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Smart Summary

Factual and Procedural Background

This suit was instituted on November 9, 1935, in the Circuit Court of St. Louis County by Theodore Hardt and Mary Hardt against defendants as principal and surety on the bond of a notary public, Dunn. The bond was executed on December 6, 1927, with a penalty of $5,000. The relators alleged that on August 26, 1930, they signed a paper granting the Phillips Pipe Line Company an easement across their land, which defendant Dunn fraudulently acknowledged without their actual acknowledgment. They sought judgment for the bond penalty and damages sustained in a suit to void the easement.

The defendants answered with a general denial and pleaded the three-year Statute of Limitations under Missouri Revised Statutes section 11742, which bars suits more than three years after the cause of action accrues. The case was tried to a jury in October 1937, resulting in a verdict favoring plaintiffs. Defendants moved for a new trial, asserting error in overruling their demurrer to the evidence at the close of plaintiffs' case. The trial court granted the new trial on that ground, and relators appealed.

Legal Issues Presented

  1. Whether the relators' suit on the notary public's bond was barred by the three-year Statute of Limitations under Missouri Revised Statutes section 11742.
  2. Whether defendants were entitled to a directed verdict based on the Statute of Limitations despite offering no evidence on that defense.

Arguments of the Parties

Appellants' Arguments

  • The instruction in the nature of a demurrer to the evidence should not have been given because relators proved all elements necessary to recover against the notary and his surety for breach of duty.
  • Defendants cannot rely on the Statute of Limitations defense because they introduced no evidence on it, did not call attention to it in their motion for new trial, and offered no instruction based on it.
  • The notary's bond is an indemnity bond, and a cause of action on such a bond accrues only when damages from the breach are sustained and ascertainable, not at the time of the technical breach.
  • Missouri Revised Statutes section 860 supports that a cause of action accrues when damage is sustained and ascertainable, not at the time of the wrong or breach.

Respondents' Arguments

  • The pleadings and relators' uncontradicted evidence showed that the three-year Statute of Limitations had run, barring recovery.
  • Under the pleadings and evidence, defendants were entitled to a directed verdict, and the trial court correctly granted a new trial after the demurrer to evidence was overruled.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State ex rel. O'Malley v. Musick, 145 Mo. App. 33, 130 S.W. 398; 165 Mo. App. 214, 145 S.W. 1184 Cause of action on notary public's bond accrues when injured party has notice; suit barred after three years. Followed as controlling precedent that the cause of action accrued more than three years before suit was filed, barring the claim.
State ex rel. Sappington v. American Surety Co. (Mo. App.), 41 S.W.2d 966 Elements necessary to recover on notary's bond for breach of duty. Cited by appellants to support sufficiency of relators' evidence on breach of duty.
Wahl v. Cunningham (Mo.), 6 S.W.2d 576 Defendant not required to offer evidence on statute of limitations when facts are pleaded and testified to by plaintiff. Applied to hold defendants could rely on statute of limitations defense despite no evidence offered.
State ex rel. Haitz v. American Surety Co. of N.Y., 217 S.W. 317 Support for application of statute of limitations in notary bond cases. Used to support respondents' position that suit was barred.
Obermeyer v. Kirshner, 225 Mo. App. 734, 38 S.W.2d 510 Affirmation of Musick case holding on statute of limitations for notary bonds. Quoted approvingly to reinforce the three-year limitation bar.
Sissel v. St. Louis S.F. Railway Co., 214 Mo. 515, 113 S.W. 1104 Defendant may rely on statute of limitations defense proven by plaintiff's own testimony and pleadings. Applied to reject appellants' argument that defendants needed to introduce evidence.
Klein v. U.S. Casualty Co., 295 S.W. 833 Same as above regarding proof of statute of limitations defense. Applied similarly to support respondents' position.

Court's Reasoning and Analysis

The court analyzed the timing of the accrual of the cause of action under the special three-year Statute of Limitations applicable to notaries public bonds (Section 11742, R.S. Mo. 1929). It found that the cause of action accrued either when the fraudulent acknowledgment was recorded on January 5, 1931, or when the relators received actual notice by a photostatic copy of the recorded instrument on September 9, 1932. Both dates were more than three years prior to the filing of suit on November 9, 1935.

The court relied heavily on the precedent established in State ex rel. O'Malley v. Musick and its subsequent affirmations, which held that the statute of limitations begins to run when the injured party has notice of the fraud, not when the wrongful act occurred. Because the relators had either constructive or actual notice more than three years before filing suit, their claim was barred.

The court rejected the appellants' argument that defendants needed to produce evidence to support the statute of limitations defense, holding that where the facts establishing the defense are admitted or testified to by the plaintiff, defendants are entitled to rely on the defense without additional evidence.

Accordingly, the trial court erred in overruling defendants' demurrer to the evidence, and the new trial granted by the trial court was proper.

Holding and Implications

The court AFFIRMED the trial court's order granting a new trial to the defendants based on the statute of limitations defense.

The direct effect of this decision is that the relators' suit on the notary public's bond was barred by the three-year statute of limitations because the cause of action accrued more than three years before the suit was filed. No new precedent was established; rather, the court applied existing Missouri law concerning accrual of causes of action and statute of limitations in notary bond cases.

STATE OF MISSOURI, AT THE RELATION OF THEODORE HARDT AND MARY HARDT, HIS WIFE (RELATORS), APPELLANTS, v. WILLIAM DUNN AND UNITED STATES FIDELITY GUARANTY COMPANY, A CORPORATION, (DEFENDANTS), RESPONDENTS.

1. — Statute of Limitations — Notary Public — Section 11742, Revised Statutes of Missouri, 1929. In cause of action against bonding company on Notary Public's bond, held that defendant's demurrer should have been sustained where it was shown that injured party had actual notice of the fraud more than three years prior to the filing of the suit for the reason that same was barred by the Statute of Limitations under Sec. 11742, R.S. Mo. 1929.

2. — Statute of Limitations. Where defendant files answer to plaintiffs' petition setting up the defense of Statute of Limitations, held that defendant did not need to offer any evidence to support such defense where such facts were pleaded in plaintiffs' petition and testified to by them.

HOSTETTER, P.J.

This suit was instituted on November 9, 1935, in the circuit court of St. Louis County. It is a suit brought by relators, Theodore Hardt and Mary Hardt, husband and wife, against defendants as principal and surety on the bond of a notary public. The bond was in conventional form, the penalty being in the sum of $5000, and was executed on December 6, 1927.

The amended petition set out in substance that on August 26, 1930, they signed a paper purporting to grant to the Phillips Pipe Line Company an easement to construct a pipe line for transporting oil, gas, etc. across their 6.21 acre tract located in St. Louis County, Missouri, and that defendant Dunn fraudulently executed an acknowledgment thereto as of the same date when, in fact, they never acknowledged same at all, and sought judgment for $5000, the penalty of the bond, with execution for $2000 damages sustained by them in successfully conducting a suit to hold the easement void and to oust said company from their premises.

The answer contained a general denial, and a plea of the three year bar of the Statute of Limitations as set out in section 11742 in chapter 80, Revised Statutes Missouri, 1929 (Mo. Stat. Ann., sec. 11742, p. 6137) relating to notaries public and containing, inter alia, the following: "Said bond after having been so recorded, shall be filed in the office of the Secretary of State, and may be sued on by any person injured; but no suit shall be instituted against any such notary or his sureties more than three years after such cause of action accrued."

The cause was tried to a jury on the 25th and 26th of October, 1937, resulting in a verdict and judgment in favor of plaintiffs for the amount of $5000, the penalty of said bond, and $1100 damages. In due time defendants filed their motion for a new trial which contained, inter alia, the following ground: 5. The court erred in overruling the demurrer to the evidence offered by the defendants at the close of the evidence offered by plaintiffs.

On December 16, 1937, the trial court sustained defendants' motion for a new trial on said fifth ground thereof, stating that "the court erred in overruling the demurrer to the evidence offered by the defendants at the close of relators' evidence." Thereupon relators duly perfected their appeal to this court. The sole question involved in this appeal is whether relators' suit was barred by the three-year Statute of Limitations.

The evidence, all of which was offered by relators, shows that the right-of-way contract referred to as relators' exhibit A, was recorded in the office of the Recorder of Deeds in St. Louis County, Missouri, on January 5, 1931, approximately four years and ten months prior to the institution of the present suit, and, further, that on September 9, 1932, the relators herein were actually furnished at their request with a photostatic copy of said contract as recorded, being some three years and two months prior to the institution of this suit. The photostatic copy showed on its face that it had been recorded in the Recorder of Deeds' office on January 5, 1931. Plainly, the relators' cause of action accrued on January 5, 1931, when the contract was recorded, or on September 9, 1932, when an actual photostatic copy of the contract as recorded was given to relators and was read by them at that time, or, if not read in its entirety, when they had ample opportunity to do so. We have reached the conclusion that relators' claim is barred by said three-year Statute of Limitations.

The following facts appear to be affirmatively shown in evidence adduced by the relators: They signed the "Right-of-Way Contract" on August 26, 1930. Thereafter, it was falsely acknowledged, and, by reason of such acknowledgment, it was duly recorded in the office of the Recorder of Deeds of St. Louis County on January 5, 1931. Mary Hardt, one of the relators who claimed that she generally attended to things herself, testified: "There was so much fighting going on about this pipe line in our neighborhood," and, in answer to a question as to when was the first time she found out about its being recorded, replied: "In August, 1932, I wrote Mr. Rittenbusch to kindly send me a copy of this contract and then it took him until the month of September that he sent it." On her cross examination she was handed plaintiffs' Exhibit A by defendants' counsel and testified that both she and her husband signed the original contract, of which Exhibit A was a photostat; that she signed it some time in August; that she wrote on August 26, 1932, to the Phillips Pipe Line Co., and asked them for a copy of the contract; that after that, in September (the latter part), she received a letter from Phillips Pipe Line Co., enclosing the photostatic copy of the contract, Exhibit A; that the Phillips Pipe Line Company's letter might have been dated September 7th, and that Mr. Ritterbusch, to whom she had written, had said that he had received her letter of August 26th, and that he had been out of town for a few days, but that now he was enclosing this photostatic copy.

The witness further testified: "Q. Now, when you received this right-of-way contract, did you read it? A. I sure did. Q. Very carefully? I mean, referring — you read the whole contract? A. Yes."

She disclaimed seeing the certificate of the recorder that it was filed for record on January 5, 1931. After examining the instrument, she said, "No, if I did, it passed my memory." "Q. You don't remember that? A. No, I really don't because I had so much trouble after that, and that I just didn't."

Theodore Hardt, the husband, testified that he had signed the original contract; that he didn't know his wife had written for a copy of the contract "until she had it;" that he was sick and worried; that she did tell him it had been recorded in the Recorder of Deeds' office; that he left everything up to Mrs. Hardt.

The proven and conceded facts bearing on the question are as follows: The instant suit on Notary Dunn's bond was brought on November 9, 1935. Exhibit 1 (Right-of-Way Contract) was signed by relators on the 26th day of August, 1930. The false acknowledgment appears to have been made on the instrument on August 26, 1930, but in any event it was made prior to January 5, 1931, the day it was filed for record in the office of the Recorder of Deeds of St. Louis County, this being about four years and ten months before the filing of the instant suit. The relators were furnished with a photostatic copy of the Right-of-Way Contract as recorded, on September 9, 1932, three years and two months prior to the institution of the instant suit.

The relators had constructive notice of the fraud after the instrument was filed for record on January 5, 1931, and actual notice when they were furnished a photostatic copy of the instrument on September 9, 1932, both constructive and actual notice being more than three years before this suit on the Notary's bond was begun.

In State ex rel. O'Malley v. Musick, 145 Mo. App. 33, 130 S.W. 398, the Springfield Court of Appeals had the exact question before it as to when the cause of action accrues upon a bond of a notary public. In that case one Musick, a notary public, was alleged to have falsely acknowledged an instrument in writing. Some five years and eight months elapsed after the execution of the certificate before suit was brought. The defense of the Statute of Limitations was interposed and said court held, in its opinion, that the action under the law was clearly barred by the Statute of Limitations at the time it was instituted. In its opinion the court said:

"The statute relating to notaries has a special limitation which has no exception or saving clause under or by which such limitation may be suspended. This statute says that any person injured may sue on the bond, `but no suit shall be instituted against any such notary or his sureties more than three years after such cause of action accrues.' [Sec. 8836, R.S. 1899.] It will be seen that this is a special Statute of Limitations and made especially applicable to notaries public. . . ."

Further the opinion holds that "the limitation as to notaries public being a special limitation of three years, renders the provisions of the general statute inapplicable." The court goes on to discuss then in the opinion as to when an action on a notary's bond accrues, within the meaning of the three-year Statute of Limitations. After a review of the various authorities the court determined that the cause of action had accrued more than three years prior to the institution of the suit.

The decision of the Springfield Court of Appeals in this case was quashed by the Supreme Court because it was one of the cases reassigned from the St. Louis Court of Appeals to the Springfield Court of Appeals immediately after its creation, and thereafter said case was duly assigned to the St. Louis Court of Appeals, and this court adopted the opinion of the Springfield Court of Appeals, and its decision and opinion adopting the opinion of the Springfield Court of Appeals is found at 165 Mo. App. 214, 145 S.W. 1184.

The opinion in the Musick case, having the O.K. of the Springfield and the St. Louis Court of Appeals, has never been overruled, but was quoted from approvingly in the case of Obermeyer v. Kirshner, 225 Mo. App. 734, 38 S.W.2d 510, l.c. 514.

There was no showing of any effort on the part of Notary Dunn or on the part of the Phillips Pipe Line Company to conceal the fraud or to prevent the relators from obtaining knowledge of the false certificate of acknowledgment, but on the contrary the instrument, as falsely acknowledged, was duly recorded in the office of the Recorder of Deeds in St. Louis County on January 5, 1931, and, in addition thereto, relators were furnished a photostatic copy of the recorded instrument in September, 1932, both dates being more than three years prior to November 9, 1935, the date of the filing of the instant suit on the Notary's bond.

It is urged by counsel for relators that as defendants offered no testimony, they cannot avail themselves of the defense of the three year bar of the Statute of Limitation. Ordinarily, of course, a defendant pleading and relying on the Statute of Limitations as a defense against plaintiff's alleged cause of action must prove facts necessary to support such defense, but in this instance the facts which show that the three year Statute of Limitations constituted a bar to relators' cause of action, were alleged in relators' petition and were testified to by them. [Sissel v. St. Louis S.F. Railway Co., 214 Mo. 515, 113 S.W. 1104, 15 Ann. Cas. 429; Klein v. U.S. Casualty Co. (Mo. App.), 295 S.W. 833, l.c. 834; Reece v. Supreme Lodge K.P. (Mo. App.), 25 S.W.2d 1079, l.c. 1083; Kennedy v. National Accident Health Ins. Co. (Mo. App.), 76 S.W.2d 748, l.c. 754.]

Under the pleadings and the evidence given by relators the defendants were entitled to a directed verdict, and the trial court was justified in granting defendants a new trial on the ground that it had erred in overruling defendants' demurrer to the evidence, offered at the close of relators' evidence.

It follows that the action of the trial court in granting defendants a new trial should be affirmed, and, it is so ordered. Becker and McCullen, JJ., concur.

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STATE EX REL. HARDT v. DUNN AND U.S. FID. G. CO
(Jun 6, 1939)