151 Mo. 604; "Whittaker v. Ins. Co., 133 Mo. App. 664; New York Life v. Cravens, 178 U. S. 389; Equitable Life Assur. Soc. v. Clements, 140 H. S. 226; Iowa State Trav. Men’s Assn. v. Euge, 242 Fed. 762; Hicks v. Nat. Life, 60 Fed. 690; Nat. Union v. Marlow, 74 Fed. 775; Equitable Life Assur. Soc. v. Winning, 58 Fed. 541; Fletcher v. New York Life, 13 Fed. 526; Bailey v. Hope Ins. Co., 56 Me. 474; Stevens v. Eaisin Fertilizer Co., 87 Md. 679; Expressman’s Assn, v. Hurlock, 91 Md. 585. The loan agreement cannot affect the'policy, for it is not a contract independent of it. Smith v. Ins. Co., 173 Mo. 329; Burridge v. Ins. Co., 211 Mo. 158; Christensen v. Ins. Co., 152 Mo. App. 551; Paschedag v. Ins. Co., 155 Mo. App. 185; Gillen v. Ins. Co. 178 Mo. App. 89; Mun v. Ins. Co., 181 S. W. (Mo. App.) 606; Crowe v. Ins. Co., 190 S. W. (Mo. App.) 960; McCall v. Ins. Co., 196 Mo. App. 318; McKinney v. Ins. Co., 270 Mo. 305; Dannehauser v. Wallenstein, 169 N. Y. 199; McDonnell v. Ins. Co., 85 Ala. 412; Merritt v. Ins. Co., 55 Ga. 103; Symonds v. Ins. Co., 23 N. H. 27. The loan agreement is a personal obligation of the parties who signed it, namely, the insured and plaintiff. Equitable Life v. De Lisle, 182 S. W. (Mo. App.) 1026; Gillen v. Ins. Co., 178 Mo. App. 89. Besides, the policy stipulates: “That in any settlement of this contract all outstanding indebtedness hereon to the company must be paid.” But if the loan agreement is a contract independent of the policy, then the law of Missouri is applicatory, for reasons, among others, that the policy was delivered as a pledge to the defendant in Missouri, and in pledge contracts the law of the place of delivery of the thing pledged or the ownér’s domicile controls. Hervey v. E. I. Locomotive Works, 93 U. S. 664; Loftus v. F. & M. N. Bank, 133 Pa. St. 97; 1 Wharton, Conf. Laws (3 Ed.), sec. 297, et seq.; Story, Conf. Laws (8 Ed.), sec. 383 et seq. Contracts of insurance or loan agreements made by a New York company in another state are not subject to the New York laws unless the policies or loan agreements so provide; and neither so provided in this case. Mutual Life v. Cohen, 179 U. S. 262; Mutual Life v. Hill, 193 U. S. 551; Metropolitan Life v. Bradley, 98 Tex. 230. The fact that the loan was payable in New York did not make the loan agreement a New York contract. Liverpool & Great Western Steam Company v. Ins. Co., 129 Ú. S. 397. The law of the place of performance always yields to the lex fori and lex loci contractus. And even if the loan agreement was accepted in New York, notice of acceptance and payment of part of the proceeds of the loan by the defendant’s Missouri agent to the insured were conditions precedent, and, hence, made the loan agreement a Missouri contract. There was part performance in Missouri, namely, the payment of part of the loan to the insured by defendant. Crohn v. IJ. C. T., 170 Mo. App. 273; Perry v. Ins. Co., 67 N. H. 291; Heiman v. Ins. Co. 17 Minn. 153; Markey v. Ins. Co., 126 Mass. 158; Scudder v. Union Nat. Bank, 91 U. S. 406; Union Bank v. Chapman, 169 N. Y. 543. (2) Even if the New York laws were applicable at the beginning, they cannot now be invoked, for no new issues can be made nor new defenses asserted after the case comes down for retrial. “If a case is to be tried by piecemeal the end of a lawsuit would never be reached. At the trial of the case all issues and defenses should be brought forward.” McLure v. Bank, 263 Mo. 128; Lilly v. Menk, 143 Mo. 137; Rasch v. Ins. Co., 201 S. W. (Mo. App.) 919; Shearlock v. Ins. Co., 193 Mo. App. 430; Bange v. Legion of Honor, 153 Mo. App. 154; Carp v. Ins. Co., 116 Mo. App. 528; Livery Co. v. Railroad, 113 Mo. App. 144; Johnson v. Blell, 61 Mo. App. 46; Singer Mfg. Co. v: Givens, 35 Mo. App. 608. The same rule obtains in sister states. In re. Estate of Cook, 143 Iowa, 733; Mantle v. Dabney, 47 Wash. 394; Barrett v. McAllister, 35 W. Ya. 116, 117; Williams v. Banks, 19 Md. 36; Bassett v. Shepardson, 57 Mich. 428; City of Louisville v. Muldoon, 20 Ky. Law Rep. 1576; Sears’ Exr. v. Marshall, 83 Ya. 383; State v. Board of County Commrs., 60 Neb. 570; Murphy v. Plankington Bank, 20 S. D. 178; Gillespie v. Fulton Oil Co., 244 111. 14; Ebelhar v. German-American Security Co.’s Assignee, 119 S. W. (Ky. C. of A.) 220; Wood v. Kerkeslager, 227 Pa. 536; Brewster y. Meng, 76 Neb. 560; Hook v. Richeson et ah, 115 111. 445; Butler v. Thompson, 52 W. Ya. 311; McAllister v. Clark, 33 Conn. 252; Continental Casualty Co. v. Semple, 112 S. W. (Ky. C. of A.) 1122; In re Quaker Realty Co., 127 La. 207. The rule is the same in cases of involuntary nonsuit. Bange v. Legion of Honor, 153'Mo. App. 168; Moore v. Nat. Acc. Soc., 49 Wash. 312; Strehlau v. Lumber Co., 152 Wis. 589; Cartin v. Railroad, 43 S. C. 221; Elder v. Railroad, 26 Idaho, 209, cases cited, including Lilly v. Menke, 143 Mo. 137, and Peery v. Railroad, 122 Mo. App. 177. Before this case went to trial the first time, the defense founded on the laws of New York was open to defendant within the legitimate scope of the pleadings. It is now too late to invoke that defense, for all “questions which were raised or could have been raised [on the first trial] are now res adjudicata.” Castleman v. Buckner, 202 S. W. (Ky. App.) 681; McKinney v. State, 117 Ind. 26. The defendant in its first and second answers admitted that the non-forfeiture statutes of Missouri were applicable and this court decided that said statutes “disposed of the whole matter,” and defendant should not be permitted to amend by denying facts already admitted. Harrison’s Admr. v. Hastings, 28 Mo. 346. Invoking the Missouri statutes waives the New York statutes. Michael v. Ins. Co., 10 La. Ann. 737. Neither should an amendment be allowed where the proof required to sustain it would have to be essentially different from the proof required to sustain the original pleading. Scovill v. Glasner, 79 Mo. 449; Maloney v. Real Estate B. & L. Assn., 57 Mo. App. 390. Where a petition is dismissed (except “without prejudice”) it will be presumed that the merits were considered and the judgment is final. And in this case the petition was unconditionally dismissed. 1 Black on Judgments, sec. 27; 2 Black on Judgments, sec. 722; Pond v. Huling, 125 Mo. App. 482. And “A final judgment on a demurrer to a-petition which goes to the merits makes the whole matter res adjudicate/,.” Ins. Co. v: Smith, 117 Mo. 261; Johnson v. Railroad, 243 Mo. 278. Upon the same principle the doctrine of res adjudicata is applied to direct reversals, without remanding where all the facts have been considered and passed upon. Schmelzer v.' Furniture Co., 252 Mo. 12; Strottman v. Railroad, 228 Mo. 154. “A determination by the Appellate Court on a former appeal that the evidence wias sufficient to take the case to the jury on all the issues raised becomes the law of the case whether right or wrong.” White v. Int. Text Book Co., 156 Iowa, 210. Before this action was instituted, the defendant put non-liability on the ground that “there is no decision of the Supreme Court of Missouri conclusively deciding the points arising in the present case,” and upon that ground alone. The New York law was not named as a defense. And if there is any proposition more firmly established than any other, it is that “an insurance company, when sued upon a policy, cannot, after the beginning of suit make any objections to paying the loss that are different from or additional to those which if stated before.” Shearlock v. Mutual Life, 193 Mo. App. 430; Castner v. Ins. Co., 50 Mich. 273; Wolf v. District Grand Lodge, 102 Mich. 23; Brink v. Ins. Co., 80 N. Y. 108; Smith v. Ins. Co., 107 Mich. 270; Taylor v. Columbia League, 135 Mich. 231; Ins. Co. v. Allen, 128 Ala. 451; Snyder v. Mystic Circle, 122 Tenn. 248; Ins. Co. v. Waugh, 60 Feb. 348; McCormick v. Ins. Co., 163 Pa. 184; Western & A Pipe Lines v. Ins. Co., 145 Pa. 346; Ins. Co. v. Elliott, 60 Ind. App. 112; Ins. Co. v. Ray, 196 Ala. 425; Ward v. Ins. Co., 69 Ore. 347; Milling Co. v. Ins. Co., 127 Iowa, 314; Jacobs v. Mexico Sugar & Refining Co., 115 App. Div. (F. Y.) 499; Railway Co. v. McCarthy, 96 U. S. 258. “He who did not speak, when he should have spoken, shall not he heard now that he should be silent.” Quinlan v. Reiser, 66 Mo. 605; York v. Ins. Office, 113 N. E. (Ind. App.) 1023; Ins. Co. v. Grove, 215 111. 299. (3) To require the defendant to pay the policy will violate certain named sections of the state and national constitutions is an entirely insufficient averment to raise a constitutional question, especially to challenge the constitutionality of Sec. 7897, R. S. 1899, for the constitutional inhibition is directed solely against certain legislative acts and not against erroneous judgments. Stegall v. Am. Pigment Chemical Co., 263 Mo. 719; Kemper Mill & Elevator Co. v. Railway, 178 S. W. (Mo.) 502; Powder Mfg. Co. v. Railroad, 196 Mo. 668, 670; Hilgert v. Barber Asphalt Pav. Co., 173 Mo. 319; Woody v. Railway, 173 Mo. 547; Kansas City v. Baird, 163 Mo. 196; Hulett v. Railway, 145 Mo. 36; Mining Co. v. Casualty Co., 161 .Mo. App. 194; Paving Co. v. O’Brien, 128 Mo. App. 285; N. 0. Waterworks v. La. Sugar Co., 125 U. S. 18; N. O. Waterworks v. La., 185 U. S. 350. A constitutional question is a grave one and hence must be lodged at the first opportunity, or it will be deemed to have been waived. “If it can be appropriately and naturally raised in the pleadings and thereby lodged in the record proper, such is the time and place to raise it.” Littlefield v. Littlefield, 227 Mo. 163; Deiner v. Sutermeister, 266 Mo. 514; Speer v. Railroad, 264 Mo. 265; Miller v. Connor, 250 Mo. 677; George v. Railroad, 249 Mo. 199; Milling Co. v. Blake, 242 Mo. 31; Ross v. Grand Pants Co., 241 Mo. 296; Wooley v. Mears, 226 Mo. 41; Hartzler v. Railway, 218 Mo. 562; Lohmeyer v. Cordage Co., 214 Mo. 685. Apart from exceptional cases (in which the instant one is not included) the constitutional question cannot be raised for the first time either in the instructions, in the motion for a new trial or in the motion in arrest. The question must be raised in the pleadings and kept alive in the instructions and motions, otherwise the issue will be considered waived and abandoned. Mercantile Trust Co. v. Lyon, 195 S. W. 1032; State ex rel. v- Railroad, 262 Mo. 735; Dubowsky v. Binggeli, 258 Mo. 201;. Piekel v. Piekel, 243 Mo. 666; Howell v. Sherwood, 242 Mo. 540; State v. Gamma, 215 Mo. 103; Shell v. Railway, 202 Mo. 339; Railroad v. Adams, 180 U. S. 38. The time for raising a constitutional" question is determined by the state practice and a decision of the state court thereon is binding on the Supreme Court of the United States. Railway v. Burrus, 244 U. S. 103; Railway v. Mims, 242 U. S. 535; Ins. Co. v. McGrew, 188 U. S. 291; Eastern Bldg. & Loan Assn. v. Welding, 181 U. S. 49. And when the decision of the State Court is placed upon a non-federal ground such as state practice or estoppel, the decision is binding on the Federal Supreme Court. Enterprise Irrig. Dist. v. Canal Co., 243 U. S. 164; Railway Co. v. Purdy, 185 U. S. 148; Layton v. Missouri, 187 U. S. 356; Jacobi v. Alabama, 187 U. S. 133; Brooks v. Missouri, 124 U. S. 394. Sec. 7897, R. S. 1899, has been held constitutional in the following cásese Cravens v. Ins. Co., 148 Mo. 583; Ins. Co. v. Cravens, 178 U. S. 389; Horton v. Ins. Co., 151 Mo. 604; Bur-ridge v. Ins. Co., 211 Mo. 403; New York Life v. Dodge, 246 U. S. 357. The constitutionality of said statute has been pronounced “a dead question.” Turner v. Land & Timber Co., 259 Mo. 15; Schmidt v. United Order of Foresters, 259 Mo. 491; Dennis v. Modern Brotherhood of America, 231 Mo. 211. The judicial construction of a statute in prior cases enters into and becomes a part of the contract. Hence the eases of Cravens v. New York Life, 148 Mo. 583, s. c. 178 U. S. 389, and Horton v. New York Life, 151 Mo. 604, became constituent elements of the policy in suit and constituted a part of the consideration for entering into the contract; and a decision now holding the non-forfeiture statute .unconstitutional to affect the policy in question would be an impairment of contract within the meaning of the State and National Constitutions. State ex inf. v. Missouri Athletic and St. Louis Clubs, 216 Mo. 604; Wall v. Travis Co., 174 U. S. 499; Douglas v. County of Pike, 101 U. S. 677; Louisiana v. Pilsbury, 105 U. S. 278; Lowenstein v. Casualty Co., 88 Fed. 478; Casualty Co. v. Waterman, 161 111. 636; Collier v. Life Assn., 119 Fed. 617; Burgess v. Seligman, 107 U. S. 20; Gelpicke et al. v. The City of Dubuque, 1 Wall. 175; Havemeyer v. Iowa Co., 3 Wall. 294; Mitchell v. Burlington, 4 Wall, 270; Schmidt v. Foresters, 228 Mo. 698; Wilkes Co. v. Coler, 180 U. S. 506; Loeb v. Columbia Twp., 179 U. S. 472; Stanley Co. v. Coler, 190 U. S. 437. In the absence of the Missouri non-forfeiture statutes the plaintiff is entitled to recover for the following reasons, namely: The policy contains no forfeiting stipulation for failure to pay a loan and the Court will not supply one. Tetley v. McEImurry, 201 Mo. 394; Haas v. Ins. Co., 84 Neb. 682; Dezell v. Casualty Co., 173 Mo. 253; Gruwell v. K. & L. of S., 126 Mo. App. 496. Neither the loan agreement nor the rules of the defendant form a part of the policy because not indorsed on the policy, set forth therein, nor attached thereto.- There is no reference whatever to the loan agreement in the policy. Miller v. Ins. Co., 168 Mo. App. 330; McCarthy v. Ins. Co., 46 Nat. Corp. Eep. 287; Snyder v. Ins. Co., 13 Wend. (N. Y.) 92; McCullom v. Ins. Co., 61 Mo. App. 352; Cole, Agt, v. Ins. Co., 63 How. Pr. (N. Y.) 442; Mutual Life v. Allen, 212 111. 134; Equitable Life Assur. Soe. v. Golson, 159 Ala. 508. The incontestability stipulation eliminates all defenses not accepted in that provision and non-payment of'loans is not excepted. Harris v. Ins. Co., 248 Mo. 304; 2 Bacon (4 Ed.) secs. 447, 448; Arold v. Equitable Assur. Soc., 228 Fed. 157; Ins. Co. v. McGinnis, 180 Ind. 16; Williams v. Ins. Co., 189 Mo. 70; Mitchell v. Supreme Lodge, 155 111. App. 183; Kelly v. North American Union, 146 111. App. 611; Loyal Americans of the Eepublic v. Mayer, 137 111. App. 574; Ins Co. v. Eobinson, 104 Ga. 256; Ins. Co. v. Fitzgerald, 143 Ga. 725; Mutual Eeserve v. Austin, 142 Fed. 398. (4) With respects to loans the agreement was that they should be made in conformity with the defendant’s rules in force when the policy was issued. Therefore, it is upon these rules — and these rules alone — that the right of forfeiture for non-payment of a loan can be predicated. The defendant failed to plead or prove said rules, although where a forfeiture is relied on its conditions must be pleaded and proven with technical accuracy and completeness. The loan agreement cannot enlarge on the policy. Burchard v. W. C. T. A., 139 Mo. App. 606; Chadwicks v. Triple Alliance, 56 Mo. App. 463; Bozeman’s Admr. v. Ins. Co., 130 Ky. 584; Francis v. Ins. Co., 243 Pa. 380. (5) The stipulation in the loan agreement for forfeiture and confiscation of the policy for non-payment of the loan is void' under Missouri common law. Parties cannot, under that law, make a valid agreement that there shall be no redemption after default. And by force of Sec. 7184, R. S. 1909, tbe stipulation is void because usurious extortion. Sheppard v. Wagner, 240 Mo. 409; Smith v. Becker, 192 Mo. App. 597. Such stipulations have been denounced as void under the common law by the courts of the sister states; and they are null, too, under the civil and Roman laws. Luckett v. Townsend, 3 Tex. 119, 49 Am. Dec. 723 (and note);' Stephens y. Sherrod, 6 Tex. 301; Smith v. Omartz Mining Co., 14 Cal. 242; Brother v. Saul, 11 La. Ann. 222; 4 Kent’s Comm., pp. 139-140; Story’s Comm. Bailments (9 Ed.), secs. 345, 346; Hughes v. Johnson, 38 Ark. 285; Vickers v. Batter-shall, 32 N. Y. Supp. 314; Palmer v. Mutual Life, 121 Minn. 395; Mutual Life, v. Twyman, 122 Ky. 513; Milliken-Helm Com. Co. v. Albers Com. Co., 244 Mo. 38; Greer v. Lafayette County Bank, 128 Mo. 559; Wood v. Matthews, 73 Mo. 477; Wilson v. Drumrite, 21 Mo. 325; Smith v. Ins. Co., 173 Mo. 340; Ins. Co. v. Evans, 136 Ky. 391; Ins. Co. v. Grigsby, 10 Bush. 310; Montgomery v. Ins. Co., 14 Bush. 51; Ins. Co. v. Van Meters, Admr., 137 Ky. 4; Drury’s Admx. v. Ins. Co., 115 Ky. 681; Toplitz v. Bauer, 161 N. Y. 325; Bailey v. Am. Deposit Co., 52 App. Div. (N Y.) 406; Ins. Co. v. Baker, 85 111. 410; Nashville Trust Co. v. First Nat. Bank, 123 Tenn. 617; Livingston v. Story, 11 Pet. (U. S.) 351; Groeltz v. Cole, 128 Iowa, 340; Seymour v. Ives, 46 Conn. 109; Ins. Co. v. Curry, 115 Ky. 100; McEachern v. Ins. Co., 15 Ga. App. 222. In the absence of statute, the pledgee cannot confiscate the pledged property. Indeed, he is bound to sell it, and he cannot even become a purchaser at the sale. Easton v. German-American Bank, 127 U. S. 532; Pauley v. State Loan, Etc., Co., 165 U. S. 606; Harmon v. Nat. Bank, 172 U. S. 644.
   BOND J.

This is the second appeal in this ease. On the former appeal the question presented was the propriety of an adverse instruction, under the constraint of which plaintiff took a nonsuit with leave to move to set it aside. The evidence in the case and the points then in judgment are set 'out in 269 Mo. 509.

Upon the remand of the former appeal the pleadings were reformed, and submitted, among other issues, the applicability of the statutes of Missouri to a loan agreement made by the assured with defendant, secured by a pledge of the policy in suit.

The loan agreement, of date October 12, 1904, was to the effect that the Mutual Life Insurance Company of New York lent to Frederick W. Y. and Mary S. Blees, the sum of $9550. From this amount the company deducted the sum of $4291.50 as premium to September 29, 1905, and $468 as interest thereon. This agreement also contained the following:

“The receipt of the foregoing amount as a loan is hereby acknowledged upon the pledge as hereinafter set forth in Policy No. 1207072 in said company. And the said parties of the second part agree to repay the said sum of $9550 to the company at its head office, Nassau, Cedar and Liberty Streets, in the City of New York, on the 29th day of September, 1905.

“In consideration of the amount of said loan the parties of the second part hereby assign, transfer and set over all of their right, title and interest in and to said Policy No. 1207072 issued by said company on the life of Frederick W. Y. Blees, together with any and all moneys which may be or become payable under the same, to the company as collateral security for the payment of said loan with interest; the said parties 'of the second part will forever warrant and defend the title of the said company to the said policy.

“In the event of default in the payment of said loan on the date hereinabove mentioned, the company is hereby authorized at its option, without notice and without demand for payment, to cancel said policy, and apply the customary cash surrender consideration then allowed by the company for the surrender for cancellation of similar policies, namely, $9550 to the payment of said loan with interest, the balance, if any, to be payable to the parties entitled thereto on demand, or the company may at its own option renew said loan for one year or less period on the written request of any one of the parties of the second part hereto, and with-' out any further notice to any one of the parties of the second part.”

The policy pledged for this loan agreement was issued on September 29, 1901. When the above loan agreement was sent to the home office of the defendant in New York and accepted, and after the deductions as therein provided for, a check for the remainder, drawn upon the American Exchange Bank of New York, was forwarded to the assured and subsequently paid. No further premiums were ever paid on the policy nor was the loan paid at its maturity, to-wit, September 29,1905.

Thereafter, on November 15, 1905, the defendant exercised the right under the loan contract to foreclose the pledge of the policy and applied the full cash surrender value to the extinguishment of the loan and cancellation of the indebtedness and the policy.

Frederick W. Y. Blees, the assured, before his death on September 8, 1906, and before making the loan, assigned the policy in question to his wife, who jointly with him executed the loan agreement. About six years after the death of her husband, the wife, who had remarried, brought the present action. On the trial the court gave a peremptory instruction to find for plaintiff, re-suiting in a judgment for $92,069.28. Defendant duly appealed.

II. The decisive question now presented relates to the action of the trial court in excluding all evidence as to the laws of New York.

Defendant pleaded that the loan agreement and pledge of the policy was a contract made in New York and governed by its laws, which were also pleaded in defendant’s answer on the last trial. The trial judge took the view that this .contract and pledge were covenants subsidiary to the policy and not independent and, therefore, as much under the restrictions of the applicatory statutes of.this State (R. S. 1909, sec. 6946) as the policy itself. That view was in accord with the former decisions of this State.. [Head v. Ins. Co., 241 Mo. 403, and cases cited.]

This case has been reviewed by the Supreme Court of the United States (N. Y. Life Ins. Co. v. Head, 234 U. S. 148), but that court did not deem it necessary to the conclusion there expressed, to rule upon the relation of a loan agreement to the contract contained in the policy — i. e. whether subsidiary or independent — since its view, that the loan agreement before it was not subject to the terms of the forfeiting statute of Missouri (R. S. 1909, sec. 6946), was based upon the postulate •that the State of Missouri could not control “all subsequent agreements” by the parties to a policy of insurance taken out in that State, if entered into “in other jurisdictions by persons not citizens of Missouri and lawful when made.” [N. Y. Life Ins. Co. v. Head, supra, l. c. 165.] To the extent that the loan contract (whether subsidiary or independent as to a policy) in the Head case was not subjected to the non-forfeiting statute (R. S. 1909, sec. 6946) governing the policy, the previous rulings of this court were disapproved.

While the parties to the loan agreement in the Head case were non-residents of Missouri, that fact was not a determining one in the decision of the Supreme Court of the United States; for in the subsequent decision of N. Y. Life Ins. Co. v. Dodge (38 U. S. Sup. Ct. Rep. 337) it distinctly appeared that the assured Dodge and his wife, the beneficiary, were at all times citizens and residents of Missouri, and that they borrowed money on a pledge of the policy, sending it and the loan contract to New York for acceptance according to the agreement signed by them in Missouri. In disposing of the issue arising on that state of facts, it was said, page 339:

“That the policy when issued to Dodge became a _ Missouri contract, subject to its statutes, so far as valid and applicable, is undisputed and clear. The controlling doctrine in that regard was announced and applied in Equitable Life Ins. Co. v. Clements, 140 U. S. 226; N. Y. Life Ins. Co. v. Cravens, 178 U. S. 389, and Northwestern Life Ins. Co. v. Riggs, 203 U. S. 243.

In each of those cases the controversy related to the interpretation and effect of an original policy — not a later good-faith agreement between the parties. We held that to the extent there stated the State had power to control insurance contracts made within its borders. With those conclusions we are now entirely content; but they do not rule the question presently presented. Here the controversy concerns the effect of the state statute upon agreements between the parties made long after date of the policy and action taken thereunder; their essential fairness and accordance wit’. New York laws are not challenged.

“Considering the circumstances recited above, w¿ think competent parties consummated the loan contract now relied upon in New York where it was to be performed. And, moreover, that it is one of a kind which ordinarily no state by direct action may prohibit a citizen within her borders from making outside of them. It should be noted that the clause in the policy providing ‘cash loans can be obtained by the insured on the sole security of this policy on demand,’ etc., certainly imposed no obligation upon the company to make such a loan if the Missouri statute applied and inhibited valid hypothecation of the reserve as security therefor as defendant in error maintains. She cannot, therefore, claim anything upon the theory that the loan contract actually consummated was one which the company had legally obligated itself to make upen demand. ’ ’

The court then referred to its previous ruling in the Head case (234 U. S. 149) reciting the fact under which is held the loan contract in that case to be free from the control of the non-forfeiting statute of this State (R. S. 1899, sec. 7897; R, S. 1909, sec. 6946) although the policy itself was a Missouri contract, and concluded the discussion, viz:

“Under the laws of New York where the parties made the loan agreement now before us, it was valid; also it was one which the Missouri Legislature could not destroy or prevent a citizen within its borders from making beyond them by direct inhibition; and, applying the principles accepted and enforced in Insurance Company v. Head, we think the necessary conclusion is that such a contract could not be indirectly brought into subjection to statutes of the State and rendered ineffective through a license authorizing the insurance company there to do business. As construed and applied by the Springfield Court of Appeals, Section 7897 (R. S. Mo. 1899) transcends the power of the State. To hold otherwise would permit destruction of the right — often of great value — freely to borrow money upon a policy from the issuing company at its home office and would, moreover, sanction the impairment of that liberty of contract guaranteed to all by the Fourteenth Amendment.”

Although meeting with a sharp dissent, the foregoing ruling is paramount and imperative on this court in all cases like the present, subject to review by the Supreme Court of the United States.

III. The question, therefore, to he ruled is whether the loan agreement and pledge of the policy in the instant case are governed by the laws of New York. This is determinable by the principles of law governing the making, the validity, the interpretation and the enforceability of contracts made under circumstances such as are shown in the record.

Absent any contrary intention, the validity, obligation and interpretation of a contract relating to personal property, are governed by the law of the place where it is made. It is generally true that the place of performance governs matters connected therewith and that the remedy depends upon the law of the place where suit is brought. [2 Elliott, Contracts, sec. 1110 et seq; Scudder v. Union Nat. Bank, 91 U. S. 406; Ruhe v. Buck, 124 Mo. l. c. 183 et seq; Tremaine v. Dyott, 161 Mo. App. l. c. 221.] No contract can be consummated until the final act essential to its obligation is performed. [2 Elliott, Contracts, sec. 1115; 5 R. C. L., p. 935, sec. 26, and cases cited under note 8.] If, therefore, the act creating the obligation of a contract is performed at a particular place, the contract must be said to have been made at that place; for until the act done there the parties are not bound. [1 Elliott, sec. 62.] It is also true that “when it appears upon the face of the contract that' there is to be a good-faith performance thereof in some jurisdiction other than that of the lex loci contractus, or that it is made with reference to the laws of some other place, then it is to be construed according to the law of the place with reference to which it is made. When the terms or nature of the contract show that it was to be executed in another country or state, then the place of making the contract becomes so far immaterial, and the law of the place where the contract is to be performed governs in determining the rights of the parties.” [2 Elliott, Contracts, sec. 1119.]

It is clear that “if the place where the contract is made is also the place where it is to be performed, there is, ordinarily, no doubt as to the application of the rule, for then the lex loci contractus and the lex solutionis are the same.” [5 E. C. L., p. 934, sec. 25, and oases cited under note 6.] Applying the foregoing principles of law, as far as invoked by the facts in the present case, there can be no escape from the conclusion that the loan contract and pledge of the policy were both consummated and to be performed in the State of New York. It is evident that the loan contract did not become a binding obligation until it was delivered to the defendant (appellant) in the State of New York and assented to and accepted by it there. It is also apparent from the portion of the loan contract quoted above that the promissors therein (plaintiff and her husband) agreed “to repay the said sum of $9550 to the company at its head office, Nassau, Cedar and Liberty Streets, in the City of New York on September 29, 1905.” Necessarily, therefore, the place of performance of the loan contract and the accompanying pledge of the property, were fixed by the agreement itself in the State of New York. These facts made it a New York contract and performable in that State, just as fully as if the parties had recited in haec verba that the laws of New York should govern an agreement entered into in that State and contracted to be performed in that State. The recital of such an agreement is the only difference as to the loan agreements between the case at bar and the recent decision of the Supreme Court of the United States in N. Y. Life Ins. Co. v. Dodge, supra. But inasmuch as such a recital was not necessary in the present case, in view of the fact that the contract itself was not made until the defendant became a party to it in New York, where it was also specifically agreed it should be performed, there is no point of essential distinction between the facts in judgment in this case and those presented in N. Y. Life Ins. Co. v. Dodge, supra.

It necessarily follows that conformity to the ruling in that case requires the judgment in the instant ease to be reversed and the ■ cause remanded for the error of the trial court in excluding the proof of the New York laws.

On a new trial an opportunity will be afforded to determine the issue as to whether or not the defendant complied strictly with the terms of the loan agreement and conformed strictly to the laws of New York in the cancellation of the policy and the extinguishment of the loan indebtedness.

The judgment is reversed and the cause remanded. It is so ordered.

The foregoing opinion of Bond, C. J., in Division One is adopted as the opinion of Court in Banc;

Walker, Baris and Williams, JJ., concur; Woodson, J., dissents.


source: Caselaw Access Project

author: BOND, C. J.

license: Public Domain

text:
    WILLIAM H. HARDING, Appellant, v. ST. LOUIS UNION TRUST COMPANY, Executor of Estate of ROGER E. HARDING.
    In Banc,
    December 14, 1918.
    1. TRUST: Executed: Voluntary: Irrevocable. An executed trust in personal property may be validly created by express declaration and present conveyance of the property to a definite beneficiary, and when thus completed it is irrevocable, though voluntary.
    2. -: Necessary Evidence. To establish an executed voluntary trust in personal property the evidence showing its creation must be so clear, full and demonstrative as to remove any reasonable doubt from the mind of the chancellor as to the existence of every element essential to its complete establishment.
    3. -: -: No Present Establishment. If the evidence shows that the purpose of decedent was not to create a trust in praesenti, but only upon condition that some mishap, like death, might overtake him while on an anxious journey to a distant city, no executed trust in the undelivered personal property was created.
    4. -: Executory. Equity never enforces a mere executory voluntary agreement for a trust.

      5. -: — : Consideration. If the express trust was fully completed in the manner prescribed by law, the question of consideration is of no moment; hut where the language used is merely an agreement to create a trust in favor of a designated beneficiary in undelivered personal property, upon a contingency, which did not happen, the fact that the agreement was wholly voluntary is of importance.
    6. -: Use and Control of Property. The fact that decedent did not, by act or by the letters and indorsements relied upon, convey any present equitable title to the beneficiary and did not deprive himself of the full use and control of the designated personal property throughout the seventeen years he continued to live, is significant as bearing on decedent’s intention to create an irrevocable trust.
    Appeal from St. Louis City Circuit Court. — Hon. Leo 8. Bassieur, Judge.
    Affirmed.

      Grant c& Grant for appellant.
    (1) When a person sui juris orally or in writing explictly or impliedly declares that he holds personal property for another, he thereby constitutes himself an express trustee. Perry on Trusts, secs. 82, 86. *2) The evidence showed a valid declaration of trust because the inscription on the outside of the envelope in the handwriting of the deceased, taken together with the signed letter of the deceased, also in his handwriting, contained three things necessary to create a parol trust in personal property: first, a clear declaration that the property did not belong to Roger E. Harding, but that he held it for another; second, there was a definite subject-matter of the trust, to-wit, the sixteen railroad bonds; and, third, there was a definite object or beneficiary of the trust, to-wit, Wm. H. Harding. Northrip v. Burge, 255 Mo. 654. (3) In order to render a sufficiently expressed, voluntary trust valid, it is only necessary that the trustor should have done everything which could have been done, the character of the property comprising the trust being considered, to transfer the property to the trustee in such mode as will be effectual to pass the title; and the settlement being beneficial to the donees, acceptance will be presumed. In re Soulard’s Estate, 141 Mo. 662. (4) It is no objection to the validity of a trust that it is purely voluntary. Leeper v. Taylor, 111 Mo. 324; Pomeroy Eq. Jur. (2 Ed.) secs. 996-997; Harris Banking Co. v. Miller, 190 Mo. 640; Watson v. Payne, 143 Mo. App. 721; Stone v. Hackett, 12 Gray (Mass.), 227. (5) It is not necessary that a third person should be trustee. The donor may constitute himself trustee. Northrip v. Burge, 255 Mo. 654. (6) The donor or trustor may not only make himself the trustee, but he may even reserve a life interest in the property and collect the interest or income thereof without impairing the validity of the trust. Davis v. Ney, 125 Mass. 590; Harris Banking Co. v. Miller, 190 Mo. 640. (7) The Statute of Limitations did not apply in this case in either suit to any portion of the property involved because this was a continuing express trust in favor of Wm. H. ITarding, and there was no evidence showing or tending to show that the trustor, the deceased, ever openly repudiated the trust, to the knowledge of the plaintiff. Johnson v. United Railways, 243 Mo. 296; Bent v. Priest, 86 Mo. 475; Johnson v. Smith, 27 Mo. 591; Smith v. Ricords, 52 Mo. 581.

      E. T. é C. B. Allen for respondent.
    (1) A disputed trust cannot be enforced at law. Ewing v. Parrish, 148 Mo. App. 492; Johnson v. Rd., 243' Mo. 304; Landis v. Saxton, 105 Mo. 489. Until the trust is determined, plaintiff would have neither a legal or equitable right to possession. Until such right was established plaintiff could not maintain replevin or conversion. Leete v. Bank, 141 Mo. 586; O’Toole v. Lowenstein, 177 Mo. App. 665; Botsford v. Bradfield, 141 Mich. 375; Fischer v. Alstein, 186 Mass. 549; Penton v. Hauser, 13 Okla. 452; Fulton v. Fulton, 48 Barb. 581; 38 Cyc. 2049. (2) Any right plaintiff had to money collected on the coupons or bonds arose at the time defendant’s testator is alleged to have collected them, and to all such collections prior to September 8, 1909, plaintiff’s right has been barred by the five-year Statute of Limitations. Landis v. Saxton, 105 Mo. 491; Prewitt v. Prewitt, 188 Mo. 683; Johnson v. Railroad, 243 Mo. 300; Eliott v. Machine Co., 236 Mo. 546. (a) Plaintiff knew as early as 1898 that his father was in' no wise accounting to him for the coupons and bonds which his petition alleges his father collected. Plaintiff acquiesced therein although he was estranged from his father. This is inconsistent with the idea that Roger E. Harding held the bonds as trustee for plaintiff. (b) It necessarily indicated that both parties regarded the bonds and coupons as Roger E. Harding’s. The claim is barred by the ten-year statute. Brown v. Selding, 105 App. Div. 509, 94 N. Y. Supp. 292; Oelke v, Theis, 70 Neb. 405; Sims v. Sims, 2 Ala. 117; Trubey v. Pease, 240 111. 523; Crissman v. Crissman, 23 Mich. 218. (3) There is no evidence that plaintiff ever made a demand on the defendant for the bonds. Defendant’s possession being lawful, it so remained until it refused to give up possession. Nansen v. Jacobs, 93 Mo. 331. (4) There was not a sufficient delivery to support a gift either inter vivos or causa mortis. Foley v. Harrison, 233 Mo. 460; Northrip v. Burge, 255 Mo. 1. c. 674; Terry v. Glover, 235 Mo. 550; Harris Banking Co. v. Miller, 190 Mo. 640; In re Soulard Estate, 141 Mo. 660; Bank v. McKenna, 168 Mo. App. 254; Mulock v. Mulock, 156 Mo. 441; Pitts v. Weakley, 155 Mo. 135. (5) Equity does not lend assistance to voluntary disposition of property while they are yet executory. Pennell v. Ennis, 126 Mo. App. 360; 28 Am. & Eng. Ency. Law (2 Ed.), 865. (6) The question in this class of cases is not whether the preponderance of the competent evidence shows that the alleged trust was executed, but it is, whether that fact is established by evidence so clear, certain, complete and convincing as to remove all reasonable doubts on the subject. Northrip v. Burge, 255 Mo. 655; Ferguson v. Robinson, 258 Mo. 113; Pitts v. Weakley, 155 Mo. 109; Mulock v. Mulock, 156 Mo. 431; Heartley v. Nicholson, 19 L. R. Eq. 233; Ferguson v. Robinson, 258 Mo. 113; Evans v. Evans, 196 Mo. 20. (7) For a man to make himself a trustee there must be an expression of an intention to become a trustee, whereas words of present gift show an intention to give over property to another and not to retain in the donor’s own hand for any purpose, fiduciary or otherwise. What is intended as a gift but is imperfect as such, cannot be treated as a declaration of trust. Young v. Young, 80 N. Y. 437;. Bank v. Webb, 21 R. I. 218; Richard v. Delbridge, 18 L. R. Eq. 11; Achman Estate, 223 Pa. St. 543; Hamilton v. Hall, 111 Mich. 291; Clay v. Layton, 134 Mich. 331; Trimmer v. Danby, 25 Law J. Ch. 421; Lane v. Ewing, 31 Mo. 86; Ferguson v. Robinson, 258 Mo. 113; Northrip v. Burge, 255 Mo. 674; McKee v. Allen, 204 Mo. 655; Pitts v. Weakley, 155 Mo. 135; Knapp v. Publishers, 127 Mo. 77. (8) In determining the validity of a voluntary settlement, the fact that the gift is not to take effect until after the donor’s death, is often of controlling weight. The instant case was an attempted testamentary disposition. Sims v. Brown, 252 Mo. 66; Heartley v. Nicholson,'19 L. R. Eq. 233; Young v. Young, 80 N. Y. 437; Sterling v. Wilkinson, 83 Va. 798.
   BOND, C. J.

I. These are suits by one of the children of Roger E. Harding, against his executor, to recover certain street railway bonds, and also the amount collected by the executor upon certain coupons attached to said bonds.

The answer _was a general denial, coupled with a plea of the Statutes of Limitations of five and ten years. Issue was taken by reply. The defendant had judgment and the plaintiff duly appealed.

II. The preponderance of the competent evidence in the record shows the facts upon which plaintiff’s claims are based to be that on December 10, 1897, Roger E. Harding, living in St. Lonis and about to make a trip to California to aid Ms daughter who had married uphappily and was in dire distress, wrote to his son in New York, informing him of these facts and that he would begin the journey on December eighteenth, adding: “If anything occurs to me, you will find sixteen instead of fourteen R. R. bonds in that package I told you about in the safe deposit box; the two additional are Suburban; in all four Suburban, Nos. 96, 176, 179, 181 — instead of two.”

This letter also inclosed a list of the bonds and their estimated value at-$17,005.

On December seventeenth, Roger E. Harding, still in St. Louis, wrote plaintiff, stating that he did not know what his address would be in Los Angeles, but to write him in care of his daughter, concluding: “The safe deposit box is the same. I have made no change. No. 1233, same as the number of your residence. Before I went to Europe I told you about the 14 bonds, and had you take down the numbers. There are now 16 bonds in the package (all I had) enclose copy of endorsement on package. These bonds are now worth $17,000 or more.”

The endorsement referred to in these two letters is, to-wit:

“St. Louis, December 1897. “This package, containing valuables, is the property of William H. Harding, of 1233 Dean St., Brooklyn, N. Y., and I hereby direct my administrator or executor to deliver it to him unopened.

Roger E. Harding.

Witnesses:

“George E. Harding

“ T. F. Turner

“R. D. Rash

“Heavy envelope sealed with five seals.”

After the daughter of Roger E. Harding, who lived in California, had been granted a divorce, she came to St. Louis with her father and he took her to the safe deposit box and opened it in her presence and took out the sealed envelopes containing the sixteen bonds and put them back loosely in the deposit box, tore up the envolope endorsed as above, and threw it in the waste basket, making certain explanations to his daughter why he did so, which we exclude as incompetent.

The trust officer who opened the safe deposit box in order to make an inventory after the death of Roger E. Harding, states that it did not contain an envelope sealed and endorsed as described in the memorandum sent to plaintiff, and that he thought the sixteen bonds were lying loose in the box.

Roger E. Harding gave plaintiff a house in Brooklyn, $12,500, and $7,000 in bonds for the education of a son of plaintiff and grandson of the deceased, and also made plaintjff beneficiary of a five-thousand-dollar life policy, and by the terms of his will excluded plaintiff from his estate, stating that he had received all that he was entitled to.

Unless the foregoing fact established a completely executed trust in the sixteen bonds claimed by plaintiff, this suit must fail.

III. That an executed trust may be validly created in personal property by express declaration and Present conveyance of such property to a definite beneficiary, and that when the trust has been thus completed, it is irrevocable, though voluntary, is the settled law of Missouri and elsewhere. [Northrip v. Burge, 255 Mo. l. c. 654, par. 2 et eases cited, Ibid 674, par. 5; Bank v. McKenna, 168 Mo. App. l. c. 257; In re Estate of Soulard, 141 Mo. l. c. 660.]

It is equally elementary that such a trust can be enforced only upon evidence so clear, full and demonstrative as to banish any reasonable doubt from the mind of the chancellor as to the existence of every element essential to the establishment of a complete express trust in personal property. [Northrip v. Burge, 255 Mo. l. c. 655, et eases cited; Ibid, l. c. 668.] It is obvious that the plaintiff’s entire case rests upon the terms of three documents: two letters and the copy on an endorsment on the package under five seals. If these stood alone, aside from the negative and explanatory evidence for the defendant, no trust could be decreed, because they show by express terms that it was the purpose of Roger E. Harding to create a trust not in praesenti, but only upon the condition that some mishap, like death, might overtake him on a journey about to be undertaken to California to assist a married daughter. That nothing further was intended by the language of the writing of Roger E. Harding when read in pari materia, is not only apparent from the contingent terms of the declaration contained in them, but from the further fact that immediately after his daughter had secured a release from her unfortunate state, he brought her to St. Louis and in her presence destroyed the superscription which had been placed upon turn package of bonds to provide for their future delivery to plaintiff upon the happening of the contingency mentioned in his executory agreement. This contingency not occurring, Roger E. Harding opened the package, took the sixteen bonds and placed them loosely in his safe deposit box and destroyed the envelope, with its superscription, which had contained them. This manifestation of the construction given by Roger E. Harding to the terms of his letters of December seventh and seventeenth, is convincing, as, indeed, the language itself fairly imports that his agreement as to this personal property was purely temporary and intended only to take effect in case any future mishap, like death, should overtake him before he should return to St. Louis. No more enlightening view of the language used by Roger E. Harding in his letters to plaintiff could be afforded than his own actions in dealing with the property therein referred to. He construed his letters and declarations as their language justified; for by the terms of these writings and in the light of circumstances surrounding the parties, they only evidenced an executory agreement to create a future trust, for a wholly undisclosed purpose, which trust agreement should fail upon the non-happening of the contingency upon which its completion depended. It being obvious, therefore, that the evidence relied on by plaintiff did not afford any proof whatever of an executed and completed trust but only tended to show an executory agreement for a trust of some kind, to arise upon a future contingency, the conclusion is unavoidable that plaintiff was entitled to no recovery in the present case.

The authorities are uniform (many of them cited in the briefs of the parties) that equity never enforces a mere executory agreement for a trust, which, like the present, is wholly voluntary. If the trust had been completely executed, as prescribed by law, then the question of consideration would be of no moment; but where, as here, no such trust was shown by the language relied upon to establish it, it necessarily follows' that, theuo could be no decree of enforcement. The obstacle Ho any relief in this case arose upon the infirmity of the written agreements relied upon to support the action.

No executed and completed trust having been shown by any evidence whatever, it becomes wholly unnecessary to speculate as to what use, or for whose contingent benefit, Roger E. Harding intended to devote the sixteen bonds in case his executory agreement had ripened into a fully consummated trust.

As bearing on his intention not to create an irrevocable trust, it is also significant that he did not by any language or act, convey any present equitable title to plaiotiff nor deprive himself of the full úse and control of the bonds in question, which the record shows hé exercised during his life and without question by the plaintiff for a period of seventeen years after the date of the letters and endorsement relied upon by him to support his claim. That these suits present matters of purely equitable cognizance, is manifest from what is shown in the record and, indeed, is frankly confessed in the brief prepared for plaintiff (appellant) where it is stated that, failing the sufficiency of evidence to show “a declaration of trust in which the deceased Roger E. Harding was the trustee and donor” this suit must fail. [State ex rel. v. Evans, 176 Mo. l. c. 317, 318; Shelton v. Harrison, 182 Mo. App. l. c. 412-3; 10 R. C. L. p. 349, sec. 99; 1 Pomeroy, Equity (3 Ed.), sec. 151; 2 Story, Equity Jurisprudence (14 Ed.), secs. 1300 to 1303; Bispham’s Principles of Equity (9 Ed.), sec. 49.]

Holding as we do that the plaintiff has misconceived the legal effect of the writings relied on to support his theory and hence has necessarily failed in adducing proof of any equitabie title in him to the property in dispute, it follows that the judgment in favor of the defendant is manifestly correct and will be affirmed. It is so ordered.

Walker, Faris and Williams, JJ., concur; Woodson, J., not sitting.


author: WOODSON, J.

text:
    R. L. BARGER v. JEREMIAH D. HEALY, Appellant.
    In Banc,
    December 19, 1918.
    1. SPECIFIC PERFORMANCE: Contract to Convey: Acceptance of Deeds: Merger. An acceptance of deeds by the vendee is a complete execution of a contract to convey. The final agreement between the vendor and vendee of lands is merged in the deeds executed and accepted, and the rights of the vendee are to be found, not in the option contract to convey, but in the covenants contained in the accepted deeds.
    2. -: -: Stipulation for Warranty Deed: Acceptance of Quitclaim. By written contract the owner of land agreed to convey, by warranty deed, to a purchaser, certain lands, clear of all incumbrances, in consideration of one hundred dollars in hand paid and eleven thousand five hundred dollars to be paid within sixty days. The vendor tendered a quitclaim deed, reserving therein all the minerals lying beneath the surface. The vendee demanded a warranty deed, without reservations, which the vendor declined to execute. In the meantime the vendee, relying on the contract, had agreed to sell the timber on the land to a tie company. He thereupon paid the purchase price and accepted the quitclaim deeds under protest and with notice to the vendor that he would hold him to strict compliance with his contract. Held, that the contract to convey was merged in the deeds accepted, and the vendee’s suit to specifically enforce the contract for a warranty deed, without reservations, should he dismissed.
    Appeal from Iron Circuit Court. — Hon. E. M. Dearing. Judge.
    Reversed.
    v Frank X. Iiiemens for appellant.
    (1) The deeds from defendant to plaintiff represent the final agreement of the parties; their rights and liabilities are defined and limited by their terms; the entire transaction is merged in the deeds and no action cau be maintained on the option contract. Smyth v. Borohoff, 156 Mo. App. 18; Wilson v. Wilson, 115 Mo. App. 641; Matheny v. Stewart, 108 Mo. 73; Wheeler v. Ball, 26 Mo. App. 443; Slocum v. Braey, 55 Minn. 249; Clifton v. Jackson Iron Co., 74 Mich. 621; Carter v. Beck, 40 Ala. 606; Timme v. Shannon, 81 Am. Dec. 635; Bryan v. Swain, 56 Cal. 616. (2) Acceptance of the deed need not be proved by formal or express words; it may be inferred from acts, conduct or words of the parties, showing an intention to accept. 13 Cye. 572; Brownlow v. Woliard, 61 Mo. App. 124; Horner v. Lowe, 159 Ind. 406. (3) An agreement to convey by warranty deed “all my right, title and interest” is fully performed by the execution and delivery of a deed effectively transferring all of the interest of the grantor; a grantor is not obliged to insert full covenants of warranty; a deed of special warranty, as in this case, suffices. Butcher v. Rogers, 60 Mo. 138 ; Waldermeyer v. Loebig, 222 Mo. 551.

      Ernest A. Green for respondent.
    The correct rule is that a suit may be maintained to compel the specific performance of a contract performed only in part, and a party will not be precluded by his acceptance and retention under protest of a deed in partial performance of a contract from maintaining specific performance of the whole contract. .Kirkpatrick v. Pease, 202 Mo. 471; Davis v. Real Estate Co., 115 Mo. App. 339; Minor v. Edwards, 12 Mo. 140; 39 Cyc. 1524; Conover v. Wardell, 20 N. J. Eq. (5 C. E. Green) 266; Earnhardt v. Clement, 137 N. C. 91; Mason v. Blair, 33 111. 194; Trabue’s Heirs v. North, 9 Ky. (2 A. K. Marsh) 361; Point St. Iron Works v. Simmons, 11 R. I. 496; 39 Cyc. 2013; Sessa v. Arthur, 183 Mass. 230; German-American Real Estate Co. v. Starke, 84 Hun, 430, 32 N. T. Supp. 403;' Davis v. Lee, 52 Wash. 330, 132 Am. St. 973; Selden v. Williams, 9 Watts, 9; Atwood v. Norton, 27 Barb. 638; Cox v. Henry, 32 Pa. 18; Stockton v. Gould, 149 Pa. 68; Lehman v. Paxton, 7 Pa. Super. Ct. 259; Close v. Zell, 141 Pa. 390, 23 Am. St. 296; Walker v. France, 112 Pa. 203; Loftus v. Read, 82 Kas. 485, 31 L. R. A. (N. S.) 457. .
   WOODSON, J.

This suit was begun in the circuit court of Iron County by the plaintiff against the defendant, asking for the specific performance of a written option-contract to convey real estate.

The decree was for the plaintiff and the defendant appealed the cause to this court.

The contract is as follows:

“Know all men by these presents:

That I, the undersigned Jeremiah D. Healy of the City of St. Louis, in the State of Missouri, for and in consideration of the sum of one hundred dollars to him in hand paid by R. L. Barger of Ironton, Iron County, Missouri, the receipt of which is hereby acknowledged, do hereby agree to grant and convey unto the said R. L. Barger or assigns, by warranty deed, clear of encumbrances, the following described real estate, situate in the County of Iron and State of Missouri, to-wit:

“All my right, title and interest in all the land I own in said county, situated in Township 35, Range 1 west, and situated in Township 35, Range 1 east, and situated in Township 35, Range 2 east, and situated in Township 34, Range 1 east, in said Iron County, Missouri. Being the same property acquired by me from Edgar R. "Wells and Rose Anne Shephard Hand and husband upon the tender and payment, however, by the said R. L. Barger within sixty days from date hereof of the total sum of eleven thousand five hundred dollars.

“Payable as follows: One-half to be paid in cash and one-fourth to be paid in three months and one-fourth on or before twelve months, secured by deed of trust for part purchase money, notes bearing 6 per cent interest and to execute unto the said R. L. Barger, or assigns, a warranty deed in due form of law to said real estate, upon the payment or otherwise satisfactory adjustment of the price herein agreed upon for said property, and to furnish an abstract of title showing good and clear title thereto at the time I purchased same. Upon the expiration of the time above specified this option may be further extended by written agreement of the undersigned, attached thereto, not to exceed one month’s additional time.

“Witness my hand this, the 31st day of December, 1913.

‘ ‘ Jeremiah D. Healy, (SEAL) ’ ’ This contract was duly acknowledged before a notary public and delivered to the plaintiff.

The petition declares upon the contract, stating that the plaintiff fully performed all the terms thereof and requested the defendant to convey to him the real estate described in the contract, and further alleged that the defendant refused to execute and deliver a general warranty deed conveying the property described, but on the contrary, delivered to plaintiff two 'quitclaims, wherein defendant excepted out of the lands described in the contract, and reserved for himself, his heirs, and assigns, the mineral rights in and to said land, specifically reserving the right to prospect and develop the same, and further alleging that plaintiff accepted said quitclaim deeds only under protest.

The defendant sets up in his answer that the contract sued upon is, and was, not the final repository of the agreement between him and the plaintiff, and sets forth in substance that it was at all times understood between him and plaintiff that all the minerals lying beneath the surface of the land sold were to be reserved to defendant, his heirs and assigns.

The reply was a general denial.

The plaintiff offered in evidence the contract sued on. D. E. Fletcher testified for the plaintiff in substance as follows:

That he represented the plaintiff and conducted the negotiations for the securing of the option contract in controversy with the defendant Healy; that the option contract sued upon was drafted in the office of the defendant, in the City of St. Louis, and that the handwriting therein was the handwriting of the defendant; that the option contract was prepared by the defendant in his office, and that the same expressed the agreement made by the parties at that time. Fletcher further testified that on the 28th day of February, 1914, in accordance with the option contract, Barger wired the defendant Healy to forward the deeds and deed of trust to the Bank of Arcadia Valley, and that the plaintiff would there complete his contract for the purchase of the lands in suit; that on the 4th day of March, the deeds and deed of trust arrived at the Bank of Arcadia Valley, and that Barger and he examined the deeds and deed of trust, and found that the same was not in accordance with the option contract, inasmuch as the deed was in substance a quitclaim deed, and reserved the mineral rights to the defendant and his heirs. Fletcher further stated that eighty acres of the land was omitted from the deed (inasmuch, however. as that defect was subsequently remedied, no further reference will be made to the same). Fletcher stated that thereupon he and Mr. Barger conferred with their attorney, Mr. Damron, relative to the matter, and that at their request Mr. Damron called up the defendant and demanded of him that he execute a warranty deed, and include therein the mineral rights which he had reserved under the deed'in controversy. This the defendant refused to do. That in the meantime, the plaintiff, in reliance upon his option contract from the defendant, had agreed to sell the timber upon this land to the Merseal & Allee Tie & Timber Company; he was advised by his attorney, Mr. C. P. Damron, that he would have to accept the deeds tendered by the defendant, and then institute his action to compel defendant to comply with the remainder of thp terms of the option contract. The witness further stated that Mr. Barger executed the deed of trust and paid one-half the purchase money due at that time. However, at the time of so doing Barger protested to the Bank of Arcadia Vallej'', defendant’s asent, against the acceptance of the deeds, and stated that the deeds were only accepted under protest and because there was no other relief left. Mr. Fletcher stated that thereafter the notes for which the deed of trust was given as security were fully paid off and that the purchase price of the land has now been paid in full. He stated, however, that the defendant has refused, and still refuses, to execute a warranty deed covering the lands in suit, .and conveying the mineral rights reserved by him under the quitclaim deed.

R. L. Barger, the plaintiff, and C. P. Damron, attorney for the plaintiff, testified, in so far as their knowledge extended, to substantially the same facts as were testified to by the witness Fletcher.

Thereupon, plaintiff offered in evidence the deeds which defendant tendered in alleged performance of this option contract, and also the canceled notes and deed of trust executed by the plaintiff in performance of the contract on his part. Plaintiff also offered the testimony of three disinterested witnesses to the effect that they heard the protests made by plaintiff over the acceptance of the deeds tendered by defendant, and heard plaintiff state that he was only accepting the deeds because of the fact that he had to comply with his contract for the sale of the timber to the Merseal & Allee Tie & Timber Company, and that he did not consider the deeds tendered as a compliance with the contract, and would hold defendant to a strict compliance with the contract.

Mr. Damron also testified that' he notified the defendant Healy over the long-distance telephone that the deeds were not in compliance with the terms of his option contract, and that plaintiff would hold him to a subsequent compliance with the contract.

Plaintiff also offered in evidence a telegram referred to in the testimony of Mr. Fletcher, as well as a ]etter from Hope, Green & Seibert, to the defendant, under date of August 20th, demanding of the defendant that he comply with his option contract and convey to the plaintiff, Barger, by warranty deed, his entire interest in the premises, including the mineral rights reserved in the deed which he had delivered to the plaintiff.

The defendant’s evidence tended to prove, the following additional facts, viz.:

Upon the arrival of the deed at the bank plaintiff examined same and found it to be a special warranty in form, to contain a reservation of mineral rights, and that eighty acres of land had been omitted. Plaintiff had his counsel call defendant at St. Louis over the telephone and informed defendant that the deed was not in compliance with the option, whereupon defendant informed plaintiff’s counsel that if they did not care to accept the deed to return the same to him. This deed was accepted by plaintiff and by him -placed of record in the Recorder’s office for Iron County on the 9th day of March, 1914. Thereafter defendant conveyed the eighty acres in manner and form and with like reservations as set forth in his previous deed, which was accepted by plaintiff and placed of record in the Recorder’s office for Iron County on the 14th day of March, 1914. Defendant forwarded, with the first deed, a deed of trust dated the 28th day of February, 1914, securing the deferred payments of the purchase price, which deed was executed and acknowledged by plaintiff on the 9th day of March, 1914, and by him placed of record in the Recorder’s office for Iron County on said date, which deed of trust secures the payment of the notes mentioned. The last of these notes were paid by plaintiff on March 2, 1915. The deed of trust was on that day presented by plaintiff and canceled by the Recorder of Deeds of Iron County. This suit was filed on the 26th day of September, 1914. That D. Edgar Fletcher, plaintiff’s partner, had at all times an undivided one-half interest in the option contract and later in the land conveyed and is not a party plaintiff.

As previously stated, the trial court found the facts for the plaintiff, and rendered a decree accordingly, and the defendant appealed.

I. Counsel for the defendant insist that the decree of the trial court is erroneous for the reason that the acceptance of the deeds made by the defendant to the plaintiff, conveying the property mentioned in pursuance to the contract, represents the final agreement between them; their rights and liabilities are defined and limited by their terms; that the entire transaction is merged in the deeds and no action can be maintained on the option contract, and the remedy for loss or damages sustained or other rights lost by a nonperformance of any of the terms of the contract is governed by the covenants in the deed.

The converse of this proposition is maintained by-counsel for the plaintiff.

We are cited to many authorities in support of these respective positions.

We will examine those of the defendant, the appellant, first. In the case of Wilson v. Wilson, 115 Mo. App. 641, the Court of Appeals held that a contract between the vender and vendee, relating to the executory acts necessary to complete the sale of real estate, are merged in the deed, the acceptance of which completes the performance and is conclusive evidence of the real contract between the parties.

In Matheny v. Stewart, 108 Mo. 73, this court, passing upon this question, held that when a conveyance of real estate becomes complete, the parties mate. and accept the covenants therein as measuring the liability of the grantor and the compensation of the grantee in case of breaches. The contract becomes merged in the deed, and the remedy for loss is confined to such as is given by its covenants.

In Smyth v. Boroff, 156 Mo. App. 18, the Court of Appeals held that while the contract for the sale of land is still executory, the law will enforce the right of the purchaser, under the contract, to a title clear of defects and incumbrances, but when the contract has been consummated by the execution and delivery of the deed, the entire matter is merged in the deed, and the covenants contained therein alone prescribe the measure of the rights of the parties, so that, where the covenant required the vendor to convey, land “by a good and proper conveyance” (and the deed was duly executed and acepted), an action would not lie on the contract for money expended in perfecting the title.

In Wheeler v. Ball, 26 Mo. App. 443, the court held that while the terms of a contract of sale of real estate is still executory, the courts will enforce the right of a purchaser to a title clear of defects and incumbrances; but when the contract becomes consummated by tbe execution and delivery of tbe deed, a different rule comes in; the terms of tbe deed fill tbe measure of tbe rights of tbe parties and tbe contract merges in tbe deed.

In Slocum v. Bracy, 55 Minn. 249,. tbe Supreme Court of Minnesota held that where a deed has been accepted as full performance of an executory contract to convey real estate, tbe contract is merged in tbe deed, upon which alone tbe rights of tbe parties thereto rest; and, in case tbe deed contains no covenants, and there be no ingredient of fraud or mistake of fact, tbe grantee cannot recover back tbe consideration paid because of a failure of title.

In Clifton v. Jackson Iron Co., 74 Mich. 183, tbe Supreme Court of Michigan held that where tbe owner of land, on contracting for its sale, reserved tbe timber, with the right of removal for a specified time, and conveys tbe land to tbe vendee before tbe expiration of tbe time so limited by warranty deed without any such reservation, tbe timber passes to tbe grantee.

In Carter v. Beck, 40 Ala. 599, l. c. 606, tbe court held that “tbe acceptance of tbe defendant’s deed by tbe plaintiff was a complete execution of tbe antecedent agreement to convey, and annulled it; and no action at law could be sustained upon it,” citing Howes v. Barker, 3 Johns. 506; Houghtaling v. Lewis, 10 Johns. 297; Cronister v. Cronister, 1 Watts & Ser. 442; Falconer v. Garrison, 1 McCord, 209; Frederick v. Youngblood, 19 Ala. 680.

The same rule was announced in a very exhaustive opinion by tbe Supreme Court of Maryland in tbe case of Timms et al. v. Shannon et al., 19 Md. 296. And in tbe case of Bryan v. Swain, 56 Cal. 616, where the plaintiff agreed to sell land to tbe defendant, and to convey a good title, and afterwards made a deed which was accepted by the defendant as a performance of tbe contract, tbe title to a part of tbe land was in the United States, but tbe defendant knew that fact when be accepted tbe deed, and tbe Supreme Court of California held that the rights of the defendant depended on the deed, and not the previous contract, the latter being merged and extinguished by the former.

Judge Napton approached the same question from a different angle, but reached the same conclusion, in the case of Minor v. Edwards et al., 12 Mo. 137, l. c. 139, where he said:

“What acts or what declarations ampunt to a waiver, is, in my opinion, a question of law; whether such acts or declartions were made or performed, is for the jury. [Hagart v. Nevins, 6 Serg. & Rawle, 360; St. Louis Ins. Co. v. Kyle, 11 Mo. 278; Rhett v. Poe, 2 How. 481; Bank of Utica v. Bender, 21 Wend. 643.] I use the term waiver as a more convenient one than the term acceptance, as used in the plea, for they are the counterpart of each other. An acceptance of a deed of inferior value to such an one as the grantee is by his contract entitled to, as a compliance with such .a contract, is equivalent to a waiver of such better title.”

• We will now review the authorities cited by counsel for plaintiff in support of his contention.

The case of Kirkpatrick v. Pease, 202 Mo. 471, is not in point. On page 492 Judge Lamm: expressly declines to pass upon the question here presented, because counsel were laboring under a misapprehension as to the question involved. He said: “But without deciding whether a vendee might not be entitled to part performance with satisfaction in damages for the part not performed, yet it is sufficient to say of this contention for the purposes of this case that it proceeds upon a misapprehension.”

Neither is the case of Davis v. Barado-Ghio Real Estate Co., 115 Mo. App. 327, in point. That was an action for damages for a breach of contract to convey real estate. The only question there involved was whether the purchaser could maintain an action for damages without first having tendered performance of the contract on his part before bringing the suit. The court held that the vendor’s agreement to convey a clear title and the vendee’s agreement to pay therefor are concurrent and dependent conditions, so that the latter must have tendered performance before he had a right of action for damages against the former for failure to perform his part. The court also held that the vendee had the right to waive the provision of that part of the contract by which the vendor agreed to convey a clear and unincumbered title, etc.; but the question involved in the case at bar was not there presented or passed upon.

The ease of Minor v. Edwards, 12 Mo. 137, has been considered with the cases cited by counsel for defendant ; and what is there said clearly shows that it holds diametrically opposite to what counsel for plaintiff contends for.

The case of Conover v. Wardell, 20 N. J. Eq. 266, was a suit to compel the performance of a contract already- performed in part; but there the deed was accepted under a mistake as to the contents or effect of the deed. In that case the court held that the mistake was sufficient grounds for equitable relief, and decreed specific performance of the non-esecuted parts of the contract to convey. But that is not this case. Here the plaintiff knew of the variance between the terms of the contract to convey and the covenants in the deeds before he accepted them, and insisted that they be made to harmonize before acceptance, but being unable to induce the defendant to make covenants of the deed conform to the terms of the contract, the plaintiff accepted the deeds under protest, and informed the former that he would bring this suit for specific performance.

The case of Point Street Iron Works v. Simmons. 11 R. I. 496, announced the same rule as that stated in Conover v. Wardell, supra.

The ease of Earnhardt v. Clement, 137 N. C. 91, although not a real estate transaction, seems on principle to be in point. There a testator contracted to bequeath certain securities to the plaintiff in consideration of personal services rendered, but instead of doing that, he bequeathed them in trust for her, etc. The court there held that the reception of the dividends by the plaintiff for a number of years under the will did not estop her from maintaining a suit for specific performance of the contract. In that case, however, the court did not pass directly upon the question involved in the case at bar. In that case the contention was made that the plaintiff was estopped from claiming the securities by having elected to accept the dividends thereof; but the court denied that contention for the reason stated that: “Before the doctrine of election can arise, two things are essential: (1) The testator must give property of his own; and (2) he must profess to dispose of property belonging to his donee (citing case). This is not the ease here. There are no inconsistent benefits. By receiving the dividends on stock, the capital of which she was entitled to have absolutely, she only accepted part of what was her due, and nothing beyond her own.” But as previously indicated, the question here presented was not presented in that case, viz: That the acceptance of the dividends was a waiver of her right to the securities and a full performance of the terms of the contract, which was merged into the will, and that it alone bespeaks their final and last agreement. But be that as it may, it seems to be in point. Trabin’s Heirs v. North, 9 Ky. (2 A. K. Marsh) 361, is an erroneous citation.

After a most careful consideration of the authorities cited by learned counsel for each party, we are satisfied that practically all of them, including the direct rulings of this court, sustain the contention of counsel'for defendant, to the effect that the acceptance of the deeds by the plaintiff is a complete execution of the contract to convey and that it is merged into the deeds which bespeak their final agreements, and whatever their rights are must be found in their covenants.

II. Under this view of the case, it becomes apparent that it would be useless, if not improper, to pass upon the other questions made and discussed by counsel for the respective parties in their able and exhaustive briefs.

For the reasons stated the judgment of the circuit court is reversed and the petition dismissed.

The foregoing opinion of Woodson, J., is adopted as the opinion of Court in Banc.

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