First National Bank of Corning v. Reid, 122 Iowa 280

First National Bank of Corning v. Reid

122 Iowa 280 | Iowa | 1904

SheRWIn, J.

No question as to the hay loaders is involved in the controversy between the First National Bank and the plow company. The plow company con-1. withholding mortgage from record fraud. that the mortgage to this bank was fraudulent because it was withheld from the record, and, because thereof, that its mortgage on the general stock is entitled to priority. The mere withholding of the mortgage from record, however, would not be fraudulent, and to make it so as to the plow company it was necessary to prove that, during the time it was so withheld, the plow company extended credit to Reid without knowledge of the mortgage. Goll & Frank Co. v. Miller, 87 Iowa, 426; Garner v. Fry, 104 Iowa, 515.

When the Plow Company took the mortgage from Reid the bank mortgage -was recorded, and, in addition *284to the constructive notice which the record furnished, the 2 Estoppel plow company had actual notice of its exact . terms and conditions. Futhermore, within three or four days thereafter, and before action was brought to recover the hay loaders, the plow company sent two of its agents to Corning to investigate the financial condition of Mr. Beid. This they did with care, and were then fully advised as to the preceding mortgage transactions. The mortgage from Beid to the plow company was an entire contract. It expressly provided that the rights of the company thereunder were subject to the mortgages on the same property then of record. If the company, when it became fully advised of the transaction between the bank and Beid, had repudiated its mortgage, it might be in a position to press its claim as to the fraudulent character of the bank’s mortgage.. But instead of repudiation, it is now and has all along been relying thereon for the superiority of its lien on the property in question. This position cannot be consistently maintained. It accepted the mortgage with a condition which the mortgagor had a right to impose for the protection of his other mortgages and for his own protection, and, having accepted the mortgage subject to the lien of the bank’s mortgage, it is bound thereby, aiml cannot now question-the validity of that mortgage, any more than the mortgagor could. Key v. National Life Insurance Co., 107 Iowa, 446; Van Buren County Saving Bank v. Woolen Mills Co., (Iowa), 94 N. W. Rep. 945; Gammon v. Bull, 86 Iowa, 754; Ellis v. Lamme, 42 Mo. 153; Griether v. Alexander, 15 Iowa, 470; Perrine v. First National Bank, 55 N. J. Law, 402 (27 Atl. Rep. 640); Tolbert v. Horton, 31 Minn. 518 (18 N. W. Rep. 647); Howard v. Chase, 104 Mass. 249; 2 Cobbey, Chattel Mortgages, 31,039.

The First National Bank’s mortgage was given to secure the $1,000 note theréin described, and all renewals or extensions of the same, and all other advances of *285money by the bank to Reid, “now made orto be hereafter 3. Statement of amount secured: notice. made, by note or otherwise.” This was sufficiently specific to put the plow company upon inquiry, and to enable it to ascertain the exact amount of indebtedness secured thereby. Magirl v. Magirl, 89 Iowa, 342. Reid’s mortgage to the savings bank covered the hay loaders as well as other property, and the plow company’s mortgage was also subject thereto; so that as between these parties, so far as the latter’s rights are predicated upon its mortgage, what we have already said disposes of the matter. It is contended, however, that the company should have been awarded the hay loaders taken on the writ of replevin because of the reserve clause in the contract of sale; and on the other side it is said that it abandoned its rights under that contract, and elected to rely upon its mortgage; and, further, that the contract was void as to the bank because of the credit extended by it to Reid at the time its mortgage was taken.

The trial court found that an election had been made by the company to hold under its mortgage. With 'this finding, however, we do not agree. It will be remembered 4 Evidence: election. t'h&t mortgage does not specifically refer to the hay loaders, though it was doubtless, given to secure the amount due for them in connection with the other indebtedness. But when the company learned the true situation of Reid’s affairs, it began the replevin action and took possession of the loaders then on hand, and this was before it took any action toward the foreclosure of its mortgage. This act of itself negatives the idea of an election at that time, and ever since then the company has been insisting upon its right to these hay loaders under •the contract of sale. It is true that it has also been claiming under its mortgage, but the two claims are not absolutely inconsistent because of the fact that there was a large amount due it which was secured by the mortgage *286after the hay loaders were replevined. We do not think there was such an election in this case as to estop the plow company, under the rule announced in Kearney & Co. v. U. P. Ry., 97 Iowa, 719.

Nor do we think the acceptance of the mortgage alone operated as an election. Under the contract, Beid had the right to dispose of the loaders in the usual course of trade, 5. Conditional sale: waiver. and bad at the time the mortgage was ex-ecu£e(j s0 disposed of many of them, and there is no evidence tending to show that at the time the mortgage was taken the plow company knew how many of the loaders were then in the possession of Reid. See Deere v. Morgan, Sheriff, 114 Iowa, 287; 6 Am. & Eng. Enc. of Law, 478; Montgomery Iron Works v. Smith, 98 Ala. 644 (13 South. Rep. 525). The trial court found that the savings bank mortgage was to secure an antecedent debt, and that it was not therefore entitled to protection against the contract of sale, and this view we think is supported by the record. Our conclusion on this branch of the case is that the plow company is entitled to the hay loaders taken on the writ, or to their proceeds in the hands of the receiver, and the decree is modified in this particular.

The question remaining is between the Gale Manufacturing Company and the First National Bank, and we will first dispose of the appeal from the order refusing 6 Lost files: substitution. substitution of the depositions. It appears that they, with other files in the case, were lost at least some time before 1898, and that all concerned in the case were aware of that fact, or at least of the fact that one of the depositions was lost. There was astipulation in open court in October, 1898, which will be presumed to have been participated in by counsel for all parlies, that the case be resubmitted on account of the loss of the files. Again, in January, 1900, a written stipulation for a resubmission and substitution was signed by *287attorneys who now-appear for the manufacturing company, and who are not shown to have had no connection withtbe case at that time. These various steps in the case seem to have been taken, before the judge who heard the case originally and who made the ruling here appealed from. An order of substitution is not a matter of absolute right, but rests in the sound discretion of the court. Tomlinson v. Funston, 1 G. Greene, 544; Gammon v. Knudson, 46 Iowa, 457. Not until long after the judgment on the resubmission, and after an appeal to this court, was there any effort made to substitute these depositions, and we think the court rightly held the manufacturing company estopped by its laches. That these depositions were not before the court when the case was finally considered and determined is clear. There was then no evidence before the court, nor is there now any showing that the Gale Company had extended credit to Eeid while the bank’s mortgage was withheld from record, and it was notin any event entitled to protection as against that mortgage. In •this- view of the case it is unnecessary to determine-whether the Gale Company took the steps requisite to sustain its claim.

With the modifications heretofore made, the judgment and the order are afiirmed. — Modified and aeeirME».