Smith v. Brown, 92-1886
| Citation | 513 N.W.2d 732 |
| Decision Date | 23 March 1994 |
| Docket Number | No. 92-1886,92-1886 |
| Parties | Gary L. SMITH and Sheila M. Smith, Appellees, v. Cathy J. BROWN, Appellant. |
| Court | United States State Supreme Court of Iowa |
Frank R. Fuhr of Klockau, McCarthy, Ellison & Marquis, P.C., Rock Island, IL, for appellant.
Dennis D. Jasper of Stafne, Lewis, Jasper, Alexander & Preacher, Bettendorf, for appellees.
Considered en banc.
Two questions are presented in this appeal involving a lien set up in a dissolution-of-marriage decree. The lien of $13,000 on a family residence ran in favor of the husband-father. It was a factor in the property division; the wife was given the right to reside in the home during the minority of the parties' children, and thereafter, on sale, to receive the proceeds subject to the husband's lien. The husband promptly sold his interest to plaintiffs and thereafter defaulted in his court-ordered support obligations. The dispute 1 is between the plaintiffs, as the husband's vendees, and the wife, who contends the lien should be subject to her former husband's support obligations. The questions are (1) whether the lien was assignable, and (2) whether it was subject to the husband's support obligations.
The trial court found the lien was assignable, a finding we think was correct. The trial court found the lien was subject only to those obligations arising prior to the assignment. We agree. We conclude that the lien was not subject to obligations arising after the assignment.
The marriage of defendant Cathy Brown and Dennis Brown was dissolved in January of 1980. The dissolution decree awarded Cathy the parties' residence until she remarried, ceased to use it as her principal residence, or the youngest child of the marriage reached eighteen. On the happening of any of these events, the decree called for the sale of the home. From the proceeds of this sale, the decree awarded Dennis $13,000 plus interest from the date of the decree. The decree then awarded Cathy the residence subject to Dennis's interest.
Cathy was awarded custody, subject to Dennis's visitation rights, of the three minor children. Dennis was ordered to pay $37.50 per child per week, the payments "becoming judgments as they accrue." This would be the rule even if the decree had been silent on the point. In re Marriage of McMorrow, 342 N.W.2d 73, 75 (Iowa 1983).
Within three months Dennis conveyed his interest in the marital residence by special warranty deed to the plaintiffs, Gary and Sheila Smith, for $5000. The Smiths and Cathy stipulate that the Smiths had not known Dennis prior to the execution of his special warranty deed to them in 1980. They also stipulate that the $5000 consideration paid by the Smiths was "adequate and fair." They agree that during the middle part of 1981 Cathy had actual and personal knowledge of the filing of the special warranty deed.
Subsequent to filing the deed, Dennis became delinquent in his child support obligations. The arrearages of $19,305 at the time of trial exceeded the value of Dennis's interests. At the time of trial the youngest minor child had already attained the age of eighteen.
The Smiths filed this declaratory judgment action seeking clarification of the parties' rights. Dennis was not made a party. Cathy answered and asserted (1) that the lien was not assignable by Dennis, and (2) she was entitled to a setoff against the lien for Dennis's delinquent support payments.
After finding the lien was assignable and that the Smiths were assignees of all Dennis's interest in the residence, the district court declared the interest was subject to setoffs for Dennis's support payments. By way of a motion under Iowa rule of civil procedure 179(b), the Smiths asked the court to order the property sold. This motion was denied; the court directed the Smiths to use ordinary proceedings for enforcing the lien. Cathy appealed and the Smiths cross-appealed. The case was tried in equity; our review is de novo. Iowa R.App.P. 4.
I. The trial court was correct in rejecting Cathy's contention that Dennis could not assign his lien interest. In Broyles v. Iowa Department of Social Services, 305 N.W.2d 718, 721 (Iowa 1981), we established that future judgments arising from dissolution-of-marriage decrees are assignable. Dennis's lien surely qualifies. When assigned, it was a present interest even though enjoyment was postponed until some future point.
II. A more troublesome question is whether the assigned interest was subject to setoff for the delinquent child support. According to the general rule an assignee takes precisely what the assignor had, and assumes not only all advantages but is subject to the same defenses. Thus the obligor can assert against the assignee all claims that would have been available against the assignor. Walters v. Iowa-Des Moines Nat'l Bank, 295 N.W.2d 430, 433 (Iowa 1980). Cathy relies on this principle.
The Smiths recognize the rule, but point to authorities that limit it. In Walters, 295 N.W.2d at 433, we quoted from and relied upon 20 Am.Jur.2d Counterclaim, Recoupment and Setoff § 87 (1965) and 6A C.J.S. Assignments § 99 (1975). These same authorities point out the corollary relied upon by the Smiths. Generally equities and defenses between the assignor and debtor arising after the assignment cannot be interposed against the assignee. 6A C.J.S. Assignments § 99, at 757; 20 Am.Jur.2d Counterclaim, Recoupment and Setoff § 89, at 307. It was for this reason that in Walters we took care to limit the right of setoff to those held "at the time of the assignment or notice thereof." 295 N.W.2d at 433.
Cathy's position is greatly weakened by the fact she is dealing with a third party. We have said that, because the rights of third parties may be implicated, "[r]eal estate titles, once fixed, should not be subjected to revision with the subsequent ebb and flow of the fortunes of former parties to the litigation." Kleinsmith v. Northwest Bank & Trust, 477 N.W.2d 388, 390 (Iowa 1991) (citing Marriage of Knott, 331 N.W.2d 135, 137 (Iowa 1983)).
It is stipulated that the Smiths were unacquainted with Dennis at the time of their purchase of the lien, and that the purchase price was "adequate and fair." The Smiths had a clear right to note that the dissolution decree did not make the lien subject to further support payments and to make their purchase accordingly. The lien was not reduced by any arrearages accumulating after the assignment.
III. In their cross-appeal the Smiths request that we not only declare the setoff inapplicable to their lien but also compel the sale of the home or the payment of the cash...
To continue reading
Request your trial
-
Kobbeman v. Oleson
...v. United Nat'l Bank, 436 N.W.2d 23, 25 (S.D.1989); Barnes v. Hampton, 198 Neb. 151, 252 N.W.2d 138, 139 (1977); Smith v. Brown, 513 N.W.2d 732, 733-34 (Iowa 1994); 6B Appleman, Insurance Law and Practice § 4271, at 138 (1979). "[I]t is fundamental that a valid cause of action must exist in......
-
Oeltjenbrun v. Csa Investors, Inc.
...could have raised against the original party. See Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 533 (Iowa 1995); Smith v. Brown, 513 N.W.2d 732, 733-34 (Iowa 1994). Furthermore, this court has explained that, under Iowa law, fraudulent misrepresentation in the inducement to a contract gives ......
-
Midland Mut. Life Ins. Co. v. Mercy Clinics, Inc.
...same defenses that would be available against the assignor." While we have previously recognized this principle, see Smith v. Brown, 513 N.W.2d 732, 733-34 (Iowa 1994), it is not applicable to Mercy's argument that Midland is liable for FDC's duties under the expansion agreement. This princ......
-
Garton v. Garton, 93-1940
...concerned with the competing claims of third-party creditors. They are thus distinguishable from the case before us. Cf. Smith v. Brown, 513 N.W.2d 732, 734 (Iowa 1994) (holding husband's lien against homestead is assignable to third party, but not subject to wife's judgment for unpaid chil......