Weir & Russell Lumber Co. v. Kempf

• Decision Date: 08 February 1944
• Docket Number: 46392.
• Citation: Weir & Russell Lumber Co. v. Kempf, 12 N.W.2d 857, 234 Iowa 450 (Iowa 1944)
• Court: Iowa Supreme Court
• Parties: WEIR & RUSSELL LUMBER CO. et al. v. KEMPF et al.

12 N.W.2d 857

234 Iowa 450

WEIR & RUSSELL LUMBER CO. et al. v. KEMPF et al.

No. 46392.

Supreme Court of Iowa

February 8, 1944

X C. Nady, and Richard C. Leggett, both of Fairfield, for appellants.

Harold McLeran, of Mt. Pleasant, for appellee.

GARFIELD, Justice.

Defendant Mae B. Kempf owned Lots 6, 7, 8, 9 and 10, Block 5, College First Addition to Mt. Pleasant. On April 4, 1939, she and her husband made a note for $2,000, secured by the mortgage in suit covering these lots, to the Insurance Plan Savings &amp Loan Association. Thereafter, plaintiff partnership, engaged in the lumber business, furnished the Kempfs certain building materials for the erection of a garage and turkey plant on the east 84 feet of the five lots. The remaining portion of the lots, the west 66 feet, was and is the homestead of the Kempfs. Plaintiff's verified statement of the materials amounting to $1,140 and claim for mechanic's lien against all the lots were filed in the office of the clerk of the district court on June 21, 1940. Later, plaintiff brought suit in equity to foreclose its mechanic's lien. The Kempfs, the savings and loan association, M. M. Kempf, who held a junior mortgage for $1,000 dated June 26, 1940, on lots 9 and 10, and certain other junior lienholders were made parties to the suit. Decree establishing and foreclosing the mechanic's lien against the east 84 feet of the lots was entered in that case (No. 3483) on June 17, 1941. Sheriff's sale of the east 84 feet under special execution issued in 3483 was held on July 26, 1941, and plaintiff bid in the property for $1,000. No appeal from the decree in No. 3483 was prosecuted.

On January 29, 1942, the Kempfs were delinquent in excess of $185 in their monthly payments on the first mortgage to the savings and loan association, which was threatening foreclosure. Plaintiff thereupon paid the association the $1,634 owing on its mortgage and took an assignment of it. The assignment recited that it was the intention of the parties the note and mortgage should not merge with plaintiff's interest in the real estate. On January 30, 1942, plaintiff started the suit now before us to foreclose the mortgage against the homestead portion (west 66 feet) of the lots. While this suit was pending, the year of redemption expired on the execution sale of the east 84 feet in the mechanic's lien foreclosure and sheriff's deed to that portion was issued to plaintiff on July 29, 1942.

In the present suit Mae B. Kempf and husband contend that since the mortgage was a first lien on all of the lots, plaintiff should be required first to sell the nonhomestead east 84 feet (which it owned under its sheriff's deed) and could resort to the homestead, west 66 feet, only after exhausting the nonhomestead part. The trial court, however rejected defendants' contention and foreclosed the mortgage against the homestead without requiring resort to the nonhomestead portion. The propriety of this determination is the question presented on this appeal.

Plaintiff contends the decree below is warranted by the adjudication in the prior mechanic's lien foreclosure. The terms of the prior decree in 3483 are therefore important here. That decree provides that the mortgage (then held by the savings and loan association) is prior and superior to plaintiff's mechanic's lien, but contains the following upon which plaintiff relies in the case at bar:

"The Court further decrees that plaintiff shall have the right to protect its interest in the real estate foreclosed upon herein, against the mortgage held by the Insurance Plan Savings & Loan Association in the event of a default on the part of defendants, Glen Kempf and Mae B. Kempf, or their assigns in the terms and conditions of said mortgage ***. That in the event of default in the terms of said mortgage, plaintiff shall have the right to advance any sums of money necessary to satisfy the terms and conditions of said mortgage or to perform any other conditions of said mortgage in order to protect plaintiff's right in the real estate foreclosed upon herein, without further notice to said defendants, and in the event plaintiff advances any money or performs any conditions in order to satisfy said mortgage, plaintiff shall be given a lien upon the real estate of defendant, Mae B. Kempf, hereinafter described, which lien shall be perfected by plaintiff filing an itemized and sworn statement of the money so advanced, or the conditions performed, in the office of the Clerk of the District Court of Henry County, Iowa, which shall be entered by said Clerk in the All Liens Docket, against said defendants and against said real estate, said real estate of Mae B. Kempf being described as the west 66 feet of Lots 6, 7, 8, 9 [234 Iowa 453] and 10, all in Block 5, College First Addition to the City of Mt. Pleasant, Iowa.

"Plaintiff shall also be subrogated to all of the rights and privileges of defendant Insurance Plan Savings & Loan Association in the event that plaintiff should at any time take over the mortgage of said defendant Savings & Loan Association."

I. It is no doubt generally true, as defendants contend, that the homestead may be sold on execution "only for a deficiency remaining after exhausting all other property pledged by the same contract for the payment of the debt." Section 10155(2), Code 1939. Ordinarily, the homestead is only secondarily liable where it and other property are covered by an encumbrance. Bissell v. Bissell, 120 Iowa 127, 132, 94 N.W. 465.

It is also well settled, where it is not stipulated to the contrary, that a purchaser under foreclosure of a junior lier acquires only the interest of the debtor and the land is charged with primary liability for payment of the prior lien. The purchase by him of such prior lien will not ordinarily avoid the primary liability of the land therefor. In the absence of some other equitable consideration, it is generally held that a purchase by him of the prior lien amounts to its payment and extinguishment. Hult v. Temple, 201 Iowa 663, 668, 208 N.W. 70, 46 A.L.R. 317, and Annotation pages 322, 329; Wright v. Anderson, 62 S.D. 444, 253 N.W. 484, 95 A.L.R. 81, and Annotation pages 89, 104.

Were it not for the provisions of the decree in the mechanic's lien foreclosure, plaintiff would be held to have taken into account, in fixing the amount of its bid at the execution sale in that case, the fact that the mortgage was a primary lien on the nonhomestead portion which plaintiff acquired and that it should be resorted to before the homestead could be taken to satisfy the mortgage. Moore v. Olive, 114 Iowa 650, 656, 87 N.W. 720. And see authorities last above.

II. From the foregoing it appears that if it were not for the terms of the decree in 3483, defendants' contention here would have merit. What is the...