Shafer v. Wilsonville Elevator Company

• Decision Date: 29 May 1931
• Docket Number: 27681
• Citation: 237 N.W. 155,121 Neb. 280
• Parties: GEORGE W. SHAFER, APPELLANT, v. WILSONVILLE ELEVATOR COMPANY ET AL., APPELLEES
• Court: Nebraska Supreme Court

237 N.W. 155

121 Neb. 280

GEORGE W. SHAFER, APPELLANT, v. WILSONVILLE ELEVATOR COMPANY ET AL., APPELLEES

No. 27681

Supreme Court of Nebraska

May 29, 1931

APPEAL from the district court for Wheeler county: BAYARD H. PAINE JUDGE. Reversed, with directions.

Reversed, with a direction.

Syllabus by the Court.

A court of equity has power to determine controverted issues involving the priority of specific liens on real estate.

An order vacating a former decree in equity at the same term of court without determining the merits of the suit is not a final or appealable order and may be reviewed on appeal from the final judgment.

A contract inserted in a petition as part of a cause of action controls allegations which it contradicts.

An oral pledge of a title deed, naming a third person as grantee, and possession thereof to secure a debt do not create a valid mortgage on the real estate described in the title deed, the statute of frauds and the recording acts preventing such a lien.

Invalid or erroneous orders in a decree in equity may be vacated by the trial court at the same term.

Where a valid judgment in favor of plaintiff in a cause of action to which defendant has no defense is improperly vacated at the same term of court on motion of a third person, equity, in subsequent proceedings in the same cause, may require its reinstatement as of the date originally entered.

The filing and recording of a lis pendens does not give notice of rights under a cause of action not pleaded.

Where a mortgagee purchases the fee to protect his lien from an intervening claim without any intention of merging his two estates and pursues a consistent course with that end in view, the mortgage lien is not discharged by merger.

A void judgment in an undetermined suit in equity may be canceled by the equity court at a later date in the same proceeding, upon proper pleadings and evidence, even after expiration of the term of court at which it was rendered.

Appeal from District Court, Wheeler County; Paine and Clements Judges.

Action by George W. Shafer against the Wilsonville Elevator Company, Incorporated, and others, in which the Home State Bank of Wilsonville intervened. From the final decree, plaintiff appeals.

Reversed and rendered, with directions.

Stevens & Stevens, for appellant.

J. F. Fults and Perry, Van Pelt & Marti, contra.

Heard before GOSS, C. J., ROSE, DEAN, GOOD, EBERLY and DAY, JJ.

OPINION

ROSE, J.

Plaintiff commenced this action to recover from borrowers the amount due him on loans of money to them, to impress a first lien in his favor for a debt of $ 2,712.20 on 680 acres of land in Wheeler county and to foreclose as security an alleged equitable mortgage thereon.

The petition contains pleas that George W. Shafer, plaintiff, from April 6, 1927, to April 18, 1927, lent to Wilsonville Elevator Company, defendant, and to its manager and principal stockholder, S. M. Bird, defendant, various sums of money aggregating $ 4,583.08, of which debt a balance of $ 2,712.20 remains due and unpaid; that as a condition precedent to the loans and for the purpose of securing the debt, the defendants named orally pledged and delivered to plaintiff a warranty deed dated December 11, 1925, conveying the land from the owners to the Wilsonville Elevator Company; that Bird orally pledged and delivered his stock as security for the loan; that the properties pledged have not been redeemed and that plaintiff claims a first lien on the land; that the First National Bank of Shenandoah, Iowa, and its receiver, H. J. Spurway, defendants, claim an interest in the land under two registered mortgages dated August 7, 1923, one for $ 7,700 and the other for $ 8,600, both of which have been paid and should be satisfied of record; that the Peters Trust Company, M. D. Cameron, and the Omaha Trust Company, defendants, appear to have an interest in the land under a mortgage dated January 10, 1917, but not registered until October 11, 1927, after plaintiff's lien attached. Plaintiff's petition and a notice of lis pendens were filed in the district court for Wheeler county February 3, 1928.

After service of summons, subsequent to answer day, all defendants were in default except the Omaha Trust Company. The latter filed an answer March 5, 1928, as trustee for Addie Drishaus, pleading ownership and nonpayment of an 8,600-dollar mortgage previously held by M. D. Cameron or the Peters Trust Company, alleging extension of time for final payment of the secured debt; original recording of the mortgage January 6, 1917; a second recording October 11, 1927, and praying for a decree adjudging this mortgage to be a first lien on the land described in plaintiff's petition.

The district court for Wheeler county, Judge Edwin P. Clements presiding, entered the default of all defendants, except the Omaha Trust Company, April 9, 1928, signed a formal decree on that date in favor of plaintiff and against the Wilsonville Elevator Company for $ 2,743.50, and, in the event of nonpayment thereof within 20 days, directed the sale of the land subject to the Omaha Trust Company's mortgage which was adjudged to be the first lien. May 12, 1928, J. F. Fults, attorney, served on the attorneys for plaintiff a notice that his client, the Home State Bank, would present to Judge Clements May 21, 1928, a motion to set aside the judgment entered April 9, 1928, and to obtain permission to intervene. After the decree had been rendered April 9, 1928, in absence of plaintiff and his counsel, on nine days' notice given to them by the attorney for the Home State Bank, a stranger to the action, the notice having been given without a petition of intervention or a summons to plaintiff, Judge Clements made the following order:

"This cause came on to be heard this 21st day of May, 1928, the same being one of the days of the regular April 1928 term of the district court held in and for Wheeler county, Nebraska, upon the motion of the Home State Bank of Wilsonville, and the court being fully advised in the premises, vacates and sets aside the decree entered herein on the 9th day of April, 1928, and leave is hereby given to the Home State Bank of Wilsonville to file its petition in intervention herein."

In the meantime the Home State Bank filed in the district court for Wheeler county in the action, May 19, 1928, a petition in intervention denying unadmitted allegations of plaintiff's petition and pleading in substance that the warranty deed, naming the Wilsonville Elevator Company grantee, had been recorded; that mere possession of the deed by plaintiff under an oral agreement gave him no interest in the land and no right to a lien thereon; that the oral agreement to mortgage the land to plaintiff is void under the statute of frauds and the recording acts; that intervener recovered in the district court for Furnas county March 19, 1928, a 2,257-dollar judgment which was docketed in the district court for Wheeler county March 26, 1928, and thus acquired a valid lien on the land described in plaintiff's petition. Intervener prayed for a dismissal of plaintiff's petition and for a decree making its judgment the first lien on the land.

September 12, 1928, the district court for Wheeler county, by formal decree, sustained the intervention by the Home State Bank, found that plaintiff had no interest in or lien on the land, dismissed his petition and discharged of record the mortgage held by the Omaha Trust Company.

In the same case plaintiff filed a supplemental petition October 25, 1928, pleading his ownership, by purchase and assignment, of the Omaha Trust Company's mortgage; the recording of that mortgage January 26, 1917; a duly recorded agreement to extend payment until March 1, 1927; a further extension agreement October 4, 1927; a second recording of the mortgage October 11, 1927; a first lien by virtue of the mortgage; nonpayment of the secured debt; the invalidity of the decree of September 12, 1928. The supplemental petition of plaintiff contained also prayers for a decree establishing his mortgage as the first lien, for the vacating of the judgment of September 12, 1928, and for adjudging the interest of intervener, if any, to be inferior to the judgment and mortgage liens of plaintiff.

November 26, 1928, intervener interposed an answer to plaintiff's supplemental petition. This answer contained a general denial and also pleas that the decree of September 12, 1928, canceling the Omaha Trust Company's mortgage, assigned to plaintiff, is in full force and effect, the term at which it was rendered having expired and no appeal having been taken; that plaintiff acquired by deed the title to the land described in his petition; that the lien of the mortgage purchased by plaintiff, if any, merged in the fee and is no longer enforceable. The answer contains also a prayer for a dismissal of plaintiff's supplemental petition. Plaintiff filed a reply containing a general denial of unadmitted allegations in the answer and pleading that he procured a deed to the land April 17, 1928, from the Wilsonville Elevator Company; that the deed was given as security for his loans to grantor; that he purchased the mortgage from the Omaha Trust Company to protect the lien adjudicated by the decree of April 9, 1928, now in full force and effect, as he alleges; that his mortgage lien did not merge in his deed and that he is entitled to a foreclosure.

The district court for Wheeler county convened September 30 1929, and entered a decree in favor of plaintiff October 1, 1929, adjudging all former proceedings in reference to intervention, and also the decree of September 12, 1928, void for want of jurisdiction, and establishing liens in the following order: Mortgage held by plaintiff and...