Stockdale v. Olson

• Decision Date: 18 November 1958
• Docket Number: No. 15824.,15824.
• Citation: 261 F.2d 191
• Parties: L. E. STOCKDALE, Appellant, v. Roy OLSON, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

261 F.2d 191 (1958)

L. E. STOCKDALE, Appellant, v. Roy OLSON, Appellee.

No. 15824.

United States Court of Appeals Eighth Circuit.

November 18, 1958.

Leo F. Fitzgibbons, Estherville, Iowa (Fitzgibbons & Fitzgibbons, Estherville, Iowa, on the brief), for appellant.

Alan Loth, Fort Dodge, Iowa, for appellee.

Before GARDNER, Chief Judge, and VOGEL and MATTHES, Circuit Judges.

VOGEL, Circuit Judge.

L. E. Stockdale brought this suit to foreclose a chattel mortgage on personal property, including corn, alleged to be covered by the mortgage and owned by Clifford Ingvall, Pearl Ingvall, John Ingvall and Bonnie Ingvall. Joined as a co-defendant was Roy Olson who claimed to own the corn allegedly covered by the mortgage and the United States of America because its instrumentality, Commodity Credit Corporation, carried a mortgage given by Olson on the corn in question. Jurisdiction of the federal court was based upon the fact that the United States was a party in District Court and while the United States did not join in this appeal, jurisdiction is retained on the basis that it was a necessary party in the original action. The defendants Ingvall did not appeal. The remaining parties will be referred to herein by name or as they were in the court below; namely, Stockdale as plaintiff and Olson as defendant. The law of the State of Iowa is controlling.

The dispute is over two cribs of corn grown on Olson's farm in 1954. For some years the Ingvalls had been tenants on Olson's farm. Ordinarily each — that is, landlord and tenants — had a 50% interest in the crops raised on the Olson farm and each paid for one-half of the seed and expenses. The parties had never signed a written lease but they more or less recognized an unsigned lease dated September 23, 1948. Between that time and March 1, 1954, however, the parties made oral agreements and arrangements which deviated from the unsigned lease. The Ingvalls were indebted to the plaintiff Stockdale, who for some years had been financing them in their farming operations. The time came, however, when the Ingvalls had financial difficulty in raising their one-half of the expenses of farm operations. In the fall of 1953 they wanted to fertilize a certain tract of land on the Olson farm which they proposed planting into corn in 1954. The estimated total cost was $2,500. They were unable to raise their one-half thereof. The Ingvalls and defendant Olson then agreed that if he, Olson, would pay the full amount of the purchase price of the fertilizer, a sufficient amount of the Ingvalls' normal share of the crop would be set over to Olson to reimburse him for the one-half cost of the fertilizer advanced in behalf of the Ingvalls. The transaction was evidenced by a note in the amount of $1,282.50, which bears a notation that it was due at harvest time and also "50% fert. on n. corn".

Early in 1954 the financial relations between the Ingvalls and Stockdale had become more seriously impaired. Sometime prior to March 22, 1954, Stockdale refused any further financing for the Ingvalls and so informed them. The Ingvalls faced a crisis as to the 1954 farming operation. They informed Olson of Stockdale's action and stated that as a result thereof they would have to give up the farm. They had no money with which to pay for their one-half share of the seed and they were already behind on fuel and repair bills and creditors thereof were threatening. As a result, on March 22, 1954, the Ingvalls and Olson orally agreed that the Ingvalls would go ahead with their farming operations on the Olson farm and that if they could not secure the necessary funds elsewhere, Olson would advance the money for them and at harvest time a sufficient portion of the Ingvalls' normal share of the crops would be set over to Olson to reimburse him. The Ingvalls were unable to raise funds elsewhere, so, based upon this arrangement, they secured seed and the pressing creditors did not proceed. On May 25, 1954, when all the bills were in, Olson completed his part of the agreement by making payment. In connection therewith the parties executed a document to encompass the March 22nd agreement and a note to cover the advances. The court specifically found that, "By reason of the arrangements made between Roy Olson and the defendants Ingvall, the latter were able to continue as lessees of the farm and produce crops on it in 1954. Without such arrangements they would not have been able to do so." The court also specifically found, "It is clear that the arrangements between the Ingvalls and the defendant Roy Olson constituted part of the leasing arrangements under which the Ingvalls farmed the farm in 1954. The plaintiff was an extraneous party to the leasing arrangements for the farm. There were no legal inhibitions which in (pro)hibited the Ingvalls and Roy Olson from making leasing arrangements for 1954 which differed from those of prior years. Under the 1954 leasing arrangements the Ingvalls instead of receiving the same share of the crops they had received in prior years were to receive a reduced share." (Emphasis supplied.)

On March 26, 1954, the Ingvalls executed a chattel mortgage to Stockdale upon their property, including "all crops raised or to be raised", which was filed for record on March 29, 1954. The agreements between the Ingvalls and Olson were made on March 22, 1954; that is, prior to the date of the note and mortgage given to Stockdale. Olson, however, did not actually complete the advances until a few days after the 1954 planting but his advances were pursuant to and in reliance upon the agreements made with the Ingvalls on March 22, 1954.

The basic question here is whether the plaintiff Stockdale had a prior claim against the future 1954 crop ahead of Olson's interest as landlord under the arrangement of March 22, 1954.

Among other things not pertinent here and involving mainly those who were parties to the original action but are not parties to this appeal, the District Court held:

"* * * that there is not involved in this case the question of equitable lien, contract lien, landlord\'s lien, or oral mortgage.

"It seems clear that under the Iowa law the relation between Roy Olson and the defendants Ingvall was that of landlord and tenant and not that of partnership. See 6 Drake Law Review 37 (1956); 8 Iowa Law Bulletin 95 (1922); Johnson v. Walland Watland (1929), 208 Iowa 1370, 227 N.W. 410; and Kelley v. Kelley (1920), 189 Iowa 311, 177 N.W. 45. See also, In re Estate of Schultz\'s (1923), 196 Iowa 125, 194 N.W. 242, on right of member of non-trading partnership to issue notes binding on firm. The relationship of partnership as to a portion of the property on a leased farm does not change the landlord-tenant relationship. Vosges v. Clark (1949), 240 Iowa 1108, 38 N.W.2d 611.

"The plaintiff\'s chattel mortgage provides that it shall attach the after-acquired property upon acquisition by the mortgagors. The plaintiff\'s chattel mortgage only attached to such interest as the defendants Ingvall had in the crop in question. McMaster v. Emerson (1899), 109 Iowa 284, 80 N.W. 389. The Iowa Supreme Court has used the terms `potential property\' and `after-acquired property\' synonymously. See 10 Iowa Law Bulletin 227 (1925).

"In the present case the crops at the time they were planted and when they came up were subject to the leasing arrangements made between the defendant Olson and the defendants Ingvall under which the share of the latter in them would be diminished from what it had been under the arrangements for the prior years. The plaintiff as an extraneous creditor had to take the situation as it existed. The defendants Ingvall and the defendant Olson had the right to make their own leasing arrangements for 1954. Under those arrangements the share of the defendants Ingvall was to be diminished for that year. The fact that the arrangements were to be carried out during the term of the lease and after the chattel mortgages to the plaintiff were executed does not change the situation. There is not involved in the case the question of co-owners of existing property making agreements in relation to common property to the prejudice of one who held a mortgage on the interest of one. In the present case the arrangements related to crops yet to be produced. The crop had not been produced by May, 1954. If nothing further had been done to them thereafter, no crops would have been produced or harvested. It would seem that where two parties enter into a joint arrangement for the production or fabrication of property to be brought into existence the rights of their individual creditors in the jointly produced or fabricated property would be subject to the arrangements made between the joint entrepreneurs for such production or fabrication.

"In the present case the plaintiff refused to make possible the production of the crops. Nevertheless he received the sum of $6,983.68 from the crops made possible by the defendant Roy Olson. In addition, the plaintiff in substance asks that the arrangements under and by virtue of which the crops were produced be ignored and that the share of the

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