Reynolds v. Black

• Decision Date: 14 May 1894
• Citation: 91 Iowa 1,58 N.W. 922
• Parties: REYNOLDS v. BLACK ET AL.
• Court: Iowa Supreme Court

91 Iowa 1

58 N.W. 922

REYNOLDS

v.BLACK ET AL.

Supreme Court of Iowa.

May 14, 1894.

Appeal from district court, Woodbury county; A. Van Wagenen, Judge.

Action in equity to determine the priorities between creditors of O'Mere & Webster to a fund in the hands of the defendant Black as trustee. Decree was entered, from which the plaintiff, Reynolds, the defendants Sioux National Bank and W. W. Byam, appeal. Reversed as to plaintiff, and affirmed as to defendants.Eugene Lutz and W. G. Sears, for appellant Reynolds and others.

Gant & Briggs, for appellant W. W. Byam.

Joy, Call & Joy, for Sioux Nat. Bank and others.

GIVEN, J.

1. The parties, and consequently the pleadings, being somewhat numerous, it would consume space unnecessarily to state the pleadings. There is but little, if any, dispute as to the facts, and the following will be a sufficient statement of them for an understanding of the questions presented: For some time prior to July 2, 1891, the defendants O'Mere & Webster were engaged in business as merchant tailors. Being largely indebted, they executed mortgages on their stock of merchandise to secure promissory notes of the firm as follows: February 11, 1891, to Sioux National Bank to secure four notes, $525 each, and filed for record July 2, 1891, at 12 noon. February 26, 1891, to H. S. Baker, to secure two notes, $75 and $110, and filed for record July 2, 1891, at 11:05 a. m. June 12, 1891, to W. W. Byam, to secure note for $500, filed for record July 2, 1891, at 11:20 a. m. June 23, 1891, to Frank Hunt, to secure note for $600, and recorded July 2, 1891, at 11 a. m. June 29, 1891, to H. E. and Stacie Mosby, to secure note given for work, $554.90, recorded July 2, 1891, at 11:10 a. m. June 29, 1891, to plaintiff, Reynolds, to secure note for $1,097.91, filed for record July 2, 1891, at 11:15 a. m. On July 2, 1891, the stock of goods was taken under the mortgage to Hunt, which has been assigned to the Sioux National Bank. The goods were sold, and the proceeds, amounting to $2,850, after payment of expenses, are held by the defendant Black as trustee, to abide the result of this litigation. At the time O'Mere & Webster suspended business--July 2, 1891--they were indebted to defendants Winglend, Siverston, Hultman, Ehlers, Gran, Snon, Thompson, Schmidt, Skorunka, Rohton, Olson, and Foley, respectively, in sums stated, for labor as workmen in about the business of the firm within the 90 days preceding. On July 3, 1891, each of these persons filed his claim, sworn to, with D. N. Kincaid, who then had possession of the property. The mortgages to Hunt and Baker have been fully paid out of the $2,850. It will be observed that four of the mortgages and the claims of laborers remain unsatisfied. The laborers claim the right to be first paid, and this the Mosbys and Reynolds concede, and the bank and Byam deny. Reynolds claims priority over the bank and Byam, which they deny. The bank concedes that Byam is entitled to priority over it. No question is made against the decree as to the Mosbys. The contentions may be reduced to two inquiries, namely: Was the mortgage to Reynolds delivered before the other mortgages were recorded, and, if so, did he have notice of the mortgages? and are the laborers entitled to priority over liens previously existing?

2. The following are the facts relating to the delivery of the mortgage to plaintiff, Reynolds: Mr. Reynolds, a resident of Wisconsin and brother-in-law of Mr. Webster, of O'Mere & Webster, loaned the firm sums of money at different times in 1888 and 1890, taking notes of the firm therefor. At the time plaintiff loaned said money it was orally agreed between him and Webster that if the firm became pressed or embarrassed they should secure him by mortgage on their stock of merchandise, or give other satisfactory security, and said Webster should give the claim to an attorney to attend to it for him. The notes executed to plaintiff were left with the firm, and in pursuance of said agreement Mr. Webster, on June 29, 1891, placed them in the hands of Lutz & Sears, as attorneys for plaintiff, telling them of said agreement. Lutz & Sears figured the amount due up to June 2, 1891, and took the note sued upon for the amount $1,097.91, and the mortgage to secure it, dating them June 2, 1891, and filed the mortgage for record July 2, 1891, at 11:15 a. m., and paid the recording for plaintiff. Lutz & Sears sent the note to the plaintiff on the same day it was taken, and soon after July 4th following received the note and plaintiff's acquiescence in what they had done, and his request that they look after his interest in the matter. Prior to this Lutz & Sears had no acquaintance or correspondence with the plaintiff. Plaintiff testifies that he first knew of the mortgage being taken June 30, 1891; that he learned it through Lutz & Sears; and we may infer that the note then reached him, as they sent it to him June 29th. The mortgage was taken, the note received, and the action of Lutz & Sears approved by the plaintiff before either of the mortgages in question were filed for record. If the order of filing is to control, plaintiff's have priority over those to Byam and to the bank; but it is claimed that he had knowledge of the execution of these mortgages at the time his mortgage was executed to him. There is no claim that he personally had such knowledge, but it is insisted that O'Mere & Webster were his agents, as well as his debtors, in the transaction; that they knew of the execution of the other mortgages, and that plaintiff is chargeable with whatever knowledge his agents had. Plaintiff contends that the mortgage was executed to him in pursuance of said parol agreement, and that what O'Mere & Webster did was in performance of that agreement on their part, and not as his agents. In Re Guyer, 69 Iowa, 585, 29 N. W. 826, the debtor, being embarrassed, executed a mortgage on his stock of merchandise in favor of one of his creditors, and placed it in the hands of an attorney, who was not agent for the creditor, and who caused it to be filed...