Henry v. State Bank of Laurens

• Decision Date: 12 June 1906
• Citation: 107 N.W. 1034,131 Iowa 97
• Parties: CORA M. HENRY, et al., Appellees, v. STATE BANK OF LAURENS and the FIDELITY SAVINGS BANK, Intervener, Appellants
• Court: Iowa Supreme Court

107 N.W. 1034

131 Iowa 97

CORA M. HENRY, et al., Appellees, v. STATE BANK OF LAURENS and the FIDELITY SAVINGS BANK, Intervener, Appellants

Supreme Court of Iowa, Des Moines

June 12, 1906

Appeal from Madison District Court. -- HON. J. H. APPLEGATE, Judge.

SUIT in equity to cancel a note and a deed to a certain house and lot made as security for the note. Trial to the court, decree for plaintiffs, and defendants appeal.

Affirmed.

J. J Crossley and F. C. Gilchrist, for appellants.

Wilkinson & Wilkinson and J. E. Tidrick, for appellees.

OPINION

DEEMER, J.

July 21, 1902, plaintiff, Cora Henry, executed to the State Bank of Laurens her note for the sum of $ 4,434.61, payable in five yearly installments. To secure this note she at the same time executed a deed for a house and lot owned by her in Winterset, Iowa and the bank at the same time gave plaintiff a written statement that said deed was held as security for the note; plaintiff to pay taxes, insurance, and interest on another loan. This action is to cancel the note and the deed upon the ground that the same were secured through duress and threats made by the president of the defendant bank. The Fidelity Savings Bank intervened in the action, claiming to be the owner of the note and the deed to secure the same, and asking judgment for the amount of said note and a foreclosure of plaintiff's equity of redemption under the deed. The original defendant denied the duress and threats, and answered that it sold the note, and assigned the deed before the maturity of the note to the aforesaid intervener. Plaintiff in reply denied the transfer of the note and deed and pleaded that the same was without consideration and in bad faith. She also averred that nothing passed by the assignment of the deed to intervener. Plaintiff pleaded practically the same matter in defense to the petition of intervention. In reply to plaintiff's answer to the petition of intervention, intervener pleaded confirmation and ratification of the note and mortgage, and an estoppel upon plaintiff from denying the validity thereof. Upon these issues the case was tried, resulting in a decree canceling both note and deed, and dismissing the petition of intervention. Defendant and intervener each appeal.

The exact claims made by plaintiff are that the note was given by reason of threats made by the president of defendant bank to prosecute her brother, who had been an employe of the bank and who it was claimed was a defaulter, for the crime of embezzlement; that the note was without any other consideration than an agreement to compound the brother's felony; and that but for threats to prosecute him for his offense and the promise to compound she would not have executed the papers. Defendants deny each and all of these allegations, say that the papers were executed to secure a debt of defendant's brother without duress or threats; that the brother was not in fact guilty of any crime, and, even if he were that they had the right to take security for the money he had abstracted from the bank; that plaintiffs ratified and confirmed the instruments, and are now estopped from denying their legality. Intervener also contends that it is an innocent holder of the instruments for value and before maturity, and is entitled to its judgment and decree of foreclosure.

The making of the note and defeasance are admitted. But it appears that at the same time and as a part of the same transaction J. A., W. J., and W. C. Henry executed a note for the same amount and with the same terms as the one in controversy, save that the latter has this statement: "This note is held as collateral security of the payment of a note executed by J. A. Henry as principal, and W. J. Henry and W. C. Henry and others as security, for above amount, a true copy of which this is. This note is voluntarily given and for a valuable consideration." J. A. Henry, one of the signers of the note referred to, is the brother above mentioned. He goes by the name of "Allie," and this he will hereafter be called in this opinion.

It appears that Allie was either a defaulter, or that he owed the bank for which he had been working the sum mentioned in these notes. In the absence of proof to the contrary, there was a sufficient consideration for both notes. Sac Co. v Hobbs, 72 Iowa 69, 33 N.W. 368. So that, unless the issue of duress, threats, or of an agreement to compound a felony be sustained, the decree of the trial court is wrong. These are purely questions of fact, the...