Des Moines Joint Stock Land Bank of Des Moines, Iowa v. Allen

• Decision Date: 17 July 1935
• Docket Number: 42248.
• Citation: 261 N.W. 912,220 Iowa 448
• Parties: DES MOINES JOINT STOCK LAND BANK OF DES MOINES, IOWA, v. ALLEN et al.
• Court: Iowa Supreme Court

261 N.W. 912

220 Iowa 448

DES MOINES JOINT STOCK LAND BANK OF DES MOINES, IOWA, v. ALLEN et al.

No. 42248.

Supreme Court of Iowa.

July 17, 1935

Appeal from District Court, Palo Alto County; James De Land, Judge.

Action by the Des Moines Joint Stock Land Bank of Des Moines, Iowa as assignee, to foreclose a mortgage on 240 acres of land in Palo Alto county, Iowa, in which they also ask personal judgment against the mortgagor, his wife, the First Trust & Savings Bank and the First National Bank, both of Fort Dodge Iowa, and for the appointment of a receiver. Judgment and decree of foreclosure was entered and a personal judgment entered against the defendant J. H. Allen. No personal judgment was entered against Mrs. Allen, his wife, or against either of the appellee banks, and no receiver was appointed. From an order denying such personal judgments and receivership, plaintiff appeals.

Affirmed in part; reversed in part.

Kelly Shuttleworth & McManus, of Des Moines, and Kelly & Kelly, of Emmetsburg, for appellant.

F. C. Gilchrist, Jr., of Laurens, and James W. Fay, of Emmetsburg, for appellees.

KINTZINGER, Chief Justice.

In 1919, the defendants J. H. Allen and wife executed an amortization note and mortgage in the sum of $24,000 to the Central Iowa Joint Stock Land Bank of Des Moines, which the latter assigned to plaintiff in 1924. In May, 1922, Mr. Allen, being greatly indebted to the First Trust & Savings Bank and the First National Bank, of Fort Dodge, Iowa, conveyed the land in question to them, as security for such indebtedness. At that time Mr. Allen was indebted to both banks in an amount greatly exceeding his equity in the land, and his deed to them was in effect a mortgage. This deed was made subject to the plaintiff's $24,000 mortgage, but contained no clause assuming the mortgage therein. Appellee banks occupied the same building, and were in most respects officered by the same men. The real estate comprises 240 acres of land in Palo Alto county, Iowa, and belonged to the defendant J. H. Allen. His wife, Grace G. Allen, had only an inchoate dower interest therein.

In 1926, Mr. Allen attempted to secure an extension of the note and mortgage, and a reduction in the rate of interest thereon. Papers to that effect were forwarded to him by plaintiff for that purpose, and were signed by the officers of the banks at Allen's request and on his behalf, in September, 1926, while he was still the owner of the land. No resolution was ever adopted by the board of directors of either bank authorizing an assumption of the mortgage or an extension thereof.

In November, 1928, the indebtedness of the defendant Allen to the appellee banks amounted to $45,656.86. The evidence shows that in order to effect a reduction of this indebtedness, Allen, in November, 1928, gave a quitclaim deed of all his interest in the 240 acres in question, and an additional 120 acres in Minnesota, to the First National Bank, for both banks. This deed contains no agreement to assume the obligation of plaintiff's mortgage.

Appellant contends that the appellee banks assumed the obligation of plaintiff's mortgage, by an oral agreement entered into between Mr. Allen and said banks, and also by reason of an implied agreement resulting from the fixing of an estimated value of $165 an acre on the land, and deducting therefrom the amount of plaintiff's mortgage, and by the extension agreement executed in 1926.

Although there is an apparent conflict in the testimony with reference to whether or not the officers of appellee banks assumed plaintiff's mortgage, it is our finding that there was no evidence of any written or oral agreement to that effect.

There was also a mortgage existing against the Minnesota land, but no question in relation thereto is raised herein, as the Minnesota land, and the indebtedness thereon, was only considered for the purpose of arriving at the amount of credits to be given Allen on his indebtedness to appellee banks.

In arriving at the amount of such credits, it was necessary to, and Mr. Allen and the banks did, fix an estimated value of $165 per acre upon all the land transferred, making its total estimated value $59,400. An existing mortgage indebtedness thereon of $32,677.76 was deducted from this total value to determine Allen's equity in said lands. His equity in both tracts was, therefore, found to be $26,722.24. $21,677.76 of the total mortgage debt was represented by plaintiff's mortgage.

Allen's total indebtedness to appellee banks was $45,656.86, upon which he was credited on the books of the banks with his equity of $26,722.24, and his obligations to that extent were returned to him, marked canceled. After deducting Allen's entire equity from his total indebtedness, he still owed appellee banks $18,934.62.

The estimated value of the 240 acres of Palo Alto county land was $39,600. Against this was plaintiff's mortgage of $21,677.76. Deducting this amount from the estimated value of the Iowa land left Mr. Allen's equity in the Iowa land $17,922.24. After crediting him with this amount on his obligations, together with the additional amount credited him on the Minnesota land, he still owed both banks $18,934.62. The evidence, therefore, shows without dispute that Mr. Allen's indebtedness to appellee banks greatly exceeded any equity he had in all the lands conveyed.

In order to determine his equity in the land, and to enable the banks to credit him with a fixed (or certain) amount on his indebtedness, he executed the quitclaim deed to the banks at the estimated value referred to. This deed simply conveyed all of his interest in the land . No written or oral agreement to assume plaintiff's mortgage was made by the defendant banks.

Plaintiff seeks judgment against appellee banks upon the theory of both an oral and implied agreement to assume payment of its mortgage. Plaintiff also asks for personal judgment against the defendant Mr. Allen, and also asks for the appointment of a receiver to collect the rents and profits during the period of redemption. The court entered a decree of foreclosure in favor of plaintiff, but denied personal judgment against the defendant banks and Mrs. Allen, and also refused the appointment of a receiver. From this action of the lower court, plaintiff appeals.

I.

Appellant contends that the court erred in failing to enter judgment against appellee banks because (1) they orally promised and agreed through their officers to assume plaintiff's mortgage, or (2) because an implied agreement to that effect resulted from the nature of the transactions between Allen and the banks, under which the land conveyed was estimated at a fixed value of $165 an acre, from which the amount of plaintiff's mortgage was deducted.

It is the well-settled rule of law that where property is conveyed subject to an existing mortgage, the grantee is not liable for the payment of such mortgage, unless it appears from the evidence that he agreed to assume it. 41 C. J. 717; 19 R.C.L. 372, § 142; 19 R.C.L. 380, § 151; Johnson v. Monell, 13 Iowa, 300; Aufricht v. Northrup, 20 Iowa, 61; Hull & Co. v. Alexander, 26 Iowa, 569; Fuller & Co. v. Hunt et al., 48 Iowa, 163; Lewis v. Day, 53 Iowa, 575, 5 N.W. 753; Ritchie v. McDuffie, 62 Iowa, 46, 17 N.W. 167; Duncan v. Finn, 79 Iowa, 658, 44 N.W. 888; Bristol Sav. Bank v. Stiger, 86 Iowa, 344, 53 N.W. 265; Seiffert & Wiese Lumber Co. v. Hartwell, 94 Iowa, 576, 63 N.W. 333, 58 Am.St.Rep. 413; Moore v. Olive, 114 Iowa, 650, 87 N.W. 720; Fitzgerald v. Flanagan, 155 Iowa, 217, 135 N.W. 738, Ann.Cas. 1914C, 1104; Halvorson v. Mullin, 179 Iowa, 293, 156 N.W. 289, 161 N.W. 309; Dimmitt v. Johnson, 199 Iowa, 966, 203 N.W. 261; Herbold v. Sheley, 209 Iowa, 384, 224 N.W. 781; Fiske v. Tolman, 124 Mass. 254, 26 Am.Rep. 659; Heidahl v. Geiser Mfg. Co., 112 Minn. 319, 127 N.W. 1050, 140 Am.St.Rep. 493; Belmont v. Coman, 22 N.Y. 438, 78 Am.Dec. 213; Robinson Bank v. Miller, 153 Ill. 244, 38 N.E. 1078, 27 L.R.A. 449, 46 Am.St.Rep. 883; Shepherd v. May, 115 U.S. 505, 6 S.Ct. 119, 29 L.Ed. 456; Farmers' Loan & Trust Co. v. Penn Plate Glass Co., 186 U.S. 434, 22 S.Ct. 842, 46 L.Ed. 1234; Capitol Nat. Bank v. Holmes, 43 Colo. 154, 95 P. 314, 16 L.R.A.(N.S.) 470, 127 Am.St.Rep. 108.

" The grantee of mortgaged land does not incur a personal liability for the payment of a mortgage debt, enforceable by the mortgagee, merely because the deed recites that it is made subject to the mortgage; nor because of his agreement to purchase subject to the mortgage. Personal liability on the part of the grantee is created only by his distinct assumption of the debt or contractual obligation to pay it." 41 C. J. 717, § 757.

" While * * * a mortgagor remains personally chargeable for the obligation secured, a grantee of the land which is subject to a mortgage assumes no personal liability for the obligation secured, * * * where he has not by express agreement undertaken the payment thereof. He is liable neither legally nor equitably to indemnify his grantor against the mortgage. * * * Mere payment of interest by the grantee does not in itself impose on him personal liability for the mortgage debt. Nor is the rule * * * altered by the circumstance that the owner conveys subject to a mortgage, and deducts the amount thereof from the consideration." 19 R.C.L. 372, § 142 (notes 7-10).

In Aufricht v. Northrup, 20 Iowa, 61, loc. cit. 62, this court said: " The sale and conveyance of the tract of land, with covenants of general warranty, subject, however, to a prior mortgage, does not of itself, and without further showing, amount, in law, to a promise by the grantee to pay off such incumbrance and discharge the mortgage debt. Johnson v. Monell, 13 Iowa, 300."

In Hull & Co. v. Alexander, 26 Iowa, 569, loc....