Banning v. Purinton

• Decision Date: 21 May 1898
• Parties: BANNING v. PURINTON ET AL.
• Court: Iowa Supreme Court

105 Iowa 642

75 N.W. 639

BANNING

v.PURINTON ET AL.

Supreme Court of Iowa.

May 21, 1898.

Appeal from district court, Jackson county; C. M. Waterman, Judge.

Action to foreclose plaintiff's mortgage, executed by John A. and Lydia A. Purinton. The defendant Foster alleged in his answer that he held judgments against John A. Purinton which were liens on the mortgaged property, that plaintiff's mortgage was fraudulent, and prayed it be declared inferior to the lien of his judgments. Decree for plaintiff, and defendant Foster appeals.Murray & Farr and T. W. Darling, for appellant.

G. L. Johnson, D. A. Wynkoop, and A. L. Bartholomew, for appellee.

LADD, J.

This action was begun May 31 1895, to foreclose a mortgage on the east 47 feet of lot 3, in block C, in Preston, Jackson county, executed June 22, 1893, by John A. Purinton and wife to the plaintiff, to secure the payment of a note of $1,500. The defendant Foster recovered one judgment against John A. Purinton December 15, 1893, for the sum of $229.14 and costs, and another on May 21, 1895, for the sum of $1,600 and costs. While these judgments are subsequent in time to the mortgage, the indebtedness was incurred prior thereto. The amended answer alleges that the real estate covered by plaintiff's mortgage is the only property of Purinton subject to execution, does not exceed in value the amount of the mortgage, and that the mortgage was executed for the purpose of hindering, delaying, and defrauding creditors.

1. The appellant insists that it is not necessary to establish the insolvency of Purinton in order to obtain the relief prayed. If the judgments may be satisfied from other property of the judgment defendant, there is no occasion for interference with the mortgage, or of invoking the intervention of a court of equity. Gwyer v. Figgins, 37 Iowa, 517;Gordon v. Worthley, 48 Iowa, 429;Pearson v. Maxfield, 51 Iowa, 76, 50 N. W. 77;Miller v. Dayton, 47 Iowa, 312. In these cases deeds were sought to be set aside, but the same rule applies with equal force to a mortgage. The latter may impede the collection of judgments quite as effectually as a deed, and, to obviate this, it is as necessary to set aside the one as the other. The jurisdiction of a court of equity in cases like this cannot be invoked by a creditor until his remedies at law have been exhausted. This rule does not prevail in all the states, but is in harmony with the weight of authority. See 5 Enc. Pl. & Prac. 465.

2. Executions were not issued on the judgments, and returned nulla bona; and it is said that the evidence does not establish Purinton's insolvency. The only evidence bearing on this issue was that of the judgment defendant. He testified that on June 10, 1893, he owned the real estate in controversy, one of the two lots occupied by him as a homestead, and $1,600 or $1,700 worth of old stock, and several hundred dollars in book accounts. The stock and book accounts went into the hands of a receiver appointed to adjust the accounts of the partnership which had existed between Foster and Purinton. All such property was exhausted in satisfying the debts of the firm. He was then asked: “Q. You own your property sought to be foreclosed in this suit? A. Yes, sir. Q. You own certain property that went into the hands of the receiver? A. Yes, sir. Q. Do you own any other property? A. No, sir.” From this, as the real estate in controversy did not exceed in value the amount due on the mortgage, it appears Purinton had no property subject to execution, and was insolvent. The defense interposed was set up in an amended answer, filed on the day of the trial. We cannot agree with appellee that insolvency must be shown at or about the time the mortgage was executed. Evidence of the pecuniary condition of Purinton, the extent of his property, the part transferred and that retained, was admissible as bearing on the allegation of fraud. But the finding of insolvency at that time was not essential to the maintenance of the action. Rounds v. Green, 29 Minn. 139, 12 N. W. 454;Hager v. Shindler, 29 Cal. 48;Kain v. Larkin (N. Y.) 36 N. E. 9; Waites, Fraud. Conv. § 239; 5 Enc. Pl. & Prac. 566. See, contra, Romine v. Romine, 59 Ind. 346.

3. Upon a careful examination of the evidence, we discover nothing indicating an intention to defraud creditors. Neither the extent of Purinton's property when the mortgage was executed nor the amount of his indebtedness was shown. Apparently he had more than enough to satisfy all his debts. The consideration of the mortgage was made up of the following items: Note...