Silver v. Wickfield Farms, Inc.
| Decision Date | 15 October 1929 |
| Docket Number | 39638 |
| Citation | 227 N.W. 97,209 Iowa 856 |
| Parties | SETH S. SILVER, Plaintiff, v. WICKFIELD FARMS, INCORPORATED, et al., Appellants; BAKER ICE MACHINE COMPANY, Intervener, Appellee |
| Court | Iowa Supreme Court |
REHEARING DENIED FEBRUARY 14, 1930.
Appeal from Van Buren District Court.--GEORGE W. DASHIELL, Judge.
Three causes of action, referred to in the opinion herein, were, on the agreement of all parties, consolidated for the purpose of trial, to determine the respective rights of the parties in said actions. The opinion states the issues and the record facts material in the determination of this appeal. A decree was entered, finding the equities to be in favor of the appellee-intervener. The defendant receiver of the Wickfield Farms, Incorporated, and certain creditors thereof, appeal.
Affirmed.
H. C. & H. C. Taylor, McBeth & Stong, and Sloan & Sloan, for W. L Eyman, Receiver, appellant.
Hollingsworth & Hollingsworth and A. L. Heminger, for Seth S. Silver appellant.
J. C. Calhoun, for F. F. Silver, appellant.
Brome & Ramsey and G. R. Buckles, for Baker Ice Machine Co., intervener, appellee.
DE GRAFF, J.
The Wickfield Farms, Incorporated (defendant), prior to the transactions involved herein, was a corporation engaged in the business of raising, buying, and selling live stock, and processing meats. It was the legal title holder of nearly 600 acres of land, situated in Van Buren County, Iowa. The Baker Ice Machine Company, intervener-appellee, is a corporation with its principal place of business at Omaha, Nebraska, and is engaged in the manufacture of machinery and ice plants intended to be used by persons engaged in preparing and processing meats for market.
On July 11, 1925, a written contract was entered into between the above-named parties, whereby the Ice Machine Company agreed to sell, deliver, and install, in conformity to certain specifications, for the Wickfield Farms, Incorporated, at Cantril, Iowa, an ice plant, for and in consideration of the sum of $ 7,381, which the purchaser agreed to pay. The Ice Machine Company shipped the machinery and installed it as per contract, but the purchaser did not pay in cash, but did execute a chattel mortgage on certain live stock owned by the Wickfield Farms, Incorporated, and located on its said farm. There was also executed and delivered to the Ice Machine Company on November 19, 1925, as security for the payment of the consideration recited in the contract of purchase, a real estate mortgage on a certain lot and buildings thereon owned by the Wickfield Farms, Incorporated. Two notes aggregating the purchase price were executed on the same date in the sum of $ 3,690.50 each, and these notes were secured by the two mortgages to which reference has heretofore been made.
It further appears that, on June 4, 1925, the Wickfield Farms, Incorporated, executed a trust deed on its real estate (not including the land subsequently mortgaged to the Ice Machine Company) to C. J. Artz, trustee, to secure an issue of bonds which were signed by said corporation and were to be issued in the total sum of $ 125,000, if necessary. Said bonds were placed in the hands of the trustee for negotiation. It also appears that, subsequent to the execution of the contract for the purchase of the refrigerating plant by the Wickfield Farms, Incorporated, there was delivered to the Baker Ice Machine Company, vendor, $ 8,000 par value of bonds, issued pursuant to the trust deed aforesaid; but the bonds were received and accepted by the Ice Machine Company as collateral security on the contract heretofore mentioned.
As a result of these contractual relations between the Wickfield Farms, Incorporated, and the Baker Ice Machine Company, and by reason of the failure on the part of the corporation to meet its obligation to pay for the refrigerating plant, two actions were commenced by the Ice Machine Company, (1) to foreclose the chattel mortgage, and (2) to foreclose the real estate mortgage. It will be observed that both of these mortgages were given to secure the same debt, and that the parties to each mortgage were the same. During the pendency of these actions, a petition was filed for the appointment of a receiver for the Wickfield Farms, Incorporated, and a receiver, W. L. Eyman, was appointed, and duly qualified as such. The receiver took charge of the property of the corporation, for the purpose of liquidation for the benefit of creditors thereof. In this action the Baker Ice Machine Company intervened, and in the two actions commenced by the Ice Machine Company, the Wickfield Farms, Incorporated, intervened. Upon the agreement of all the parties, these three causes were consolidated, for the purpose of trial. No other question involved in the receivership was at issue, except to determine the rights of the parties in the three actions consolidated, in which a judgment and decree was entered. It is from this decree that the instant appeal is taken.
I. It is the contention of the receiver-appellant that the Baker Ice Machine Company, as a holder of the bonds delivered to it as collateral security, is within the meaning of the terms and provisions of the bonds and trust deed securing the same, and that the trustee in the foreclosure of the trust deed represented all of the holders of said bonds, and that, in the action to foreclose said trust deed, and in taking judgment against the Wickfield Farms, Incorporated, and in the selling of the property at sheriff's sale, and in the bidding for the same by the trustee, there was a satisfaction of the judgment to the extent of the amount bid at sheriff's sale, which was done by exchange of receipts between trustee and the sheriff, and resultantly, the indebtedness owed by the Wickfield Farms, Incorporated, was satisfied to the extent of the amount which was substantially the amount of the outstanding bonds. The claim, according to the appellant's viewpoint and proposition, is that the Baker Ice Machine Company is barred from further proceedings in its foreclosure actions against the Wickfield Farms, Incorporated, except for the deficiency judgment. It may be conceded that the record in the foreclosure proceeding involving the trust deed stands as a verity, and is final, and cannot be collaterally attacked. The sheriff's return on the execution showed the purchase of the property for $ 54,742, and the credit given of said amount on the judgment rendered in the said foreclosure proceedings is final, and has the same legal effect, so far as this action is concerned, as though a payment had been made in cash, to be distributed among the bondholders. The trustee had the right, and in this instance that right was granted to the trustee by the decree, "to bid upon said property such an amount as he may deem just and fair to properly protect the interests of the bondholders." In this connection it may be said that, where such power is not expressly given, it may very well be implied. It is the duty of the trustee to bid in the property at foreclosure sale, if necessary to protect the interests of the bondholders. 3 Fletcher's Cyclopedia of Corporations, Section 1437; Nay Aug Lbr. Co. v. Scranton Tr. Co., 240 Pa. 500 (87 A. 843). It may be conceded further that a foreclosure proceeding is an exclusively statutory remedy, and is the creature of legislative enactment, and the statute authorizing the same must be strictly followed. A strict foreclosure has been abrogated in this state. Gamut v. Gregg, 37 Iowa 573. It is therein said: "What is known as a strict foreclosure has no place in our system of procedure." We see little reason to quarrel concerning the definition of "a holder," and the fact that the vendor in this case is, and was recognized from the beginning as, a collateral holder is not an important consideration. It is not of the essence of this case. The fact may be recognized that, although a bond is taken as collateral security for an existing debt, that does not "make the holder any less a bona-fide holder for value than if he was a purchaser for cash." Hoskins v. Seaside Ice Mfg. & C. S. Co., 68 N.J.Eq. 476 (59 A. 645).
Under this record, the Baker Ice Machine Company had the right to elect what remedy it should pursue. It did adopt a remedy which was its right, to foreclose a chattel mortgage and a real estate mortgage given to secure the indebtedness owed to it by the Wickfield Farms, Incorporated. The appellee in no way elected to declare upon the bonds held by it as collateral, and in no way attempted to subject same to the payment of its debt. Appellee makes no claim to, or right in, the bonds held as collateral, but in fact has abandoned all rights thereto and...
To continue reading
Request your trial