Keene Five-Cents Sav. Bank v. Archer

• Decision Date: 19 October 1899
• Citation: 109 Iowa 419,80 N.W. 505
• Parties: KEENE FIVE-CENTS SAV. BANK v. ARCHER ET AL.
• Court: Iowa Supreme Court

109 Iowa 419

80 N.W. 505

KEENE FIVE-CENTS SAV. BANK

v.ARCHER ET AL.

Supreme Court of Iowa.

Oct. 19, 1899.

Appeal from district court, Pottawattamie county; W. R. Green, Judge.

Suit in equity to foreclose a mortgage made by defendants Archer and wife upon certain real estate in the city of Council Bluffs to secure a note executed by D. W. Archer to one W. F. Wahl, and by him (Wahl) indorsed to the Kimball-Champ Investment Company, and by the investment company indorsed and assigned to plaintiff. Defendants Archer admit the execution of the note and mortgage, but plead payment of the same to the Kimball-Champ Investment Company, which, it is claimed, was at the time acting as agent for plaintiff. The defendant New Hampshire Banking Company denied the allegations of plaintiff's petition, pleaded payment of the note sued on, and filed a cross petition asking judgment on a note held by it against Archer, and the foreclosure of a mortgage made to secure the same on the real estate covered by plaintiff's mortgage. Some other issues were made by the pleadings, which will be referred to in the body of the opinion. The trial court dismissed plaintiff's petition, and passed a decree foreclosing the mortgage of the New Hampshire Banking Company, and plaintiff appeals. Affirmed.Isaac E. Congdon, Finley Burke, and C. B. Aitchison, for appellant.

Wright & Baldwin and A. W. Askwith, for appellees Archer.

Stone & Tinley, for appellees Kimball-Champ Inv. Co. and Charles R. Hannan.

Sims & Blanchard, for appellee New Hampshire Banking Co.

DEEMER, J.

February 9, 1889, defendant Archer made and delivered to W. F. Wahl his three promissory notes, aggregating $8,000, due on or before one, two, and three years, respectively, and, in conjunction with his wife, executed the mortgage sought to be foreclosed. This mortgage was duly filed for record, and is prior in point of date to the claims or liens of any of the other parties to the suit. Wahl indorsed the notes, before matured, to the Kimball-Champ Investment Company, and also assigned the mortgage made to secure the same, and the Kimball-Champ Investment Company sold and transferred all of said instruments to plaintiff. At or about the time of the maturity of the first and second notes, plaintiff returned each of them to the Kimball-Champ Investment Company for collection. The investment company collected or accounted to plaintiff for the amount due on each note, and there is no controversy over either of these instruments. The third note was never sent to the investment company, but remained in the possession of plaintiff from the time of its purchase down to the commencement of this suit. On or about September 30, 1890, Archer, who was then constructing a building on the property covered by the mortgage, became desirous of securing some more money, and concluded to merge all indebtedness growing out of his building operations into one mortgage. Following out his desire, he applied to the Kimball-Champ Investment Company for a new loan of $8,000, and stated to them that he wished to take up the indebtedness due on the first mortgage. The investment company furnished him the money, and agreed to take up the outstanding Wahl note, and have it back within 10 days. The officers representing the investment company assumed, from their prior dealings with the plaintiff, that they had authority to accept payment of the last of the series of notes executed by Archer to Wahl. One of them testified: “As all the notes were payable at the office of the investment company or Kimball & Champ on or before date due, we did not consider that we were presuming or assuming anything in accepting payment of the note held by plaintiff; the assumption being that we had a right to accept payment, and settle with plaintiff afterwards, which understanding Archer was cognizant of.” “Through a long course of dealing with the bank of this nature, and in our capacity, we regarded ourselves as representing the Western interests of the bank, so far as it covered the territory we operated in, such as collection, and reinvesting the proceeds of such collection for them, in said territory.” “Frequently we collected notes in the possession of, and belonging to, plaintiff, and reinvested the proceeds, without any express direction to that effect, and subsequently settlements were made with the bank, and our action was invariably acquiesced in by plaintiff.” The other active manager testified to practically the same state of facts. The money to take up the note was never forwarded to plaintiff, and the note was not returned. Shortly after the execution of the second mortgage, the investment company transferred the notes secured thereby to the New Hampshire Banking Company. This last-named company had no knowledge whatever, when it purchased the notes, of the agreement between Archer and the investment company. Within a year after these transactions occurred, the investment company became financially embarrassed, and on July 22, 1891, it executed a trust deed to one ...