Court Opinion

ID: 3537197
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:49:52.204656+00
Date Added: 2024-06-11T13:38:28.768653
License: Public Domain

I am unable to concur in the opinion of Judge Ellison. As I understand our two former opinions [348 Mo. 1164,159 S.W.2d 258, 260] when they were rendered and as I read them now, the only question then decided was that no equitable mortgage was created in favor of the bank by the execution and delivery to it of the note and deed of trust made payable to the insurance company. I think that question was correctly ruled, but I fail to see how that ruling is res judicata as to the ownership of the Brody note. Judge Ellison's opinion says that the ownership of that note, as well as the Kohn and Wulf notes, was put in issue by the pleadings. If so, the trial court found that issue for the bank and we did not disturb the finding on appeal. True, our former opinion incidentally discussed some of the evidence relating to the three notes which were secured by deeds of trust on respondent's real estate when she began negotiations with the bank, but only as to whether or not such evidence indicated an intent to create an equitable mortgage in favor of the bank by the delivery to it of the note and deed of trust made payable to the insurance company.
Our former opinion [159 S.W.2d 258] starts with the statement: "Action to decree an equitable mortgage on land," and says that the question depends upon intent of the parties. Then the opinion recites that appellant there, respondent here, negotiated with the bank for a loan of $45,000.00 to pay off the three existing notes secured by deed of trust and to improve her real estate. It being against the rule of the bank to make long time loans on land, negotiations were had with an insurance company whereby it agreed to make the loan on a first deed of trust on condition that the property be improved in a certain manner and freed from mechanics' liens. Appellant executed a note in the sum of $45,000.00 payable to the insurance company and secured by deed of trust which was recorded and delivered to the bank, but the insurance company never paid out any money on this loan. Appellant executed a note for $45,000.00 to the bank and the proceeds were deposited to the credit of "Goedecke Building Fund," subject to the joint check of appellant and an official of the bank. Appellant also executed a collateral pledge contract. The entire building fund was consumed in taking up the three outstanding secured notes [payable to Brody, Kohn and Wulf, respectively] and in improving the real estate, leaving mechanics' liens to the amount of several thousand dollars unpaid. Our opinion states that those three notes were paid from the building fund and in another place quotes an official of the bank as saying: "I explained that the collateral for the short time loan must be a note and deed of trust on the land in favor of an insurance company and [226] an agreement from the company to purchase the loan when the building was completed. I also explained that the prior deeds of trust *Page 492 
on the property would be paid from the short time loan, and the deeds of trust securing said notes would be held by plaintiff [the bank] and released of record at the pleasure of the plaintiff."
But the opinion also states that the deeds of trust securing the three notes were not released of record and that the notes, as well as the insurance company note, were held by the bank under the collatral pledge agreement. Then, in winding up the discussion of that branch of the case, the opinion says:
"Thus it appears that there is no evidence tending to show that defendant intended to create a mortgage in favor of plaintiff by executing and delivering the Phoenix Mutual note and deed of trust to plaintiff. Furthermore, it appears that there is no evidence tending to show that plaintiff so understood said execution and delivery of the note and deed of trust. On the contrary, the evidence conclusively shows that plaintiff relied for security on its control of the $45,000 in the `Goedecke Building Fund,' its supervision through Vice-President Griffin of the building construction, its control of the three notes secured by deeds of trust and its control of the note and deed of trust executed by defendant in favor of the Phoenix Mutual Life Insurance Company, on which note the insurance company agreed with plaintiff to make a loan to defendant."
Although our former opinion, in discussing the evidence in relation to the three notes, uses the words "pay" and "paid," it also says that the notes were held by the bank under the collateral pledge agreement and that the bank relied in part upon its control of the notes. Of course, the notes could not be governed by the collateral pledge agreement until the owners of the notes received the amount due them. If payment to the owners out of the building fund discharged the liability of Mrs. Goedecke on these notes and extinguished the liens of the deeds of trust there would be no advantage to the bank in holding them under the collateral pledge or controlling them. In other words the bank could not so hold or control the notes until the owners received their money, and afterwards there would be no reason for the bank to hold or control them unless Mrs. Goedecke was still liable for their payment or the deeds of trust were still in force. I think our former opinion indicates a view that the liability of Mrs. Goedecke on the three notes was not discharged. Certainly our opinion indicates that the parties intended to preserve the lien of the three deeds of trust as collateral security to the bank, and this could be done by agreement even though the notes be considered as "paid." [19 R.C.L., page 444. sec. 228; Pomeroy's Equity Jurisprudence, 5th Ed., page 172, sec. 797; Powell v. Jefferson Bank (Mo.), 96 S.W.2d 338; Gardner v. Switzer, 186 S.W.2d 561.] Be that as it may, we did not expressly decide those questions, nor did we impliedly decide them by holding that the execution of the note *Page 493 
and deed of trust to the insurance company constituted no equitable mortgage in favor of the bank.
In the instant case respondent procured a temporary injunction restraining appellant bank from foreclosing the Brody deed of trust. The bank filed answer and counterclaim. The trial court found for the defendant bank, dismissed plaintiff's petition and rendered judgment on the counterclaim, then granted a new trial on the express ground that our former opinion is res judicata.
I think the order granting a new trial should be reversed and the cause remanded with directions to reinstate the judgment.