Peoples National Bank, N.A., Respondent/Plaintiff-Counterclaim v. Patricia Fish, Appellant/Defendant-Counterclaim v. U.S. Bank, N.A., Respondent/Third-Party Cross-Claim Counter ( 2020 )

In the Missouri Court of Appeals
Eastern District
DIVISION FIVE
PEOPLES NATIONAL BANK, N.A., ) No. ED107584
)
Respondent/Plaintiff-Counterclaim ) Appeal from the Circuit Court of
Defendant, ) St. Louis County
)
vs. ) 13SL-CC03334
)
PATRICIA FISH, et al., ) Honorable Nancy Watkins McLaughlin
)
Appellant/Defendant-Counterclaim )
Defendant, )
)
vs. )
)
U.S. BANK, N.A., )
)
Respondent/Third-Party ) Filed: April 7, 2020
Cross-Claim Counter Plaintiff. )
OPINION
1. Introduction.
Appellant Patricia Fish appeals the judgment entered after a four-day bench trial in favor
of Peoples National Bank, N.A. (PNB) and U.S. Bank (USB), on their separate claims against her
for liability on two promissory notes and related deeds of trust purportedly executed by her or by
her then-husband Brian Fish in her name and secured by her Clayton, Missouri home, property
which Appellant solely owned. The trial court found in favor of PNB and USB based on its finding
that Brian Fish executed Appellant’s signature on the promissory notes and deeds of trust with
Appellant’s “express approval and authority.” Alternatively, the trial court found that even if the
documents were not executed with Appellant’s authority, then Appellant is still liable because she
ratified Brian Fish’s authority to execute those documents in her name because she was fully
knowledgeable of the transactions and she received the substantial proceeds of the transactions.
The trial court entered judgment in favor of PNB on its first count for liability under its
promissory note for the principal amount outstanding plus contract interest, post-judgment interest,
late charges, and attorney’s fees. The court also entered judgment in favor of PNB on its claim for
judicial foreclosure subject to the interests of USB. As to the claims and counterclaims between
USB and Appellant, the court found in favor of USB on all such matters and entered judgment for
USB for the principal amount remaining due on its promissory note plus interest and attorney’s
fees. Finally, the court outlined the procedures to be followed pursuant to its judgment in favor of
PNB and USB of judicial foreclosure for the sale of Appellant’s home in the event Appellant fails
to pay the foregoing judgments within 20 days of their becoming final.
We affirm the judgment in favor of PNB and USB because the record strongly supports
the trial court’s conclusion that Appellant ratified Brian Fish’s authority to execute both
promissory notes and deeds of trust.
2. Factual and procedural background.
Appellant purchased her Clayton, Missouri home as its sole owner in 1996 and she
remained the sole owner at all relevant times. At the time the two mortgage loan transactions at
issue before us were executed on May 15, 2009 and May 21, 2009, there were already two
mortgages encumbering Appellant’s home: (1) a first mortgage loan in favor of Bank of America
with a principal balance of approximately $408,000 secured by a deed of trust on the property, and
(2) a second mortgage in favor of Parkside Financial Bank & Trust (Parkside) with a balance of
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$550,000 which debt consisted of a $50,000 loan Parkside made to the Fishes personally and a
$500,000 loan Parkside made to St. Louis Sports Partnership, a business owned by Brian Fish and
Mark Militello. While the Fishes and the Militellos were all jointly and severally liable on the
entirety of the Parkside debt which was also secured by Appellant’s home through a second deed
of trust, Parkside agreed to divide the debt and hold the Fishes responsible for $300,000 and the
Militellos the remaining $250,000.
After falling behind on their loan payments to Bank of America and Parkside, the Fishes
sought to refinance these two mortgage loans and ultimately obtained the two new loans at issue
from PNB: (1) the First Loan, executed on May 15, 2009, and the Second Loan, executed 6 days
later on May 21, 2009. Soon thereafter, USB acquired the First Loan from PNB, while PNB
retained ownership of the Second Loan.
The documents executed for each loan consisted of a promissory note and a deed of trust
on Appellant’s property. Both promissory notes and deeds of trust bore the purported signatures
of Appellant and Brian Fish. Appellant maintained throughout this litigation that those were not
her signatures but were forgeries by Brian Fish and that she never gave Brian Fish the authority to
sign on her behalf. The parties engaged in substantial litigation on the issue of Appellant’s
signatures and there was extensive testimony on that question at trial.
The trial court, sitting as the fact-finder, concluded that Appellant did not sign the
documents herself but that Brian Fish signed her name to the documents and he did so with
Appellant’s express approval and authorization. The trial court’s finding in this regard was based
on the circumstances surrounding the execution of the documents including the communications
between representatives of PNB and Appellant. PNB loan officer Thomas Carley testified that he
and Appellant exchanged numerous telephone calls, emails, and facsimiles during the spring of
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2009, during which Appellant inquired about the details of the transactions including the tasks and
documents necessary for closing and Appellant expressed urgency that the loan transactions be
closed as soon as possible.
Carley testified that he personally went to Appellant’s home on May 15 and May 21, 2009
and retrieved from Brian Fish the respective loan documents which already bore the purported
signatures of Appellant and Brian Fish. Carley then took the documents back to his office and
instructed a PNB employee to notarize the signatures even though that employee had no personal
knowledge regarding the signatures. In fact, Carley testified that he never met Appellant in person
before the documents were executed and did not witness Appellant sign the documents nor did he
witness Brian Fish’s signatures. Carley also admitted that Appellant never told him orally or in
writing that Brian Fish had her authority to execute her signature on the documents.
Nevertheless, Carley testified that it was his understanding that Appellant travelled
frequently for her job and therefore was often unavailable for in-person meetings. He said that
Appellant was aware of the closing dates of both loans and she was aware that the proceeds would
pay off Appellant’s outstanding and overdue debt to Bank of America and Parkside.
There was also testimony that from time to time when Appellant was to be out of town for
work and in order to pay for household bills and expenses, Appellant gave Brian Fish blank checks
from her checking account, which she had signed, and authorized him to fill in the name of the
payee and the dollar amount. And sometimes, she left unsigned checks with Brian Fish and gave
him the authority to complete the checks and sign her name to them.
After the loans were executed, there was considerable evidence as to Appellant’s conduct
and knowledge regarding the loans during the approximately three-year period of time from May
2009 until 2012. Appellant admitted that she made monthly payments on both loans. Appellant
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admitted that in 2009, 2010, and 2011, she and Brian Fish claimed on their joint tax returns the
deductions for the interest paid on both loans. In 2012, in response to her accountant’s inquiry
regarding the deductibility of the interest on the Second Loan, Appellant responded that she had
made “all the payments on the loan since its inception a few years back” and that it was a personal
loan attached to the house. In 2010, in connection with Appellant’s and Brian Fish’s divorce
proceedings, Appellant listed both loans on her sworn statement of property and expenses. Finally,
there was evidence, including expert witness testimony and Appellant’s own testimony, that
Appellant in connection with the Second Loan signed several documents known as “Change in
Terms Agreements” which contained language that purported to renew the original May 21, 2009
promise to pay.
3. Standard of Review.
This Court will affirm the trial court's judgment in a court-tried case unless there is no
substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares
or applies the law. Ivie v. Smith, 439 S.W.3d 189, 198-99 (Mo.banc 2014) (citing Murphy v.
Carron, 536 S.W.2d 30, 32 (Mo.banc 1976)). Furthermore, a judgment in a court-tried case will
be affirmed on any basis supported by the record. Poger v. Mo. Dep’t. of Transp., 501 S.W.3d 37,
41 (Mo.App.E.D. 2016). In a court-tried case, the evidence is interpreted in favor of the judgment,
and all contrary evidence is disregarded. Reyner v. Crawford, 334 S.W.3d 168, 172 (Mo.App.E.D.
2011). Substantial evidence is evidence that, if believed, has some probative force on each fact
that is necessary to sustain the circuit court's judgment. Ivie, 439 S.W.3d at 199.
4. Discussion.
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Appellant brings this appeal in four points relied on. In her first point, Appellant claims
the trial court erred when it found that she had given Brian Fish the authority to sign her name to
the promissory notes and deeds of trust at issue. Appellant relies principally on two statutes, §
432.010, 1 the Statute of Frauds, and § 442.360, a provision pertaining to powers of attorney, for
her argument that PNB’s and USB’s failure to prove that Appellant gave Brian Fish a properly
executed and recorded power of attorney authorizing him to execute these transactions is legally
and factually fatal to the trial court’s finding that Brian Fish had Appellant’s authority. In her
second point, Appellant asserts that the trial court’s holding that she ratified both loan transactions
through her conduct was erroneous because there was no substantial evidence that the
aforementioned statutes were complied with or that Appellant had full knowledge of all facts
material to the two transactions including the terms of the promissory notes and deeds of trust.
And in her third and fourth points, Appellant attacks the trial court’s conditional holding that in
the event we reverse the court’s findings that Brian Fish had Appellant’s authority to execute the
loans on her behalf or that Appellant ratified the loans, then PNB and USB should be granted an
equitable lien on Appellant’s home under applicable equitable principles.
Under the second point, we find there is substantial evidence in abundance that Appellant
ratified Brian Fish’s authority to execute the two promissory notes and associated deeds of trust.
As a result, we need not reach Appellant’s first point which addresses the trial court’s finding that
Brian Fish had Appellant’s express authority when he executed the loan documents in Appellant’s
name. Likewise, we need not reach the third and fourth points which attack the aforementioned
conditional portion of the trial court’s judgment.
A. Appellant ratified Brian Fish’s authority.
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All statutory references are to RSMo 2000 unless otherwise indicated.
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We borrow liberally from our Southern District colleagues’ comprehensive opinion in
Wilks v. Stone, 339 S.W.2d 590 (Mo.App.S.D. 1960). Ratification in the context of agency is the
express or implied adoption or confirmation, with knowledge of all material matters, by one person
of an act performed in his behalf by another who at that time assumed to act as his agent but lacked
the authority to do so. Id.; see also, Epps v. Epps, 438 S.W.3d 422, 424–25 (Mo.App.S.D. 2014).
Ratification relates back and is the equivalent of authority at the commencement of the act. Id. It
is the affirmance of a contract already made. Id.
The existence of agency and the authority of the agent can be and often is implied by proof
of facts, circumstances, words, acts, and conduct of the party to be charged. Id. As applied to the
agency or authority which is created or related back by means of ratification, it may be implied by
any facts and circumstances from which it can be reasonably inferred that the party to be charged
(with knowledge of the facts) acquiesced in and accepted the transaction as his own, or which are
inconsistent with any other intention. Id.
As to the nature of the facts, circumstances, and conduct that will justify the inference of
agency, no fixed rule can be stated and there is no particular mode by which it must be established
because it depends upon the situation in each individual case. Id. Probably the most certain
evidence of implied ratification is the acceptance and retention of the fruits of the contract with
full knowledge of the material facts of the transaction. Id.
Since ratification may be established by facts and circumstances, it is a question for the
trier of the fact whether the whole sum total of the facts and circumstances justifies the reasonable
inference that the party charged as principal accepted the transaction as his own. Id. It is not
necessary that each separate act, fact, or circumstance stand on its own as proof sufficient to justify
the inference. Id.
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While PNB’s conduct in connection with the execution of these two loans was
unprofessional and sloppy, the record before us nevertheless abounds with evidence that Appellant
ratified Brian Fish’s authority to execute both loans and deeds of trust in her name. First and
foremost, upon the execution of these loan documents in May 2009, Appellant immediately reaped
the huge financial fruits of these transactions when the new loans extinguished over $700,000 in
outstanding and past-due debt Appellant personally owed and which encumbered her home. And
there can be little doubt on this record that Appellant knew at the time Brian Fish executed these
new loans in her name that her existing debt would be paid off and the encumbrances on her home
removed. Appellant was in repeated contact with PNB’s loan officer regarding the details of the
new loans and urged him to expedite the closings because, it is fair to infer, the existing mortgage
holders were pressuring Appellant regarding the past-due status of her payments on those existing
loans.
Appellant’s conduct over the next several years further demonstrated Appellant’s intent to
ratify Brian Fish’s authority to execute the loans. Appellant acknowledged her personal obligation
on both loans by making numerous payments from her personal checking account, by executing
the Change in Terms Agreements (at least as to the Second Loan), and by representing to the
United States and Missouri tax authorities and to the family court judge presiding over her divorce
proceedings, that the loans were hers.
The latter two representations also further satisfy the most important factor from Wilks’
ratification analysis–whether Appellant reaped the benefits of the transactions–because Appellant
benefitted financially by claiming the tax deduction on the interest paid on the loans and likely
benefited in connection with the property distribution made in her divorce case.
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We conclude, therefore, that the record here readily demonstrates that Appellant ratified
Brian Fish’s authority to execute the two promissory notes and the two deeds of trust at issue.
5. Conclusion.
For the reasons set forth above, we affirm the judgment of the trial court.
James M. Dowd, Judge
Colleen Dolan, C.J., and
Sherri B. Sullivan, J., concur.
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