298 N.W. 641 | Iowa | 1941
DISSENT: Miller, J. On February 18, 1927, the appellants executed to the plaintiff, which we will refer to as the appellee, their promissory note for $8,000 payable in installments over a series of years. To secure the indebtedness, they executed a mortgage on their farm. About a year later, they sold and conveyed the land to Frank Turpin, and the defendant, Fannie Alice Ahart. By the deed, the grantees assumed the mortgage indebtedness, and thereafter Mrs. Ahart and her husband, the defendant, H.H. Ahart, made such payments as were made upon this indebtedness. On April 3, 1936, the Christiansens and the Aharts, as first parties, and the appellee, as second party, executed a written extension agreement. It recited the execution and existence of the note and mortgage, and stated that the indebtedness thereon was $8,500 as of April 1, 1936. It fixed the amount of the future annual installments and their maturities. It stated:
"(2) Second party is willing and hereby agrees to permit the time for payment of said mortgage indebtedness to be so extended and to accept payments accordingly, and first parties hereby jointly and severally expressly covenant and agree to pay the installments and the mortgage indebtedness, as set out in paragraph (1) hereof.
"(3) This agreement shall not affect any other terms of the original note and mortgage, nor any other rights thereunder, and first parties hereby jointly and severally agree to perform all of the covenants and obligations of such note and mortgage. * * *"
The petition herein for judgment and foreclosure was filed on May 24, 1938. On June 7, 1938, the Aharts moved for a continuance under a Moratorium Act, which motion was granted, but the continuance was terminated by the court on November *539 10, 1938 upon an application of the Aharts, that day filed. Prior to that date, through negotiations between appellee and the Aharts, a writing had been prepared by which the Aharts tendered to appellee their deed to the mortgaged property, and also their stock in the farm loan association, "for the consideration of my, our, release by said Bank [appellee] from all personal liability to it on said loan for the payment of the debt secured thereby and the further consideration of one dollar." The tender recited that the deed was "conditioned that said Bank's interest as mortgagee in said lands shall not merge with the title therein conveyed." The tender also recited that it was voluntarily made because of the desire to be relieved of all personal liability and responsibility for the payment of the loan, and with full knowledge of their further right to occupy the farm until dispossessed by law. Possession was tendered upon acceptance of the tender and deed.
The deed recited that in consideration of one dollar "and release from personal liability on debt [the grantors] do hereby grant, bargain, sell, convey and confirm unto" the appellee the mortgaged property, free of incumbrance, except appellee's mortgage. It contained the usual covenants of warranty, but also recited: "It is the express intention of the parties hereto that the right of said grantee under its mortgage covering the property above described shall not merge with the Equity of Redemption herein conveyed by grantor to the said grantee." Both tender and deed were dated and executed on November 10, 1938, and on that day were sent from Harlan, Iowa, to appellee by its attorney. The deed was accepted by appellee and returned to Harlan on December 23, 1938 and filed for record the following day. On the latter date, a decree was filed in this action. Default was taken against the appellants, as they in no way appeared. It was in the usual form of a judgment and decree of foreclosure. Foreclosure was decreed against all parties, with direction for issuance of execution and sale. As first filed, personal judgment was rendered against both the appellants and the Aharts. When the appellee was informed of this, it directed its attorney to have the judgment and decree corrected, in accordance with its agreement with the Aharts that they should be released from personal liability for *540 the debt. This correction was made about December 28, 1938, leaving personal judgment against the appellants only. After the execution sale, there remained a deficiency judgment of about $1,900. Appellee learned of some real estate equities which the appellants had and about March 1, 1939, after some negotiations, the appellee released the lien of its judgment from one of these properties on the payment of $240. On or about October 1, 1939, after further investigation and negotiations respecting another property, the appellee accepted a further sum of $400 and satisfied the deficiency judgment in full. A short time later, the appellants state that they learned of the tender and deed transaction and the release of any personal liability on the part of the Aharts. On December 15, 1939, the petition for new trial and the vacation of the judgment and decree was filed. Resistance to this was filed alleging lack of diligence, voluntary payment of the $640 when appellants had or should have had full knowledge of the facts, and the failure to allege or show facts constituting a good defense.
[1] I. We will pass upon the matter of a good defense first, because if there is no defense, the other issues are immaterial. Appellants state their proposition on this issue thus: "The release of appellants' co-obligor is a satisfaction of the debt terminating the liability of the appellants so that the judgment against them is erroneous." In support of the proposition, they cite Malanaphy v. Fuller and Johnson Mfg. Co.,
To this proposition the appellee answers that the liability of a mortgagor for the payment of his mortgage indebtedness to the mortgagee, or to the holder thereof, is not qualified in any way by the transfer of the property to a vendee who assumes and agrees to pay the indebtedness. Although as between the mortgagor-vendor and the assuming vendee, the latter becomes primarily liable for the payment of the mortgage *541
indebtedness, and the former becomes secondarily liable, or a surety for the grantee, the mortgagor remains a primary debtor to the mortgagee or mortgage holder. By his assumption agreement, the grantee also becomes primarily liable to the holder of the mortgage papers, as well as primarily liable to the mortgagor for its payment. The holder of the mortgage papers may proceed against either or both of these primary obligors for the enforcement of his claim. With respect to the extension of time to the assuming grantee, we have held consistently from the case of Corbett v. Waterman,
The appellants have not brought themselves within either of these last stated rules, first, because they are liable to the appellee as principal debtors, and, second, because the appellee has done nothing to damage them. Appellants cite, but do not discuss, Malanaphy v. Fuller and Johnson Mfg. Co., supra (
In the case before us, the appellants are not in the position of Malanaphy and Daly. The obligation of the appellants and the Aharts under the extension agreement was joint, and joint and several. Appellee could sue one, or more, or all of them. It had to make the Aharts parties in order to cut off their equity of redemption. When the suit was begun, it asked full relief against all of them. Aharts had but a qualified ownership in the property, and appellee had a right under its mortgage to subject the property to the payment of the debt. When it took the deed from Aharts, it reserved its foreclosure rights to perfect the title, and also to subject the land to public auction at Sheriff's sale where the appellants could protect their rights at a fair sale. The possession of the land and the crops were protected in the decree by receivership. In this manner the appellants had the full value of the property applied to the debt. The fact that there was a deficiency judgment against appellants cannot be charged against appellee as wrongful conduct against the appellants. They were deprived of no rights of subrogation as against the property. With respect to a personal judgment against the Aharts, that was a matter which was optional with the appellee. It was not required to take such a judgment against them, and it did not. By releasing them from personal liability to it, it deprived the appellants of no right that was prejudicial, since from the day of the Aharts' default in the performance of their assumption agreement, the appellants had, and still have, the right to sue the Aharts for the breach.
[2] II. What we have said in the preceding division disposes of the case, but appellants also contend that regardless of whether they may have had any rights as sureties which appellee did not respect, they were released by the release of their co-obligors. Appellants cite Seymour Co. v. Butler,
The same rule is stated in Bonney v. Bonney,
Considering all of the circumstances of the case, it appears to us that the release of the Aharts from personal liability was not intended as a satisfaction of the entire debt, but was nothing more than a covenant not to sue or to press the claim against them. The Aharts, in fact, paid nothing, and the appellee received nothing for the release. The Aharts gave nothing from any independent source. The appellee simply took by foreclosure *545 of its mortgage the property it was entitled to thereunder. It could have taken it whether the Aharts were willing or unwilling. The tendency of the courts is away from the discharge of those jointly liable, whether by contract or by tort, by what may be called technical releases. Such tendency is wise and sound. Any other policy is unfair both to the injured party, or the creditor, and to those jointly bound. Suppose that four persons are jointly liable by contract or by tort for $10,000. One of them is insolvent and execution proof, but his friends or his relatives are willing to donate $2,500, or he is willing to sacrifice his homestead to raise that amount providing that he can have a full satisfaction of his liability. He should be permitted to do it and the injured party or creditor should be at liberty to accept it, without the danger of being penalized by discharging the others jointly liable. Any such amount so received is a pro tanto benefit not only to the one entitled to it, but also to the others jointly liable — nobody is hurt and all are benefited.
It is our view the appellants were in nowise prejudiced by what the appellee did, and are not entitled to the relief asked.
III. The trial court found that the payment of the $640 was voluntarily made by the appellants at times when they had knowledge or should have had knowledge of the facts upon which they based their petition. The record does not justify our disturbing this finding. The judgment and decree is affirmed. — Affirmed.
HALE, C.J., and SAGER, STIGER, MITCHELL, WENNERSTRUM, and GARFIELD, JJ., concur.
*546MILLER, J., dissents as to division II.