Bissell v. Lewis

• Decision Date: 10 June 1881
• Citation: 56 Iowa 231,9 N.W. 177
• Parties: BISSELL, TRUSTEE, v. LEWIS AND OTHERS.
• Court: Iowa Supreme Court

56 Iowa 231

9 N.W. 177

BISSELL, TRUSTEE,

v.LEWIS AND OTHERS.

Supreme Court of Iowa.

Filed June 10, 1881.

Appeal from Polk circuit court.

Action to foreclose a mortgage executed by Helen A. Lewis and Charles G. Lewis, her husband. N. E. Walsh and John M. Day were made defendants. Other parties intervened, claiming they were entitled to mechanics' liens on the mortgaged premises superior to the liens of the mortgage. The court entered a decree foreclosing the mortgage and establishing the several mechanics' liens, which were decreed to be superior to the lien of the mortgage, and also that the defendant Day was entitled to priority over the mortgage for certain interest coupons he claimed to belong to him. The plaintiff appeals.Wright, Gatch & Wright, for appellant.

Barcroft & McCaughan, Deitrick & Snell, Phillips & Conrad, Smith & Morris, L. W. Goode, Smith & Baylies, and J. H. Stevenson, for John M. Day and intervenors.

No appearance for H. A. and C. G. Lewis.

SEEVERS, J.

On the twenty-fifth day of July, 1877, the defendants Helen A. and C. G. Lewis executed 11 bonds, with coupons attached for the payment of the interest semi-annually; said bonds and coupons being payable to George P. Bissell, or bearer, at the banking house of George P. Bissell & Co., Hartford, Connecticut. Said bonds were payable 10 years after date, and to secure the same the said Lewises executed a mortgage on certain real estate to “George P. Bissell, trustee, for the holders of certain bonds.” No question is made on this appeal as to the correctness of the decree of the circuit court foreclosing the mortgage, or as to the amount found due thereon. Nor is it questioned that the intervenors are entitled to priority to the mortgage, if they are entitled to liens at all, as the same were adjusted in the decree of the circuit court, except as to the amount found due them. So far as is necessary the rights and liens of the parties will be separately considered.

1. As to the coupon claim of John M. Day. On the twenty-fifth day of January, 1878, there became due certain of the interest coupons secured by the mortgage. The mortgagors failed to pay the same, and Day claims he became the owner thereof; and, as they were the first due, that he is entitled to a lien on the mortgaged property to the amount of such coupons prior to that of the plaintiff, to whose rights he should be subrogated to the extent of his lien, as he claims.

The plaintiff claims Day paid said coupons in pursuance of a contract entered into with the Lewises, and that the indebtedness evidenced by said coupons was extinguished. On the twenty-fifth day of February, 1878, Day entered into a contract whereby he agreed to purchase of the Lewises, upon certain conditions, the mortgaged premises, and thereby Day agreed to pay the interest coupons then overdue within three days upon being made secure in so doing by the Lewises. Because of the non-payment of said coupons, the whole mortgage became due at the option of the mortgagee; therefore Day stipulated in the contract with the Lewises the latter should protect him as to this, and his purchase was made on condition he should have the same time to pay the mortgage the Lewises would have had if default had not been made in the payment of the interest. Without insisting on being secured, as above stated, Day, on the next day after the contract with the Lewises, remitted to the plaintiff the interest aforesaid, and wrote him: “I have purchased the property with the agreement with Lewis, to be ratified by you, that there is to be no forfeiture upon the time originally given for the payment of the loan. If in this matter I cannot have the same time that the Lewises were entitled to before defaulting on their interest, so report and return the draft.” On March 1st the plaintiff acknowledged the receipt of the draft to pay the interest coupons, and, in reference thereto, said, “which we will send to you upon payment of $3.63 interest on interest due us. If the property passes into your hands we understand that you assume the loan without any change in the time, etc., and that we hold you and also Lewises on the bond.” To this Day replied, March 9, 1878: “Of course I am willing to pay $3.63. I do not assume payment of the loan made to Lewises from you, though I, of course, expect to pay the same.”

On March 19th the coupons were sent to Day. Without doubt, Day intended to pay the coupons when he wrote the first letter to the plaintiff, upon the conditions therein stated, which were that there should be no forfeiture, and he should have the same time to pay as if no default had been made in the payment of the interest. This offer had not been withdrawn when the coupons were sent Day, on the nineteenth day of March. This amounted to an acceptance by the plaintiff of the conditions attached to the payment; for if the plaintiff kept the money, he could only do so upon the terms proposed by Day. Whether the $3.63 interest was paid we do not know; but clearly the plaintiff accepted the promise of Day to pay the same, or at least waived the prepayment of that amount before sending the coupons. The plaintiff, without doubt, regarded the transaction between him and Day as a payment and not a sale of the coupons. It is said it could only be regarded as a payment on condition the bondholders agreed to waive their rights resulting from the non-payment of interest, and this they did not do. But Day did not stipulate the bondholders should so agree. All he asked was that the plaintiff should do so. This the latter clearly did when he cancelled and sent the coupons to Day. The latter got all he bargained for, because the forfeiture was not insisted upon; nor has it been at any time claimed the plaintiff or bondholders elected to consider the whole indebtedness due because of the failure to pay said interest, or on the ground the forfeiture had not been waived. If Day had insisted the consent of the bondholders should be obtained, it might have been done. Having got all he asked, Day should not complain.

We shall not stop to inquire whether the plaintiff had the power to bind the bondholders or not. Day evidently believed he had; or, if not so, he was content to rely on his agreement to this effect, and the bondholders have never repudiated it. We think the court erred in holding the coupons aforesaid had not been paid, and making the same a lien on the mortgaged premises.

2. The claim of John M. Day as assignee of the lien of W. F. Getchell & Sons. In his contract with the Lewises, Day agreed “to take up mechanics' liens to the amount of $5,000;” and it is objected by the plaintiff-- First, that Day paid off this lien in pursuance of such contract; second, that Getchell did not have a lien; and, third, conceding he had, the court erred in allowing 10 per cent interest on the amount due. As to the first point, we have examined the record with care, and feel well satisfied the fair preponderance of the evidence is that Day did not pay off or “take up,” in pursuance of the contract aforesaid, the Getchell lien, but that he purchased it, and instead of being extinguished it was assigned by Getchell to Day. The point made and insisted on under the second objection is that during the progress of the building, for the erection of which the materials were furnished, Getchell took collateral security for the performance of the contract, and therefore is not entitled to a lien. Miller's Code, § 2129.

The real estate upon which the building was to be erected belonged to Mrs. Lewis, and the contract with Getchell was made by her husband, C. H. Lewis. The latter testified he “was the general agent for Mrs. Lewis for all matters connected with that building.” There is nothing contradictory to this evidence, but much to strengthen and confirm it. Such agency must, therefore, be regarded as established; and herein lies the distinction between this case and Miller v. Hollingsworth, 33 Iowa, 224, and Price v. Hornby, 46 Iowa, 696. That C. H. Lewis, as such agent, made a contract with Getchell for and on behalf of Mrs. Lewis, entitling the former to a lien, we do not understand to be disputed, unless it be true that collateral security was taken which had the effect to cut off the lien. At the time the contract was made Lewis became personally responsible for its performance, and before its completion he, in connection with Mrs. Lewis, executed their joint note or notes for at least a portion of the amount due thereon. As C. H. Lewis was personally bound by the contract, and the notes being given in pursuance thereof, the lien was in no manner affected thereby. Bonsall v. Taylor, 5 Iowa, 546;Logan v. Attex, 7 Iowa, 77. Nor can such notes be regarded as collateral security for the performance of the contract. Ridd v. Wilson, 23 Iowa, 464;Burdick v. Moon, 24 Iowa, 418.

But it is insisted that, conceding C. H. Lewis to be the agent of Mrs. Lewis, such agency did not authorize him to enter into a joint contract binding Mrs. Lewis and himself; and that as this was done, it amounted to taking collateral security. At least, this is the logical result of the argument of counsel for appellant. We think that C. H. Lewis, as agent for his wife, had the power to make such contract as he...