Marshall Inv. Co. v. Lindley

• Citation: 134 N.W. 853,156 Iowa 6
• Parties: MARSHALL INV. CO. v. LINDLEY ET AL. MARSHALL INV. CO. v. ALLEN ET AL.
• Decision Date: 07 March 1912
• Court: Iowa Supreme Court

156 Iowa 6

134 N.W. 853

MARSHALL INV. CO.

v.LINDLEY ET AL.

MARSHALL INV. CO.

v.ALLEN ET AL.

Supreme Court of Iowa.

March 7, 1912.

Appeal from District Court, Polk County; Lawrence DeGraff, Judge.

Action to establish and foreclose liens. Two actions were brought by the same plaintiff against different defendants. They were so related in their facts that they were consolidated by agreement and tried together. There was a decree for the plaintiff in both actions, and the defendants have appealed. Affirmed.J. A. Merritt, for appellants.

George E. Brammer, for appellee.

EVANS, J.

These actions were originally brought as actions to foreclose purported mortgages. The plaintiff is a corporation. The alleged mortgages purported to have been executed by the plaintiff itself. They were executed to its own secretary as mortgagee, and the same secretary joined in the execution thereof as an officer of the company. They were executed by the president and secretary as officers of the corporation, but were acknowledged by the secretary alone. These mortgages purported to cover certain real estate then owned by the plaintiff company and which it later conveyed subject to the mortgages. The defendants are the present owners of such real estate.

The defendants appeared and answered the petitions respectively. The substance of each defense was an attack upon each mortgage as being inherently and absolutely void in its inception because of the facts already stated, and praying that the mortgages be decreed to be a nullity. It was also claimed that the mortgages were necessarily merged in the legal title while both were held by the plaintiff, and further that the assignment of the mortgages to the plaintiff corporation by its secretary amounted to a satisfaction and discharge thereof.

Being confronted with this defense, the plaintiff shifted its position and amended its petitions and set up the certain transactions, including a contract, which furnished the occasion and the consideration for the mortgages and the apparent liens which plaintiff seeks to enforce against the real estate. The substance of such amendment was that on August 14, 1909, the plaintiff entered into a written contract of exchange of property with the Paul Land Company, whereby the plaintiff undertook to convey the property involved in this suit to the Paul Land Company subject to incumbrance of $10,000. The property in question consisted of 50 acres located in or near the city of Des Moines. It consisted of two tracts known in this record as the “20-acre” tract and the “30-acre” tract. The contract of August 14th bound the plaintiff to convey this property to the Paul Land Company “by good and sufficient warranty deed with the general covenants of warranty, subject to a mortgage of ten thousand ($10,000) dollars drawing interest at the rate of 6 per cent. per annum payable annually and due in five years, but with the option to the owner of the said land to pay any multiple of one hundred ($100.00) dollars of the said amount on any interest per day, the said land to be otherwise free and clear of liens and incumbrances.”

The contract also provided that the conveyances should be made of the respective properties on August 23, 1909. The mortgages sued on were executed on August 21, 1909. There was an existing valid mortgage of $1,500 at that time on the “30-acre” tract. The plaintiff executed another mortgage thereon for $4,500 to its secretary, and a mortgage of $4,000 on the “20-acre” tract to the same mortgagee. This made a sum total of $10,000 of incumbrance against the property. The last two named mortgages are those upon which suit was originally brought herein. The purpose of their execution was to conform with the contract entered into with the Paul Land Company on August 14th. On August 23, 1909, the property was conveyed by the plaintiff to the Paul Land Company in pursuance of the contract of August 14th, and by an appropriate deed containing the following provision “subject to mortgages to the amount of ten thousand ($10,000) dollars at 6 per cent. annual interest due January, 1914, with optional payments also to taxes and interest now due.”

The plaintiff contends that, by reason of this contract and its conveyance of the land thereunder, it was and is entitled in equity to a lien upon the property which is the practical equivalent of the mortgages, and that it is entitled to such liens regardless of the validity of the mortgages as such. The evidence in the case is brief and presents practically no conflict. It is undisputed that the plaintiff parted with its title to the said property substantially in the manner above stated. It appears, however, that the name of the Paul Land Company was not inserted in the deed as grantee. At its request no grantee was named in the deed at the time of its delivery by plaintiff, the intent being to permit the Paul Land Company to insert the name of a grantee at its own will. Later the Paul Land Company sold the property to one C. M. Gray and delivered to him the deed in blank which it had received from the plaintiff. Gray's name was later inserted in such deed as grantee. Gray sold the property to the defendant Allen. Allen sold the “30-acre” tract to the defendant Cora Lindley, and entered into an executory contract with the defendant Meadder to sell to him 10 acres of the “20-acre” tract. Thus the legal title of the “30-acre” tract now rests in the defendant Cora Lindley, and that of the “20-acre” tract in defendant W. C. Allen. The...