Corn Belt Trust & Sav. Bank of Belle Plaine v. May
| Decision Date | 15 January 1924 |
| Docket Number | No. 35282.,35282. |
| Citation | 196 N.W. 735,197 Iowa 54 |
| Court | Iowa Supreme Court |
| Parties | CORN BELT TRUST & SAVINGS BANK OF BELLE PLAINE v. MAY ET AL. WURTELE v. WURTELE ET AL. |
OPINION TEXT STARTS HERE
Appeal from District Court, Benton County; B. F. Cummings, Judge.
The first action is to foreclose a mortgage by the plaintiff, plaintiff claiming that its mortgage, though subsequent in point of time, should be decreed prior and superior to certain mortgages given to the defendant Tobin. Plaintiff also claimed that the widow, Minnie Wurtele, elected to take a part of the land as her homestead, and waived and was estopped from claiming dower therein. The widow filed a cross-petition alleging that she had not elected to take homestead, but that she was entitled to her distributive share in the 560 acres of land left by her husband. Tobin, trustee, also filed cross-petition asking foreclosure of his mortgages.
The second case was an action in partition brought by one of the heirs against the widow and other heirs, wherein Tobin, trustee, was made a party defendant. In the partition case the widow made the same claim, and the court therein found and decreed that she had not elected to take homestead. We take it that the appellant bank was not a party to that proceeding, and it was stipulated herein that the question as to election should be tried on the same evidence submitted in the partition suit. The court, the same judge presiding, again found there was no election.
The cases were consolidated by agreement in the district court, and they have been consolidated here and were submitted together. The trial court decreed foreclosure of plaintiff's mortgage, and one of the defendant Tobin, trustee mortgages, about which there seems to be little, if any, controversy now; also decreed a foreclosure of the $30,000 mortgage of Tobin, trustee, to the extent of about $14,000, and that said mortgage of Tobin, trustee, was in good faith, free from fraud and wrong, and prior and paramount to the claim of appellant bank; also decreed that the widow was entitled to her distributive share in the land and decreed partition.
This, in brief, states the issues and the decrees, which take up 110 pages of the abstract. The bank appeals. Affirmed.Snyder & Snyder, of Belle Plaine, and Nichols & Nichols, of Vinton, for appellant.
Tobin, Tobin & Tobin, of Vinton, and Charles E. Hughes and R. S. Milner, both of Belle Plaine, for appellees.
The appellant does not now claim that the first mortgage of Tobin was fraudulent, nor does it claim that there was any actual fraud in the $30,000 mortgage. There is some claim that there was constructive fraud as to it, or, as counsel put it, that it is and should be subsequent to the appellant's mortgage. The principal controversy here is as to the $30,000 mortgage and the alleged election by the widow to take homestead in part of the property.
The appellant states the two propositions substantially as we have stated them. They state that the court was in error in holding that Minnie Wurtele was entitled to an undivided one-third interest in the real estate left by her deceased husband, and, second, in holding that the mortgage of Tobin, trustee, known as the $30,000 mortgage, was a superior lien to that of the appellant's mortgage.
We shall proceed at once to a consideration of what we conceive to be the controlling points in the case.
It should be first stated that plaintiff assumedthe burden of showing the alleged priority of its mortgage in the first case, and in the second, concedes that distributive share is the primary right of the widow and assumed the burden to show the alleged election to take homestead. To do this it was compelled to, or at least did, go into the camp of its adversaries. No witnesses were called by the defendant. The evidence to establish plaintiff's claim consists, for the most part, of the testimony of appellees Matilda Wurtele and Emma L. May, daughters of Jacob Wurtele, deceased, and plaintiff's attorney. One of the Wurteles and two other witnesses testified briefly. It is contended by appellant that appellees called by it as witnesses gave evasive testimony, and the attorney contradicted some of the statements made by them as to conversations had between them. There may be some variation in the testimony of the two main witnesses and parties, but we think there is no substantial variance. The trial court, in the exercise of its discretion, practically permitted counsel for appellant to cross-examine the parties called in its behalf. In view of the large record, we shall not attempt to state the evidence in detail, but state our conclusions.
1. There was a first mortgage of $10,000 on the land which was a prior lien to the Tobin mortgages, which is not the subject of controversy. The first mortgage to Tobin, trustee, was dated March 1, 1920. It was duly recorded March 5, 1920. The second mortgage of $30,000 was dated December 23, 1920, and recorded on the 27th. The plaintiff's mortgage was dated March 9, 1921, and recorded on the 10th, and is for $11,276.04. The plaintiff's mortgage was given for prior indebtedness due from the mortgagors to plaintiff bank, some of which dated back as early as 1908. The bank paid nothing at the time of the execution of its mortgage. The mortgages were executed by James S. May and Emma L. May on their interest in the land of Jacob Wurtele, deceased. Although they had given but three mortgages, prior to plaintiff's mortgage, plaintiff's mortgage recited that it was subject to all mortgages except three mortgages, one for $10,000, one for $15,000, and one for $30,000. The explanation of this is that it was supposed all three were fraudulent and this was so written to protect the bank. But this shows notice to the bank of the three prior mortgages. There is other evidence tending to show notice to the bank which will be referred to later.
We think there is no evidence which fairly contradicts the claim of Tobin, trustee, that he paid to the Mays $14,250.73. Of this amount approximately $3,200 was paid prior to the execution and recording of plaintiff's mortgage and the balance afterwards. Between $100 and $200 was advanced after the suit was brought, but appellee made no claim for that, and it was not included in the judgment. Appellant contends that it is entitled to priority as to the whole amount, and especially so as to the amounts paid after its mortgage was executed and recorded. It is contended by appellant that the payments of money by Tobin to the Mays under the $30,000 mortgage were mere voluntary payments, and that even though there was no actual fraud in giving the $30,000 mortgage, it is a suspicious circumstance and at least constructive fraud, since it tended to hinder plaintiff, as a creditor, in the collection of its claim. The $30,000 mortgage does not show on its face that it was given for advances to be made.
No Iowa authorities are cited by either side on this proposition, except that appellee cites Smith v. Moore, 112 Iowa, 60, 83 N. W. 813, to the point that a mortgage executed to secure a pre-existing debt does not constitute the mortgagee a bona fide purchaser, or entitled to any priority as such. It is conceded by appellant that there is no doubt as to the validity of a mortgage providing for future advances, and that if there was an agreement by Tobin to make an advancement he had the right to make the advances notwithstanding subsequent mortgages or other liens, but that if there is no such agreement, then no advancements can be made as against the mortgage of subsequent date after notice of the latter. They cite 27 Cyc. 1178 and 1179. They contend, also, that the notice of the later mortgage can be either actual or constructive notice, citing 27 Cyc. 1179, 1180. They concede there are cases holding that constructive notice is not sufficient, but that this rule is applied only where the mortgage of earlier date discloses that it is one for future advances. 3 Pomeroy, Equity, § 1199 (3d Ed.), and other cases.
On the other hand, appellee advances the following propositions with authorities to support them: That a mortgage given to secure future advances, in good faith, and properly recorded, is valid as between the parties to it and as to subsequent incumbrancers, and that the rule holds even though the mortgage does not, on its face, disclose that it was given to secure future advances, citing 19 R. C. L. 286, 393; Dummer v. Smedley, 110 Mich. 466, 68 N. W. 260, 38 L. R. A. 490;Minor v. Sheehan, 30 Minn. 419, 15 N. W. 687;Perkins v. Drew (Ky.) 122 S. W. 526;Du Bois v. First National Bank, 43 Colo. 400, 96 Pac. 169;Union National Bank v. Moline, Milburn & Stoddard, 7 N. D. 201, 73 N. W. 527;Scofield v. Minot, 31 N. D. 605, 154 N. W. 527;Good v. Woodruff, 208 Ill. App. 147;Tully v. Harloe, 35 Cal. 302, 95 Am. Dec. 102. Again, that where a mortgage is given to secure future advances, the filing of subsequent mortgage is not constructive notice to the prior mortgagee so as to postpone the lien of his mortgage for advances made thereafter, even though such advances are optional and not obligatory. The prior mortgage is affected only by actual notice of the subsequent mortgagee, and the burden is on the latter mortgagee to prove such notice. 19 R. C. L. 429, 431, 393; Anderson v. Liston, 69 Minn. 82, 72 N. W. 52;Tapia v. Demartini, 77 Cal. 383, 19 Pac. 641, 11 Am. St. Rep. 288;McDaniels v. Colvin, 16 Vt. 300, 42 Am. Dec. 512; Union Bank v. Moline, Milburn & Stoddard, supra; 1 Jones, Mortgages, §§ 372, 373 (6th Ed.); 3 Pomeroy, Equity, §§ 1197, 1199 (3d Ed.).
[1] Our own statute seems to lend support to this doctrine, and that constructive notice because of recording applies to prior incumbrancers. Code, § 2925. The evidence in the instant case we think fails to show actual notice to Tobin, trustee. Appellee also contends that persons interested in limiting advances under a prior mortgage for future advances can do so only by...
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