130 Iowa 469 | Iowa | 1906
Quite necessary to an understanding of the questions presented in argument are the facts in the case, and we shall set forth the substance thereof. October 10, 1898, Morris & Cuthbert sold and delivered to J. W. Smith, a farmer and cattle feeder living near Graettinger in Palo Alto county, sixty-five head of two year old steers. In payment, Smith gave his two notes, one for $1,650, due June 10, 1899, and the other for $750, due October 10, 1899. Said notes were in ordinary form, except that in the body of
Respecting the connection of the defendant bank with the transaction, it appears that some time early in the spring of 1899 Smith applied to Donlon, cashier in charge of the bank, for a loan of money to be used in buying feed for his stock. At the time thereof Smith advised Donlon of the existence and approaching maturity of the $295 and the $1,650 notes given to Morris & 'Cuthbert. It may be here remarked that Donlon, as a witness on the trial, testified that he was not advised of the $750 note, or the mortgage, and that, as matter of fact, he did not know of the same un
With such facts established it Would go without saying that Morris & Cuthbert could not be heard to charge a conversion. In case of a sale thus made, the purchaser takes the property divested of the lien of the mortgage. Smith v. Bank, 99 Iowa, 282; Harlan v. Ash, 84 Iowa, 38; Livingston v. Stevens, 122 Iowa, 62. And the mortgagee may not be heard to claim a lien on the proceeds. Harlan v. Ash, supra; Nordby v. Clough, 79 Iowa, 428; Waters v. Bank, 65 Iowa, 234. 7 Cyc. page 46 and cases cited in note.
In Smith v. Bank, the facts appearing were that each of the parties held mortgages executed by one Carvell upon a certain herd of cattle — that of plaintiff being the prior lien. The bank had actual knowledge of the existence of plaintiff’s mortgage. Plaintiff consented that Carvell might ship and sell the cattle, and this was done. By direction of Carvell the proceeds were remitted to and deposited in his name in the defendant bank, and, upon this being done, 'Carvell gave the bank a check for the amount due upon its mortgage indebtedness, and directed that payment of the balance be made to plaintiff. It was held that as the proceeds of the sale were not impressed with any lien, and as upon the facts no relation of trust was established, plaintiff had no right as against the bank to question the payment made by Carvell to it in satisfaction of its debt. See, also, Maier v. Freeman, 112 Cal. 8 (44 Pac. 357, 52 Am. St. Rep. 155) ; Estes v. McKinney (Tex. Civ. App), 43 S. W. 556; Fairweather v. Nelson, 76 Minn. 510 (79 N. W. 506) ; Bank v. Bernard (Tex. Civ. App.), 30 S. W. 580; Evans v. Bank, 76 Mo. App. 449; 7 Cyc. 52.
What, then, is to be said as to the rights of plaintiffs in the premises? As we understand, the question is not whether plaintiffs took the mortgage free from latent equities inhering therein as between the mortgagor and the original mortgagees. It is whether a complete defense may be made out as against a charge of conversion preferred by an assignee of a mortgage, by showing that disposition of the property was made without notice, actual or constructive, of the rights or interests of such assignee, and pursuant to an agreement with, and under the direction of, the original mortgagee. And this question we think must be answered in the affirmative. As related to a mortgage upon chattel
2. Same: consent: evidence. II. In view of a possible retrial of the case, we think it proper to express opinion respecting such of the other questions presented by counsel for appellant in argument, as will presumably again confront the trial court. To begin with, it is said by counsel for appel- . " f lant that m any event the facts do not disclose any such hostile interference with the plaintiff’s right of property as to amount to a conversion; that, in truth, de
Nor the error pointed out in the first division of this opinion, the judgment must be, and it is, reversed.