163 Iowa 255 | Iowa | 1913
On and prior to the 13th day of December, 1888, the plaintiff herein was the owner of the land in controversy. He was the son of one Christian Lamka, and on the 13th day of December, 1908, executed and delivered to his father a certain note for $1,100, payable December 13, 1910, bearing 6 per cent, interest, and, to secure the same, made and delivered to his father a certain mortgage upon the land in controversy. In said note there was this provision: “This debt is null and void at the death of Christian Lamka, and is then to be considered canceled; the note being made only for the purpose of securing 6 per cent, annual interest to said Lamka during his life on the value of said land, and for no other purpose.” The mortgage contained the following provision: “This mortgage is given for the purchase money of the above-described premises. It is hereby expressly agreed that, at the death of the said Christian Lamka, this mortgage is to become null and void, and to be considered paid in full.”
It appears that on the 6th day of December, 1904, the plaintiff and his wife executed and delivered to Joseph E. Donnelly a warranty deed to the premises described in,the mortgage and in controversy here and other lands for an expressed consideration of $8,000. It appears that the deed from the plaintiff to Donnelly contained this provision, that they are free from incumbrance, except $2,700 to L. W. Darrow, and a mortgage to Christian Lamka and Mina Ortman, which the grantee assumes and agrees to pay as part of the purchase price. It appears that on July 27, 1905, Joseph E. Donnelly and wife conveyed to the defendants herein, John
Upon the trial of the cause, judgment was entered against Joseph E. Donnelly for $1,100 and interest, and, from this judgment, he does not appeal. Judgment was also entered against Mary Nehl, executrix of the estate of John' P. Nehl, deceased, and H. P. Nehl jointly for $1,100, with interest at 6 per cent, from February 22, 1911, and the court further provided that, if Donnelly paid the judgment so entered, he should be subrogated to the rights of the plaintiff in the judgment as against Mary Nehl, executrix, and H. P. Nehl. The cause was dismissed as to the defendant Hentges on the theory that it did not affirmatively appear that he had retained any portion of the purchase money, and had no knowledge that the same .had been retained by the other defendants at the time he made the purchase from the Nehls. The Nehls appeal, and their appeal will be considered first. They appeal from the judgment in favor of the plaintiff
We will first take up and consider the points relied upon by the Nehls for a reversal.
The contract upon which the note and mortgage was given, as expressed therein, was made between the plaintiff and his father for the benefit of the plaintiff. The portion of the purchase price retained by Donnelly could only become his, as against the plaintiff, when he was required to pay the mortgage. The note and mortgage were canceled upon the death of the plaintiff’s father, and this by reason of the-agreement between the father and the plaintiff. This inured to the benefit of the plaintiff, and not Donnelly. The relationship of the parties would have been the same had the mortgage and note not contained these conditions, and the plaintiff had paid to his father the amount of the note and mortgage after conveyance to the Donnellys'. He then would be entitled to recover that portion of the unpaid purchase money which was retained by Donnelly to protect himself against the contingency of having to pay the mortgage or having the land,, which was deeded to him, appropriated to that purpose. Donnelly, therefore, as to the plaintiff, stood
Nehls purchased from Donnelly, with notice of the fact, not only- constructive, but actual, that Donnelly had not paid to the plaintiff the $1,100 in controversy here. When they purchased from Donnelly, they, too, retained out of the purchase price sufficient to protect them and the property purchased from the contingency of this mortgage. If this mortgage had been discharged at the time the Nehls purchased it, Donnelly would have been entitled to the $1,100 retained by the Nehls to meet the contingency of this mortgage. It is not claimed that Nehls paid this mortgage. It was canceled and rendered void by the death of Christian Lamka, by reason of the agreement made between the plaintiff and his father as evidenced by the note and mortgage. The testimony discloses that the Nehls retained $1,100 of the purchase price of this property from Donnelly to meet the contingency 'of this mortgage, and the mortgage and the indebtedness secured by it are canceled and discharged, and the land relieved therefrom, not by any act of the Donnellys, but by reason of the contract between the plaintiff and his father. At the time this action was commenced, therefore, the Nehls’ retained, and had in their possession, so much of the purchase price as remained unpaid, and was withheld by them because of the existence of this Christian Lamka mortgage.
The plaintiff had a vendor’s lien upon this, the property in controversy as against Donnelly, for so much of the purchase price as was withheld by Donnelly to meet the contingency of this mortgage. Donnelly had a vendor’s lien against the property for so much of the purchase price as was withheld by the Nehls to meet the contingency of this mortgage. The unpaid purchase price, whether paid by the Nehls to Donnelly, or by Donnelly to the plaintiff, was the property of the plaintiff. Plaintiff brings this action against both par
This case is clearly distinguishable from those cases in which the vendee purchases subject to a mortgage — cases wherein he does not assume or agree to become personally liable for the mortgage. The land, then, is the fund out of which, or to which, the parties must look for reimbursement. The mortgage in this ease was peculiar, having provisions in it which relieve the land and the plaintiff from all liability for the amount of the note upon the death of plaintiff’s father.
It is a familiar doctrine, and the authorities are in harmony upon the proposition, that, even where there is a mortgage upon the land at the time of the sale, and the vendee retains out of the purchase price a sufficient amount to meet the mortgage, even without an expressed agreement to that effect, he will be held to have assumed the payment of the mortgage, and is personally liable for the amount to the mortgagee, and would be clearly liable to his vendor for the amount of the mortgage in the event the vendor was required to pay it. This is upon the theory that, the grantee having retained a certain portion of the purchase money belonging to his grantor for the purpose of meeting an. obligation of his grantor, he is bound, both in law and equity, for the amount of the consideration so retained to .some one; either bound in the property which he receives, or bound personally. If, by the action of his grantor, he and the land are relieved from the obligation, then the grantor becomes entitled to the balance of the unpaid purchase money.
The provision in the Christian Lamka note and mortgage by which it became defeated was made for the benefit of the plaintiff herein, and, upon the death of his father, he became released from the obligation thereunder. These grantees are now seeking to reap the fruits and benefits of that contract by retaining from the plaintiff the balance of the purchase price withheld by them from him to meet this contingency.
In 1 Jones on Mortgages, see. 751, it is said: “Whenever the mortgage debt forms a part of the consideration of
We hold in this case that the defendants have retained a certain portion of the purchase price of the land from their grantor, the plaintiff herein; that they held the same to protect them against a possible liability from the mortgage; that the contingency upon which the liability rested has passed; that the plaintiff is now entitled to recover from them the balance of the unpaid purchase money. This is eminently just and equitable, and there was no error in the court in so holding.