Senneff v. Brackey

• Decision Date: 24 March 1914
• Citation: 146 N.W. 24,165 Iowa 525
• Parties: SENNEFF v. BRACKEY ET AL. KINGLAND v. BRACKEY ET AL.
• Court: Iowa Supreme Court

165 Iowa 525

146 N.W. 24

SENNEFF

v.BRACKEY ET AL.

KINGLAND

v.BRACKEY ET AL.

Supreme Court of Iowa.

March 24, 1914.

Appeal from District Court, Winnebago County; C. H. Kelly, Judge.

Action to foreclose a mortgage given by Albert A. Brackey upon lands devised to him by one Alf. T. Brackey. A special administrator of the estate of Alf. T. Brackey claimed that a judgment held by him against Albert A. Brackey for money converted by him, although rendered after the execution of the mortgage to plaintiff, was a prior lien. The trial court found that the judgment was entitled to priority, and plaintiff appeals. Affirmed.Senneff, Bliss & Witwer, of Britt, for appellant.

Oliver Gorden, of Forest City, Morgan & Meighen, of Albert Lea, Minn., and T. A. Kingland, of Lake Mills, for appellees.

DEEMER, J.

Alf. Tallackson Brackey, by his last will and testament, devised to his son, Albert A. Brackey, a life estate in a certain quarter section of land with remainder over equally to all the children of Albert A. The remainder of his estate, both real and personal, was devised equally between all his children. At the time of decedent's death, Albert A. had in his possession $3,260 which belonged to his father, or his estate. Albert was then and has ever since been insolvent. Decedent died April 12, 1909, and Albert A. offered the will for probate. All the other heirs joined in contesting the will, and a trial was had which finally reached this court, resulting in an order confirming the will and probating the same. T. A. Kingland was appointed special administrator of testator's estate, in October, 1909. He brought suit against Albert A. Brackey for the amount of money held by him belonging to his father's estate, and as a result thereof, in the same month, recovered judgment for the amount claimed. In June and November of the year 1911, Albert A. Brackey executed mortgages to various parties, which covered all his interest in the quarter section of land specifically devised. These mortgages were executed to Senneff, Senneff & Bliss, the Farmers' State Bank of Lake Mills, the First National Bank of Lake Mills, and the Lake Mills Implement Company, respectively. Each one of said mortgagees knew at the time that the mortgagor was insolvent, and on June 29, 1912, he filed a voluntary petition in bankruptcy and has been discharged, as we understand it. The controversy is with reference to the priorities of these several mortgages and judgment liens. The trial court found that the judgment in favor of the special administrator was prior and superior to the mortgage liens, and superior to the claims of the trustee in bankruptcy, and the mortgagees and trustee in bankruptcy appeal.

A few more facts should be stated in order that the exact legal propositions may be fully understood. The mortgages covered not only the life estate devised to Albert A. Brackey, but also his one-seventh interest in another 80-acre tract of land which was afterward sold at referee's sale, in a partition suit, by T. A. Kingland, referee, and one-seventh of the proceeds from the sale was paid to plaintiff Senneff to be applied on one of the mortgages held by him. The interest of Albert A. Brackey in the personal estate of his father will not exceed $500. The original notice of the suit brought by the special administrator against Albert A. Brackey was served on March 16, 1910, and the petition was filed March 18, 1911. In June of the year 1911, Brackey made one of the mortgages, heretofore referred to, to John A. Senneff to secure the sum of $1,500, and on November 4, 1911, the mortgages were made to one of the banks, and the implement company before referred to, and on the same date he executed a mortgage to Senneff & Bliss to secure the sum of $1,200. On November 11, 1911, a verdict was returned for the special administrator in the suit brought by him for the sum of $3,260.

On June 29, 1912, Brackey filed a petition in bankruptcy, and on October 5th of the same year judgment was rendered on the verdict. At the time the will was made, Albert did not owe his father any money, but at the time of the testator's death he (Albert) held $3,260 in his hands, belonging to the estate, which he refused to turn over. The mortgages referred to were, generally speaking, made to secure pre-existing debts; but the $1,200 mortgage was made to secure Senneff & Bliss, who are attorneys, in their fees, not only in the will contest case, but in defending against the suit brought by the special administrator. They appeared for Brackey in the suit brought by the special administrator and knew of the claim made against him in that suit.

At the time of the making of the $1,200 mortgage, Senneff knew that if judgment was obtained by the special administrator Brackey would be insolvent, but he testified that at the time of the taking of the $1,500 mortgage he was not aware of the mortgagor's insolvency, although he was advised of the claim made by the special administrator. The $1,200 mortgage was given while the suit of the special administrator was being tried; Senneff & Bliss, the mortgagees, being attorneys for the mortgagor. Albert A. Brackey was in fact insolvent at the time of testator's death and remained so until he went into bankruptcy. Neither Senneff nor Senneff & Bliss knew of this fact, however, at the time the first mortgage to Senneff was made, but they were advised before the taking of the Senneff & Bliss mortgage that, if the special administrator recovered in his suit against Brackey, Brackey would be unable to pay the amount to the estate.

After recovering the judgment, the special administrator brought the second action referred to in the title to this opinion, in which he asked that his judgment be declared to be a specific lien upon the real estate devised to him by the testator, prior and superior to the liens created by the several mortgages, and that Senneff be required to refund the amount received by him from the referee in the partition suit, representing Albert A. Brackey's interest in the lands sold in that suit.

The $1,500 mortgage was made to secure the money with which to pay Senneff & Bliss for their attorney's fees in the will contest, and possibly some other matter.

The suits by the special administrator to secure the judgment and to establish the lien thereof against Brackey's interest were not unduly delayed, because the contest of the will was pending, and until that was finally decided no one knew whether Albert A. Brackey would take under the will or as an heir of his father. When the $1,200 mortgage was taken, the mortgagees felt and believed that the suit they were then trying was likely to go against their client, and it was made to secure their attorney's fees in that case, and also some other services theretofore rendered. Upon these facts, and the issues joined, the trial court made the following findings and order in the case brought by Kingland, special administrator:

“It is conceded by the parties that, at the time of the death of Alf. T. Brackey, deceased, Albert A. Brackey was indebted to various and sundry parties in an amount sufficient so that together with the amount of the above judgment he was insolvent. The evidence shows that, if the claims of the defendants are allowed priority over said judgment, the effect will be a loss to said estate of a substantial part, or perhaps all, of said judgment. I am of the opinion that the ‘diligent creditor’ rule does not apply, and that the defendant Albert A. Brackey ought not to be permitted, either by direct or indirect means, to avail himself either personally, or by assignment to others, of property which comes from the estate of Alf. T. Brackey, deceased, and at the same time be permitted to defeat the recovery by said estate of a valid claim against him. It seems to me that to permit him to do so would be unjust to the estate. I have no hesitancy in concluding that so far as Albert A. Brackey would derive any benefit from the personal estate of Alf. T. Brackey, deceased, the estate would properly offset in its favor any claim against Albert A. Brackey, and in principle I can see no reason why the same rule should not apply to the realty. The evidence shows that a certain tract of real estate which belonged to Alf. T. Brackey at the time of his death was sold by regular partition proceedings in court, and the portion of the proceeds thereof which would have belonged to Albert A. Brackey, but for the claim of said estate against him, was paid to the defendant John A. Senneff. This plaintiff, special administrator, personally acted as referee in making such partition sale and distributing the proceeds derived therefrom, and I am of the opinion that in legal effect the payment made by him to said Senneff was voluntary and that the amount thereof cannot now be recovered back.

It follows that in my opinion the claim of plaintiff should be and the same is hereby, together with the costs of this proceedings, decreed to be prior and superior to the claims of said defendants and each of them by reason of any and all mortgages made by Albert A. Brackey upon the real estate in question, or any interest therein; that plaintiff has a prior lien upon any and all moneys or personal property of every kind and nature coming, directly or indirectly, to Albert A. Brackey or his assigns from the estate of Alf. T. Brackey, deceased, except that the amount heretofore paid to John A. Senneff by reason of said partition proceedings is hereby decreed to be the property of said Senneff. The claim of plaintiff is also hereby decreed to be prior and superior to the right of the defendant trustee in bankruptcy. The costs of this action are hereby taxed to defendant Albert A. Brackey, and judgment is entered accordingly.”

And in the action brought by Senneff to foreclose his mortgages the court entered the following decree: “By this proceeding plaintiff asks the foreclosure of certain...