Bennett Savings Bank v. Smith

• Decision Date: 17 May 1915
• Docket Number: 30044
• Parties: BENNETT SAVINGS BANK et al., Appellees, v. W. S. SMITH et al., Appellants
• Court: Iowa Supreme Court

152 N.W. 717

171 Iowa 405

BENNETT SAVINGS BANK et al., Appellees, v. W. S. SMITH et al., Appellants

No. 30044

Supreme Court of Iowa, Des Moines

May 17, 1915

REHEARING DENIED SATURDAY, SEPTEMBER 25, 1915.

Appeal from Linn District Court.--HON. F. O. ELLISON, Judge.

SUIT for foreclosure of mortgage resulted in decree as prayed from which W. A. Smith appeals.-- Affirmed.

Affirmed.

J. S Dewell and C. O. Boling, for appellant.

F. J. Casterline & Son, for appellees, Wm. Bierkamp, Jr., and the Bennett Savings Bank.

LADD, J. DEEMER, C. J., GAYNOR and SALINGER, JJ., concur.

OPINION

LADD, J.--

William Bierkamp, Jr., was owner of a livery barn and four lots in Bennett, and conveyed them to Albert Bierkamp. The latter, on August 6, 1906, executed his promissory note for $ 2,500, payable in five years and bearing interest at the rate of 6 per cent. per annum, to William Bierkamp, Jr., and to secure same, a mortgage on said property. This note and mortgage were assigned to the Bennett Savings Bank. Subsequently Albert Bierkamp conveyed the property back to William Bierkamp, Jr., and the latter, exchanging it for Fortune Dyke mining stock, executed a deed July 19, 1909, of the same to W. A. Smith, with usual covenants of warranty and containing a stipulation that "the second party assumes and agrees to pay a mortgage on the said described property of $ 2,500 with interest at 6 per cent. from June 15, 1909". As the note and mortgage were not paid at maturity, this suit for judgment and foreclosure was begun December 4, 1911, the Bierkamps and Smith and his wife being made parties defendant. Thereafter the bank assigned the cause of action to William Bierkamp, Jr., and he was substituted as party plaintiff. Certain motions were overruled, an answer filed, a hearing had on the merits, and decree of foreclosure entered as prayed. Only the questions raised in argument will be given consideration.

I. The defendant Smith moved that plaintiff be required to elect whether he would prosecute his cause of action on the note or on the assumption of its payment in the deed, and that upon such election, the other cause of action be dismissed. The motion was rightly overruled. Sec. 3465 of the Code provides: "Where two or more persons are bound by contract or by judgment, decree or statute, whether jointly only, or jointly and severally, or severally only, including the parties to negotiable paper, common orders and checks, and sureties on the same or separate instruments, or by any liability growing out of the same, the action thereon may, at the plaintiff's option, be brought against any or all of them." In this action, Smith, in the deed, assumed and agreed to pay the note and mortgage, and thereby became primarily liable therefor, and the makers merely sureties for him. Corbett v. Waterman, 11 Iowa 86; Marble Savings Bank v. Mesarvey, 101 Iowa 285, 70 N.W. 198. This being so, though liability arose on separate instruments, both might, under the express language of this section, be made parties. See Swartley v. Oak Leaf Creamery Co., 135 Iowa 573, 113 N.W. 496; Darling v. Blazek, 142 Iowa 355, 120 N.W. 961; Bossingham v. Syck, 118 Iowa 192, 91 N.W. 1047. There being no misjoinder, the motion was rightly overruled.

II. Defendant Smith, being a resident of Harrison county, moved for a change of venue to the district court of that county; for that, as is said, he is liable on a contract, if at all, separate and independent of the note and mortgage, to which he was not a party. The motion was overruled. Sec. 3493 of the Code exacts that "An action for the foreclosure of a mortgage of real property, or for the sale thereof under an incumbrance or charge, or to enforce a mechanic's lien thereon, shall be brought in the county in which the property to be affected, or some part thereof, is situated." As Smith held title to the property, he was a necessary party to the proceeding, for only by making him a party could his equity of redemption be cut off. Porter v. Kilgore, 32 Iowa 379; Tucker v. Silver, 9 Iowa 261. See cases collected in 9 Ency. P. & P. 305. As suit must have been brought in Cedar county and Smith was a necessary party, his motion for change of venue was rightly overruled. This conclusion was not obviated by any offer on his part to reconvey the land, for neither the bank nor Bierkamp was under any obligation to accept a conveyance in satisfaction of the indebtedness.

III. But it is argued that Smith was entitled to a jury trial of the issues involving his personal liability for the debt. In the first place, he proceeded to trial to the court and thereby impliedly waived a jury, if he had a right thereto. McGuire v. Kemp, 3 G. Greene 219; Hawkins v. Rice, 40 Iowa 435. In the second place, the cause was properly on the equitable side of the calendar, and the interposition of a defense at law was not ground for the transfer to the law side, even if such a motion had been made, nor was there error in exacting its trial to the court without the intervention of a jury. Evans v. McConnell, 99 Iowa 326, 63 N.W. 570; Eller v. Newell, 159 Iowa 711, 141 N.W. 52.

IV. From the statement of facts, it will be recalled that William Bierkamp, Jr., conveyed the land to his brother Albert, and the latter executed back to William the note and mortgage sued on, which William assigned to the bank. Subsequently, Albert conveyed the land back to William, and he to Smith. It is now contended that when William acquired the cause of action by assignment from the bank, this assignment operated to satisfy the mortgage under the doctrine of merger. It did not purport to be his debt and he did not hold the legal title to the land. Moreover, it appears there was no design to satisfy the debt or discharge the incumbrance, but on the contrary, the assignment was for the express purpose of transferring the cause of action to William Bierkamp, Jr. , to enable him to enforce the claim. In these circumstances, there is no room for the inference that there was a merger. But it is said that, upon the conveyance of Albert to William, this happened. Such a result was obviated by the bona fide ownership of the security by the bank. It was not a case of ownership of the hypothecated property and the debt merging in one person, as in Byington v. Fountain, 61 Iowa 512, 14 N.W. 220, and Fouche v. Delk, 83 Iowa 297, 48 N.W. 1078. There was no merger.

V. The exchange was made through one Townsend as agent. He was acting under written instructions from Smith in disposing of Fortune Dyke mining stock. On May 12, 1909, Townsend wrote Smith, saying:

"The livery and feed barn being incumbered is not what I would call gilt-edged by any means, but I do believe that it will deal for a good automobile and maybe two of them, and do it a whole lot quicker than the mining stock will go. My idea is that an offer of say 16,000 shares of common or 8,000 shares of the preferred and get the equity, then to pound the equity for automobiles or some cheap land. This party says that the property was appraised by the directors of the local bank in Bennett...