92 Iowa 247 | Iowa | 1894
I. The agreed statement shows the following facts: April 16, 1889, the firm of Flory & Newton, composed of O. D. Flory and C. N. Newton, dissolved, Newton taking the stock, and agreeing to pay the debts. On the next day, Newton gave to Mary A. Leverton, his sister-in-law, a mortgage for two thousand dollars on the stock; and on the following day, April 18, he gave her another mortgage on the same stock, to secure nine hundred and ninety-three dollars. On the twentieth of April, following, he gave W. A. Armstrong a mortgage on the same property, to secure two hundred dollars. On the twentieth and twenty-third days of April, 1889, the defendant Patton, as sheriff, levied three writs of attachment on the mortgaged property, and took possession thereof. These writs were issued in suits brought by the Ottumwa Buggy Company, Kelly Manufacturing Company, and Cummings & Emmerson, against Flory & Newton and the members of the firm. Thereafter, on the seventh day of May, 1889, and while the sheriff was in possession of said property, Newton executed a mortgage upon the same to D. "W. Haydock, to secure a debt owing to him by Flory & Newton. On June 8, 1889, the attaching creditors brought a suit in equity against Flory & Newton, M. A. Leverton, and William A. Armstrong, claiming liens under their attachments superior to the first three mortgages, because of said mortgages being fraudulent and void as to creditors. Shortly thereafter, M. A. Leverton and W. A. Armstrong each brought an action against the sheriff, based on their mortgages, in which each claimed to be entitled
In Hibbard v. Zenor, 75 Iowa, at page 479, 39 N. W. Rep. 714, the court, referring to said section 4 says: “The creditors were contesting the validity of the mortgage, on the grounds: First, that it was fraudulent; second, that it had never been delivered; and, third, that they had no notice of it, which, if true, rendered it invalid as to them. The provisions of the act have no application when the mortgage is sought to be avoided on these grounds.” In Thomas v. Manufacturing Co., 76 Iowa, at pages 739 and 740, 39 N. W. Rep. 874, the court, after referring to section 4 of said chapter 117, says: “Under that provision, the creditor may contest the right of the mortgagee upon any ground that goes to its validity; but before he can do that (except, perhaps, by an action in chancery, to which, however, he is not bound to resort), he must acquire an apparent lien upon the property, for until he has acquired such a lien, he would have no standing to dispute the mortgage; but he can acquire a lien only by levying on it.” In the late case of Citizens State Bank v. Council Bluffs Fuel Co., 89 Iowa, 618, 57 N. W. Rep. 444, this court recognizes the right of creditors of the mortgagor to levy upon the mortgaged property, and to contest the validity of the mortgage, without complying with said chapter 117. It also holds that the validity of the mortgage may be tested under garnishment proceedings. In Jewett v. Sundback, 58 N. W.
TIL It will be seen from what we have said that these attaching creditors, claiming that the prior mortgages were fraudulent, had a right to levy their attachments on the mortgaged property, and, having done so, to contest the validity of the prior mortgages, without complying with chapter 117; also, that, while their levies did not create actual liens on the mortgaged property, they gave to the creditors such an apparent lien or interest as was necessary to and did entitle them to contest the validity of the mortgages, for the purpose of having their apparent liens fully established as against all or any part of the mortgages found to be fraudulent as to creditors. Mr. Haydock, on the advice of the present plaintiff, then acting as his attorney, took his mortgage after these levies, and while the property was in the hands of the sheriff, both he and his attorney then having full knowledge of these facts, and of the rights of the attaching creditors, upon the strength of their levies, to proceed to contest the validity of the mortgages.
Other questions are discussed which, in view of our conclusion, need not be considered. After a careful examination of the entire record, we reach the conclusion that there was no error in overruling plaintiff’s demurrer to the defendant’s answer, nor in entering judgment dismissing the plaintiff’s petition upon its merits. ’ Affirmed.