Lutz v. Cunningham

• Decision Date: 05 August 1949
• Docket Number: 47403.
• Citation: 38 N.W.2d 638,240 Iowa 1037
• Parties: LUTZ et al. v. CUNNINGHAM et al.
• Court: Iowa Supreme Court

38 N.W.2d 638

240 Iowa 1037

LUTZ et al. v. CUNNINGHAM et al.

No. 47403.

Supreme Court of Iowa

August 5, 1949

Breen, Breen & McCormick and Rider &amp Bastian, all of Fort Dodge, for appellants.

Loth & Melton, of Fort Dodge, for appellee.

BLISS Justice.

This is another of the too many appeals to this court in which the appellant makes no attempt to properly abstract the testimony so as to present only such part thereof as bears upon the propositions in issue, but prints a copy of the transcript as the Record. Such practice is an imposition on the court and aids no one.

Many of the facts are stipulated and there is little factual controversy. On October 22, 1928, one Deppe held the record title to the residence involved herein--a pebble-dash bungalow with a red tile roof on a lot with only a 30-foot frontage in Fort Dodge. On the above date, Mogensen, who was apparently contemplating the purchase of the lot, entered into a written contract to sell it to the defendant-cross-petitioner, who was then Mrs. Lenore Frear. The latter then held a contract of purchase to another property in which she had an 'equity'. The purchase price provided in the Mogensen contract was $6000. She assigned her 'equity' to Mogensen and received a credit therefor on the Mogensen contract of $1760, leaving a balance owing of $4240 to be paid in monthly installments of $40, commencing on November 17, 1928, and on said day of each month thereafter, until the principal sum had been reduced to the amount of the mortgage against the property. The contract debt bore interest at 7% computed semi-annually with payments applying first on the interest and then on the principal. Time was of the essence of the contract, and it contained the usual clause giving the grantor the right of statutory forfeiture for specified defaults. When the price had been so reduced the purchaser would be entitled to an abstract showing merchantable title and a warranty deed in which the grantor would assume the payment of the mortgage indebtedness. The vendee in the contract agreed to regularly and reasonably pay all taxes and assessments on the property including those for 1928, and all thereafter imposed. The vendor reserved the right to keep the premises mortgaged up to $3500, and the vendee agreed to keep the property insured against all the elements up to $3500 during the life of the contract. The contract was never placed on record.

On December 14, 1928, Deppe conveyed the property by warranty deed to Mogensen. The deed was recorded the same day. On December 15 1928, Mogensen and wife executed and delivered a promissory note for $3500 and a mortgage on this property securing payment of the note, to the defendant, Home Building and Loan Association. The mortgage was filed for record the same day. The mortgage debt drew interest at the rate of 58 1/3 cents a month on each $100 of the debt, payable in the sum of $41.42 at the time of executing the note and a like sum on the fifth day of each month thereafter, until such time as the amount paid on the 35 shares of mortgagors' stock pledged to the Association, together with the profits to the credit thereof would equal the par value of $100 per share; said monthly payment being $21 for one month's dues on the shares of stock pledged, and $20.42 for one month's interest on the loan. The mortgagors agreed to furnish insurance on the property in the sum of $3500, and if they failed to do so or to pay insurance premiums, the mortgagee might do so at the expense of mortgagors, and include the amount paid in the mortgage debt.

The cross-petitioner testified that she and her husband took possession of the property under the contract and paid Mogensen $240, or six monthly payments. The sixth payment would probably be the payment due April 17, 1929. On February 21, 1929, Mogensen and wife executed a warranty deed to the property to Wretman for $1 and other valuable consideration and 'subject to a mortgage of $3500 to the Home Building and Loan Association.' When the deed was delivered does not appear bat it was recorded on April 26, 1929. Mogensen told cross-petitioner that thereafter payments on the contract should be made to Wretman. The latter's records show that between May 21, 1929 and May 16, 1931, both inclusive, the tenants had paid Wretman 22 payments of $40 each, or $880 of the contract. This amount was $120 less than was due for the period. During this time Mr. Frear died and early in 1931, Mrs. Frear moved to California. In May, 1931, the property became unoccupied and she returned from California and put the house in order for another tenant. She testified that she thought she personally made the $40 payment on May 16, 1931 to Wretman. On this trip she rented the house to a Mr. Shaw fro $40 a month. He occupied the place and under her instructions paid the rent to Wretman. Mrs. Frear at once returned to California, and from there sent $15 to the Association, as shown by its receipt to her, 'for payments' on house, June 15, 1931. On September 25, 1931, she wrote a letter from Alameda, California to the Association. Neither the letter nor a copy of it was produced. It was the recollection of Mr. Klapka, secretary of the Association, that in her letter she inquired if the Association would be interested in purchasing any equity she had in the property. On October 1, 1931, Klapka, as secretary, wrote to her stating: 'We have your letter of September 25th enclosing order for $10 to apply on your loan payments. Just at this time, with conditions as they are, it would not be possible for us to take over your property so as to get the payments all in one place. Money is just too scarce for use to consider any loans at all. Probably when things get better we could look into this for you but for the time being at least we couldn't do a thing for you. However the way it is being handled now should take care of everything satisfactorily until other arrangements can be made. * * *' The letter then mentions that 'your renters complained of difficulty with the furnace so they have had a furnace man look it over'; that the furnace company recommended some repairs costing $26.60, which the Association authorized. There is no evidence who paid for the repairs.

Mr. Klapka testified that, at the time the letter was written, Mr. Wretman, while behind in his payment on the mortgage debt, had been making part payments with regularity. Concerning the period during which Wretman had title to the property, Mr. Klapka, for the Association, testified: 'We had nothing to do with the handling of the property, and some reasonably close to contractual payments were being made on the mortgage, so that arrangement at that time was satisfactory. I was not managing the property. I presume Mr. Wretman was. I was not collecting the rents and I was not being called on to pay taxes or to make improvements or repairs. Either Mr. Wretman was doing that, or it wasn't being done, as it later turned out; but I was not asked to concern myself with the property at that time. I could gather from my reply to her letter of September 25th that she might have asked us to take over her equity. I see here I said I couldn't do it. * * * In other words we had all the money in the property that we wanted to, which was probably more than it was worth. At that time all we had invested in the property was the mortgage plus some delinquent taxes we paid. * * * Wretman was making payments on our paper. They were not contractual payments. They were made reasonably regularly, but reduced in size. In other words the mortgage was running behind. Any amounts Mrs. Cunningham paid to Mr. Wretman as shown on his statement did not come to us except just such payments as our books show he made to us. In other words the payments she testified she made to Mogensen and Wretman did not come to us. All that we were being paid we interest on the mortgage.' In the spring of 1932, Mrs. Frear left California permanently for Alberta, Canada, where she married Mr. Cunningham, who died about two years before the trial.

On May 31, 1933, Wretman and wife executed a quit-claim deed of the property, in consideration of $1 and other valuable consideration, to the defendant Association.

It recited: 'This deed is an absolute conveyance of title in effect, as well as in form, and is not intended as a mortgage or security of any kind.' There was no mention of the contract in the deed. As noted herein, in the deed from Mogensen to Wretman the latter had not assumed payment of the mortgage debt. In narrative form Mr. Klapka testified:

'When we took this property from Mr. Wretman there wasn't any question that it wasn't worth what was owing on our mortgage. Mr. Wretman is a business man in Fort Dodge.'

'Q. Is there any reason why, if the property had been worth any more than was against it, that he wouldn't and couldn't have kept it? A. Well, if it was worth more than he owed us, he certainly wouldn't have turned it back to us.'

Mr. Klapka testified that until the deed was received from Mr. Wretman on or about June 1, 1933, neither he nor the Association had anything to do with the management or operation of the property at all, and it was simply the mortgage holder taking such payment as the owner gave it; that neither he nor his company in receiving the deed had any intention of releasing the mortgage, but intended to and did continue to carry the mortgage on their books as an active mortgage, representing their financial interest in the property. The mortgage never was released of record. He further testified that Wretman never turned over to the Association any contract between Mogensen and Mrs. Frear, nor did it ever have any copy of the contract, and that such information as the Association had about...