Pfeffer v. Corey

• Decision Date: 18 November 1930
• Docket Number: 40557
• Parties: H. S. PFEFFER, Appellant, v. A. R. COREY et al., Appellees
• Court: Iowa Supreme Court

233 N.W. 126

211 Iowa 203

H. S. PFEFFER, Appellant, v. A. R. COREY et al., Appellees

No. 40557

Supreme Court of Iowa, Des Moines

November 18, 1930

Appeal from Polk District Court.--JOSEPH E. MEYER, Judge.

Action at law on a promissory note. Jury waived. Trial to the court. Judgment for the defendant. The plaintiff appeals. The facts appear in the opinion.

Reversed.

Ray A Emmert, for appellant.

George A. Wilson, for A. R. Corey, appellee.

C. B Hextell, for Agnes Kunz Corey, appellee.

GRIMM J. MORLING, C. J., and EVANS, FAVILLE, and KINDIG, JJ., concur.

OPINION

GRIMM, J.

On the 19th of June, 1929, the plaintiff filed in the district court of Polk County, Iowa, his verified petition, asking for judgment on the balance due on a promissory note for $ 7,000, signed by the defendants, A. R. Corey and Agnes Corey, husband and wife. The note appears to have been executed and delivered to one Murphy, and afterwards assigned, on June 18, 1920, to O. J. Clark, by written indorsement; and on March 23, 1923, it was assigned, by written indorsement, to the plaintiff in this case. The original note is dated at Blue Earth, Minnesota, March 1, 1920, and was due on the 1st day of March, 1925. It was payable at the Blue Earth State Bank, Blue Earth, Minnesota. It contained the ordinary acceleration clause. At the bottom of the note there appears the following: "This note is Secured by Second Mortgage on 138.26 acres in $ 1/2- Sec. 4-104-25, Faribault County, Minnesota." On the reverse of the note, in addition to the assignments hereinbefore referred to, was the following: "3/5/1925. Paid on Prin. $ 1,000.00. 4/20/1929. Paid by foreclosure of mortgage securing this note the sum of $ 4,324.80."

There were two coupon notes, one for $ 360, dated at Des Moines, Iowa, January 20, 1925, due March 1, 1929, and payable at the Blue Earth State Bank, Blue Earth, Minnesota; the other for the same amount and of the same date, due March 1, 1930, and payable at the same place.

On the 13th of August, 1929, the defendants filed an unverified general denial. On November 7, 1929, the plaintiff filed a motion to strike the answer, for the reason "that it is a dilatory and frivolous pleading." This motion to strike was overruled. On January 18, 1930, the defendant Agnes Corey filed a verified separate amended and substituted answer. In this she admitted that the defendants are residents of Polk County, Iowa. She also admitted the execution of the note by A. R. Corey and Agnes Corey, and of the interest notes by A. R. Corey. She pleads various affirmative defenses, not including res adjudicata, or previous payment. In our view of the case, these affirmative defenses need no consideration. On January 24, 1930, the plaintiff filed a reply, having reference particularly to the affirmative defenses of the separate amended and substituted answer of the defendant Agnes Corey.

The cause went to trial on January 27, 1930. A jury was waived. The original note and the two coupons were produced by the plaintiff and marked for identification. The defendants admitted the genuineness of the signatures on the original note and the coupons. The original note and the coupon notes were offered in evidence and received without objection. All of the indorsements on the original note were introduced in evidence without objection. Then plaintiff and defendant both rested. The court found for the defendant, and dismissed plaintiff's petition. A motion for judgment notwithstanding the findings was filed, and overruled.

I. By very ingenious arguments on both sides of this controversy, the discussion has taken a wide range. As we view the case, the determination of one proposition disposes of all the controversy in the case, so far as this appeal is concerned. The introduction of the note with the signatures admitted created a prima-facie case for the plaintiff. There was neither plea nor proof of either prior adjudication or payment. It is the contention of the defendant that, because the indorsement on the note indicated that a foreclosure had been had, and as a result a credit was given on the note, the note was merged in the foreclosure, and the plaintiff's case fails. While, without a proper pleading on the subject, this position is not available to the defendant, nevertheless we will examine it.

It will be observed that the original note is dated in Minnesota, payable in Minnesota, and, by the notations thereon indorsed, is secured by a second mortgage on Minnesota land. In the absence of proof to the contrary, we must assume that the laws of the state of Minnesota were, at the time of the foreclosure, and still are, identical with the laws of Iowa. We think the fair assumption from the indorsement upon the note of the credit by foreclosure is that the foreclosure was had on April 20, 1929. The foreclosure suit must have been brought in the county in which the property affected is located. (Section 12374 of the Code of Iowa, 1927).

The law of Minnesota being assumed to be the same as that of Iowa, the plaintiff in this case, at the time the foreclosure referred to was begun, might have brought suit on the note or on the mortgage; but if separate suits were brought on the note and the mortgage, in the same county, the plaintiff would be required to elect which one he would pursue, and the other would be discontinued at plaintiff's costs. (Section 12375 of the Code of 1927).

Section 11081, Code of 1927, provides that:

"Service may be made by publication, when an affidavit is filed that personal service cannot be made on the defendant within this state, in either of the following cases: * * *

"3. Foreclosure. In an action for the sale of real property under a mortgage, lien, or other incumbrance or charge."

The service might also have been by personal service outside of the state of Minnesota. Under the law of Iowa, if a mortgage is foreclosed "by good personal service," the plaintiff may not thereafter maintain a separate action upon his note. Schnuettgen v. Mathewson, 207 Iowa 294, 222 N.W. 893.

It is the contention of the appellee, in substance, that there is a presumption that the foreclosure referred to in the indorsement on the back of the note was by personal service on the defendants in Minnesota, and that a judgment in personam was procured. This appeal depends, in the last analysis, entirely upon the validity of this assumption. If the foreclosure was had in Minnesota, in the county where the land was located, and personal service was had upon the defendants in said county, and a judgment in personam was procured, then, under the authority of Schnuettgen v. Mathewson, 207 Iowa 294, 222 N.W. 893, that foreclosure was a bar to this action on the note. In the Schnuettgen case, this court said:

"We have held that a mortgagee may maintain a personal action on his note against the debtor, and may, after judgment therein, foreclose his mortgage. But we have never held that a mortgagee who has foreclosed his mortgage by good personal service may afterwards maintain a separate action upon his promissory note. Indeed, we have held affirmatively to the contrary. Kenyon v. Wilson, 78 Iowa 408, 43 N.W. 227, and cases therein cited. The reason for the distinction is apparent. The note is the evidence of the debt. When merged in judgment, the judgment becomes the evidence of the debt. Jurisdiction in a foreclosure suit rests in the county where the mortgaged property is situated. A creditor may be able to obtain personal jurisdiction of his debtor where he finds him, without acquiring such jurisdiction in the county where the mortgage must be foreclosed. But when the mortgagee forecloses his mortgage upon personal service, he exhausts the full measure of remedy available to him against such defendant. Judgment against the debtor is prerequisite to the foreclosure of his equity of redemption. If plaintiff has not previously obtained it in a personal action, he must obtain it in the foreclosure action. The scope of the adjudication in a foreclosure decree is as broad as plaintiff's cause of action against the defendants which he has brought into court. The adjudication of the amount of the debt is the first prerequisite of a foreclosure decree. The amount of the debt, as adjudicated, becomes the conclusive basis of the right of redemption."

In the case of Smith v. Moore, 112 Iowa 60, 83 N.W. 813, this court said:

"Again it is insisted that plaintiff's notes were merged in the judgment recovered in ...