Hubbard v. Robert B. Wallace Co.
| Decision Date | 07 May 1926 |
| Docket Number | 36653 |
| Citation | 208 N.W. 730,201 Iowa 1143 |
| Parties | GEORGE A. HUBBARD et al., Appellees, v. ROBERT B. WALLACE COMPANY et al., Appellees; METROPOLITAN LIFE INSURANCE COMPANY, Appellant |
| Court | Iowa Supreme Court |
Appeal from Pottawattamie District Court.--T. C. WHITMORE, Judge.
THE plaintiffs are husband and wife, and bring this action in equity, praying the cancellation of a certain note and mortgage executed to the Robert B. Wallace Company incorporated, of Council Bluffs, Iowa, on May 8, 1923, and by the said company transferred to the United States Trust Company, of Omaha, Nebraska, and by the latter, to the Metropolitan Life Insurance Company, of New York, upon the grounds of fraud and of a partial failure of consideration and to quiet title to the mortgaged premises against all of the above named corporations, defendants herein. The Metropolitan Life Insurance Company alone appeared and filed answer. A decree was entered for plaintiffs, as prayed, and the insurance company appeals.
Affirmed.
Morsman Maxwell & Haggart and Tinley, Mitchell, Ross & Mitchell, for appellant.
Robertson & Robertson, for appellees.
STEVENS, J. DE GRAFF, C. J., and FAVILLE and VERMILION, JJ., concur.
The Robert B. Wallace Company, incorporated, was for many years engaged in the loan and insurance business in Council Bluffs, Iowa. For two years preceding the transaction involved in this action, George A. Hubbard was engaged in the business of a general contractor and builder, purchasing vacant lots and erecting buildings thereon for the purpose of sale. To aid him in carrying on said business, he procured loans on the property to be improved, on a 15-year semi-annual amortization plan. On or about March 1, 1923, he made application in writing to the Wallace Company for a loan of $ 4,500, proposing to secure the payment thereof by mortgage upon the lots involved herein. Later, he sold a portion of this real estate, and, on May 8, 1923, with his wife executed a note for $ 3,000, payable to the Wallace Company, together with a mortgage upon the remaining property, to secure the payment thereof. On the following day, a new application was signed by George A. Hubbard alone for the loan. The note provided for the payment of interest semiannually, at the rate of 6 per cent, and of the principal in monthly installments of $ 90, the note maturing finally on September 1, 1938. The plan upon which the loan was made contemplated the payment of the $ 3,000 to appellees in installments, as the building progressed, the final payment not to be made until it was wholly completed. This, as we gather from the record, is the plan upon which loans of the character above mentioned are customarily made. On July 9, 1923, the note and mortgage were transferred by the Wallace Company to the United States Trust Company, of Omaha, Nebraska, and, on the following day, the trust company transferred the same to appellant. These transfers were accomplished by indorsements on the back of the note, without recourse, and by written assignments of the mortgage in the usual form, both of which were simultaneously filed for record in the office of the county recorder of Pottawattamie County.
Robert Wallace, who was president of the Wallace Company, died August 29th. It was then, or shortly thereafter, discovered that the company was insolvent. The $ 3,000 was paid by the trust company to the Wallace Company as follows: $ 1,400 in May, and the balance in June, 1923. The court found in its decree that the total amount disbursed by the Wallace Company to or for appellees under the terms and provisions of the loan was $ 745. This sum, with interest, was tendered by them in open court, and in writing, to the party found by the court to be entitled thereto. The payments made to appellees by the Wallace Company were as follows: $ 300 in cash, and the balance upon orders delivered to laborers and materialmen employed upon the building, and drawn on the Wallace Company, or for other purposes fully authorized by the application. Payment of one order for $ 1,400 was declined by the Wallace Company.
On August 31st, two days after the death of Robert B. Wallace, this action was commenced for the cancellation of the note and mortgage. Three defenses were interposed by the Metropolitan Life Insurance Company, appellant, all of which are urged by counsel upon this appeal.
I. Appellant alleges that it purchased the note and mortgage from the United States Trust Company in due course, without notice of any defects in the title of the holder thereof, and that it paid full value therefor. It is not claimed that appellant did not pay full value for the note, but it is contended by appellees that it is nonnegotiable, and subject to all of the defenses that might have been urged against it if action were brought thereon in the name of the original payee. The mortgage, which, by specific provisions of the note, was made a part thereof, contained the following provisions:
The mortgage further provided for the payment of the expense of collection, in the event that an action should be commenced thereon, including reasonable attorney fees and the expense of an abstract. The particular provisions of the mortgage which it is claimed destroy the negotiability of the note are those authorizing the holder to pay taxes, assessments, and insurance upon the property, if appellees should default therein, making the same a lien upon the property, and authorizing recovery thereof in an action against the makers to foreclose the mortgage, and the further provision accelerating the maturity of the note. It is urged that these provisions of the mortgage, which, by the terms of the note, are incorporated therein, render uncertain and indefinite the amount which the maker promises to pay, and also the time of payment.
The first question we shall discuss has not previously been decided by this court. It is the rule, well settled in this state, that instruments relating to the same transaction and contemporaneously executed will be construed together. Swearingen v. Lahner, 93 Iowa 147, 61 N.W. 431; Des Moines Sav. Bank v. Arthur, 163 Iowa 205, 143 N.W. 556; Lundean v. Hamilton, 184 Iowa 907, 169 N.W. 208. This is the rule in other jurisdictions. Frost v. Fisher, 13 Colo.App. 322 (58 P. 872). Nevertheless it was held in Des Moines Sav. Bank v. Arthur, supra, that the negotiability of a note was not affected by the provision in a mortgage executed to secure the payment thereof which authorized the mortgagee to pay the taxes on the mortgaged premises and to recover the same of the mortgagor. The doctrine of these cases is not applicable to the present controversy, for the very obvious reason that the note in question by its specific terms incorporates in and makes every provision of the mortgage a part thereof. The proposition here urged by appellant must be disposed of in exactly the same manner and upon the same principle as it would if the provisions of the mortgage above set out were written in the body of the note. If a note containing identical provisions would be nonnegotiable, then the note in question must be. It is true that the note on its face expresses a definite amount, and also a definite time of payment. Does the provision of the mortgage relating to taxes, assessments, and insurance, the exact amount of which it is impossible to foresee, give rise to such uncertainty as to destroy negotiability? The mere statement of the proposition would seem to answer the inquiry in the affirmative. The court referred to this question, but reserved it for the future, in Des Moines Sav. Bank v. Arthur, supra; and, as it has not been previously decided by this court, we must look to the authorities in other jurisdictions in...
To continue reading
Request your trial