Northwestern Mut. Life Ins. Co. v. Blohm

• Decision Date: 13 January 1931
• Docket Number: 40363
• Citation: 234 N.W. 268,212 Iowa 89
• Parties: NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Appellee, v. HANS BLOHM et al., Appellees; C. A. CAIRNS, Appellant
• Court: Iowa Supreme Court

234 N.W. 268

212 Iowa 89

NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Appellee, v. HANS BLOHM et al., Appellees;

C. A. CAIRNS, Appellant

No. 40363

Supreme Court of Iowa, Des Moines

January 13, 1931

REHEARING DENIED APRIL 10, 1931.

Appeal from Crawford District Court.--J. A. HENDERSON, Judge.

The foreclosure of two mortgages is involved in this proceeding. One mortgage was held by The Northwestern Mutual Life Insurance Company, and it, as plaintiff, sought to foreclose the same against Hans Blohm, and other defendants, while C A. Cairns owns the other mortgage, and he, as plaintiff attempted to foreclose the same against the defendants, Hans Blohm, and others. A contest arose concerning the priority of two mortgages. As a result of the trial in the district court, The Northwestern Mutual Life Insurance Company's mortgage was declared a superior lien, and the mortgage held by C. A. Cairns was found to have been paid. From such judgment and decree, C. A. Cairns appeals.

Affirmed.

Stipp, Perry, Bannister, Starzinger & Little, for The Northwestern Mutual Life Insurance Company, appellee.

L. W. Powers, P. W. Harding, and W. E. Kahler, for Hans Blohm, appellee.

L. W. Powers, for Robert Ewall, Administrator, appellee.

Sims & Page and Davis, McLaughlin & Hise, for C. A. Cairns, appellant.

KINDIG J. FAVILLE, C. J., and EVANS, STEVENS, ALBERT, DE GRAFF, WAGNER, MORLING, and GRIMM, JJ., concur.

OPINION

KINDIG, J.

Two mortgage foreclosure proceedings are involved and the cases were consolidated for the purposes of this appeal.

On February 26, 1921, Hans Blohm, and his wife, Lena Blohm, executed a note payable to Mary C. Cairns, or order, in the sum of $ 9,000, secured by a mortgage upon certain real estate in Crawford County. This note, under its terms, became due March 1, 1922. Said mortgage was recorded in the Crawford County Recorder's office on February 26, 1921.

Mary C. Cairns, the payee in the note, and mortgagee under the security agreement, died February 16, 1924. Before her death, however, she duly assigned the note and mortgage to her brother, C. A. Cairns, who is the plaintiff and appellant in the suit brought to obtain judgment against Hans Blohm, the above-named maker and mortgagor, for money due under the note, and foreclose the foregoing mortgage against him and The Northwestern Mutual Life Insurance Company, defendant in that suit and appellee here, which claimed a prior lien on the real estate concerned. Other defendants were named in that foreclosure suit, and they are appellees here. That is a brief description of one of the suits thus consolidated. Parenthetically it is here noted, for hereafter it will be important to know, that the appellant represented, and transacted business in Iowa for, his sister.

The other proceeding involves a note executed by the appellees, Hans Blohm and Paul Schnieder, under date of January 22, 1923, payable to the appellee, The Northwestern Mutual Life Insurance Company, in the sum of $ 14,500, and due in five years thereafter. Execution of the Insurance Company note and mortgage was made by the above-named Paul Schnieder because previous thereto he had agreed to buy the land in question from Hans Blohm. A mortgage on the same land covered by the Cairns mortgage was given by the makers of this note on even date therewith to secure the Life Insurance Company thereunder. Thereafter, on March 15, 1923, this mortgage was recorded in the office of the Crawford County Recorder. So, the foreclosure proceeding brought by the Life Insurance Company is the second suit consolidated, as previously indicated. In that foreclosure proceeding, Hans Blohm, the appellee, Paul Schnieder, and others, together with the appellant, C. A. Cairns, were made defendants.

To more fully understand the issues, it is to be understood that: First, payment of the note secured by the Life Insurance Company mortgage not having been made when it became due, foreclosure suit was started by the payee, as already described; and, second, the appellant, claiming the Cairns note was not paid, also brought an action to foreclose the mortgage securing the same. It is claimed by the appellant that, as before said, the $ 9,000 note given to Mary C. Cairns has never been paid, and the mortgage securing the same is still unsatisfied. Hence appellant brought the above named foreclosure suit and urges that his mortgage is, as compared with the Life Insurance Company's mortgage, a first lien because prior in date and first placed upon the record. The entire controversy centers around the existence of the Cairns mortgage, as a lien on the real estate. Appellees argue that this mortgage was released of record May 2, 1923, before the assignment aforesaid under a written satisfaction piece purporting to be signed by Mary C. Cairns March 1, 1923, and on that date acknowledged by her.

Continuing their contention at this point, appellees maintain that regardless of the satisfaction piece, the Cairns mortgage was paid by those obligated thereon, and thereby rendered inoperative. Appellant, on the other hand, declares that the purported satisfaction piece was a forgery, and that the mortgage indebtedness had never been satisfied. For a better understanding of these conflicting claims, it is necessary to know the following additional facts. At the time the said mortgage was given to the appellee, The Northwestern Mutual Life Insurance Company, there were, so far as material here, three mortgages on the land, to wit, one for $ 9,500 to the Prudential Life Insurance Company, the Cairns mortgage above-named, and another for $ 8,260 to B. W. Hunt. Hans Blohm, the debtor, procured the money represented by the mortgage to the appellee, The Northwestern Mutual Life Insurance Company, for the purpose of paying the mortgages held by The Prudential Life Insurance Company and Cairns. When interest and principal on those two mortgages are totaled, it is seen that the $ 14,500 procured from The Northwestern Mutual Life Insurance Company, even when added to the cash then held by Blohm, was not sufficient. So, in order to raise sufficient funds to liquidate the mortgages held by The Prudential Life Insurance Company and Cairns, Blohm borrowed an additional $ 4,000 from the Bank of Denison and gave a mortgage, to secure the same, on his residence in that city. By adding said cash belonging to Blohm and the $ 4,000 thus procured to the $ 14,500 previously obtained from The Northwestern Mutual Life Insurance Company, there was sufficient to satisfy the mortgages held by The Prudential Life Insurance Company and Cairns.

Believing that the Bank of Denison was the authorized agent of The Prudential Life Insurance Company and Cairns for the purpose of receiving payments of the respective mortgages, Blohm authorized the money borrowed by him, as aforesaid, delivered to that banking institution in order to satisfy the mortgages held by The Prudential Life Insurance Company and Cairns. After so doing, the before mentioned mortgage held by B. W. Hunt was released and a new mortgage for a like amount given on the land as junior to the $ 14,500 mortgage held by the appellee, The Northwestern Mutual Life Insurance Company. When that was done, Blohm and Schnieder, as well as the appellee, The Northwestern Mutual Life Insurance Company, understood that the latter's mortgage was a first lien on the real estate now in question. A chronological statement of the events leading up to this mortgage will confirm that fact.

Under date of September 2, 1922, Hans Blohm made application to the appellee, The Northwestern Mutual Life Insurance Company, for the $ 14,500 loan. Subsequently, on January 22, 1923, the note evidencing the indebtedness under the loan was executed by Hans Blohm and Paul Schnieder. As security for this note, the mortgage, beforesaid, to the appellee, The Northwestern Mutual Life Insurance Company was executed by Blohm and Schnieder on the same date. Accordingly, Hans Blohm and Paul Schnieder signed a written order on January 31, 1923, directing the appellee, The Northwestern Mutual Life Insurance Company, to pay the proceeds of such loan to the Bank of Denison.

Next in the order of events is the satisfaction piece purporting to have been executed by Mary C. Cairns under date of March 1, 1923, releasing the Cairns mortgage. So, on March 10, 1923, the appellee, The Northwestern Mutual Life Insurance Company, in accordance with the aforesaid order of Blohm and Schnieder, drew a draft on the National Exchange Bank of Milwaukee, Wisconsin, for $ 14,500, payable to the Bank of Denison. On March 19, 1923, the Bank of Denison signed a memorandum acknowledging the receipt of the $ 14,500 check, and on the following day the check was endorsed by the bank and put into the process of clearing. Credit for the $ 14,500, plus the $ 4,000 borrowed from the bank, was given by that institution to Hans Blohm on the books of the bank. Thereafter, and near the same time, Blohm drew a check on his account (composed of money thus borrowed, together with said cash), payable to the Bank of Denison as the agents of The Prudential Life Insurance Company and Cairns, as before explained. Apparently the Bank of Denison, upon receipt of that money, duly paid the Prudential Life Insurance Company and gave credit on its books to Mary C. Cairns, but had not remitted the same to her when the institution suspended business and went into the hands of a receiver.

In addition to the foregoing, it is argued by appellees that the bank of Denison, from the year 1915 until it closed, was the general agent of Mary C. Cairns and the appellant, for the purpose of making and consummating loans and collecting the interest and principal due thereunder. Such power to collect appell...