West Grove Sav. Bank v. Dunlavy
| Decision Date | 09 February 1921 |
| Docket Number | 33410. |
| Citation | 181 N.W. 404,190 Iowa 1054 |
| Parties | WESTGROVE SAVINGS BANK, Appellant, v. OSA DUNLAVY et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Davis District Court.--C. W. VERMILION, Judge.
ACTION in equity, in which plaintiff seeks to have the rights and priorities of the parties in and to the proceeds of a sale determined. The trial court held that the Steckels interveners, had no lien on the funds. The decree gave A. J Bond priority on the proceeds of sale for the amount of his debt, and also the unpaid debt of the Moulton Bank against P C. Bond. P. C. Bond was given the proceeds of sale of the exempt property and priority thereto as against plaintiff bank. The amounts of the debts of P. C. and A. J. Bond, the Moulton Bank, plaintiff, and the Steckels, interveners, were fixed by the decree, and the application of the proceeds of the sale was specifically directed, and judgments for the same were entered, as set out in the decree. The Steckels did not agree to the sale of the mortgaged property, and the court denied their claim for a lien on the proceeds of the sale. The court, as to them, simply fixed the amount of the indebtedness of P. C. Bond to them. Neither P. C. Bond nor the Steckels, interveners, appeal, and the adjustment of the amount of the indebtedness of P. C. Bond to the Steckels is not questioned by appellant. The plaintiff appeals. The facts will be more fully stated in the opinion.
Affirmed.
Payne & Goodson, for appellant.
E. Rominger, George F. Heindel, and Henry C. Taylor, for appellees.
P. C. Bond, son of A. J. Bond, was living on a farm which he had rented from Steckel & Son, and from his father. He had become indebted to the Moulton State Savings Bank, which, wishing to have security for the indebtedness, asked the father to sign the notes, and talked about a mortgage on the live stock, by P. C. and wife. After some negotiations, the father, A. J., proposed to his son that he would sign, as surety, for the amount due the bank, which was $ 4,300, if the son would give him a mortgage, as security as such surety, and for an indebtedness to the father from the son of $ 1,200, evidenced by a note. This understanding between P. C. and A. J. was known by the officers of the Moulton bank. The agreement was made,--and pursuant thereto, P. C. and wife, Joda, executed to A. J. the mortgage dated December 18, 1915. The consideration therein expressed is $ 5,500. The property mortgaged was 9 head of horses and 2 mules, 98 cattle, 425 sheep, and wool therefrom. The condition of the mortgage is: "If the said P. C. Bond shall pay the said A. J. Bond, his heirs, assigns, etc., his three promissory notes, dated January 31, 1914, December 16, 1915, described as follows: One for $ 1,200, payable January 31, 1914; one for $ 2,300, payable June 16, 1916; one for $ 2,000, payable September 16, 1916, with interest," etc.
The mortgage provides further:
"This mortgage is also expressly made to secure any claims held by mortgagee against mortgagors, or either of them, or any future loans, advances, or indebtedness accruing from said grantors, or either of them, and assigns to said grantee or his assigns or his beneficiaries, or any claims that may come into the hands of said mortgagee or his assigns, by purchase, or otherwise, against said mortgagors, or either of them, and to be security for attorneys' fees, etc."
Plaintiff's mortgage is dated September 19, 1916, to secure a note of $ 1,850, both note and mortgage being signed by P. C. Bond without having his wife join therein. Some of the property is covered by both mortgages, but more is included in plaintiff's mortgage, and the exempt property is included in plaintiff's mortgage. The property is described with somewhat more particularity in plaintiff's mortgage. Plaintiff placed its mortgage with defendant Dunlavy, and directed him to take possession of the property described in its mortgage, for the purpose of selling it, and to foreclose the mortgage. Dunlavy took possession of the property. At about that time, and on November 16, 1916, a written agreement was entered into, signed by A. J. Bond, the cashier of plaintiff bank, Joda F. Bond, and P. C. Bond, which recites that P. C. Bond is indebted to A. J. and the Moulton bank, on which note to the Moulton bank A. J. is surety, and indebted to the plaintiff; that the amounts owed to these parties are secured by mortgages upon certain chattel property owned by P. C. Bond; that A. J. Bond had commenced proceedings to foreclose his mortgage, and that the sheriff has taken possession of the property, under said foreclosure proceedings. It was agreed, as the writing recites, by and between the parties who hold mortgages on said property that all property covered by said mortgages may be sold at public sale by the sheriff, November 29, 1916; that the proceeds be held by the clerk of the sale until the parties have adjusted priorities and claims, and determined the amount due each party secured by the mortgages, and then the proceeds to be paid to said parties according to their priority and claims to the proceeds; that the mortgage claims shall remain a lien upon the proceeds, the same as it then existed against the property. The real purpose of the mortgage to A. J. was to secure the two notes of $ 2,000 and $ 2,300 due the Moulton bank, and, of course, the $ 1,200 indebtedness of P. C. to A. J. Bond. The cashier of plaintiff bank had talked with P. C. about the amount, and the cashier was advised by P. C. of the amount due the Moulton bank, and the amount due P. C.'s father; knew that the mortgage given by P. C. to his father was to secure the $ 2,000 note and the $ 2,300 note given to the Moulton bank; knew this from statements of others, and from the fact that the amounts were given in a prior mortgage to plaintiff bank by P. C., which prior mortgage had been satisfied; so that, if the evidence outside of the mortgage itself is considered, plaintiff was informed of the true situation, and knew that this money had been borrowed from the Moulton bank, although the mortgage was given to A. J. Bond, to secure him. In any event, plaintiff knew the amounts. The mortgage itself gives the amounts of the three notes, which include the two notes to the Moulton bank, so far as amounts are concerned. P. C. Bond, as the head of a family, claims some of the property as exempt, and that, as to such, he is not bound, because his wife did not sign the mortgage. On the other hand, it is claimed by appellant that the wife, by signing the agreement to sell, ratified the mortgage, so that she and her husband are bound, even as to the exempt property. We take it that the only purpose of the agreement to sell was that the proceeds should stand in the place of the property until the rights of the parties were determined. Nowhere in the agreement to sell is it stated that the exemption is waived. Though quite a large number of cases are cited by both sides, bearing directly or indirectly upon points suggested in argument, and related matters, there are really but two questions presented, and they are: First, in regard to the exempt property; and second, whether the mortgage to A. J. Bond is invalid as to the $ 2,000 note and the $ 2,300 note, so...
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