Metropolitan Life Ins. Co. of City of New York v. Laufersweiler
| Decision Date | 05 May 1936 |
| Docket Number | 43313. |
| Citation | 267 N.W. 74,221 Iowa 1008 |
| Parties | METROPOLITAN LIFE INS. CO. OF CITY OF NEW YORK v. LAUFERSWEILER et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Winnebago County; T. A. Beardmore Judge.
Application by receiver of closed bank, holding title to three-fourths of the real estate involved in foreclosure, for continuance of foreclosure under chapter 115, 46th Gen.Assem., to March 1 1937. Continuance granted by district court. Mortgagee appeals.
Reversed.
Thompson & Weible, of Forest City, and Tinley, Mitchell, Ross & Everest, of Council Bluffs, for appellant.
Breen & Breen, of Fort Dodge, for appellee.
On February 28, 1935, the plaintiff filed a petition for the foreclosure of a mortgage executed by John Laufersweiler March 24, 1924, to secure a note for $15,000 made payable to George A. Rich. The note and mortgage were transferred to the plaintiff shortly after they were made. There was an acceleration clause for failure to pay interest, taxes, and insurance, and at the time of the commencement of the action the claim had grown to $17,576.98.
D. W. Bates, as superintendent of banking, was made a party as receiver of the First State Bank & Trust Company of Fort Dodge, Iowa, and on March 7, 1935, filed an application under the Act S. F. 34, now chapter 115, Acts of the 46th Gen. Assem. said application setting forth that the matter came within the provisions of the act, that he was not in default, and asked a continuance under the provisions of the act, and for orders as to distribution of the rents from the property involved.
The plaintiff filed a resistance to this application, setting forth a denial that Bates as the receiver was the owner of the legal title to the land in the action, and alleging that E. H. Rich, Donald Vincent, and C. W. Gadd were the owners and legal titleholders of the real estate; that said bank and its receiver were beneficiaries only for said trustees for the purpose of securing the indebtedness of the former owner to said parties. The resistance further set forth that, if the applicant was the owner of the real estate, he would not be such owner or legal titleholder as to be entitled to make application for continuance of this action under the act, and that it was neither the intent nor the purpose nor spirit of such legislation, nor of the Legislature in passing same, to grant relief by continuance to such owner or owners of the legal title as the applicant; and, third, that the real estate under foreclosure in this action was not the home or homestead of the applicant, and said applicant was not an individual owner or farmer in possession of and farming said land; and, fourth, that the applicant was not an individual in the sense intended by said S. F. 34, but a receiver of a defunct bank, and as such stood only in the position of, and had no greater rights than, said defunct bank; fifth, that the bank and its receiver stood in the position of junior lienholders and/or creditors of the original owners of said land; sixth, that by the nature of the situation of which the court may take judicial notice, said closed bank and its receiver were insolvent and hopelessly involved financially; that the bank and its receiver had no means or property out of which to pay the indebtedness sued on and secured by plaintiff's mortgage except the real estate under foreclosure, and no way or means of refinancing or refunding said indebtedness within the period of continuance asked and provided by said legislation; seventh, that the granting of said application would not in any way contribute to the betterment of the financial situation of said closed bank and its receiver, but would work immeasurably to the disadvantage of the plaintiff; and that the injury, damage, and detriment to the plaintiff would far surpass the corresponding benefit to the applicant, if any; and that the equities of the whole situation were with the plaintiff and against the defendant applicant, and it would be inequitable to grant said application.
Such were the issues upon which the matter was tried. The defendant's counsel at the opening of the trial made a statement, which was taken into the record, showing that the First National Bank of Fort Dodge went into voluntary liquidation and was succeeded by the First State Bank & Trust Company, which assumed all of the deposit liability of the national bank, and selected from the assets whatever they thought was good, and the balance of the assets of the national bank were assigned to three trustees, Gadd, Rich, and Vincent, for the purpose of guaranteeing a " gap" note. The " gap" note took up the gap between the deposit liability and the assets the new bank took over, and the assets which the state bank did not elect to take were transferred to these three trustees as collateral security for the " gap" note. Not long thereafter the state bank went into the hands of a receiver, and it became apparent that the " gap" note would have to be paid, and all the assets, including this particular fund that the three trustees held, were transferred to the First State Bank & Trust Company.
The evidence showed that the original maker of the note died some time prior to September, 1931, and Elsie A. Laufersweiler was made executrix of the estate of the deceased, and that, under an order of court entered the 25th day of September, 1931, the executrix was authorized to deed three-fourths of the land involved herein to the First National Bank of Fort Dodge, Iowa, and did so deed the property to that bank, the deed being executed and acknowledged on the 6th day of October, 1931. The national bank deeded the three-fourths of the land by warranty deed to three trustees, said deed containing the clause: " To have and to hold the said described real estate to said E. H. Rich, Donald Vincent and C. W. Gadd, the survivor or survivors of them, as trust property and to the uses and upon the trusts and with the powers herein expressed and declared, to-wit: To sell and convey the same and with the full power and authority in said Trustees or the survivor or survivors of them to execute, acknowledge and deliver such deeds and instruments as may be effectual to pass to any grantee the fee simple title thereto; and no purchaser from said Trustee shall be bound, required or concerned in any manner to see to the disposition or application of the purchase money; said Trustees to stand possessed of the purchase money and net proceeds of any sale thereof for the use and benefit of the First State Bank & Trust Company of Fort Dodge, Iowa."
On the 27th day of March, 1934, the said three trustees, Rich, Vincent, and Gadd, deeded by warranty deed to the First State Bank & Trust Company at Fort Dodge an undivided three-fourths interest in the said real estate.
The evidence in the case showed further that D. W. Bates, superintendent of banking, filed a petition in equity in the district court of Webster county, Iowa, alleging, among other things, that the First State Bank & Trust Company was now in an insolvent or unsafe condition; second, that the interests of the creditors required the closing of said bank; third, that said bank was closed voluntarily by the board of directors. The petition further contained paragraph IV: " Plaintiff avers that even though an assessment of 100% be made upon the capital stock of said bank that such institution would still be in a condition of insolvency or in an unsafe condition and that it would be unsafe for said defendant bank to continue business." The petition prayed for the appointment of a receiver. An appearance and recommendation for appointment of a receiver was made in that action on behalf of the bank by its officers, and by its board of directors, and consenting to the appointment of a receiver. Bates was accordingly appointed receiver on the 26th day of July, 1934, with all the powers usually given to receivers in such cases.
Such is the record made in the court below. Upon this record the court on the 12th day of April, 1935, entered the order appealed from and granted the continuance to March 1, 1937. From that order the plaintiff appealed to this court.
It will be observed that application in this case is made under the...
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