Des Moines Joint Stock Land Bank v. Danson

• Court: Iowa Supreme Court
• Writing for the Court: PER CURIAM Per Curiam.
• Citation: Des Moines Joint Stock Land Bank v. Danson, 220 N. W. 102, 206 Iowa 897 (Iowa 1928)
• Decision Date: 26 June 1928
• Docket Number: 39109
• Parties: DES MOINES JOINT STOCK LAND BANK, Appellant, v. W. C. DANSON, et al., Appellees

220 N.W. 102

206 Iowa 897

DES MOINES JOINT STOCK LAND BANK, Appellant, v. W. C. DANSON, et al., Appellees

No. 39109

Supreme Court of Iowa, Des Moines

June 26, 1928

SUPPLEMENTAL OPINION OCTOBER 23, 1928.

Appeal from Kossuth District Court.--D. F. COYLE and F. C. DAVIDSON Judges.

This was a contest between P. P. Zerfass, trustee in bankruptcy for W. C. Danson, defendant, on the one hand, and the Des Moines Joint Stock Land Bank, on the other, for the proceeds of the rents and profits on certain lands during the redemption period under foreclosure. Judgment and decree was in favor of the trustee, and the Land Bank appeals.

Affirmed.

R. J Bannister, Cosson & Newcomb, and T. P. Harrington, for appellant.

Sullivan McMahon & Linnan, for appellee.

OPINION

PER CURIAM.--Two appeals are here consolidated. They relate to judgments and decrees entered respectively by the Hon. D. F. Coyle, judge, and the Hon. F. C. Davidson, judge.

On the 23d day of February, 1927, the Des Moines Joint Stock Land Bank, appellant, as plaintiff, commenced an action against the appellees, W. C. Danson, E. B. Butler, and Lenette W. Butler, as defendants, for the foreclosure of a real estate mortgage on certain lands in Kossuth County, consisting of 209.75 acres. The real estate mortgage was given by Danson and the Butlers to secure a note of $ 13,463.62, jointly executed by them. In the petition there was an application for the appointment of a receiver, to collect the rents and profits and apply them on the indebtedness. Default was made by Danson and the Butlers, and judgment in rem was accordingly entered against them, December 8, 1927.

Meanwhile, the appellee Danson filed his voluntary petition in bankruptcy, and was duly adjudged a bankrupt, March 1, 1927. Immediately after the entry of the default, on December 8, 1928, at the request of the appellant, the portion of the petition for foreclosure relating to the appointment of a receiver was duly heard before the Hon. D. F. Coyle, judge, and judgment and decree denying the same entered December 15, 1927.

That controversy was waged between the appellant and the intervener, Zerfass, the trustee in bankruptcy for the appellee Danson. Many items of dispute relate to this phase of the litigation. During the hearing, appellant asked for a continuance of the cause for a few days, in order that he might obtain the original note and mortgage, for the purposes of evidence but this was refused. Furthermore, appellant demanded "a decree with reservations for a hearing on the appointment of a receiver until the next term of court," and this suggestion, too, was rejected. Then appellant sought to withdraw its application for the appointment of a receiver, and have the question concerning that point reserved until after the execution sale. Again the court disallowed the relief. So, two decrees were prepared, one for the default, and the other declining to name the receiver. Soon after those proceedings, appellant prepared and filed a formal application for a stay order, pending execution sale and appeal to this court, which was also refused by the district court, but later allowed by us.

Next in order of events was the sale of the real estate under the foreclosure judgment, resulting in a deficiency of $ 1,000. Appellant now demands a reversal of some or all of the various orders and judgments relating to the receivership.

For the sake of clearness, it is deemed best to state any further facts and circumstances in connection with the discussion of each particular proposition presented for our review.

I. To obtain the appointment of a receiver, when provision therefor is contained in the mortgage, it is necessary to show, not only that the debtor is insolvent, but also that the security is insufficient. Parker v. Coe, 200 Iowa 862, 205 N.W. 505; Young v. Stewart, 201 Iowa 301, 207 N.W. 401. We said, in Parker v. Coe, supra:

"Even where the mortgage provides for the appointment of a receiver to collect the rents and profits, we have held that there must be a showing of insufficiency of security, to warrant a court of equity in depriving the owner of the right given him by statute to the possession of the premises during the year for redemption. Durband v. Ney, 196 Iowa 574, 191 N.W. 385; Sheakley v. Mechler, 199 Iowa 1390, 203 N.W. 929."

Was that condition met by appellant at the hearing before Judge Coyle in December, 1927? Clearly not. Danson was a bankrupt, and the Butlers were nonresidents, yet no evidence of any kind was offered to show that this 209.75-acre farm was not valuable enough to entirely satisfy appellant's judgment, including interest and costs, aggregating in the total approximately $ 15,033.32.

Apparently for the purpose of furnishing a sufficient record in this regard, appellant, through its counsel, offered "to accept $ 1,000 less than the total amount due." Assuming, as we do, without deciding, that such concession on appellant's part can be considered as testimony, yet, nevertheless, it is not admissible to show either the market or security value of the realty. See Atlantic Nat. Bank v. Korrick, 29 Ariz. 468 (242 P. 1009); 22 Corpus Juris 179, Section 124. Within the text contained in the Corpus Juris citation is the following:

"No probative value can be attached to the mere fact of offers to sell the land in question, and a fortiori the same is true as to offers to sell similar or neighboring land. The amount for which an owner would have sold his property is influenced by too many fortuitous circumstances to be relevant on an inquiry as to value. * * *"

Thus, there was no competent evidence upon which the court would have been justified in appointing the receiver.

II. Some statements were received into the record concerning the fact that there was waste, in that the crops were not being properly cared for and harvested. Because of this, appellant argues, it should have been entitled to a receiver.

Under certain circumstances and conditions, it is true, a receiver, because of the general statutory provisions therefor, regardless of the terms of the mortgage, may be appointed, for the purpose of preserving and maintaining the security. McBride v. Comley, 204 Iowa 622, 215 N.W. 613; Young v. Stewart, supra. Once more appellant failed in its proof, because it did not show that, even if the crops in question were ruined or lost, the land itself would be depreciated in value thereby to the extent that the security for the indebtedness sought to be collected was not sufficient.

III. Although a receiver is obtained on the theory of preventing waste, as distinguished from the doctrine relating to sequestration of the rents and profits for application upon the debt, even then, in such event, those chattels cannot be used as additional security for the reduction of the obligation. McBride v. Comley, supra. Apt language employed in the McBride case is:

"Forsooth, the pretext of this prevention [stopping waste] cannot be used as a camouflage for the real, in order to appropriate property not covered by the original lien, and through this unauthorized method acquire unpledged resources with which the mortgage burden may be partly or wholly paid. * * *"

Likewise, in the case at bar, appellant could not avail itself of the rents and profits for the reduction of the amount due it upon the theory of a receivership to avoid waste and destruction.

IV. Another difficulty is encountered by appellant at this juncture, in this: the 1927 crops were in dispute. Therefore, whatever waste related to the failure to protect them has already been committed. Emergency in this regard does not now exist. Consequently the question is moot at this late date.

V. Further consideration must now be directed to the question of whether or not a continuance should have been granted. According to the record, there was only one more day in the term. Application was for a longer period. Resultantly, the cause would have gone over the term, had appellant's request been allowed. Moreover, appellant did not ask for this favor at the beginning of the trial, but rather, at the end thereof, when it was apparent that it was not going to succeed in its efforts to obtain a receiver. Had such redress been demanded in the beginning, no doubt the trial court should have granted it. Equitable Life Ins. Co. v. Rood, 205 Iowa 1273, 218 N.W. 42; John Hancock Mut. Life Ins. Co. v. Linnan, 205 Iowa 176, 218 N.W. 46. Nevertheless, it is another thing for a litigant to try his cause in reference to the receivership before foreclosure sale, and then, at the moment of defeat, as a matter of final salvation, change front, and ask for the continuance of that very cause, in order to prevent the antagonist from reaping the fruits of the apparent victory. Discretion in this regard is possessed by the trial court. Cavanagh v. O'Connor, 194 Iowa 670, 186 N.W. 907; Percival-Porter Co. v. Oaks, 130 Iowa 212, 106 N.W. 626; Reed v. Lane, 96 Iowa 454, 65 N.W. 380; Anderson v. Anderson, 191 Iowa 497, 181 N.W. 241; Linnemann v. Kirchner, 189 Iowa 336, 178 N.W. 899.

Additional time was not desired by appellant due to any cause constituting a ground for continuance. With this state of the record before us, we do not feel justified in interfering with the court's discretion in the premises.

VI. Absence of the original note and mortgage was not a legal excuse for an adjournment of "continuance." A justifiable reason for not having those documents in court was not shown. Anyway, had they been there, the final result of the trial would have been the same; for, without the required showing concerning the insufficiency of the security, appellant could not prevail.

For the purposes of this discussion, we are treating the record as if it...