Dillivan v. German Sav. Bank

• Decision Date: 18 January 1910
• Citation: 124 N.W. 350
• Parties: DILLIVAN v. GERMAN SAVINGS BANK ET AL.
• Court: Iowa Supreme Court

124 N.W. 350

DILLIVAN

v.GERMAN SAVINGS BANK ET AL.

Supreme Court of Iowa.

Jan. 18, 1910.

Appeal from District Court, Carroll County; F. M. Powers, Judge.

This is a suit in equity, brought by a minor within one year after attaining his majority to vacate and modify a decree of foreclosure rendered against him, and to grant a new trial, to set aside a sheriff's sale and deed of the land under said foreclosure, and asking an accounting from defendants Benan Salisbury and A. J. Heaton for the rents and profits of said land and a judgment against Heaton for the amount of certain moneys secured by him while acting as plaintiff's trustee of certain property in the state of Kansas. The trial court rendered judgment against Heaton alone for something like $824, but denied all other relief asked by plaintiff. Both parties appeal. As defendant Heaton first perfected his appeal, he will be called “appellant.” Affirmed on defendant Heaton's appeal, and reversed and remanded on plaintiff's appeal.

Evans and McClain, JJ., dissenting.J. B. McCrary and Hutchinson & Jacobs, for plaintiff.

Lee & Robb, for defendants.

DEEMER, C. J.

The case is quite complicated, both as to the issues and in its facts, and we shall have some difficulty in stating it so as to be understood. The controversy relates, among other things, to a certain tract of land in Carroll county, consisting of 33 and a fraction acres of land. It appears that the land was a part of a certain 48-acre tract at one time owned by William Kendall. On September 17, 1886, Kendall made a mortgage upon the land to the defendant German Savings Bank to secure the sum of $500. Thereafter Kendall conveyed the land to defendant Benan Salisbury subject to the mortgage, which mortgage Salisbury assumed and agreed to pay as part of the consideration of the property. Thereafter Salisbury conveyed 33 1/3 acres of the land to Elizabeth Petty “in consideration of $1,000 in hand paid.” This conveyance was by warranty deed, with full covenants, save that the deed was made subject to the mortgage to the German Savings Bank. There was no assumption of the indebtedness or agreement to pay the same contained in the deed. Mrs. Petty, who was plaintiff's mother, died in December, 1894, but shortly before her death she conveyed the property to defendant Heaton. This conveyance was also made subject to the mortgage, but the grantee therein did not assume or agree to pay it. On the same day that Heaton received the deed he executed a quitclaim deed of the property to plaintiff, who was then a minor, but who knew nothing of the conveyance until many years thereafter. On the same day that Mrs. Petty made the conveyance of this land to Heaton she conveyed to him some town property in the state of Kansas, and also turned over to him some personal property. This town property stood in Heaton's name until after this suit was brought, although he had deeded the same to plaintiff over date of October 15, 1894. This deed was never delivered or recorded until after the commencement of the suit. With some notes left with Heaton by Mrs. Petty he secured some Kansas land, title to which was taken in his own name. Title to this also remained of record in Heaton's name until after the commencement of this suit, when he mailed plaintiff a deed for it, the deed bearing date February 5, 1904. None of this property ever in fact belonged to Heaton, and he does not now claim that he ever had the beneficial ownership of it. He, however, undertook, through his agent, the management of the Kansas property, and collected the rents and profits thereof. For these he never accounted until the bringing of this suit. In May of the year 1896 the German Savings Bank brought action to foreclose its mortgage for the amount due thereon, making Kendall, Salisbury, Heaton individually, and Heaton as administrator, Floyd W. Dillivan, W. H. Petty, and others defendants. Notice was served upon Heaton, and Salisbury personally, and the return shows the following service upon Floyd W. Dillivan: “On Floyd W. Dillivan by reading the same to said defendant and handing to him a true copy thereof, and, he being a minor, that the notice was read to and a true copy delivered to William Dillivan, with whom Floyd W. Dillivan resides, he having no general guardian, which service was made in Crawford county, Iowa.” No service was had upon Kendall. The return day fixed in the notice was for the September, 1896, term of court. On September 23, 1896, a guardian ad litem was appointed by the court for Floyd W. Dillivan, and he immediately filed answer. The other defendants made default.

Upon hearing the testimony the trial court rendered a decree in substance as follows: “Judgment for $401.97 with 7 per cent. interest, and for $30.05 attorney's fees and costs, all in favor of the plaintiff, the German Savings Bank of Davenport, Iowa, and against the land in controversy and other lands, establishing the lien of the German Savings Bank as superior to any rights of any of the defendants in the land in controversy, and ordering that the land in controversy be first sold to satisfy the said judgment, interest, and costs.” The last clause of the decree is as follows: “And in making sale aforesaid the north 33 1/3 acres shall be first sold, and if the said north 33 1/3 acres of mortgaged property does not sell under special execution as aforesaid for a sufficient amount to satisfy the liens therein determined, then the balance shall be sold for any balance remaining due plaintiff. Continued as to William M. Kendall.” Thereafter execution issued upon this decree, and the land was sold en masse to Benan Salisbury for the sum of $472.19. No redemption having been made, the sale went to deed to the purchaser, and thereafter he (Benan Salisbury) conveyed the land to his son, the defendant Harold Salisbury, in whose name the title now stands, The petition filed by the German Savings Bank was in the ordinary form of such petitions, reciting the making of the notes and mortgage by Kendall, covering the 48 acres, the maturity of the notes, the fact that the other defendants made some claim to the property, and alleging that, whatever their claim, it was junior and inferior to the mortgage. The prayer was as follows: “Wherefore plaintiff demands judgment against the said William M, Kendall for the amount due upon the said promissory notes, to wit, for the sum of $350, with interest and costs, including a reasonable attorney's fee, and asks that the said judgment be decreed to be a lien upon the said mortgaged premises from the date of said mortgages, to wit, the 17th day of September, A. D. 1886, and that the lien of the said defendants, and each of them, upon the said mortgaged premises may be decreed to be junior and inferior to the plaintiff's mortgage, that the equity of redemption of the said defendants, and each of them, be forever barred and foreclosed, and that a special execution issue for the sale of said mortgaged premises, or so much thereof as shall be necessary to satisfy said judgment with interest and costs. And that the court adjudge and decree, if any part of said mortgaged premises be sold under this decree, and not redeemed within one year from the date of sale, that a writ of possession shall issue under the seal of this court, directed to the sheriff of said county, commanding him to put the purchaser under this foreclosure in possession thereof.”

Title to the 33 1/3 acres of land at the time of the bringing of this suit was in defendant Harold Salisbury. Heaton was appointed administrator of Mrs. Petty's estate, and as such received whatever personal property she had left at the time of her death. This administration is closed, and no claim is now made regarding this matter. Plaintiff asks to have the decree of foreclosure vacated and set aside under the statute, to which we shall presently refer; asks that the sheriff's sale and deed be canceled and set aside because Salisbury could not be a purchaser thereat; asks an accounting from both Salisbury and Heaton because of the sale of the property under the foreclosure, and an accounting from Heaton for the rents and profits of the Kansas property. The trial court denied him all relief save a judgment against Heaton personally for the rents and profits of the Kansas property. The appeals are from this decree.

We shall first consider Heaton's appeal. By his own concession he was plaintiff's trustee of the Kansas property, and as such it was his duty to exercise the utmost good faith, and to render a strict and accurate account of all he received on plaintiff's behalf. He was not, however, an insurer of the property, or a guarantor of any income therefrom. In this respect he is to be held only to the use of ordinary care in making it income-producing. If he failed to do that, he is liable for the reasonable rental values. If, on the other hand, he used ordinary and reasonable care in handling the property, he is only to be charged with the actual receipts less proper and legitimate expenditures. However, as means of information as to the amounts received are peculiarly within his own knowledge, plaintiff having made a prima facie case, the burden is upon defendant to show the amounts of his receipts and expenditures. Plaintiff showed that the property was in the possession of and under the control of the defendant from the time he received the deeds thereof down to the time this action was commenced. He also introduced the deposition of a witness, who testified as follows: “I was acquainted with the rental value of business and residence property in Plainville, Kan., in the years 1894 to 1901. I am acquainted with the property known as the A. J. Heaton or Floyd Dillivan property; was acquainted with the rental value thereof from 1897 to 1901. I think it rented from 1894 to 1896 for $10 per month; 1897 it rented for $4 per month; 1898 for $5 per month; 1899, 1900, and 1901,...