Fairfax State Sav. Bank v. Coligan

• Decision Date: 13 January 1931
• Docket Number: 40457
• Citation: 234 N.W. 537,211 Iowa 670
• Parties: FAIRFAX STATE SAVINGS BANK, Trustee, Appellant, v. THOMAS F. COLIGAN et al., Appellees
• Court: Iowa Supreme Court

234 N.W. 537

211 Iowa 670

FAIRFAX STATE SAVINGS BANK, Trustee, Appellant, v. THOMAS F. COLIGAN et al., Appellees

No. 40457

Supreme Court of Iowa, Des Moines

January 13, 1931

Appeal from Linn District Court.--JOHN T. MOFFIT, Judge.

Suit in equity to foreclose a real estate mortgage.The defendants are husband and wife.The defense is made by the wife.She pleads by answer and cross-bill that her signature to the note was attached through mutual mistake, and was not contemplated by the agreement pursuant to which the note was to be given by her husband.She pleads that, preceding the giving of the note and mortgage, an agreement of compromise had been entered into between the parties, of a pending bona-fide dispute between them; that such agreement absolved her from any obligation to sign the note; and that the same was signed by mistake.She prays relief against such mistake.She admits her signature to the mortgage.A trial being had the court found for the defendant-wife, and absolved her from liability upon the note.From so much of the decree as absolved this defendant, the plaintiff has appealed.

Affirmed.

E. A Johnson, for appellant.

John D Stewart, for appellee.

Trewin, Simmons & Trewin, for intervener.

EVANS, J. MORLING, KINDIG, WAGNER, and GRIMM, JJ., concur.

OPINION

EVANS, J.

The note and mortgage in suit were executed in May, 1924.The note and mortgage are concededly valid against Thomas Coligan, the husband.The mortgage is valid as against both defendants.The compromise alleged, involved another note of $ 2,700 plus.By the terms of the compromise, as claimed by the defendant-wife, she was to secure or pay $ 2,700, and to be absolved from further personal liability upon certain notes which preceded these.She paid the $ 2,700.The history of the transaction which culminated in the note and mortgage in suit is, briefly, that Thomas Coligan had become a surety for one Jerry Mulherin, who became insolvent.The creditor was the Fairfax State Savings Bank.In adjusting the liability of Thomas under his suretyship, this bank divided the indebtedness into two parts, and into two notes, of $ 2,700 and $ 5,200, respectively.It obtained the signature of Mrs. Coligan on the $ 2,700 note and the signature of Thomas Coligan upon the $ 5,200 note and the indorsement of guaranty by each of these parties upon the note of the other.The creditor-bank became insolvent, and passed into the hands of the receiver.These two notes were a part of its assets, and as such, came into the hands of the receiver.The alleged compromise resulted from the attempted collection of those two notes.One Boyer was the examiner in charge of the insolvent bank, and Byers was his attorney.Upon demand for the payment of those two notes, Mrs. Coligan asserted that her signature had been obtained by misrepresentation and fraud, and such was the nature of the existing controversy, if any.She consulted her attorney, Donnelly, and the later negotiations of compromise were conducted by him.

The terms of the alleged compromise, as testified to by the defendant's witnesses, were that Mrs. Coligan was to pay or secure the $ 2,700 note by a mortgage upon an unencumbered 80 acres of land owned by her, and that she was to be absolved from further personal liability; and that her husband was to secure the $ 5,200 note by a second mortgage upon his farm of 338 acres, in which mortgage she was to join; that, while signing the mortgage, she inadvertently signed the note, also.

The contention for the plaintiff, under the testimony of its witnesses, was that there was no existing dispute or controversy, and no compromise; that the negotiations between the parties simply related to an extension of time upon the existing indebtedness, as represented by the previous notes; and that there was no absolving of the defendant from any existing obligation as indicated by the previous notes.It will thus be seen that the question at issue is mainly one of fact.The burden is upon the defendant to establish her defense and cross-bill by clear and satisfactory evidence.

The point of conflict between the witnesses is clear-cut.If the case rested upon the oral evidence in the record, we should have to say that the burden resting upon the defendant had not been carried.It so happened, however, that the terms of the alleged compromise were formulated in the form of an oral proposition by Donnelly on behalf of his client.This oral proposition was received by Boyer tentatively, to be sent to his superior officer for approval.He immediately reduced the proposition to writing, and sent it to his superior officer for approval.At the same time, he made a memorandum of the same proposition for the guidance of his attorney in the preparation of the notes and mortgages which were contemplated by the proposal.These writings then and there made by Boyer were introduced upon the trial, and they quite dominate the evidence.Exhibit 4, being the memorandum to guide the attorney, was as follows:

"Rosalie Colgan mortgage for $ 2,700.00 5 years--annual interest 6% with privilege of paying $ 100.00 or any multiple on any interest-paying day--she is to pay up all back interest--revenue stamps for note--filing fee for mortgage--Furnish abstract of title--pay for examination to date of loan and for continuance showing the mortgage--Note and mortgage to be signed by Thomas Colgan her husband, secured on 80 acres land by first mortgage.

"Thomas Colgan.

"Mortgage for--dated May 16, 1924--$ 5,563.00 $ 5,200 payable on or before 3 yrs.--6%--annual interest. $ 363 due on or before March 1st, 1925, 6% interest from date until paid.Privilege of paying $ 100.00 or any multiple at any time.Colgan to pay for revenue stamps, filing fee,--and to furnish abstract showing prior mortgages--continuance to this date and the mortgage to be signed by himself and wife, Rosalie Colgan both note and mortgage secured by mortgage on 338 acres of land more or less, record title in name of Thos. Colgan--subject to prior mortgages of record, aggregating $ 40,000.00."

Exhibit 15, containing the proposition as sent to the superior officer, was as follows:

"Robert L. Leach, May 8, 1924.

"Superintendent of Banking,

"Des Moines, Iowa.Att. F. R. Jones.

"Dear Sir:

"In Re: Thomas Colgan loan, $ 5,200, guaranteed by Rosalie Colgan, and Rosalie Colgan note, $ 2,705.08, guaranteed by Thomas Colgan.

"The status of this matter is as follows:

"Thomas Colgan holds the record title to 338 acres of land about 2 miles west of Fairfax.Rosalie Colgan holds title to 137 acres of land adjoining this land, the latter land being unimproved.There is a mortgage for $ 40,000.00 covering the 338 acres belonging to Thomas Colgan and for 57 acres of the 137 acres belonging to Rosalie Colgan, this mortgage being recorded sometime this spring and running for a period of five years.

"Rosalie Colgan claims that her signature was obtained to the note signed by her of $ 2,705.08 and her endorsement on the note of Thomas Colgan by misrepresentation.Of course, that would be for her to establish, but under advice of her attorney, she is resisting payment on these grounds.

"However after consultation with Mr. Donnelly, of Johnson, Donnelly & Lynch, attorneys of the city, at which Mr. Byers and I were both present, they make the following proposition: That Rosalie Colgan will secure her note for $ 2,705.08 by giving a first mortgage on her 80 acres.Neither the time nor the rate was discussed, but the time would be immaterial as the loan would be unquestionably good and the rate I think would be six per cent.Thomas Colgan will secure the $ 5,200.00 by giving a second mortgage on his 338 acres.The time was not discussed, but we would, of course, insist upon the maturity of this mortgage prior to the first mortgage.I think it can be arranged that this mortgage should not run to exceed four years, and...