Larson v. Ames Church of Christ
| Decision Date | 12 January 1932 |
| Docket Number | 41040 |
| Citation | 239 N.W. 921,213 Iowa 930 |
| Parties | HATTIE BALL LARSON, Appellee, v. AMES CHURCH OF CHRIST et al., Appellants |
| Court | Iowa Supreme Court |
Appeal from Story District Court.--S. A. CLOCK, Judge.
Action in equity to foreclose a mortgage on real estate of the Ames Church of Christ. The defendants, Ames Church of Christ and its trustees, in answer pleaded payment of the balance due on said mortgage, to wit, $ 700, and that the mortgage had been released on the margin of the record by Parley Sheldon, the agent of plaintiff. The trial court found and determined that the release of the mortgage created a prima facie payment of the mortgage, but that the plaintiff by her evidence overcame the said presumption, and awarded her judgment and decree of foreclosure of the said mortgage in the sum of $ 700 with accrued interest. From the decree entered, the defendants appeal.
Reversed.
Lee Steinberg & Walsh, for appellee.
Ray P Scott, for appellants.
DE GRAFF, J.
This action involves the foreclosure of a real estate mortgage as to the balance due thereon. The defendants in their answer plead payment of the mortgage indebtedness and tender in proof a release on the margin of the record of said mortgage. A release of the mortgage is prima-facie proof of payment. The sole question before us is whether the facts pleaded and proved by plaintiff are sufficient to overcome the prima-facie case so established by defendants.
It appears from the record without dispute that the Ames Church of Christ purchased four separate lots as a site for their new church sometime in 1920, among which was a lot called the Dunning lot, the one in question. The purchase price of this lot was $ 4200, of which $ 1600 was paid in cash at the time of purchase. The church borrowed from the Story County Trust & Savings Bank at Ames, Iowa, the sum of $ 2600 on a note, securing same by mortgage on said Dunning lot. The money so borrowed was to pay the balance of the purchase price. While the money was furnished by the said Story County Savings Bank, the note and mortgage were executed to Parley Sheldon, who was the president of this bank. After the execution of the note and mortgage to Sheldon, he executed an assignment of the mortgage to the bank and endorsed the note in blank. The assignment of the mortgage, however, was not recorded. The note and mortgage by their terms matured November 1, 1924. At the time the church purchased this particular lot, a church drive was made and pledges were secured from members of the church in the sum of $ 2600, which was proposed to be used to pay the indebtedness before the note and mortgage matured. These pledges were to be collected by A. J. Scott, one of the trustees of said church and one of the defendants herein. When the pledges were collected, they were placed in a savings account in the Story County Trust & Savings Bank. This savings account is known in the record as No. 155, and as the sums accumulated from time to time from these pledges, they were applied upon the $ 2600 note until the year 1922, when the principal indebtedness was reduced to $ 700, which is the amount involved in this foreclosure action. In September, 1923, the matter of these pledges was called to the attention of the church board, and it passed a resolution by which the pledges so far unpaid were cancelled, the collections audited by a committee of the board, and the matter as to further collections on said pledges was closed.
On November 23, 1923, the interest at 6% on the balance of $ 700 was paid to the bank out of the deposit in the savings account No. 155. This left a balance in this account of $ 7.06.
It may be mentioned at this time that Parley Sheldon had been the guardian of the plaintiff Hattie Ball prior to her marriage to Larson. She reached her majority in 1920, and at that time (Nov. 22nd) the guardian Sheldon turned over to Hattie the sum of $ 1297.13, which was used in part to pursue a commercial course, and she later secured a position in the Extension Department of the Iowa State College at Ames, Iowa. After paying for her training, she left her funds with Mr. Sheldon to invest for her. Shortly prior to the 15th of May, 1924, she had on hand sufficient funds to purchase the mortgage note heretofore mentioned, upon which there was then owing the balance of $ 700. An assignment was executed by Mr. Sheldon to Hattie Ball Larson, and the old assignment from Sheldon to the bank was destroyed. This assignment to Hattie, like the first assignment to the bank, was not recorded, but the note, mortgage, and assignment, together with the abstract of title, were taken from the assets of the bank and were placed by Sheldon in a chest or drawer in a safe where he kept the trust papers of his clients.
The difficulty in this case is traceable to Sheldon, who failed to place on record the assignment to his former ward, Hattie Ball (Larson), and it may be stated that the Ames Church of Christ, or the trustees thereof, had no notice, either actual or constructive, that the instant plaintiff had any interest in the mortgage in question.
Upon the trial the defendant trustee Scott testified that on November 1, 1924, the due date of said note, he went to Mr. Sheldon's office and paid him in checks and money the sum of $ 742, and on that occasion Mr. Sheldon turned over to him the note, mortgage, and the abstract of title. At that time Scott took with him a Release or Satisfaction Piece for Sheldon to sign; but he declined to do so, stating to Scott, in effect, that he (Sheldon) did not do business that way, but that he would enter a release upon the margin of the mortgage record in the office of the County Recorder of Story County at Nevada, Iowa. This, Sheldon failed to do, until Scott, who is a lawyer, upon the examination of the abstract, learned that the mortgage had not been released of record. Thereupon, Scott visited Mr. Sheldon and advised him of his oversight in the matter, as per his promise of November 1, 1924, to release said mortgage on the margin of the record. This conversation occurred March 17, 1927, and Sheldon thereupon went to the County Recorder's office and made the marginal record releasing the mortgage. There is no question concerning this fact. This release consequently had been on the record unchallenged from on or about March 17, 1927, until the filing of this suit, in May, 1929. The plaintiff at no time during the period in question ever made demand for the interest due on the $ 700 remaining unpaid, as claimed by her, nor, as far as the record discloses, did she ever talk to Mr. Sheldon concerning the matter.
The note and mortgage were not offered or introduced upon the trial of the instant case, for the reason that the fair preponderance of the evidence discloses that the note and mortgage were burned by the church authorities in a celebration commemorating the discharge of this indebtedness which had been the cause of much anxiety during its existence. Several witnesses testified regarding the burning of the note and mortgage in question on April 6,...
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