Kingman Plow Co. v. Knowlton

• Decision Date: 17 February 1909
• Citation: 143 Iowa 25,119 N.W. 754
• Parties: KINGMAN PLOW CO. ET AL. v. KNOWLTON ET AL.
• Court: Iowa Supreme Court

143 Iowa 25

119 N.W. 754

KINGMAN PLOW CO. ET AL.

v.KNOWLTON ET AL.

Supreme Court of Iowa.

Feb. 17, 1909.

Appeal from District Court, Mahaska County; K. E. Wilcockson, Judge.

This is a proceeding wherein plaintiffs and some of the defendants seek to redeem from a sale on execution, to set aside a mortgage made by E. S. Knowlton to Sylvia H. Knowlton, his wife, upon the real estate sold at sheriff's sale, and to subject the land or the proceeds thereof to the payment of judgments held by the appellants against Knowlton. The trial court set aside the mortgage, decreed Warren C. Johnson to be the absolute owner of the property, and quieted the title in him against all other parties to the litigation. Plaintiffs and most of the defendants appeal. Reversed and remanded.H. H. Sheriff, for appellants.

J. F. & W. R. Lacey, F. T. Nash, Dwight F. Downing, W. R. Nelson, Ed Pritchett, and H. H. Sheriff, for appellees Home State Bank of Humeston and others.

Warren C. Johnson and S. V. Reynolds, for appellee New Sharon Creamery Co.

Irving C. Johnson, Shangle & Gordon, Bolton & Wagner, and McNett & McNett, for other appellees.

DEEMER, J.

The facts are complicated and the issues obscure, and we shall have some difficulty in stating the case with any degree of clearness. There is little dispute regarding the controlling facts, and the questions are largely of law. E. S. Knowlton owned 180 acres of land in Mahaska county, Iowa. On the 24th day of March, 1904, he executed a mortgage upon the land to his wife, Sylvia H. Knowlton, purporting to secure a note for the sum of $5,800. Knowlton was heavily in debt and practically insolvent when this mortgage was made, and for the purposes of the case, the Knowltons not having appealed, we must find that the mortgage was without consideration and fraudulent and void as to all creditors who were and are in position to challenge the same. Between April 1, and November 9, 1904, various judgments were rendered against E. S. Knowlton. Among these judgment creditors was one F. J. Enger, whose judgment was obtained April 1, 1904. Execution was issued on this judgment March 27, 1905, levy made upon the 180 acres of land April 4, and a sale had May 13, 1905. The property was bid in by Warren C. Johnson for an amount sufficient to satisfy the judgment upon which the sale was had, and judgments held by Hunt, Helm, Ferris & Co., Fairbanks-Morse & Co., Temple Pump Co., and the Pattee Plow Co. Thereafter defendant Irving C. Johnson purchased the judgments of the Oskaloosa Savings Bank and of the Frankel State Bank, both rendered April 18, 1904, and upon the strength of these two judgments he (Irving C. Johnson) redeemed from the execution sale to Warren C. Johnson, and the satisfaction of these two judgments, together with the five which were satisfied by the execution sale, amounted to $4,700. Irving C. Johnson also procured an assignment of the original sheriff's certificate of sale, and upon the strength of his redemption and of the assignment of the certificate took a sheriff's deed to the property in due course on May 26, 1906, having invested in the property between $4,700 and $4,800. Neither Warren C., nor Irving C., Johnson were creditors of Knowlton, and Warren C. Johnson bid openly at a regularly advertised public sale, and there is no claim of any fraud upon his part, or upon the part of Irving C. Johnson. Irving C. Johnson regularly redeemed under the two judgments purchased by him, and as no redemption was made by any of the subsequent judgment creditors or by the owner, Knowlton, the sheriff's deed issued as before stated. The statutory period of redemption expired some time prior to May 26, 1906, the date of issuance of the sheriff's deed. It appears from the evidence that before the issuance of the execution on the Enger judgment, the attorneys for all the judgment creditors met in the office of Irving C. Johnson and discussed the validity of the Knowlton mortgage, and it was agreed among them that it could probably be defeated, and all were advised as to the likelihood that the mortgage upon the land could be set aside. We must assume for the purposes of the case that the mortgage was and is invalid as to all creditors who were entitled to challenge the same. Instead of redeeming from the execution sale as they had the right to do, the creditors commenced this proceeding, or came into it after the action was brought, and asked relief against the Knowlton mortgage, and as the case turns largely upon the nature of the pleadings and issues tendered, it will be necessary to refer to them at some length.

On January 11, 1906, the Kingman Plow Company commenced this action, alleging its purchase of a judgment held by the E. Bement's Sons against Knowlton for the sum of $160, and the recovery of a judgment on its own behalf for $1,017.74, and the issuance of executions on each of said judgments, which were returned “no property found.” This action was commenced about one month before the statutory period for redemption from the execution sale had expired. The execution sale and redemption satisfied the first seven judgments rendered in order of time against Knowlton, and the eighth is held by D. P. Thorpe, one of the defendants and cross-appellants. The first judgment mentioned in the Kingman petition filed in this case is the ninth in order of time, and the second is the twenty-fifth in order of time. The petition makes the following judgment creditors parties defendant: The New Sharon Creamery Company, the Hunt, Helm, Ferris Company, Fairbanks-Morse & Co., Temple Pump Company, Pattee Plow Company, Oskaloosa Savings Bank, and Frankel State Bank, whose judgments were each and all satisfied by the proceedings under the execution sale, and the Interlocking Fence Company, the Havana Metal Wheel Company, the Oskaloosa National Bank, the Moline Plow Company, Schuttler & Hotz, the Brown Buggy Company, the Home State Bank, and Kingman & Co. Knowlton and his wife were also made parties defendant, as also was Warren C. Johnson. It was alleged that on and prior to March 24, 1904, Knowlton was largely indebted to various persons, firms, and corporations to an amount exceeding $35,000, and that the mortgage made by him to his wife for $5,800, to which reference has heretofore been made, was without consideration, and was made with intent to hinder, delay, and defraud his creditors; that Sylvia H. Knowlton then claimed to own the note and mortgage, and that she would sell and put the same beyond the reach of the creditors of E. S. Knowlton unless she was enjoined from so doing.

We now copy the following paragraphs from the petition: “Plaintiff says that Sylvia H. Knowlton participated in said fraud and had knowledge thereof; and to enable the said defendant E. S. Knowlton to accomplish said fraud, the said Sylvia H. Knowlton claimed, and is now claiming, that she made the said defendant a loan for the amount of said mortgage, when in truth and in fact the said defendant E. S. Knowlton never borrowed any money from said Sylvia H. Knowlton. The plaintiff says that said defendant has no property other than the mortgage herein described out of which the plaintiff's claim can be made. Plaintiff is credibly informed, and alleges the truth to be, that the mortgage and note herein described was never delivered by the said E. S. Knowlton to said Sylvia H. Knowlton, and the same was recorded by the said E. S. Knowlton, and has at all times been in the possession and under the control of said E. S. Knowlton. The plaintiff says that, notwithstanding the fact that Sylvia H. Knowlton claims to be the owner of said note and mortgage, this plaintiff has a lien on said note and mortgage, or so much thereofas shall be needed for the payment and satisfaction of the judgments herein described, with interests and costs and accruing costs, and in equity said note and mortgage is liable and subject to sale under execution, or an order of sale that may be made by the decree herein for the satisfaction and payment of said judgments with interests, costs, and accruing costs. The plaintiff says that the mortgage from said E. S. Knowlton to Sylvia H. Knowlton, his wife, a copy of which is hereinbefore referred to and marked ‘Exhibit C,’ was without consideration, notwithstanding the recital in said mortgage; that the grantee in said mortgage gave no consideration therefor, and the same was voluntary and without any consideration whatever, and the same is void. Plaintiff says that said D. P. Thorpe, and D. P. Thorpe, agent, claims a lien for some $2,200 or $2,300 against the defendant, said E. S. Knowlton, but this plaintiff is informed, and he alleges the truth to be, that some $4,000 or $5,000 worth of collateral was indorsed and delivered by the said E. S. Knowlton to D. P. Thorpe and D. P. Thorpe, agent, and that there has been money collected on said collateral to pay said claim in full, and that the same has been paid in full and should be canceled by this court.”

As against the judgment creditors who were made defendants, and also against Warren C. Johnson, it was alleged that they each claimed some interest in or lien upon, the premises, but that this interest or lien, whatever it might be, was junior and inferior to the lien of the plaintiff. The prayer of the petition was as follows: “Wherefore the plaintiff prays that its lien, under and by virtue of the judgments hereinbefore described, be decreed a first lien on the mortgage and note that is given by E. S. Knowlton to Sylvia H. Knowlton and recorded in Book 40, page 339, Mortgage Records of Mahaska County, Iowa, and that on final trial of this cause the said note, or so much thereof as shall be necessary, be decreed to be subject to sale under execution for payment of said judgments, interests, and costs and accruing costs, and in the event of sale the plaintiff shall receive title to said note and mortgage, free and clear of all liens of any of ...