McElroy v. Allfree

• Decision Date: 13 June 1906
• Citation: 131 Iowa 112,108 N.W. 116
• Parties: MCELROY v. ALLFREE ET AL.
• Court: Iowa Supreme Court

131 Iowa 112

108 N.W. 116

MCELROY

v.ALLFREE ET AL.

Supreme Court of Iowa.

June 13, 1906.

Appeal from District Court, Jasper County; Byron W. Preston, Judge.

Suit in equity to have the title to certain land standing in the name of George D. Wood, deceased, declared to be held by him in trust for the bank of which plaintiff is receiver. Elizabeth Wood is the widow of George D. Wood, deceased, and she denied the allegations of plaintiff's petition and asked that her interest in the land as a survivor of her husband be protected. Allfree, the adminstrator, denied the allegations of plaintiff's petition, pleaded that his intestate was the owner of the land at the time of his death, that the same was needed to pay debts of the estate, and, after setting aside the widow's share, should be subjected thereto. R. N. and Amelia Stewart filed answers and cross-petitions in which they alleged they were the owners of the land in controversy, that the same was conveyed to Wood as security for a loan of money, and they asked that the deed be declared a mortgage and that they be permitted, after an accounting, to redeem. Defendants Clifton and Hazel Wood are minor children of George D. Wood, deceased, and they were represented by a guardian ad litem who filed an answer in denial of the adverse claims of all parties. The relation of the other parties to the suit need not be here stated. Upon these issues the case was tried to the court, resulting in a decree in favor of the Stewarts and dismissing all other petitions and claims. Plaintiff, Elizabeth Wood, and H. B. Allfree, administrator, appeal. Affirmed.Carr, Hewitt, Parker & Wright and McElroy & Cox, for appellant McElroy.

Henry Silwold, for appellant Allfree.

Ryan, Ryan & Ryan, for appellant Wood.

N. T. Guernsey and E. J. Salmon, for appellees Stewart.

E. J. Salmon, for appellees Wood and West.

DEEMER, J.

George D. Wood, now deceased, was the managing officer and cashier of a partnership composed of himself and Alexander Wood doing a banking business in the town of Colfax, under the name and style of the “Bank of Colfax.” George D. Wood died by his own hand and W. O. McElroy was appointed receiver of the bank. Allfree was appointed administrator of the George D. Wood estate. Elizabeth Wood is the widow of George D., and Clifton D. and Hazel are his minor heirs. Prior to the year 1897, R. N. Stewart was the owner of the land in controversy. At divers dates about the year named various parties obtained judgments against Stewart, issued executions, caused the land to be sold thereunder, and sheriff's certificates to be issued thereon. Geo. D. Wood in his own name procured assignments of these certificates and thereafter took deeds thereunder. Plaintiff claims that Wood took them in trust for the bank of which he was cashier, and that he obtained them with money belonging to the bank. This was denied by the administrator of Wood's estate, and by his widow and heirs. R. N. and Amelia Stewart also made denial, and they further claimed that Wood took title to the land as security for money which he had furnished them; that he was in fact a mortgagee, and they asked an accounting, for leave to redeem, and other relief. The Stewart title was established by the trial court and if its finding in this respect be affirmed there is no need for considering the other issues.

We shall first take up that proposition. The claim of the Stewarts in brief is that after their property had gone to sheriff's sale and while certificates were outstanding, they entered into an agreement with Wood whereby he, Wood, agreed to take assignments of the certificates of sheriff's sale, procure deeds to the land, and hold the title as security for the amount advanced, and for other sums which they (the Stewarts) were then owing the bank, until all should be paid. Of course, the legal title when this action was brought was in Wood, in virtue of the sheriff's deeds, and without testimony on any of the issues the administrator, widow, and heirs of Geo. D. Wood would be entitled to the decree. And the first point made by appellants is that the title of the Stewarts was completely and wholly divested by the sheriff's deeds, and that the attempt by the Stewarts to prove a parol agreement with Wood, whereby he was to take the title acquired by him, is an undertaking to prove an express trust by parol in contravention of section 2918 of the Code of Iowa and of the many decisions of this court. It is true that an express trust cannot be established by parol testimony, but a resulting or constructive one may be; and it may also be shown as a general rule that a conveyance, absolute upon its face, was intended as security and was in fact a mortgage. The reasons for this last proposition are fully explained in Bigler v. Jack, 114 Iowa, 667, 87 N. W. 700, and need not be repeated here.

Appellants, while conceding the rule, insist that it does not apply here for the reason that Wood secured his title from an independent source, to wit, the sheriff's deeds, and not through the Stewarts, and that, in such cases, parol evidence, to show that it was taken as security simply, is not admissible, for that it tends to engraft a trust upon an absolute conveyance from one other than a party in interest. They rely chiefly upon Dunn v. Zwilling, 94 Iowa, 233, 62 N. W. 746;Hain v. Robinson, 72 Iowa, 735, 32 N. W. 417, and other like cases. On the other side, it is argued that Wood's title was derivative and not independent, and that, in any event, it was as much a fraud for Wood to take title in the manner he did and then deny the agreement as if he had taken his title directly from the Stewarts instead of the sheriff. In the first place it should be conceded that the holder of a sheriff's deed does not acquire an independent title, but a derivative one, immediately from the sheriff, but mediately from the judgment debtor. In other words, generally speaking, he gets no other or greater title than the judgment debtor held. This is true both as to foreclosure and judgment sales. Mathes v. Cover, 43 Iowa, 512; Jones on Mortgages (6th Ed.) § 1654, and cases cited. The purchaser becomes privy in estate with the mortgagor with respect to the title as it existed when the mortgage was executed, or of the judgment debtor if the sale be under a judgment. So that the title acquired in this case was derivative and not independent. Had title fully passed by sheriff's deed at the time when it is claimed Stewart made his agreement with Wood, there might be some ground for holding that such an agreement is in the nature of a trust and cannot be established by parol.

Authority for this seems to be found in the cases relied upon by appellants, or at least in some of the language used therein. But that is not the...