Des Moines Joint Stock Land Bank v. Nordholm

• Citation: 253 N.W. 701,217 Iowa 1319
• Decision Date: 04 April 1934
• Docket Number: 42076
• Parties: DES MOINES JOINT STOCK LAND BANK, Appellant, v. DAVID T. NORDHOLM et al., Appellees
• Court: Iowa Supreme Court

253 N.W. 701

217 Iowa 1319

DES MOINES JOINT STOCK LAND BANK, Appellant, v. DAVID T. NORDHOLM et al., Appellees

No. 42076

Supreme Court of Iowa, Des Moines

April 4, 1934

Appeal from Boone District Court.--O. J. HENDERSON, Judge.

This case involves the application of the defendants, David T Nordholm and Elsie Marie Nordholm, husband and wife, for an extension of the time of redemption after an execution sale of their land under a mortgage foreclosure. The application was made by the defendants under the Iowa moratorium statute. A resistance was filed to the application by the plaintiff. In its resistance, the plaintiff put in issue the constitutionality of the Iowa moratorium statute. These issues were decided in favour of the defendants by the district court, and the time of redemption was continued in accordance with the moratorium statute. From the judgment thus entered, the plaintiff appeals.--Modified and affirmed.

Modified and affirmed.

Allen Whitfield and Edgar Musgrave, for appellant.

Frank Hollingsworth, for appellees.

Davis McLaughlin & Hise, Thomas & Loth, C. J. Lynch and Donnelly Lynch, Anderson & Lynch, and Vernon A. Vrooman, amici curiae.

KINDIG, J. EVANS, MITCHELL, ANDERSON, and DONEGAN, JJ., concur. CLAUSSEN, C. J., and STEVENS, ALBERT, and KINTZINGER, JJ., dissent.

OPINION

KINDIG, J.

On January 12, 1925, the defendants-appellees, David T. Nordholm and Elsie Marie Nordholm, husband and wife, executed a note for $ 12,000 to the plaintiff-appellant, Des Moines Joint Stock Land Bank of Des Moines, a corporation. The note was payable according to an amortized plan of $ 390 on the first days of February and August of each year, until sixty-eight semiannual payments were made. Then a final payment of $ 388.92 was to be payable on August 1, 1959. Interest at the rate of 5 1/2 per cent per annum, payable semiannually, was to be paid on all deferred payments. In order to secure the note the appellees executed to the appellant a mortgage on certain land in Boone county, Iowa. Although the record is indefinite on the subject, yet it appears that some, if not all, of the installment payments were met by the appellees before August 1, 1931. It definitely appears in the record that the appellees failed to pay the amortized installment of $ 390 due on August 1, 1931. After the appellees' default in that payment, the appellant, in accordance with the terms of the note and mortgage, declared the entire unpaid portion of the indebtedness due and payable.

Accordingly, on September 8, 1931, the appellant commenced a suit in equity in the district court of Iowa, in and for Boone county, to recover judgment on the note and obtain the foreclosure of the mortgage securing the same. So, on March 25, 1932, the foreclosure suit resulted in a judgment of $ 12,041.49 in the appellant's favor against the appellees. As a part of that judgment, the mortgage was foreclosed on the Boone county real estate. An execution issued on the judgment, and on May 6, 1932, the sheriff of Boone county offered the real estate for sale. At the sale, the appellant bid $ 11,000 for the property and the sheriff sold the same to it for that amount. Therefore a deficiency judgment remained. To evidence the appellant's purchase of the real estate at that execution sale, the sheriff, on May 6, 1932, issued to it a sheriff's certificate of sale. Under section 11774 of the 1931 Code, then applicable, the appellees had one year in which to redeem the Boone county land from the execution sale. That section reads:

"The debtor may redeem real property at any time within one year from the day of sale, and will, in the meantime, be entitled to the possession thereof; and for the first six months thereafter such right of redemption is exclusive."

When that statute, therefore, is applied to the facts in the case at bar, the appellees could have redeemed the land from the execution sale at any time within one year from May 6, 1932. If the appellees did not redeem within that period, however, their right of redemption would have terminated and the appellant would have been entitled to a sheriff's deed for the land.

While the year of redemption was passing but before it had passed, the legislature of Iowa, on March 18, 1933, enacted chapter 179 of the Acts of the Regular Session of the Forty-fifth General Assembly. This chapter of the Session Laws is popularly known as a moratorium extending the period of redemption. So far as material, the act provides:

"Section 1. In any action, for a real estate foreclosure of a mortgage or a deed of trust, which has been commenced in any of the courts, and in which a decree has been or may hereafter be entered, but the redemption period, as now provided, has not expired, upon application of the owner or owners of such real estate, the court shall, unless upon hearing upon said application good cause is shown to the contrary, order that no sheriff's deed shall be issued until March 1, 1935, and in the meantime the such owner or owners may redeem such property, and are entitled to possession thereof.

"Provided, the court having jurisdiction of such foreclosure action shall order and direct, that there shall be applied from the income of said real estate so much thereof as is just and equitable, toward the payment of taxes accruing thereon during the period of redemption extension as provided by this act, and any balance distributed as the court may direct, and shall make such provision for the preservation of said property as will be just and equitable during the redemption period, and to this end the court may, in his discretion, in order to carry out the foregoing powers, appoint a receiver of said real estate, and invest said receiver with such powers as the court may find will be just and equitable to all parties to the proceeding.

"Providing, that in the event the said owner or owners do not comply with the orders of the court, the order for extension of redemption period as authorized by this act shall, on proper hearing, be set aside by order of the court.

"Sec. 2. During the period of extension of redemption, as herein provided, the owner or owners of said real estate shall have the exclusive right to redeem, and the rights of redemption of subsequent mortgagees, junior lienholders, and creditors shall terminate within the period as by law now provided, the provisions of this act notwithstanding.

"Sec. 3. During the period of extension of redemption, as herein provided, the clerk of the district court of the county in which such foreclosure action is brought, shall receive and disburse the income from said real estate, as the court shall order as just and equitable.

"Sec. 4. Any provisions of any law or laws now in force, which are in conflict with the provisions of this act, are hereby suspended until March 1, 1935.

"Sec. 5. From and after March 1, 1935, this act shall cease to be in force.

"Sec. 6. If any court of competent jurisdiction finds that any word, phrase, clause, sentence, or part of this act is unlawful it shall not invalidate any other part of this act."

The act carried a publication clause and went into effect immediately.

On April 8, 1933, David T. Nordholm, one of the appellees, filed an application in the district court of Boone county for an extension of the period of redemption on the said real estate until March 1, 1935. In that application, the said appellee agreed to submit to any order of court made "in reference to the income of said real estate during the redemption period as provided by law." A notice of that application for the extension was duly served upon the appellant, and in response to that notice the appellant appeared and filed a resistance to the application for an extension of the time of redemption.

Three objections to the extension are named in the appellant's resistance to the application and referred to in its argument on this appeal. These objections are: First, that chapter 179, Acts of the Regular Session of the Forty-fifth General Assembly, "is unconstitutional because it impairs the obligation of the mortgage contract originally given to appellant, contrary to section 10, article I of the Constitution of the United States, and article I, section 21 of the Constitution of the State of Iowa"; second, that said chapter 179 "is unconstitutional because it deprives appellant of vested property rights without due process of law as required by the Fourteenth Amendment to the Constitution of the United States and article I, section 9, of the Constitution of the State of Iowa"; and, third, that such chapter "cannot be sustained as constitutional on the theory that it is a valid exercise of the police power of the state of Iowa."

The application for the extension, and the resistance thereto were submitted to the district court on April 21, 1933, and on that date the district court continued the period of redemption until March 1, 1935. As a part of the judgment extending the period of redemption, the district court also provided: First, "that the appellees shall remain in possession of the premises" during the extended period of redemption. Second, but that as a safeguard to that provision of the judgment, the district court declared that the "possession of the defendants * * * shall be conditioned upon the faithful compliance with" chapter 179 enacted by the Forty-fifth General Assembly, "and with the orders of this court (district court) and with the terms of the written leases to be hereinafter executed. Said leases when executed shall provide for a reasonable rental of the premises described in the foreclosure action, which rental shall be one-half of all corn and two-fifths of all small grain raised on said premises, to be delivered to market...