Simmons v. Simmons
| Decision Date | 07 February 1933 |
| Docket Number | No. 41741.,41741. |
| Parties | SIMMONS ET AL. v. SIMMONS ET AL. IOWA-DES MOINES NAT. BANK & TRUST CO. v. LEWIS ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Clarke County; Homer A. Fuller, Judge.
This is a proceeding by the Iowa-Des Moines National Bank & Trust Company, first, to obtain the allowance of a claim held by it against Simmons & Co., a private bank, of Osceola; and, second, to obtain an order of court marshaling the assets of said bank in receivership so that partnership creditors first would be paid from partnership assets, and the claimant, the sole creditor of W. B. Murray, as an individual, would be paid from the individual property of said partner. The district court allowed the claim against the partnership, and denied the prayer for the marshaling of assets. From that judgment, the claimant appeals.
Reversed.Murrow & Miles, of Corydon, and Strock, Sloan & Dyer, of Des Moines, for appellant Iowa-Des Moines Nat. Bank & Trust Co.
L. E. Crist, O. M. Slaymaker, and R. E. Killmar, all of Osceola, for appellee J. H. Lewis.
O. M. Slaymaker and R. E. Killmar, both of Osceola, for appellee J. J. Fleming.
Simmons & Co., a copartnership, for many years operated a general banking business at Osceola. On December 10, 1930, it closed its doors, and a receiver was appointed to liquidate its affairs. At this time there were six members in the partnership. They were A. D. Simmons, L. L. Simmons, Paul Simmons,N. C. Hoffman, W. B. Murray, and W. B. Emary.
The receivership proceeding was instituted by some of the partners against the others. A. A. Nowers first was appointed temporary receiver. Thereafter, on December 15, 1930, the receivership was made permanent, and D. T. Eells became the permanent receiver. Then, on January 2, 1931, the district court by order required each of the six partners to convey his respective property to the receiver under the condition that the receiver hold such property separate from the partnership property and in trust for the benefit of the individual and firm creditors, according to law, as their interests might appear.
In compliance with the order, five of the individual partners immediately made conveyance of their respective properties to the receiver. Later Murray turned at least $50,000 worth of property over to the receiver to be distributed to his individual, or to the partnership, creditors, according to which of them under the law is entitled thereto. Consequently the receiver had in his possession the property of the partnership and the property of each individual partner. These properties were kept separate by the receiver to be finally disposed of as above indicated, according to law. By thus transferring his property to the receiver, the partner Murray did not intend to waive his right of having the same distributed among the partnership and individual creditors, as the rules of this state require. This fact is obvious, because the partner Murray did not make an absolute conveyance, but transferred the property to the receiver to be distributed according to law.
Apparently the private property of the partner W. B. Murray consists of notes and mortgages amounting to approximately $50,000, and 360 acres of clear land located in Clarke county. The property belonging to the partner Murray is primarily involved in the present litigation. During the latter months of its existence, Simmons & Co. borrowed extensively from the claimant-appellant, Iowa-Des Moines National Bank & Trust Company. Said last-named institution is located in Des Moines. On October 11, 1930, A. D. Simmons came to Des Moines, where he consulted with Clyde Brenton and J. R. Capps at the Iowa-Des Moines National Bank & Trust Company. Such consultation was for the purpose of determining on what basis the Des Moines Bank would loan more money to Simmons & Co., the copartnership. After some discussion, it was agreed between the Des Moines Bank and Simmons that Simmons & Co. would be loaned further money providing, in addition to certain notes to be pledged, the individual partners would sign a guaranty that Simmons & Co. would pay all loans thus made, together with all unpaid past loans. No definite sum was agreed upon; but it was agreed between A. D. Simmons and the Des Moines Bank that the guaranty should cover $150,000, which amount Simmons & Co. contemplated borrowing.
A blank guaranty agreement was furnished by the Des Moines Bank. This blank agreement was taken by A. D. Simmons for the purpose of obtaining the signatures of the individual partners thereto. Accordingly, A. D. Simmons procured the signature of each partner to the written guaranty, including that of W. B. Murray. Thereafter, on October 13, 1930, A. D. Simmons brought back to the Iowa-Des Moines National Bank & Trust Company, at Des Moines, the completed guaranty agreement with the signature of the partners thereto. When thus delivered, the completed guaranty agreement was regular on its face, and the Iowa-Des Moines National Bank & Trust Company knew of no defects in, or defenses to, the instrument.
Relying upon the validity of the guaranty, the Iowa-Des Moines National Bank & Trust Company loaned Simmons & Co. additional money. On October 13, 1930, the Des Moines Bank loaned Simmons & Co. $25,000 on the strength of the guaranty. Later, on October 28th, the Des Moines Bank, relying on the guaranty, loaned Simmons & Co. $15,000; and then again the Des Moines banking institution on November 21, 1930, still depending on the guaranty, loaned Simmons & Co. an additional $10,000. At the time of the trial, the balance due the Des Moines Bank for the moneys thus borrowed by Simmons & Co. totaled $79,538.51. Obviously that sum includes approximately $29,538.51 which was loaned by the Des Moines Bank to Simmons & Co. before the guaranty agreement; but, as previously explained, the guaranty covered past unpaid loans as well as present or future. Thus the entire $79,538.51 above named was covered by the guaranty agreement. Apparently the original amount of the loan was reduced by the application of certain collateral securities given by Simmons & Co. to the Des Moines Bank.
In due time, under the receivership proceedings claims of the various creditors of Simmons & Co. were filed with the receiver. Included among these claims was the $79,538.51 held by the Des Moines Bank. Among these claims of the Des Moines Bank were $59,974.35 for bills payable and $19,564.16 for rediscounts, thus making a total, as before said, of $79,538.51.
It appears that the receiver paid the creditors of the copartnership, including the Des Moines Bank, a 4 per cent. dividend from the partnership property of Simmons & Co. Following that payment, the Des Moines Bank, on April 14, 1931, filed its claim against the individual estate of the partner W. B. Murray on the theory that he was personally liable to the Des Moines institution on the aforesaid written guaranty. Subsequently, on May 19, 1931, the receiver of Simmons & Co. filed a claim against the property of the individual members of the partnership on behalf of all the partnership creditors for $995,000. This claim was thus filed by the receiver on the theory that the partnership property would lack that amount of paying all the claims filed. The Des Moines Bank asked that its claim, above named, be allowed against the individual property of the partner W. B. Murray, and be paid therefrom before partnership claims are satisfied out of such individual property. Many defenses were made to this application of the Des Moines Bank by the receiver. These defenses will be considered in the order hereinafter followed.
For some reason, after the appointment of Eells, J. H. Lewis seems to have been made receiver for Simmons & Co. J. J. Fleming, having an interest in the controversy in favor of the partnership, intervened and contested the claim of the Des Moines Bank. As before stated, the trial court allowed the two claims of the Des Moines Bank, aggregating $79,538.51. That aggregate amount was allowed as a general claim against the partnership. When thus allowing the Des Moines Bank's claim as general, the district court provided that all collections made on collateral should be applied thereon before dividends were paid. The district court refused to marshal the assets as prayed by the Des Moines Bank.
I. An argument is made by J. H. Lewis, receiver and appellee, and J. J. Fleming, intervener and appellee, that the Des Moines Bank is not entitled to have the assets marshaled for the reason that it did not pray for such relief. It is contended by the Des Moines Bank that it is entitled to have the assets marshaled as follows: First, that the partnership assets shall be applied on its claim as well as on the claims of other partnership creditors; and, second, that the individual assets of the partner Murray shall be applied on its claim to the exclusion of the partnership creditors. There are no creditors of the partner Murray as an individual, except the Des Moines Bank.
[1] Careful consideration has been given to the appellees' contention that the pleadings are insufficient to entitle the Des Moines Bank to a marshaling of the assets, and it is found that the same is without merit. Not only did the Des Moines Bank ask that its claim be allowed against both the partnership and the property of the individual partners thereof, but likewise the Des Moines institution prayed for general equitable relief. In his answer to the claim of the Des Moines Bank, the receiver declared that it had no interest in the individual property of the partner Murray, except as a partnership creditor. Furthermore, the receiver denied that the Des Moines Bank had any equities in the individual or partnership property, except to participate ratably as a partnership creditor. To that answer the Des Moines Bank filed a reply in which it asked that its claim be allowed as preferred against...
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