First Trust Joint Stock Land Bank of Chicago, Ill. v. Diercks
| Decision Date | 19 June 1936 |
| Docket Number | 43449. |
| Citation | 267 N.W. 708,222 Iowa 534 |
| Parties | FIRST TRUST JOINT STOCK LAND BANK OF CHICAGO, ILL., v. DIERCKS et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Buena Vista County; James De Land Judge.
Action in equity to recover judgment on a $7,000 note and to foreclose mortgage upon 120 acres of real estate in Buena Vista county, given to secure the payment of said note. F. H Diercks and wife, Lottie Diercks, the original makers of the note and mortgage, filed separate answers, the husband claiming that he was acting as agent for the First National Bank of Sioux Rapids, Iowa, of which he was cashier as well as a stockholder and director, and was not personally bound of which fact it is alleged plaintiff had full knowledge, the wife setting up the usual defense that she signed merely to release her dower, and that the note was without consideration as to her. By way of reply plaintiff pleads an estoppel for the reason that the alleged defense, if established, would show collusion between the defendants and the plaintiff to evade the law of the United States which requires the plaintiff to make loans only to individuals, and also alleges that the defense pleaded was an attempt to controvert the stipulations and covenants of the note and mortgage and attempt to vary and alter the terms and provisions of the note and mortgage, and that the matters alleged as a defense were all merged in the mortgage and note and the alleged verbal negotiations prior thereto are therefore immaterial and irrelevant and an attempt to change the provisions of the note and mortgage by parol testimony. It denies any knowledge of the matters pleaded by way of defense. The trial court found for the plaintiff and rendered judgment and decree accordingly, from which the defendants Diercks, have appealed.
Affirmed.
E. M. Duroe, of Sioux Rapids, for appellants.
Whitney, Whitney & Stern, of Storm Lake, for appellee.
The following facts are undisputed: One Stuhlmiller purchased the real estate covered by the mortgage in question some years prior to the execution of this mortgage from one, Jennie Halkney, under a contract of purchase. Thereafter Stuhlmiller became heavily indebted to the First National Bank of Sioux Rapids, Iowa, and the bank took an assignment from Stuhlmiller of all his interest in this real estate contract. There was still due and owing to Jennie Halkney on this contract the sum of $7,000, which was a lien against this property, and any interest the First National Bank of Sioux Rapids had by virtue of this assignment was subject to the $7,000 claim held by Jennie Halkney. The defendant F. H. Diercks was cashier of said bank, and E. M. Duroe, an attorney representing said defendant in this case, was at that time vice president of said bank. One John Merrill, a local resident of Storm Lake, Iowa, was at the time fieldman for the First Trust Joint Stock Land Bank of Chicago.
The negotiations leading to the final execution of the note and mortgage in question began as follows: Mr. Merrill called at the bank soliciting loans. Diercks informed him that the bank owned this farm known as the Stuhlmiller farm on which the $7,000 debt was due, and told Merrill that " if they wanted that loan they could have it." The farm was inspected and appraised and Merrill informed Diercks that the plaintiff could not make a loan to a corporation, but if the title to the land were taken by either Mr. Duroe or Diercks, the company could make the loan. There is no dispute that the plaintiff was organized under an act of Congress which prohibited the loaning of money to a corporation, unless the individual stockholders of the corporation were directly engaged in farming and stock raising. The application for the loan in question was therefore made by the defendant F. H. Diercks for $7000. The alleged purpose for which he was borrowing the money, as stated in the application, was to pay off this existing indebtedness due Jennie Halkney. He represented himself as the owner of the real estate, gave a list of all his personal assets and liabilities, duly answered the 150 questions required of him by the printed application. There was not a single statement in any of the answers indicating that Diercks was not the absolute owner in fee simple of the real estate offered as security for the loan. The wife's name appears in the caption of the application as one of the applicants for the loan, but her name is not signed to the application.
On February 18, 1926, a letter was written by the plaintiff, addressed to F. H. Diercks, president of the First National Bank of Sioux Rapids, Iowa, which states: Diercks as cashier on March 1, 1926, addressed a letter to the plaintiff, inclosing abstract of title " in connection with the F. H. Diercks loan," in which letter he states: " The deed from Jennie Halkney is ready to be delivered just as soon as the money is received from this loan." On March 9, 1926, the plaintiff wrote a letter addressed to the First National Bank of Sioux Rapids, Iowa, in re: " VX 4826-F. H. Diercks and Lottie Diercks, his wife, $7000.00," in which letter the plaintiff states: " In conformity with your previous request, we have prepared and enclose herewith mortgage papers in the above loan, to be completed as follows:" Here follows a list of printed requirements among which are the following:
" (A) Mortgage, to be signed by all parties exactly as their names appear therein. * * *
(B) First Mortgage Note for $7000.00 to correspond with terms of mortgage and to be executed by each party signing the mortgage. Both husband and wife must execute mortgage and note, without regard as to which spouse holds title. Be sure that the note and mortgage are signed by the same parties and names written as they appear in the mortgage. * * * May we ask that you make no changes or alterations in any of the papers. We suggest that you carefully examine them before they are executed and, should you discover any discrepancies, kindly forward such papers to us, with your comments, and we will promptly return them to you in proper form. * * *
(D) * * * Before we can disburse funds in any loan, we require the executed note and abstract extended to show the record of our mortgage." (Italics supplied.)
With these instructions direct from the plaintiff, which would not be misunderstood, Diercks executed the mortgage and note, and his wife sign and execute the same, and they were returned to the plaintiff, and the plaintiff furnished the $7,000 to Mr. Diercks. After the loan was consummated Diercks deeded the farm to the First National Bank of Sioux Rapids, which bank, at the time this case was tried below, was in process of liquidation through receivership. Defendants now seek to avoid payment for the reasons heretofore stated.
The evidence shows that Mrs. Diercks executed the papers at the request of her husband for the avowed purpose of releasing any apparent dower interest which she might have as his wife, and that the husband explained to her that it was a bank transaction, and that it was necessary for the title to the real estate to be taken in his name, as the loan could not be made to the bank, and after the loan was made the land would be deeded back to the bank, and that there would be no personal liability as against the Diercks. The record is silent as to whether or not Diercks told his wife that the plaintiff would require her signature to the note and mortgage before they would make the loan. Diercks very reluctantly admitted in his testimony that he knew the plaintiff required the signature of the wife and husband before they would accept the loan.
Knowledge of the fact that Diercks did not own the real estate offered as security was conveyed to the agent, Merrill. But there is no evidence that Merrill or any one else ever conveyed this knowledge to the plaintiff. There is not a syllable of evidence that the plaintiff corporation had any actual knowledge at variance with that contained in the application for the loan, and the correspondence between the bank and the defendant Diercks and that shown by the abstract of title, and we do not understand that any claim is made that the plaintiff corporation had any personal knowledge, but the defendant strenuously contends that since the fieldman, Merrill, had knowledge of the whole transaction, this knowledge was imputed to the plaintiff, and in this manner, knowledge of the entire truth of the situation was brought home to the plaintiff. Merrill was not a general agent. His duties consisted of collecting interest on loans already made, making appraisals of land, looking after insurance and soliciting loans. The evidence shows that he had no authority to make any agreements with prospective borrowers generally, but that all such matters were required to be submitted to the home office for a final approval, just as was done in the closing of the loan in this case. He was therefore an agent with limited authority.
It is a well-established principle of the law of agency that whatever an agent says or does within the scope of his express or implied authority binds his principal and is deemed the act of his principal. Ellison v Stockton, 185 Iowa 979, 170 N.W. 435. It is likewise well established that an agent, clothed with special or limited authority, can only bind his principal within the limits of the authority granted. Ney v. Eastern Iowa Telephone Co., 162 Iowa 525, 144 N.W. 383. And persons dealing with an agent with special limited authority have the burden of showing that...
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