J. W. Squire Co. v. Hedges
| Decision Date | 27 October 1925 |
| Docket Number | No. 36843.,36843. |
| Citation | 205 N.W. 525,200 Iowa 877 |
| Parties | J. W. SQUIRE CO. v. HEDGES ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Decatur County; A. R. Maxwell, Judge.
Action in equity to foreclose certain mortgages on real estate. The facts are stated in the opinion. Affirmed.W. O. Jamison, of Seymour, and McGinnis & McGinnis, of Leon, for appellants.
Freemont Benjamin, of Council Bluffs, and Francis Varga, of Leon, for appellee.
The material facts, with a single exception, to be presently noted, are not in dispute.
Clarence Hedges was the owner of certain land upon which J. W. Squire had a first mortgage for $9,000, and the defendant W. H. Donald had a second mortgage securing two notes, one for $3,946, due in five years, and the other for $4,000, due in eight years. These mortgages had been executed by Frank Drinkall, a former owner of the land. Donald transferred the note for $4,000, and it came into the hands of the appellant Clara E. Lemley, in a manner not material to the present controversy. Donald made no assignment of the mortgage securing the note. While it is not questioned that the assignment or transfer of the note operated as an equitable assignment, pro tanto, of the mortgage security, there was nothing of record to show that Donald was not the owner of both notes, or that Donald's assignee or Mrs. Lemley had any interest in the debt or the mortgage. Before the maturity of any of this indebtedness, Hedges, being desirous of securing a larger loan, arranged with the appellee, J. W. Squire Company, a corporation of which the holder of the $9,000 mortgage was president, for a loan of $13,000 to be secured by a first mortgage on the land. On April 10, 1917, Hedges and wife executed a note for $13,000 and a mortgage securing the same upon the land, and notes for the commission for the loan, amounting to $975, also secured by mortgage on the land. These mortgages were duly filed and recorded. Out of the $13,000 so borrowed, the amount due under the first mortgage of $9,000 was paid, $3,000 was paid on the note held by Donald secured by the mortgage to him, and Hedges received the balance. Donald was a party to this transaction, and signed a writing, appearing on the margin of the record of the mortgage for $13,000, as follows:
An agreement, substantially in the same form, signed by Donald, appears on the margin of the record of the mortgage securing the commission notes. The mortgage to Donald was recorded at page 194 of Book 164. These agreements are not dated, but they appear to have been made before the completion of the $13,000 loan. Donald had no authority from the holder of the $4,000 note to agree that the lien of appellee's mortgage should be prior or superior to the mortgage securing such note.
This action is to foreclose the $13,000 mortgage and the mortgage securing the commission notes. The appellant Clara E. Lemley claims a prior lien under the Donald mortgage for the amount due on the $4,000 note.
The only disputed matter of fact is whether the local agent of appellee, who negotiated the $13,000 loan, had actual notice that Donald was not the owner of the $4,000 note at the time the latter executed the above agreements. Donald testified that he informed the agent of that fact. This the agent denied. The lower court found that the agent had no such notice, and our examination of the record brings us to the same conclusion. Without setting out the evidence, we may say that Donald's memory was obviously at fault in some respects as to the transaction, while it is extremely improbable that the agent, although insisting on an agreement that would make the $13,000 mortgage the prior lien as against Donald's mortgage, would accept his agreement to that effect with knowledge that he did not own one of the notes secured by it. Moreover, thereafter, and before the institution of this action, Donald commenced and prosecuted to judgment an action to foreclose his mortgage for the balance due thereon, including the note for $4,000 held by appellant, procuring the note from her for that purpose. The appellee was not made a party to that action, although, if the appellant's contention that the appellee was chargeable with notice that Donald had transferred the $4,000 note, and therefore the holder of the note had a superior lien to the lien of the appellee's mortgage, be correct, the relief now sought by appellant would have been properly granted in that action.
[1] Under the doctrine that the transfer of the note operated as an equitable assignment of the lien securing it, the assignment of the note affected real estate, and came under the operation of the statute with reference to the recording of such instruments. Bank v. Anderson, 14 Iowa, 544, 83 Am. Dec. 390; Bowling v. Cook, 39 Iowa, 200;Daws v. Craig, 62 Iowa, 515, 17 N. W. 778;Kenosha Stove Co. v. Shedd, 82 Iowa, 540, 48 N. W. 933;Livermore v. Maxwell, 87 Iowa, 705, 55 N. W. 37;Nashua Trust Co. v. Mfg. Co., 99 Iowa, 109, 68 N. W. 587, 61 Am. St. Rep. 226;Jenks v. Shaw, 99 Iowa, 604, 68 N. W. 900, 61 Am. St. Rep. 256.
Section 2925, Code of 1897 (section 10105, Code of 1924) provides as follows:
“No instrument affecting real estate is of any validity against subsequent purchasers for a valuable consideration, without notice, unless recorded in the office of the recorder of the county.”
The appellee, as mortgagee, was a purchaser within the meaning of the statute. In re Estate of Gill, 79 Iowa, 296, 44 N. W. 553, 9 L. R. A. 126;Weare v. Williams, 85 Iowa, 253, 52 N. W. 328.
If Donald, after the transfer of the $4,000 note, had satisfied of record the mortgage securing it, although without authority of the holder of the note, and the appellee, relying upon the record, had made the loan and taken the mortgage in suit without notice of appellant's claim, it is well settled that the rights of a...
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