Stanwood v. Des Moines Savings Bank

• Decision Date: 18 March 1910
• Docket Number: 2,964.,2,963
• Citation: 178 F. 670
• Parties: STANWOOD et al. v. DES MOINES SAVINGS BANK et al. DES MOINES SAVINGS BANK v. STANWOOD et al.
• Court: U.S. Court of Appeals — Eighth Circuit

178 F. 670

STANWOOD et al. v. DES MOINES SAVINGS BANK et al.

DES MOINES SAVINGS BANK v. STANWOOD et al.

Nos. 2,963, 2,964.

United States Court of Appeals, Eighth Circuit.

March 18, 1910

Charles A. Clark (W. C. Marquis, on the brief), for Stanwood and others.

George F. Henry, for Des Moines Savings Bank.

Before HOOK and ADAMS, Circuit Judges, and CARLAND, District Judge.

HOOK Circuit Judge.

This was a suit by Annie W. Stanwood and others, creditors of an insolvent trust company, to obtain a decree that Edward S Wishard held the legal title to some real property in Des Moines, Iowa, in trust for the payment of their claims, for an accounting between them and defendants Wishard and the Des Moines Savings Bank, a mortgagee, and that the lien of the bank's mortgage be subordinated to their claims. While the suit was pending, Wishard conveyed to a trustee selected by complainants, and they released him from further responsibility. A decree was entered fixing the amount due the bank, declaring its mortgage to be a first lien, and providing for foreclosure and sale of the premises. The complainants appealed from the decree, and the bank prosecuted a cross-appeal.

The facts necessary to an understanding of the case are these While Wishard was the president of the trust company, the property in controversy was acquired by it and the title taken in his name under an arrangement the details of which are unimportant here. The property was at the time it was so acquired subject to three mortgages given by the former owner. One of the mortgages was held by the bank and the other two by an insurance company. The trust company was afterwards declared insolvent, and its property was placed in the hands of a receiver.

Wishard then became the attorney for the complainants and represented their claims. Whilst that relation subsisted, the bank bought the two mortgages of the insurance company and caused all three of them to be foreclosed in Wishard's name. Wishard became the purchaser at sheriff's sale and finally obtained title free from redemption. He then executed to the bank two notes aggregating $36,143, and two mortgages on the property to secure them. The amount of the notes was the principal and interest of the old incumbrances with the addition of the costs and attorney's fees in the foreclosure suit. These are the notes and mortgages now involved.

The complainants complain that the lien of the bank was given priority over their claims, that the bank was not charged with certain rents and profits of the property while it was in Wishard's possession, and also because the court decreed a foreclosure and sale. It is not denied the three original mortgages were valid and were paramount liens on the property. It would be difficult to discover any ground for destroying their priority or that of the two mortgages which replaced them. The latter were, with slight exception, for the amount of the former with accrued interest. The result sought by complainants is attempted to be worked out by a charge of fraud against Wishard and the bank. But even if Wishard was guilty, the master to whom the cause was referred reported that he found nothing to support the...