Kelliher v. Sutton

• Decision Date: 08 February 1902
• Citation: 89 N.W. 26,115 Iowa 632
• Parties: KELLIHER v. SUTTON ET AL.
• Court: Iowa Supreme Court

115 Iowa 632

89 N.W. 26

KELLIHER

v.SUTTON ET AL.

Supreme Court of Iowa.

Feb. 8, 1902.

Appeal from district court, Sac county; S. M. Elwood, Judge.

Suit in equity to foreclose a mortgage executed by defendants Sutton to James Taylor to secure the payment of two notes aggregating over $1,700. Plaintiff, Kelliher, obtained the notes and mortgage from Taylor after maturity, and he makes the Suttons and numerous of their judgment creditors parties defendant. One of these creditors, to wit, Fuller & Johnson Manufacturing Company, appeared and answered, denying the validity of the mortgage, and filed a cross bill against Kelliher, in which it asked that the mortgage be declared fraudulent and void, that its lien be held superior thereto, and for general relief. Plaintiff joined issue on the allegations of the cross bill, and it was agreed that these pleadings should be treated as settling the issues between plaintiff and the other judgment creditors who were made defendants, and that all parties should be bound by the decree rendered therein. On these issues the case was tried to the court, resulting in a decree finding that the liens of the judgment creditors were prior and superior to the lien of plaintiff's mortgage. Plaintiff appeals. Affirmed.C. D. Goldsmith and William Sheller, for appellant.

W. A. Helsell, for appellees.

DEEMER, J.

For many years prior to the time this controversy arose C. W. Sutton and Geo. W. Sutton were engaged in merchandising at Odebolt, Iowa, under the firm name of C. W. Sutton & Son. The title to lots 9, 10, and 11 in block 4 in said town appeared to be as follows: Lot 9 stood in the name of C. W. Sutton, lot 10 in the name of G. W. Sutton, and lot 11 in the name of C. W. Sutton & Son. On November 19, 1896, G. W. Sutton conveyed lot 10, upon which there was a brick store building, to Lucinda Sutton, wife of C. W.; and on the same day C. W. Sutton & Son transferred their stock of merchandise to John McCorkindale; and at about the same time C. W. Sutton and wife made the mortgage in controversy to Taylor, which covered lot 9 and “C. W. Sutton's interest in lot 11.” This controversy is over lot 11 in block 4. The creditors claim that the mortgage to Taylor was executed without consideration, and with the specific intent to cheat and defraud the creditors of C. W. Sutton & Son,--C. W. and Geo. W. Sutton. It appears that they were all creditors at the time the mortgage was executed to Taylor, and that they have since reduced their claim to judgment. It is also claimed that, as the mortgage only covered C. W. Sutton's interest in the property, and as the creditors are the creditors of a partnership of C. W. Sutton & Son, their liens are prior to that created by the mortgage. Sutton and Taylor claim that the mortgage was executed to secure Taylor for money received by Sutton as the guardian of Taylor; that, although the title to lot 11 was in C. W. and Geo. W. Sutton as “C. W. Sutton & Son,” yet in truth C. W. Sutton was the sole owner thereof, and possessed the entire interest therein; and that the money secured by C. W. Sutton as guardian of Taylor was used by the firm of C. W. Sutton & Son in the transaction of partnership business. They deny any fraud in the making of the mortgage, and say it was executed in good faith, to secure Taylor the money owing him. Plaintiff acquired possession of the mortgage in this manner: McCorkindale, who it is claimed purchased the partnership stock of merchandise, it is said sold the same, after holding it a short time, to Taylor, receiving the notes and mortgage in suit in payment thereof. Sutton and wife had given a bond to plaintiff, Kelliher, to convey him the lot in controversy, and it became evident to all that they could not make good title to the lot because of the outstanding mortgage, and for the further reason that some of the creditors of the firm had obtained judgments which were apparent liens. It is claimed that he (Kelliher) wanted the property, and that, after discovering the apparent liens, he went to McCorkindale, and purchased the note and mortgage, paying $25 in cash, and promising him more if he succeeded in obtaining title to the property through foreclosure proceedings. All this was after the maturity of the notes, and, even if it were not, plaintiff has not shown himself to be a purchaser for value. The primary question in the case is the validity of the Taylor notes and mortgage as against prior creditors of the firm of C. W. Sutton & Son who have reduced their claims to judgment not only as against the firm, but also as against the individual members thereof. If this mortgage was executed with intent to hinder, delay, and defraud these creditors, it is invalid, even if based on a valuable consideration. Evidence as to the fraudulent use of the...