Des Moines Sav. Bank v. Arthur

Citation143 N.W. 556,163 Iowa 205
Decision Date25 October 1913
CourtUnited States State Supreme Court of Iowa


Appeal from District Court, Madison County; W. H. Fahey, Judge.

On the 6th day of October, 1900, Thomas and Montana Duff executed to A. B. Shriver their promissory note for $1,800 payable on the 6th day of October, 1910, with interest at the rate of 5 1/4 per cent. per annum payable annually, but, if any part of the principal or interest should not be paid when due, it would bear 8 per cent. per annum. This note was secured by a mortgage executed by the payors on 101 acres of land. On February 10, 1906, the Duffs conveyed the land to Edwin Trester and the latter negotiated a loan with A. B. Shriver in order to take up that mentioned and pay to the Duffs $1,200 on the purchase price. A note for $3,000 was executed to Shriver by Trester and wife payable five years after date and secured by a mortgage on the land. The $1,200 was received from Shriver and paid over to the Duffs, and Shriver explained that he owned the $1,800 note and mortgage, but that it was in Des Moines, up as security, and that he would get it in a few days and cancel it. The $3,000 note and mortgage of Trester and wife were assigned to A. B. Anderson, September 22, 1906, and they subsequently conveyed the land to E. E. Gallup and wife, who later conveyed it to E. O. Arthur. The deed of the Duffs to Trester warranted title except as to the $1,800 mortgage. On June 11, 1901, Shriver assigned the mortgage securing the note for $1,800 to the Security Loan & Trust Company, and this assignment was recorded, and there was nothing of record indicating a reassignment thereof to Shriver or any one else. In the fall of 1909, Shriver negotiated a loan of $1,600 with the Des Moines Savings Bank and executed his note for that amount payable 90 days after date with interest at the rate of 7 per cent. per annum, and as collateral security for its payment hypothecated the note for $1,800 and assigned to said bank the mortgage securing the same. This action was begun by said bank January 6, 1911, praying for judgment on said note of $1,800 against Montana Duff and demanding foreclosure of said mortgage against the land and that it be established as a lien prior to the $3,000 mortgage held by Anderson. Arthur, the owner of the land, was made a party defendant, and he pleaded that the note of $1,800 and mortgage securing it were executed as one instrument, that the terms of the mortgage rendered the note nonnegotiable, that the note had been paid by the transactions mentioned, and that the plaintiff was not an innocent holder. He also filed a cross-petition praying judgment against Turrill, Elliott, Gallup, and Trester on the warranty deeds for whatever amount might be recovered against him on the $1,800 note and mortgage. Montana Duff filed answer alleging that Trester had assumed and agreed to pay the note of $1,800 and pleaded the same defense as Arthur. A. B. Anderson prayed judgment on the note of $3,000 against the Tresters, Shriver, Elliott, Turrill, and Arthur, and that the mortgage securing said note be foreclosed. Trester answered the cross-petition of Arthur and joined in praying the relief demanded. Shriver filed a disclaimer. Some other matters were in issue not necessary to be mentioned. On hearing, the plaintiff's petition was dismissed and judgment entered on the cross-petition of A. B. Anderson as prayed and decree foreclosing the same. The plaintiff appeals. Reversed.Jno. A. Guiher, of Winterset, for appellant.

Church & McCully and J. F. Gallup, all of Jefferson, and W. S. Cooper, of Winterset, for appellees.


[1] This is an action to recover judgment against Montana Duff, on a promissory note of $1,800 given October 6, 1900, and payable ten years thereafter, given by herself and husband to A. B. Shriver, and to foreclose a mortgage on 101 acres of land executed by them to secure its payment. E. O. Arthur, who had acquired the land, was made defendant, as also was A. B. Anderson, who held a note of $3,000 given by Edwin Trester to Shriver February 10, 1906, payable five years after date and secured by a mortgage on the same land. Plaintiff prayed that the lien of this mortgage be decreed inferior to that sued on. Other parties were brought in as defendants to cross-petitions, and S. H. Arthur by amendment to the petition. In printing the abstract, all parties other than plaintiff were designated appellees without indicating their relation to the case other than as defendants or appellees, and this is one of the grounds of the motion of dismissal. It will be noted that the parties defendant were correctly named, but others who were defendants in cross-petitionswere included as though parties to the main action. The statute exacts that the cause be docketed as in the court below (section 4108, Code), and this should have been done. But the section, being remedial, is directory, and, inasmuch as the identity of the action has been preserved and the relation of defendants to the case disclosed in the abstract, there could have been no prejudice and there should not be a dismissal on this ground.

[2] The judge presiding filed an opinion with the clerk November 23, 1911, and service of notice of appeal was not acknowledged until August 7, 1912. As more than six months had intervened, dismissal on this ground is demanded. As time for the purposes of appeal is computed from the entry of decree which occurred February 24, 1912, instead of the announcement of the decision, service of the notice of appeal was in time. Martin v. Martin, 125 Iowa, 73, 99 N. W. 719;Sievertson v. Paxton-Eckman, 142 N. W. 424. The record does not bear out the suggestion that there was delay in the final entry because of the trials of issues raised on the petitions of intervention, and, as the record does not disclose that the same attorney represented plaintiff and Anderson, the issuance of execution on the decree of the latter cannot be construed as a waiver of the right of appeal, even were appellee's theory to be adopted. The motion to dismiss the appeal is overruled.

II. The note of $1,800 executed by Montana Duff and husband to A. B. Shriver October 6, 1910, and payable ten years thereafter, was deposited by him with the Des Moines Savings Bank in the fall of 1909 as collateral security of his note of $1,600 payable in 90 days and the mortgage executed by the Duffs to secure payment of their note duly assigned to said bank. It advanced the face of the note less $28, interest for the period until maturity, and the president of the bank, who negotiated the loan, testified that before making it he ascertained that the mortgage was a first lien on land constituting ample security for its payment and that he was without knowledge that the note and mortgage had been paid.

[3] The note and mortgage had been paid by the execution of a note of $3,000 to Shriver by Trester and wife, the former of whom having acquired the land, and a mortgage on the land securing the same. Though the $1,800 note and mortgage were not then in Shriver's possession, he procured the same subsequently; but, instead of canceling the one and releasing the other, he negotiated the loan with the bank as stated. As it acquired these for value and without notice, the defense of payment must fail unless the note is found not to be negotiable, for under the decisions of this state foreclosure of the mortgage may not be defeated by a defense not available against the note. Preston Kean & Co. v. Morris Case & Co., 42 Iowa, 549. The theory of defendants is that the mortgage and note are to be construed together and treated as one instrument, and the following clause contained in the mortgage renders the note nonnegotiable: “Said first party shall pay all taxes and assessments upon said property to whomsoever laid, or assessed, and including personal taxes, and should any reduction be made in the assessment of taxes on said land by reason of this mortgage, and payment thereof required of the mortgagee or assigns, then said mortgager shall pay the taxes on this mortgage and the debt hereby secured before delinquent; and said first party shall not suffer waste; shall keep all buildings thereon insured to the satisfaction of said second party in a sum not less than two hundred dollars, delivering all policies and renewal receipts to said second party, and shall pay, in case of suit, a reasonable attorney's fee and expenses of continuation of abstract, and all expenses and attorney's fees incurred by said second party or assigns by reason of litigation with third parties to protect the lien of this mortgage. A failure to comply with any one of the agreements hereof (including warranty of title) causes the whole debt to at once become due and collectible, if said second party or assigns so elect, and no demand for fulfillment of broken conditions nor notice of election to consider the debt due, shall be necessary previous to commencement of suit to collect the debt hereby secured, or any part thereof, or to foreclose this mortgage. * * * All money paid by said second party or assigns for insurance or taxes shall bear interest at the rate of eight per cent. per annum, payable semiannually, and be a lien on said land under this mortgage.”

[4] It is settled, in this state at least, that the note and mortgage, having been executed at the same time and as a part of the same transaction, are to be construed together. Iowa National Bank v. Carter, 144 Iowa, 715, 123 N. W. 237;Swearingen v. Lahner, 93 Iowa, 147, 61 N. W. 431, 26 L. R. A. 765, 57 Am. St. Rep. 261. And such appears to be the general rule. Brooke v. Struthers, 110 Mich. 562, 68 N. W. 272, 35 L. R. A. 536 and note; 1 Jones on Mtgs. § 71. This is but the application of the familiar doctrine concerning the construction of agreements contemporaneously executed.

[5] But how far under this rule are the collateral agreements contained in...

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9 cases
  • Des Moines Savings Bank v. Arthur
    • United States
    • United States State Supreme Court of Iowa
    • October 25, 1913
  • First Nat. Bank of Ft. Dodge v. McCartan
    • United States
    • United States State Supreme Court of Iowa
    • June 26, 1928
    ...because the statute expressly makes notes payable on or before a fixed date negotiable.” Inconsistency does not appear in Bank v. Arthur, 163 Iowa, 205, 143 N. W. 556, Ann. Cas. 1916C, 498. Involved in that decision was an “acceleration clause” in a mortgage rather than in the “note,” and t......
  • Winne v. Lahart
    • United States
    • Supreme Court of Minnesota (US)
    • April 27, 1923
    ......149, 101 N.W. 417, 68 L.R.A. 146, 107 Am. St. 1003;. Des Moines Sav. Bank v. Arthur, 163 Iowa 205, 143. N.W. 556, Ann. Cas. 1916C, 498. ......
  • Winne v. Lahart
    • United States
    • Supreme Court of Minnesota (US)
    • April 27, 1923
    ...54 N. W. 736, 19 L. R. A. 673; Thorp v. Mindeman, 123 Wis. 149, 101 N. W. 417, 68 L. R. A. 146, 107 Am. St. 1003; Des Moines Sav. Bank v. Arthur, 163 Iowa 205, 143 N. W. 556, Ann. Cas. 1916C, This court has consistently adhered to the doctrine that the note and the mortgage are separate and......
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