Clark v. Chapman

• Decision Date: 17 December 1931
• Docket Number: No. 41122.,41122.
• Citation: 213 Iowa 737,239 N.W. 797
• Parties: CLARK v. CHAPMAN ET AL.
• Court: Iowa Supreme Court

213 Iowa 737

239 N.W. 797

CLARK

v.CHAPMAN ET AL.

No. 41122.

Supreme Court of Iowa.

Dec. 17, 1931.

Appeal from District Court, Polk County; O. S. Franklin, Judge.

Suit to foreclose a mortgage upon real estate. The defendants Birdie V. Chapman and C. L. Chapman, her husband, were the mortgagors. The defendants Lewis Boudinot and his wife, Genevieve, were named in the petition as parties claiming some interest in the property. The Chapmans made no defense. The answer of the Boudinots was affirmative, and set up their alleged right and title to the property, and specially claimed a homestead right therein. They averred that in December, 1926, they had conveyed the property to Birdie V. Chapman by warranty deed; that said deed was intended as a mortgage to secure a debt; that they orally reserved their homestead rights, and continued in possession of the property. By reply, plaintiff denied the claims thus set up, and pleaded an estoppel upon said defendants. The decree was for the plaintiff, and the defendants Boudinot have appealed.

Affirmed.

Gillespie & Moody, of Des Moines, for appellants.

J. A. Merritt, of Des Moines, for appellee.

EVANS, J.

The mortgage in suit was made January 5, 1928, and was for $8,300. The mortgaged property consists of about two acres of ground, divided into many lots, and situated upon East Fourteenth street in the city of Des Moines. It comprises two residence houses--one of which was at the time of the conveyance occupied by the Boudinots as a homestead, and the other was rented to a tenant. This occupancy was begun by Lewis V. Boudinot and his then family in 1917. Prior to the year 1924, his wife died, survived by her husband and two children. In 1924 Boudinot married his present wife (Genevieve), and has continued to occupy the property with his family since that time. In December, 1926, this husband and wife conveyed this property, including both houses, to Birdie V. Chapman (a sister of Lewis V. Boudinot), by a warranty deed with full covenants, subject, however, to liens of record. While holding the title thus conveyed, Birdie V. Chapman and her husband executed the mortgage in suit. There was no controversy or friction of any kind between the Chapmans and the Boudinots either prior to, or since, the execution of the mortgage. They all testified that they acted in good faith in the negotiation and delivery of said mortgage. If they have since been guilty of bad faith, it is not as against each other, but against the plaintiff, and jointly. The contention of the Boudinots now is that the warranty deed was intended as a mortgage to secure a debt owing to Birdie V. Chapman; that there was no intention on the part of the Boudinots to part with their homestead rights; that, by the continued possession of the property, they maintained their homestead rights; that the mortgage in suit was void as to them because they did not sign the same.

It appears on behalf of plaintiff that Chapman, the husband of Birdie, solicited this loan from the plaintiff, and that Boudinot was with him when he did it. Chapman represented to the plaintiff that his wife was the owner of the property. This was done in the presence of Boudinot, as the latter testified. The plaintiff went with them to view the property. Boudinot conducted him through the house which he was occupying. The other tenant conducted him through the other house. By this conduct the plaintiff was led to believe, and did believe, that Boudinot was a tenant of his sister on this property, and that the other was tenant of the same purported owner. Upon the trial herein, Boudinot testified that he was not a tenant of his sister, but was in control himself of both properties, and collected rent from the other tenant.

Ignoring some of the facts herein suggested, the defendants contend broadly that they never parted with their homestead right, and that in some way they reserved it, and that it is superior to any rights accruing either to Birdie V. Chapman or to her mortgagee.

[1] Concededly, it is open to a grantor to prove that his warranty deed was intended as a mortgage. The proof, however, of such a contention must be clear and convincing. At this point we defer the consideration of that issue, and consider first another feature of the case. For that purpose, and for the moment, we assume as true the following testimony of Mrs. Chapman as a witness for the defendants:

“Q. You tell in your own words what the agreement was at the time you took that deed? A. My brother owed us about $1800.00, and his health was not good, and so he wanted to secure us, and his banker advised him to secure us, and he trusted me in the belief that if anything should happen to him that I would care for the rest of the property for his children, what was left of it, and that is the way it was.

Q. If Mr. Boudinot paid you the indebtedness which he owed you and your husband, what were you going to do? A. To deed it back.”

[2][3][4] It may be laid down as a self-evident proposition that the rights conferred upon Clark by the Chapman mortgage were at least equal to the rights conferred upon Birdie V. Chapman by the warranty deed. The evidence discloses that the property was incumbered for $8,300, and that the purpose of the loan negotiated with the plaintiff was to meet that incumbrance, which had matured. The transaction was closed at the People's Savings Bank, where the other incumbrance was held. The plaintiff's check was turned in by the parties to the People's Savings Bank, and the previous mortgage was canceled and delivered to the plaintiff. Not a dollar of the proceeds of the loan was diverted to any other purpose than to take up the existing incumbrance and thereby to conserve the property. Boudinot was present at this closing transaction. But, even if he were not present, and even if he knew nothing about it at that time, could he challenge the transaction as against his sister and repudiate the right in her to effect this change of creditors or mortgagees for the purpose of conserving the property? If she had a claim upon her brother for $1,800, it was nevertheless inferior to the existing mortgage. Her claim could not be saved to her out of the property, unless she first paid the prior lien. If she had paid the lien out of her own funds, could Boudinot challenge her right to reimbursement? These questions quite answer themselves. The fact that there was an existing mortgage upon the property and that the loan from plaintiff was made for the purpose of discharging it, and that it was thus discharged, is entirely ignored in appellant's opening argument. The question is met in the reply argument by the statement that: “Nowhere in the record is there any testimony that the appellant, Genevieve Boudinot ever signed any mortgage or deed other than the mortgage which was signed in favor of Birdie V. Chapman.”

Mrs. Chapman testified:

“Q. And you knew Mr. Clark was furnishing the money? A. Yes.

Q. You was present up at the bank, were you, at the Peoples Savings Bank, when he turned the money over? A. Yes.

Q. He turned over $8,300.00 and then that was used to pay off the incumbrances on the place? A. Yes.”

Boudinot testified:

“Q. Was there anything said there by the Chapmans while you were present about how much money they would have to have? A. Yes. He told him he would have to have around $8,000.00, the loan was $8,000.00 and that he would have to have a little better than that.

Q. It was going to take up another mortgage loan that you had made before you deeded it to Birdie? A. I presume so.”

[5] The plaintiff testified in substance that the contemplated loan was to be for $8,000, but was increased to $8,300, because such an amount was necessary to discharge the existing mortgage. The denial in appellant's reply brief that there was any mortgage, which had been signed by Genevieve, is inconclusive. At the time the deed was made to Mrs. Chapman, the marriage of Genevieve was comparatively recent. Her husband had owned the property since 1917. If the existing incumbrance antedated the marriage, it was no less valid and enforceable because of the marriage. The marriage imposed no infirmity upon existing mortgages. Appellants make this further response in their reply argument: “Appellants deny that there was a mortgage on the property which was a valid lien against the appellants' homestead, and appellants state that there has never been a mortgage against the homestead which could be validly enforced against it.”

This denial presents only a legal conclusion, and is predicated wholly upon the mere absence of data from the record. The burden was upon the appellants and not upon the appellee. The evidence shows that all the parties treated such mortgage at all times prior to this suit as valid and enforceable. That of itself is quite sufficient for our present consideration.

It is plain to our minds that, if Birdie V. Chapman had paid off the existing mortgage, she would have been entitled in equity to reimbursement. Nor would she be entitled to any less if she were to discharge the present judgment entered against her in favor of the plaintiff. And this is so on the theory of her testimony above quoted. The indications of the record are that she and her husband are safely insolvent and are quite fearless of the judgment. As witnesses, they have lent their aid freely to their brother. The right of plaintiff, as mortgagee under Mrs. Chapman, is quite equal to what her own rights would have been if she had advanced the funds herself.

Under the facts herein disclosed, plaintiff would have been clearly entitled to the remedy of subrogation, if he had asked it. That remedy doubtless would have furnished the simplest solution of the problem. Nevertheless the facts which would have justified such remedy are equally effective to repel the affirmative defense pleaded by the defendants.

[6][7][8][9] II. Is the evidence sufficiently persuasive to support the...