Federal Land Bank of Louisville v. Robertson

• Decision Date: 08 November 1935
• Citation: 95 S.W.2d 317,20 Tenn.App. 58
• Parties: FEDERAL LAND BANK OF LOUISVILLE v. ROBERTSON, Superintendent of Banks, et al.
• Court: Tennessee Court of Appeals

95 S.W.2d 317

20 Tenn.App. 58

FEDERAL LAND BANK OF LOUISVILLE v. ROBERTSON, Superintendent of Banks, et al.

Court of Appeals of Tennessee, Western Section.

November 8, 1935

Certiorari Denied June 13, 1936.

Appeal from Chancery Court, Obion County; W. W. Herron, Chancellor.

Action by the Federal Land Bank of Louisville against D. D Robertson, Superintendent of Banks and receiver of Kenton Banking Company, and others, wherein defendant Sol Shatz filed a cross-bill. From an adverse decree, the plaintiff appeals.

Affirmed in part, and reversed and rendered in part.

Pierce & Fry, of Union City, for appellant.

W. M Miles, of Union City, for appellees.

KETCHUM Judge.

On April 26, 1919, G. C. Fowler and his wife, Vallie Fowler executed a trust deed on a tract of 98 I/3 acres of land in Gibson county, Tenn., to Walter H. Howell, trustee, to secure the payment of an indebtedness of $3,800 to the Federal Land Bank of Louisville, Ky., payable in 68 semiannual installments on the amortization plan in accordance with the amortization tables promulgated by the Federal Farm Loan Board. The payment of said note was guaranteed by the Kenton National Farm Loan Association of Kenton, Obion county Tenn., through which said loan was obtained, and the stock of the said G. C. Fowler and wife, Vallie Fowler, in said association, in the sum of $190, was pledged as additional security for the repayment of said note, all in accordance with the provisions of the Federal Farm Loan Act, 1916, 39 Stat. 360, see 12 U.S.C.A.§§ 641-1012, inclusive.

Thereafter by a second deed of trust of date April 17, 1922, the said G. C. Fowler and wife conveyed said tract of land to A. W. Fowler, as trustee, in trust to secure the payment of three certain notes to R. E. Fowler; and three other notes executed by G. C. Fowler with W. L. Fowler, as security, payable to the First National Bank of Kenton, Tenn., two for $1,250 each, and one for $300, which trust deed was subject to the first mortgage indebtedness of $3,800 in favor of the Federal Farm Land Bank of Louisville.

This second trust deed was foreclosed on December 27, 1924, and said land was conveyed by the said A. W. Fowler, trustee, to Sol Shatz, the said sale being made subject to the lien of the prior trust deed in favor of the Federal Land Bank amounting then to $3,608.93. The recited consideration in this deed was $85 per acre for the acreage of 98 I/3 acres, "but with the amount of the indebtedness secured in said prior deed of trust to be counted out or deducted therefrom to amount unpaid and yet to be paid thereon of $3,608.93, and to be further abated by unpaid taxes for the years 1922, 1923 and 1924, which are a lien on said land and accrued thereon since the execution of said deed of trust, and aggregating the sum of $296.29: and said Sol Shatz having fully complied with the terms of sale by paying into my hands the sum of $4643.11, which includes $190.00 for Federal Land Bank stock as a part of and relating to said original loan of $3800.00."

In the habendum clause it is recited that this conveyance was made "subject to the first mortgage lien on said land to secure the Federal Land Bank of Louisville, Kentucky, to amount unpaid and yet to be paid thereon of $3608.93, as of January, 1st, 1925."

On January 14, 1925, the said Sol Shatz executed a document in which he assumed the payment of the unpaid balance to be paid on the mortgage indebtedness owing by G. C. Fowler on said land, and received a certificate that the Fowler stock in the Kenton National Farm Loan Association had been transferred to him, and that he had been elected to membership in said association. These documents, all on one sheet, are as follows:

"Loan No. 5307.

"To the Federal Land Bank of Louisville, Louisville, Ky.:

"This is to certify that I (or we), for the sum of $8500.00, have purchased the entire tract of land which was mortgaged to you by G. C. Fowler to secure a loan from you in the sum of thirty-eight hundred dollars, and I (or we) have assumed the payment of said indebtedness and have purchased the original shares of stock held by the vendor in the Kenton National Farm Loan Association, and have assumed all liabilities of membership thereunder.

"Dated at Kenton, Tenn., the 14th day of January, 1925.

"[Signed] Sol Shatz, Signature of Purchaser,

"Kenton, Tenn., Permanent address.

"Witness: A. M. Howell."

"I (or we) certify that the above statements are true, and I (or we) hereby confirm the sale and authorize the Secretary-Treasurer to legally transfer the original shares of stock to the purchaser or purchasers set out above.

"[Signed] G. C. Fowler, Signature of Seller.

"Witness: A. M. Howell."

"This is to certify that Sol Shatz, having purchased the entire farm of G. C. Fowler, on which there is a mortgage or trust deed to the Federal Land Bank of Louisville in the sum of Thirty-Eight Hundred Dollars, and the stock and the stock interest thereof, the said Sol Shatz has been elected to membership in the Kenton National Farm Loan Association.

"Dated at Kenton, Tenn., the 14th day of January, 1925.

"[Signed] H. K. Dodson, President.

"Attest: A. M. Howell, Secretary-Treasurer."

"Important: Read carefully and fill in all Above Spaces.

"Loan cannot be transferred unless entire Farm covered by a loan is sold to party seeking to assume loan.

"Purchase price requested in above form means the entire consideration.

"The stock interest of the vendor must be transferred to the purchaser.

"$5.00 transfer fee must accompany this form when same is returned to the Federal Land Bank."

The purchaser, Sol Shatz, paid the $5 transfer fee at the time he signed this instrument.

The semiannual payments of principal and interest due on said mortgage indebtedness to the Federal Land Bank were paid up to and including that due on July 1, 1931, and default was made in the payment of the installment due on January 1, 1932. By reason of this default the Federal Land Bank of Louisville caused said land to be advertised and sold under its mortgage deed of trust on November 12, 1932, and at said sale it purchased said land for the sum of $1,500. After applying this amount to the payment of the costs of the sale and the taxes for the year 1931, and crediting the balance on the mortgage indebtedness, there remained a balance due on said mortgage indebtedness of $2,070.56, for the recovery of which amount the Federal Land Bank of Louisville files this bill against Sol Shatz and the defendant D. D. Robertson, superintendent of banks, in his capacity as receiver of the Kenton Banking Company, and G. C. Holloman, its liquidating agent.

The bill alleges that on August 12, 1930, the Kenton Banking Company of Kenton, Tenn., had purchased said farm and had assumed the payment of the unpaid balance then due on said mortgage indebtedness to the Federal Land Bank of Louisville, Ky., and a copy of said assumption agreement, similar in form to that executed by the defendant, Sol Shatz, was copied in the bill.

The defendant, Sol Shatz, filed his answer to said bill in which he admitted the execution of the first mortgage deed of trust on said land by Fowler and wife to secure the payment of $3,800 in installments, and set up the execution by them of the second deed of trust above referred to, the foreclosure of the latter trust deed, and the purchase by him of the land therein described, subject to the lien of said first mortgage deed of trust in favor of the Federal Land Bank. He denied, however, that he intended to assume the payment of said first mortgage indebtedness, or that he did in fact assume the payment of it; and averred that said transfer form or assumption agreement was not read to him, and that he signed it "as a mere formality" to be gone through in order to effect a transfer of the stock in the Kenton National Farm Loan Association from the former owner, G. C. Fowler, to himself. He averred that he had no intention of assuming said first mortgage indebtedness, and that the trustee's deed from A. W. Fowler, trustee, shows that he did not assume it; and that the recital in said certificate that he had assumed said first mortgage indebtedness was untrue; that there was no consideration for said assumption agreement, and that it was not binding upon him. He averred that if the signing of said certificate constituted an assumption of said indebtedness, it was signed by him by mistake, as it was not his purpose, or the purpose of the Kenton National Farm Loan Association, at whose instance he signed it, that he should assume said indebtedness, but it was signed simply in order that he might acquire the stock of the said G. C. Fowler in said association; and he averred that the act of Congress establishing federal land banks provided that only persons who were members of national farm loan associations could obtain loans from said banks, and required them, in making a loan, to purchase 5 per cent. of the amount of such loan of the stock of such association. He, therefore, filed his answer as a cross-bill, and prayed that said assumption agreement might be set aside and annulled upon the ground that he had executed the same "by mistake or by accident," and for general relief.

D. D Robertson, superintendent of banks, in his capacity of receiver of the Kenton Banking Company, and G. C. Holloman, the liquidating agent of said bank, in their answer denied that the Kenton Banking Company had ever acquired title to said land or had assumed the payment of said first mortgage indebtedness, and averred that the statement in the bill that it had done so was untrue; that the original of the "transfer form" was prepared at the instance of the complainant, and while it appears that the...