Keegan v. Rock
| Decision Date | 09 March 1905 |
| Citation | 102 N.W. 805,128 Iowa 39 |
| Parties | JAMES KEEGAN v. M. J. ROCK and KATIE A. ROCK, Appellants |
| Court | Iowa Supreme Court |
Appeal from Iowa District Court.--HON. O. A. BYINGTON, Judge.
ACTION to foreclose a mortgage. From a decree for plaintiff, the defendants appeal.
Reversed.
C Hedges and J. B. Murphy, for appellants.
J. M Dower and Thos. Stapleton, for appellee.
On May 20, 1897, the defendants executed to the Farmers' Loan & Trust Company, of Iowa City, their promissory note for the payment of $ 3,300, with interest coupons attached, and a mortgage to secure the same, covering their farm of 157 acres in Iowa county. The note and mortgage were thus executed in pursuance of an arrangement for a loan of the amount named with the proceeds of which other mortgages and incumbrances on the farm were to be satisfied, so that the mortgage in question should become a first lien. In the negotiations for this loan defendants were represented by one Thomas. The mortgage was duly recorded, but before the loan was fully consummated the Loan & Trust Company discovered that the incumbrances were so large that the amount to be loaned would not fully satisfy them, and thereupon refused to carry out the arrangement. Thomas then induced the officers of the Loan & Trust Company to assign and transfer the note and mortgage to him, and he caused this assignment of the mortgage to be placed on record. Subsequently, on February 8, 1898, Thomas assigned the note and mortgage to plaintiff, Keegan, and one Lortz as collateral security for a note of $ 600 executed by him to them in consideration of $ 500 advanced by them to him, the note bearing the legal rate of interest. And shortly afterward Thomas made a further assignment of the same note and mortgage to the plaintiff, as security for the sum of $ 1,250, evidenced by a note then executed by him to plaintiff. The assignment of the mortgage by Thomas to plaintiff was duly acknowledged and put on record. On November 15, 1898, plaintiff, having acquired by assignment the interest of Lortz in the $ 600 note, now asks that he have judgment against Thomas on these two notes executed by him, and a foreclosure against the defendants of the mortgage. The trial court found that $ 330 of the amount of the $ 1,250 note was a pre-existing indebtedness of Thomas to plaintiff, and therefore, as to this amount, the plaintiff was not entitled to enforce the mortgage as against defendants; but decreed that the mortgage should be foreclosed as against defendants to the extent of the balance of the $ 1,250 note and the $ 500 borrowed by Thomas from plaintiff and Lortz jointly.
It is conceded that at the time the original note and mortgage executed by defendants to the Loan & Trust Company were assigned by the officers of the company to Thomas, they were wholly without consideration, and that the assignment was without defendants' authority. Plaintiff can have the mortgage foreclosed as against defendants only on one or the other of two grounds: either because Thomas was the agent of defendants, and for them borrowed $ 500 from plaintiff and Lortz, and the sum of $ 920, included in the $ 1,250 note, from plaintiff, or that plaintiff is purchaser, without notice, under the assignment from Thomas to plaintiff and Lortz, of the notes for the $ 500 borrowed from them and the $ 920 claimed to have been advanced by plaintiff, and is entitled to a foreclosure as against defendants.
I. The notes executed, the one to plaintiff and Lortz and the other to plaintiff alone, for which it is claimed that the mortgage sued on constitutes security, were executed by Thomas apparently acting in his individual capacity. It is therefore necessary for plaintiff, in order to have a foreclosure of the mortgage as against defendants on the theory that the money advanced to Thomas was so advanced to him as agent for defendants, to show the existence of such agency. But we find in the record no satisfactory evidence that defendants either expressly or impliedly authorized Thomas to act for them in securing money by means of the mortgage as collateral, nor that plaintiff and Lortz dealt with him as the agent of defendants. The mere fact that defendants allowed Thomas to retain possession of the note and mortgage after he had failed to effect the loan thereon from the Loan & Trust Company would not...
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