Bensen & Marxer, Inc. v. Reger
| Decision Date | 30 September 1918 |
| Docket Number | 30815 |
| Citation | 168 N.W. 881,186 Iowa 19 |
| Parties | BENSEN & MARXER, Incorporated, Appellee, v. J. M. REGER, et al., Appellees; TROY LAUNDRY MACHINERY COMPANY, Limited, Intervener, Appellant |
| Court | Iowa Supreme Court |
Appeal from Polk District Court.--HUBERT UTTERBACK, Judge.
THE appellant complains that a chattel mortgage given to it was held to be noneffective, as against the claims of the other parties to the litigation.--Reversed and remanded.
Reversed and remanded.
Casper Schenk, for appellant.
T. L Sellers and H. L. Bump, for appellees.
Frank Tillotson, B. M. Tillotson, and Emma Tillotson made a chattel mortgage to appellant upon a certain piece of laundry machinery bought of appellant. The mortgage secured ten promissory notes, given by these parties at the same time. This chattel mortgage is prior, in point of time, to any claim which the other parties to the suit have. But they claim the mortgage is no longer effective, and should be canceled; and the trial court canceled it. The machinery has been sold, and the appellant now makes claim upon the proceeds. If these notes are still enforceable, and this mortgage effective, appellant is entitled to recover the sum claimed by it. Among other things, the appellees argue that the mortgage was not so recorded as to impart notice. But neither this point nor some others argued are in the case.
"That the said contract of purchase, notes and mortgage has been canceled, and the property secured thereby returned to appellant, on or about January 1, 1914, and it accepted said machinery and sold the same to the defendant J. M. Reger; and that said note and mortgage are of no force and effect, and the lien on the said personal property has been canceled, and is now void and of no effect."
We construe this pleading to defend with the claim that the mortgage indebtedness should be canceled, and the mortgage is no longer effective as a lien. While it is said this is so because appellant accepted the machinery and sold the same to Reger, we think this is no more than a fact argument why cancellation is due, and that it does not enlarge the defense beyond claiming that cancellation is due. The appellees confess that, if certain specified transactions "did not amount to a merger or cancellation" of the mortgage, then the decree cannot be sustained. We agree with appellant that the sole question is whether these transactions sustain a cancellation of the mortgage and mortgage debt. The decree holds appellant canceled its debt because of a request by Frank Tillotson, and because, subsequent to or in connection with this cancellation, it sold the machinery to defendant Reger. The question is whether whatsoever was done in the premises sustains the conclusion of the trial judge that its effect was to extinguish the lien of the mortgage and the mortgage debt.
The witness Frank Tillotson says he purchased the machinery originally, and later wrote the machinery company that he could not pay the note, and it would have to take the property. The appellant acknowledged the receipt of this communication, and added:
Though Frank Tillotson purchased the machinery, that does not establish that he was or remained its sole owner, and that he alone was or remained indebted for the purchase price. On the contrary, the mortgage given for the purchase price was signed by himself and the other two Tillotsons. Now, the mere giving of the mortgage does not prove that the property mortgaged belongs to the mortgagor. Lee County Sav. Bank v. Snodgrass Bros., 182 Iowa 1387, 166 N.W. 680. On the other hand, the fact that Frank Tillotson did the purchasing does not prove he was the sole owner of the property to secure and evidence the purchase price of which he and two others gave this mortgage and these notes. It is, however, proved that the mortgage debt was owed by all three, and nothing is left open except whether Frank Tillotson alone owned the mortgaged machinery. That there is failure to prove that Frank Tillotson was sole owner does appellant no harm. For the burden of proving every element to establish cancellation is on appellee. Code Section 3622, 3629; 6 Cyc. 281; 34 Cyc. 1094; 16 Cyc. 926; 27 Cyc. 1397. It is elementary, then, that a request by Frank Tillotson alone that the mortgaged property be taken back and the mortgage debt canceled, effects nothing, even though the mortgagee agreed to the proposal. At most, all that was accepted was the offer of one mortgage debtor to cancel the mortgage debt owed by three. Moreover, the offer and acceptance on paper were not completed by delivery to the mortgagee, in accordance with the terms of its acceptance. In Frentress v. Markle, 2 G. Greene 553, two executed a partnership note. Before the note became due, they dissolved, and it was agreed that one partner should take the property and pay the debts of the firm. The holder of the note approved the arrangement, and promised to return the note, and take in satisfaction the individual notes of the one partner, and give the other a receipt. But the old note was not given up, nor was a new note or receipt given, and it was held the agreement did not show a release of the one partner, nor an accord and satisfaction, and was not more than an executory agreement. At this point, consideration is lacking. A release must be supported by a sufficient consideration. 34 Cyc. 1048. That may be some disadvantage to the creditor--the altering of his condition for the worse, which may, among other things, arise because of some release of the principal, or the surrender of some security or right. 34 Cyc. 54. It may be a detriment to the debtor. 9 Cyc. 308. A promise by a creditor of a firm to release one partner and hold the others is not supported by a consideration, when the partner claiming the discharge parted with no security, and did not act upon the promise to release. Fagg v. Hambel, 21 Iowa 140. And mere voluntary declarations made by a creditor that a debtor is discharged or released do not bind him. 34 Cyc. 1048.
But this was not all that was done. After the said acceptance by the appellant, Frank Tillotson exercised whatever authority he had in the premises in another direction. He advised the appellant that Reger "will take up the unpaid notes on mangle." Upon this, the appellant responded that, as soon as it received a draft for $ 30.60, it would immediately cancel "the three notes which fell due October, November and December 20th." This worked an abandonment of the acceptance of the offer to surrender the machinery to appellant in return for a cancellation of the mortgage debt. If the trial court was justified in canceling this debt, it must be because of the consent by appellant that the property might be turned over to Reger, upon compliance by Reger with conditions stated in this last acceptance. Now, surely, where the holder of a mortgage consents to a sale of the mortgaged property upon condition that the new owner shall pay the mortgage debt, this, of itself, is neither a merger nor a cancellation of the mortgage debt, and of itself justifies no cancellation of such debt by the court. It is the position of appellee that the effect of this was to both cancel the mortgage and extinguish the mortgage debt. It may be said, in passing, that, if it be assumed it was intended by this to release the mortgagors from personal liability, it does not follow that the mortgage itself was discharged. 27 Cyc. 1404. But passing that, it is our opinion that the letter from appellant is, first, a permission to sell, which would avoid prosecution for selling, and, next, an acceptance of an offer of additional security. Our reasons for this view are the following:
(a) The witness Tillotson says he did not agree to give up his claims to the property, because (in effect) he would not do so since the notes and mortgage...
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