Mauer v. Rohde

• Decision Date: 31 August 1977
• Docket Number: No. 2-58530,2-58530
• Citation: 257 N.W.2d 489
• Parties: Velma MAUER, Plaintiff, v. Duane ROHDE et al., Defendants. THORP CREDIT, INC., Defendant-Cross-Petitioner-Appellee, v. William F. RYAN and Charlene Ryan, Defendants-Appellants.
• Court: Iowa Supreme Court

Page 489

257 N.W.2d 489

Velma MAUER, Plaintiff, v. Duane ROHDE et al., Defendants.

THORP CREDIT, INC., Defendant-Cross-Petitioner-Appellee, v. William F. RYAN and Charlene Ryan, Defendants-Appellants.

No. 2-58530.

Supreme Court of Iowa.

Aug. 31, 1977.

William B. Perry, Storm Lake, for appellants, William F. Ryan and Charlene Ryan.

E. Ralph Walker, of Thoma, Schoenthal, Davis, Hockenberg & Wine, Des Moines, for appellee, Thorp Credit, Inc.

Heard by MOORE, C. J., and RAWLINGS, LeGRAND, REYNOLDSON, and McCORMICK, JJ.

REYNOLDSON, Justice.

In this declaratory judgment action involving title to a residence property, trial court held for plaintiff Velma Mauer, declared void a sheriff's deed to defendants Ryan, and established the priority of the mortgage lien of defendant cross-petitioner Thorp Credit, Inc. We affirm in part, reverse in part, and remand.

This litigation spins off from a number of suits brought in Sac County in the 1960's in which L. H. Wagener, Inc., Martin Mauer Construction Company, Martin Mauer, Velma Mauer, Merle Quirk, and others were parties. By order dated May 19, 1967, eight of these lawsuits were consolidated.

One of the consolidated cases was no. 13340, filed February 14, 1967, in which L. H. Wagener, Inc. was plaintiff and Martin Mauer Construction Co., Inc. was defendant. This was an action on an unsecured promissory note in the amount of $25,000.

October 27, 1970, an amended and substituted petition was filed in no. 13340. Martin Mauer and Merle Quirk were added as defendants. It was asserted the money owed to plaintiff had been invested in certain described real estate, which included the property involved in the case before us. The petition prayed for judgment of $25,000, statutory attorney fees and costs, that the judgment be decreed a lien on described property "from date of filing this action," and that it be sold on special execution to satisfy the judgment. Similar amended petitions filed in two of the other lawsuits are of only peripheral concern here.

The amended petition described a homestead owned by Martin Mauer and occupied by him and his wife, Velma, for almost 20 years.

December 9, 1970, Martin Mauer conveyed the homestead to Velma. On the same date, Martin and Velma executed and delivered to Thorp Credit, Inc. a mortgage on this property to secure a promissory note for $167,814.68, executed by Thomas S. Johnson and Velma Mauer. This mortgage was recorded the same date. The evidence indicates the mortgage proceeds were used to release several prior encumbrances.

Abstractor's searches on December 3, 1970, December 10, 1970, and January 11, 1971, did not disclose the "lis pendens" Ryans allege was generated by the October 27, 1970 amended and substituted petition. It had not been docketed so as to provide notice to third parties under § 617.11, The Code. Nor had the action been indexed on February 8, 1972, when a search was made by a different abstractor preparatory to foreclosure by Thorp Credit, Inc.

In March, 1972, the lis pendens index book pages were laminated. Backdated indexing notations relating to case no. 13340 were later discovered to have been written on the surface of the lamination. Thiessen, one of the abstractors, testified he found the deputy clerk making the backdating entries. The latter told Thiessen this was being done at the request of L. H. Wagener, who was present during the conversation. Thiessen's recollection of this incident placed the date earlier than the above physical evidence indicates the backdating occurred, but later than the execution and filing of the Thorp mortgage.

February 10, 1973, L. H. Wagener, Inc., L. H. Wagener and his wife Dorothy Wagener, Martin Mauer Construction Company, Martin Mauer and Velma Mauer entered into a settlement stipulation for disposition of seven of the above lawsuits, including no. 13340. It provided, inter alia, for judgments in favor of the "parties Wagener" against "the corporate defendants bearing the name Mauer," Martin Mauer and Velma Mauer. Deficiency judgments against Martin and Velma Mauer were waived "above any recovery from real property described in Wagener petitions as amended." It was further stipulated that,

"No general execution shall be issued on said judgment. Special execution may issue thereon against the real property described in the Amended and Substituted Petitions, 13340, 13341, and 13354, and shall not be issued against any other real or personal property of Martin Mauer or Velma Mauer."

Causes of action against other named parties were to be dismissed.

A separate agreement provided for assignment of rights of redemption by "parties Mauer" to "parties Wagener," and gave the former a two-year option to repurchase their residence (the property here involved) for $15,000.

Pursuant to the stipulation in case no. 13340, the judgment presented to and executed by the court on February 15, 1973, awarded L. H. Wagener, Inc., a $42,252.14 judgment against Martin Mauer Construction Company and Martin Mauer and provided,

"that the lis pendens of plaintiff filed herein by way of amended and substituted petition herein (sic) October 27, 1970, is hereby ratified, approved and confirmed as of said date, the lien of the judgment and decree herein shall constitute a lien against the aforesaid real estate relating back to date of October 27, 1970 * * *."

Of course, Thorp was not noticed nor was it a party to the 13340 action. Thorp commenced its own foreclosure action February 10, 1972. Pursuant to a stipulation and confessions of judgment, a decree was entered in the Thorp foreclosure on April 16, 1973. It awarded Thorp a $56,000 judgment against Velma Mauer, declared the mortgage a lien on the Mauer homestead from its date, December 9, 1970, and provided for execution and sale.

March 14, 1974, special execution issued on the Wagener judgment. Levy was made on the Mauer homestead. At sheriff's sale the property was purchased for $500 by Term Leasing Corp., alleged to be owned solely by L. H. Wagener. The certificate of purchase was assigned to William F. Ryan and Charlene Ryan, husband and wife. Further assigned to Ryans was the assignment of right of redemption initially executed by the Mauers in favor of Dorothy Wagener. The sheriff's deed to Ryans was dated August 8, 1974.

Apparently learning of the above litigation, Thorp persuaded Velma Mauer to file the instant petition for declaratory judgment on September 11, 1974. Named defendants were Sac County sheriff Duane K. Rohde, William F. and Charlene Ryan, Thorp and Term Leasing. The petition raised technical objections relating to sale of the homestead on the Wagener execution, and prayed that the sheriff's deed be set aside and defendants Ryan be enjoined from removing plaintiff from her home.

No relief was prayed for as against Thorp. The latter answered and filed a cross-petition against the other defendants, asserting its mortgage lien was superior to any interest of Ryans in the property, that it had no notice of any action in the Wagener proceeding "that would affect the rights, title and interest of Defendant/Cross-Petitioner, Thorp Credit, Inc. in and to the property described herein." Thorp prayed for declaratory judgment that its right, title and interest in the property be declared paramount and superior to every right, title and interest which might be claimed by the other defendants and that the sheriff's deed be set aside and all proceedings in connection therewith be declared null and void.

Ryans filed a motion to drop Thorp as an improperly joined party under R.C.P. 27(a) a motion to strike Thorp's answer and cross-petition as an improperly joined action under R.C.P. 27(b) (asserting the cross-petition was a collateral attack on the Wagener judgment), and a second motion to strike the cross-petition as unauthorized under R.C.P. 33(a). These motions were overruled.

Ryans, answering the petition, pled the prior Wagener judgment and underlying stipulation, asserting waiver, estoppel, and res judicata. Their answer to the cross-petition was the equivalent of a general denial.

Briefs filed below by Thorp directly attacked the validity of the alleged lis pendens created by the Wagener amended and substituted petition. Attached were copies of certain bankruptcy court findings dated April 19, 1974, in proceedings involving Thomas S. and Corinne M. Johnson. These debtors had acquired a portion of the property in litigation from Mauer. L. H. Wagener, Inc., represented by the same counsel who later represented Ryans, filed lien claims in the Johnson bankruptcy based upon the "lis pendens" and subsequent judgments in cases numbered 13340, 13341 and 13354.

The bankruptcy court made specific findings relating to the backdating in the lis pendens index, held the judgments of the Iowa district court null and void as purporting to establish liens on the Johnson property, and rejected the lien creditor claim of L. H. Wagener, Inc.

Certified copies of these bankruptcy papers together with transcripts from a related July, 1973, hearing were offered as evidence in this case, and objected to as constituting a collateral attack on the Wagener judgment establishing the retroactive lien.

Without passing on the merits of the objection, we note these exhibits disclose the issue of the validity of the alleged lis pendens in relationship to the Thorp lien was litigated below.

Following trial, the ruling and decree in the case before us was filed May 5, 1975. District court found the backdating was done at Wagener's request, that the cause of action in the amended petition was not an action "affecting real estate" as required by § 617.10, The Code, and therefore was not entitled to lis pendens status and indexing. The purported filings were declared invalid, void and of no effect. The court held the sheriff's deed to Ryans void and confirmed the title to the real estate in Velma Mauer subject to Thorp's mortgage lien. The...