Lowden Savings Bank v. Zeller
| Decision Date | 28 September 1923 |
| Docket Number | 35061 |
| Citation | 194 N.W. 966,196 Iowa 1205 |
| Parties | LOWDEN SAVINGS BANK, Appellant, v. L. and L. F. ZELLER et al., Appellees; FRED H. FRAHM et al., Appellants |
| Court | Iowa Supreme Court |
REHEARING DENIED DECEMBER 14, 1923.
Appeal from Cedar District Court.--F. O. ELLISON, Judge.
ACTION to enjoin foreclosure of a chattel mortgage given by defendant Frahm to defendants the Zellers. The court found the mortgage to be a valid prior lien on all nonexempt property, and that plaintiff was entitled, under its mortgage lien, to the exempt property. All parties appeal.--Modified and affirmed on appeal of bank; affirmed on appeals of the Frahms and the Zellers.
Modified and affirmed on appeal of bank; affirmed on appeals of Frahms and Zellers.
Johnson Donnelly & Lynch and D. D. McGillivray, for appellants.
E. L Magruder and J. C. France, for appellees.
Defendant F. H. Frahm was a married man, the head of a family, and a farmer. On June 8, 1918, he executed a chattel mortgage to L. & L. F. Zeller, a copartnership, covering 20 head of two-year old steers, 5 head of heifer calves, 5 head of Shorthorn male calves, 15 cows, 5 horses, and 110 Hampshire pigs about three months old. This mortgage provided:
"It being understood that this mortgage shall also include the increase and all additions that may hereafter be made to the above described; also any other chattels of every nature and kind that I may own and possess on the above described premises or elsewhere in Massillon Township, Cedar County, Iowa, or Cedar County, Iowa, during the time that this mortgage is in force."
The mortgage secured a note of $ 3,000, therein described, and further provided:
"It being understood that this mortgage shall also include any other indebtedness that I may owe said mortgagees or their assigns during the time that this mortgage is in force."
The wife of F. H. Frahm did not sign this mortgage. The mortgage was recorded on June 11, 1918.
On June 21, 1921, Frahm executed a note in the amount of $ 1,773, to the First Trust & Savings Bank of Oxford Junction. This note was given in renewal of three notes purchased by the Zellers prior to that date, and was executed to the bank, instead of to the Zellers, by mistake, and was, in August, 1921, indorsed over to the Zellers. The bank, in fact, never owned the note.
On December 16, 1921, defendants Fred H. Frahm and Emma Frahm, his wife, executed to the plaintiff bank their note for $ 5,000, and to secure said note, the said defendants executed and delivered to plaintiff bank a chattel mortgage upon all the personal property on the farm occupied by them. Said chattel mortgage was recorded on December 17, 1921. This mortgage covered 4 horses, 12 milch cows, 11 white-faced heifers, 12 spring calves, 75 head of hogs, 32 head of brood sows, 57 head of fall pigs, 1 Hudson automobile, a full line of farm machinery and equipment; also, all corn, hay, and grain; and "also all other personal property hereinafter acquired by mortgagors or either of them and placed or kept on said premises at any time in the life of this mortgage; also, all increase of live stock." The mortgage provided that, "in addition to the note hereinafter described, this mortgage shall also stand as security for all other indebtedness hereinafter owing by mortgagors or either of them to mortgagee."
After the execution of said mortgage, the plaintiff bank loaned Frahm additional sums in the amount of $ 300.
On January 28, 1922, the Zellers placed their chattel mortgage in the hands of the sheriff of Cedar County for foreclosure, and caused the sheriff to take possession of the following described property as the property of F. H. Frahm, all of said property being covered by plaintiff bank's chattel mortgage, to wit, 75 head of fat hogs, 57 fall pigs, 32 brood sows, all Jersey Reds, 1 thoroughbred Jersey Red boar, 6 two-year-old heifers, 12 cows, 8 calves, 4 horses, 200 chickens, 1,500 bushels of corn, 8 tons of hay, and all farm machinery, and caused the sheriff to give notice of the sale of said property under and by virtue of said chattel mortgage.
I. On the 9th day of February, 1922, plaintiff bank began this action, alleging that, by virtue of its chattel mortgage, it held a first and paramount lien upon all of the personal property covered by and described in said chattel mortgage, and prayed that defendants the Zellers and B. F. Barclay, sheriff, be enjoined from foreclosing said Zeller mortgage and restrained from proceeding to sell the said personal property. A temporary injunction was granted. Plaintiff bank prayed that, upon final hearing of the cause, it be adjudged that the lien of its mortgage be established as a paramount lien to any interests or liens of the Zellers and the Frahms in and to all of said personal property, and that the Zellers be required to plead any cause of action they claimed to have for the foreclosure of their alleged mortgage lien, and that the interests and rights of the parties be determined, and that, upon the final trial, the temporary injunction be made permanent, and the defendants enjoined from further proceeding with their foreclosure sale.
By way of affirmative defense, the Zellers alleged that the property taken possession of by them under their chattel mortgage was property covered by the terms of said mortgage; that said mortgage was given to secure the payment of the $ 3,000 note mentioned in the mortgage; that said mortgage was also given to secure the payment of a certain note executed by the Frahms for $ 1,773, which note was made after the execution of the mortgage, and on July 27, 1921, and is included in the security of the mortgage by virtue of the clause in the mortgage reading:
"It being understood that this mortgage shall also include any other indebtedness that I may owe such mortgagees or their assigns during the time that this mortgage is in force."
Defendants the Frahms admitted all the allegations of the petition, and joined with plaintiff in praying for the relief asked in the petition. By way of cross-petition against defendants Zellers and Barclay, sheriff, they allege that, subject to the right of plaintiff under its chattel mortgage. F. H. Frahm is the owner of the property described in plaintiff's mortgage; that defendants Zellers have no lien on said personal property; that the mortgage held by the Zellers, under which they are attempting to proceed in foreclosure, has been satisfied by payment to the mortgagee of the proceeds of sale of the property covered by said mortgage; that the property which the Zellers are attempting to sell is not covered by the mortgage given to the Zellers; and that the Zellers' mortgage is not a lien on said property. The Frahms prayed that the plaintiff bank's mortgage be adjudged to be the only mortgage lien upon the personal property which the Zellers are attempting to sell under their mortgage, and that the Zellers and the sheriff be restrained from proceeding to sell said property.
Answering the cross-petition of the Frahms, the Zellers made general denial; admitted that they caused the sheriff to foreclose their mortgage; alleged that any money derived from the sale of any property described in their mortgage, paid by Frahms to them, was applied upon indebtedness due from Frahm, other than that secured by said mortgage; that such sums of money were so applied with the knowledge and consent of Frahm; that the indebtedness secured by their mortgage is due and unpaid; and that the lien of their mortgage still attaches to the property seized by the sheriff.
II. Under the issues thus made, the cause was tried. The court found certain property to be exempt to Frahm, and that the mortgage given by Frahm and his wife to the plaintiff bank covered their exempt property and other property; that the Zeller mortgage, not being signed by Emma Frahm, wife of F. H. Frahm, was not a lien upon exempt property; that, as to the exempt property, the mortgage lien of the plaintiff bank was prior and superior to the mortgage of the defendants, Zeller & Zeller, and covered 5 brood sows, 2 cows, 2 calves, 2 horses, about 200 chickens, certain grain and hay, and the farm machinery; and also that the mortgage held by plaintiff bank was a superior lien to the Zeller mortgage on the "57 fall pigs," held to be exempt property; that the Zeller mortgage was a valid lien on the balance of said property taken by the sheriff; and that said lien was prior to and superior to plaintiff's chattel mortgage and to any claim or interest which the defendants Frahms may have therein. The court further found that the mortgage given by F. H. Frahm to Zeller & Zeller was given to secure the payment of the $ 3,000 note mentioned in the mortgage, and also the $ 1,773 note executed by Frahm on July 27, 1921, and owned by Zeller & Zeller. Judgment was rendered against F. H. Frahm and Emma Frahm in favor of plaintiff bank on the note for $ 5,000 mentioned in the mortgage of the Frahms to it. It was decreed by the court that the Zeller mortgage was a prior lien on all the property involved, except property found to be exempt. The temporary injunction was dissolved, except as to the property found to be exempt, from which judgment and decree plaintiff bank and defendants Frahm and Frahm have appealed. Also defendants the Zellers appeal from the holding of the court that the 57 fall pigs were exempt property, claiming that said pigs were not under six months of age when seized under the chattel mortgage.
III. We will first consider the issues between appellant bank and appellees the Zellers on the appeal of appellant bank. The most important questions involved in this...
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Lowden Sav. Bank v. Zeller
...196 Iowa 1205194 N.W. 966LOWDEN SAVINGS BANKv.ZELLER ET AL.No. 35061.Supreme Court of Iowa.Sept. 28, 1923 ... Appeal from District Court, Cedar County; F. O. Ellison, Judge.Action to enjoin foreclosure of a chattel mortgage given by defendant Frahm to defendant Zellers. The court found the mortgage to be a valid prior lien on all ... ...