Merchants Mut. Bonding Co. v. Underberg, s. 63415

• Decision Date: 23 April 1980
• Docket Number: Nos. 63415,63656,s. 63415
• Citation: 291 N.W.2d 19
• Parties: MERCHANTS MUTUAL BONDING COMPANY, Plaintiff, v. Irwin H. UNDERBERG, Appellant, and Virgil G. Wilson and Lois R. Wilson, Appellees. Elizabeth Janet UNDERBERG, Appellee, v. MERCHANTS MUTUAL BONDING COMPANY, Plaintiff, and Virgil G. Wilson and Lois R. Wilson, Appellants.
• Court: Iowa Supreme Court

Page 19

291 N.W.2d 19

MERCHANTS MUTUAL BONDING COMPANY, Plaintiff, v. Irwin H. UNDERBERG, Appellant and Virgil G. Wilson and Lois R. Wilson, Appellees Elizabeth Janet UNDERBERG, Appellee, v. MERCHANTS MUTUAL BONDING COMPANY, Plaintiff and Virgil G. Wilson and Lois R. Wilson, Appellants.

Nos. 63415, 63656.

Supreme Court of Iowa.

April 23, 1980.

B. V. Willie, Eagle Grove, for appellant Irwin H. Underberg.

Maurice C. Breen of Breen & Breen, Fort Dodge, for Virgil G. Wilson and Lois R. Wilson.

Larry E. Ivers, Eagle Grove, for Elizabeth Janet Underberg.

Considered by REYNOLDSON, C. J., and LeGRAND, REES, UHLENHOPP, and McGIVERIN, JJ.

LeGRAND, Justice.

This is a consolidated appeal which raises interesting questions concerning the alleged waiver of homestead rights by Irwin H. Underberg and his wife Elizabeth Janet Underberg. The trial court ruled the homestead interest of Irwin H. Underberg was subject to levy and execution sale to satisfy a judgment against him but that the homestead interest of Elizabeth Janet Underberg was exempt. There is an appeal from each of these orders. We reverse the trial court on the appeal of Irwin H. Underberg and affirm the trial court on the appeal of Virgil B. Wilson and Lois R. Wilson.

I. Irwin H. Underberg operated a brokerage business under the name of Underberg Brokerage. In 1974 he applied for a bond with Merchants Mutual Bonding Company (Merchants) to secure his obligation as a grain dealer in accordance with the laws of this state. The bond was issued with Virgil B. Wilson and Lois R. Wilson (Wilsons) agreeing to indemnify Merchants for any loss sustained under the bond. Later Merchants sued Irwin H. Underberg and both Wilsons under the provisions of the bond and obtained judgment against all three in the amount of $15,000.00. The Wilsons paid the judgment and Merchants assigned to them "all claims (it has) as plaintiff" in this action. Those claims were against Irwin alone; no claim was asserted against Elizabeth. Thus Merchants no longer has an interest in this matter. The dispute is between the Underbergs and the Wilsons. The Wilsons seek to recover the amount they paid as indemnitors. The sole question here is whether they have recourse against the Underberg homestead to satisfy this obligation.

The bond application upon which this case is premised contained, among other things, a provision that the homestead of Irwin H. Underberg and Elizabeth Underberg "may be sold on execution to satisfy any indebtedness arising under this agreement or any judgment rendered" pursuant thereto. The application also provided that it should be liberally construed to fully protect and indemnify each of the sureties and their successors.

The trial court made two separate orders in this matter. First, it decreed Irwin had waived his homestead rights in the bond application and held his interest in the homestead subject to levy and sale. Next, upon Elizabeth's petition of intervention, the court decreed her homestead interest was not subject to levy and sale. We consider first the question of Wilsons' appeal of the order holding the homestead interest of Elizabeth exempt from execution. We consider this to be dispositive of the case.

II. The Homestead Interest of Elizabeth Janet Underberg.

Irwin and Elizabeth hold title to the homestead as joint tenants. All of the consideration for its purchase came from Irwin.

When suit was started to enforce the obligations of the bond, Elizabeth was not made a party. The action by Merchants was against Irwin and the Wilsons. No judgment has ever been rendered against Elizabeth. As far as the record before us discloses, she has no obligation under the bond and there is no claim that she has.

In order to prevail Wilsons must establish that Elizabeth pledged her homestead interest to pay off her husband's obligation. The bond application can have no such far reaching effect. At best, it might be held to make the homestead subject to payment of her indebtedness. But she has no indebtedness. We decline to say that the alleged waiver subjects the homestead to execution for debts other than...