Butson v. The Home Savings & Trust Co.

• Decision Date: 16 January 1906
• Citation: 105 N.W. 645,129 Iowa 370
• Parties: W. T. BUTSON, Appellant, v. THE HOME SAVINGS AND TRUST COMPANY, W. H. BREMNER, Trustee, and J. D. WHISENAND, Receiver, Appellees
• Court: Iowa Supreme Court

105 N.W. 645

129 Iowa 370

W. T. BUTSON, Appellant, v. THE HOME SAVINGS AND TRUST COMPANY, W. H. BREMNER, Trustee, and J. D. WHISENAND, Receiver, Appellees

Supreme Court of Iowa, Des Moines

January 16, 1906

Appeal from Calhoun District Court.-- HON. Z. A. CHURCH, Judge.

ACTION in equity to cancel mortgage given on the property of plaintiff. Cross-petition by defendants to foreclose the same mortgage. Decree of foreclosure as prayed in cross-petition and plaintiff appeals. Modified and affirmed.

Modified and affirmed.

Healy Bros. & Kelleher, for appellant.

W. H Bremner, W. A. Graham, and Frick & Crandall, for appellees.

OPINION

WEAVER, J.--

On April 18, 1896, the plaintiff was the owner and holder of five shares of stock in a building and loan association known as the "Iowa Deposit & Loan Company." Prior to the date named plaintiff had obtained a loan from said association in the sum of $ 300, to be paid in the usual manner by maturing the aforesaid shares of stock. The payment of the loan was further secured by a mortgage upon the plaintiff's property, and the stock at this time had been so far paid up that it had a withdrawal value of $ 125.51. At this point dealings between plaintiff and the defendant Home Savings & Trust Company began. This company paid for the plaintiff to the deposit and loan company the sum of $ 174.49, being the difference between the original loan, $ 300, and the withdrawal value of plaintiff's stock, $ 125.51. By this transaction the loan from the deposit and loan company was satisfied and the mortgage was thereupon released. The plaintiff then subscribed for five shares of stock in the Home Savings & Trust Company, and gave to said company his written obligation to it for the sum of $ 300, and secured the same by a pledge of the said last five shares of stock and by the mortgage now in controversy. In the papers executed between the plaintiffs and defendant the only reference made to the transaction with the deposit and loan company was in the following clause, indorsed upon or attached to the certificate issued to the plaintiff:

In consideration of the transfer of five shares of stock from the Iowa Deposit & Loan Company to the Home Savings & Trust Company, Des Moines, Iowa when 45 monthly deposits have been made on this stock to the said Home Savings & Trust Company, this certificate shall be treated as matured and the holder thereof shall be entitled to receive its full book value in cash.

While the note and mortgage in question were made and delivered upon the theory that said Home Savings & Trust Company had made to the plaintiff a loan of $ 300, said defendant did not, in fact (except by way of alleged credit hereinafter mentioned) lend, pay, or advance to or for plaintiff any other sum or amount than the said item of $ 174.49, which was required to enable the latter to take up his obligation to the deposit and loan company. Thereafter the plaintiff continued to make monthly payments to the said Home Savings & Trust Company on said five shares of stock, as well as payments of premiums and interest on the basis of a loan of $ 300, for the period of about 39 months. The aggregate of payments thus made is $ 249.60, distributed as follows: Stock dues, $ 117; premiums, $ 70.20; interest, $ 58.50; and fines, $ 3.90. At the end of said period of 39 months the Home Savings & Trust Company went into voluntary liquidation; the defendant W. H. Bremner being appointed trustee to take charge of and wind up the business of the corporation. Thereupon the plaintiff made no further payments upon his said obligation, but later made to said Home Savings & Trust Company and to its said trustee a written offer and tender to pay the additional sum of $ 100, and demanded a surrender of his note and a cancellation of the mortgage. The tender being refused, plaintiff instituted this action on April 11, 1902, for an accounting concerning the amount due to the said corporation and to enforce cancellation of the mortgage, offering at the same time to pay whatever amount should be found justly due from him. Thereafter, on October 4, 1892, the insolvency of the corporation being apparent, its affairs were placed in the hands of the defendant Whisenand, as receiver, for settlement.

Prior to the appointment of the receiver the corporation and its trustee filed their joint answer herein, averring that the loan to plaintiff was for $ 300, and that after giving due credit for the withdrawal value of the stock in the deposit and loan company, and for all payments since made, there was still due from plaintiff $ 174.03, for which sum by way of cross-bill they asked judgment and foreclosure of the mortgage. After the appointment of the receiver he became a party defendant to this action, and filed his separate answer and cross-bill. His answer repeats in substance the averments made in the answer of his codefendants -- admits the payments made, admits the withdrawal value of plaintiff's stock is $ 296.60, but alleges that by reason of an impairment of the capital plaintiff has become liable to certain assessments amounting to $ 113.81, and that there is still due upon the debt from plaintiff the sum of $ 174.03, for which sum he demands foreclosure of the mortgage. Later said receiver amended his answer and cross-petition and increased his claim for recovery upon the note and mortgage to $ 297.03. Plaintiff's reply to the cross-petition contains substantially a reaverment of the matters contained in his petition. On trial of the issues joined the district court found against the plaintiff, dismissing his bill, and in favor of the defendants upon the cross-bill, assessing the amount of plaintiff's indebtedness at $ 300.27 and decreeing a foreclosure of the mortgage. From this decree the plaintiff has appealed. The foregoing extended statement of the history of this case is practically undisputed and renders unnecessary any discussion of fact propositions.

I. We will first inquire as to the legal effect of the original transaction between the plaintiff and the defendant Home Savings & Trust Company. Was it in fact a loan of $ 300 as contended by the defendant, or a loan of $ 174.49 as contended by the plaintiff? At that date plaintiff's deposit and loan company stock had a withdrawal value of $ 125.51. Had plaintiff desired to take up the loan it would have required a withdrawal or surrender of his stock and the payment of $ 174.49 in cash. Stated in the language of counsel for appellee: "Butson owed the Iowa Deposit & Loan Company $ 300. His stock in that company was worth $ 125.51. Therefore, to cancel the loan and his debt to the deposit and loan company, he or some one for him must pay to the company the difference between $ 300, the debt, and $ 125.51, the value of the stock. The amount thus required was $ 174.49." If this admirably clear statement were applied to a similar transaction between two individuals, one of whom is not a building and loan association, the conclusion that the debtor's obligation to the person who paid this difference for him was exactly $ 174.49, and no more, would be so clear as to make wholly unnecessary argument in its support. It is insisted by the appellee, however, that, in addition to canceling the plaintiff's debt to the deposit and loan company, the effect of this deal was to make the latter a subscriber to the stock of the Home Savings & Trust Company with an advance payment thereon of $ 125.51, and a debtor to its loan fund for the sum of $ 300.

This statement is literally correct from appellee's stand-point, but a little exploration under its surface will demonstrate beyond question the error in the result reached by the trial court. The cross-petition filed by the receiver for the Home Savings & Trust Company serves, in effect, to convert this action into one for the foreclosure of the mortgage, and the law governing such proceedings must be the measure of the rights of the parties for that purpose. The statute provides that, when a building and loan association goes into court and demands recovery upon one of its contracts, "no greater recovery shall be had than the net amount of principal actually received, with interest thereon at the rate of not greater than twelve per cent. per annum on the net amount of the loan actually received by and paid to the borrower with statutory attorney fees; no evasion of this provision shall be had by means of any dues, membership fees, fines, forfeitures or other charges, any agreement to the contrary notwithstanding." Code, section 1898.

The "net amount of the loan" actually received by the plaintiff is therefore an inquiry which must be answered before we can ascertain whether the demand of the company is or is not excessive. It is not pretended that the Home Savings & Trust Company purchased the loan originally held by the deposit and loan company. That debt was paid, canceled and discharged. It is not claimed that the Home Savings & Trust Company paid out to the plaintiff or on his account any other or greater sum than $ 174.49; but the debt of $ 300 is...