198 Iowa 238 | Iowa | 1924
Lead Opinion
— The issues presented are largely questions of fact. It being so, we shall not go into the details of the evidence more than seems necessary.’ The ultimate issue is whether the two mechanics’ lien claimants have liens superior to that of the appellant’s mortgage. This involves other, issues, which, boiled down, are whether they are entitled to mechanics’ liens on the premises, and as to the first claim, what should be considered the last item in the account; whether appellant is a subsequent mortgagee in good faith and without notice; and whether notice to Beynolds as agent is notice to appellant.
Material was furnished by the lumber company for a house, garage, chicken house, and silo chute, and by the hardware’ company for plumbing and water heater. The Lovell Company also furnished lumber and material in the sum of about $2,500 for a barn on the place, which was first built; but a note was given therefor, and that has been paid, and is now. out of the case. The trial court found that the items going to make up the. house account constituted, in fact, a separate account, and that the last item in said account was under date of March 6,1920, when there was a net balance due on account thereof of $2,201.61; that, on that date, Carter gave the lumber company a note for $2,392.49, the difference going as a credit on account of merchandise not going into the house, and a small payment of interest; that, on April 23, 1921, Carter paid $790 on this account, leaving a balance, with interest, of $1,586. The court decreed that the lumber company’s lien for this account was superior to the lien of the hardware company and of the appellant. It also found that the last item furnished on the other improvements going upon the 80 was furnished under date of May 24, 1921, and that at that time there was a balance due and owing of $1,570.83, on which the lumber company is entitled to interest; that the total amount due the lumber company was $3,243.24; that the lumber company has a lien upon the' real estate described, which is superior to rights and claims of any other of the parties involved in these cases. It also finds that appellant was not an innocent mortgagee for value, at the time he secured his mortgage, and that he secured no lien superior to the liens of the Lovell Company and the Larson Company; that appellant had knowledge of the in
.Defendant Roy W. Carter is the owner of the 80. acres of land, and Pearl Carter is his wife. The Lovell Company is engaged in the lumber business at Union, Hardin County, and the Larson Company is located at Eldora.
D. D. Reynolds is vice president of the Union Savings Bank, and had exclusive charge of loaning all money. Appellant was a customer of the bank, and had money on deposit. On March 1, 1920, Reynolds loaned Carter $20,000, for Callaway.. It was in three notes, and unsecured. Under the evidence, Reynolds was acting as agent for appellant originally, and in reference to subsequent transactions in regard to the loan, — both Reynolds and appellant so testify. Reynolds testifies, in part, that neither he nor the bank has any interest in the 80, either as lien holder or otherwise ,• that his connection with the transactions relating to the 80 is the loan which was made to Mr. Carter by appellant; that it was made through his personal action, — that is, as he says:
“I represented Mr. Callaway in a personal capacity, as his agent in handling the transaction. The mortgage was made in my favor, as an individual, and the note; the reason for that being that Mr. Callaway expressed to me the desire not to be publicly known in the transaction, for reasons of his own, I suppose. I had no interest in the loan; neither did the bank. In loaning-this money to Mr. Carter and taking the mortgage and note, I was acting for Mr. Callaway.”
Appellant testified:
*242 “I did not personally superintend the loan or looking after the loaning of this $20,000. Mr. Reynolds did that.”
The noto> and mortgage were made to Reynolds, who assigned them to appellant. On March 1, 1921, Carter did not know to whom the money belonged. Carter was becoming somewhat involved financially. There was a prior mortgage of $14,000 on his land. Reynolds, or his bank, at about that time was unwilling to take any more of Carter’s paper. Carter was unable to pay the notes, and was told by Reynolds that his principal would either want part of the money or security of some kind. Reynolds told Carter that, if the latter could pay part of the note, he thought he would take care of the rest of it for a while. The notes were put into one, and renewed. Carter signed the one note on March 1, 1921, and the loan was at that time extended for two years. Upon the execution of the one note, the old notes were surrendered to Carter, at which time he was told by Reynolds that his client would want some cash or some kind of security. Thereafter, and on June 1, 1921, Carter and his wife executed a mortgage, and it was recorded the next day. Reynolds says that the delay in executing the mortgage -was due to his own neglect. The . mortgage was on the 80 acres of land in question, which included the homestead of the Carters. Reynolds first suggested a mortgage on the 80 about May first, according to Carter. Carter first spoke to his wife about the mortgage about a week before it was signed. Reynold’s memory is not clear about this, and says that he may have prepared the mortgage about the time Carter signed it. He testifies further:
“I do not believe I had talked with Mrs. Carter prior to the time that she signed the mortgage. I sent the notary down to her home to get the mortgage signed and acknowledged on June 1. * * !>i I am a graduate of a law department. I knew that this real estate constituted the Carters’ homestead on March 1, 1921. I knew that a mortgage not signed by the wife was void; that it was not in legal existence until signed by Carter- and his wife. The renewal of the note was conditioned upon the giving of security. ’ ’
The materials for the so-called house account amounted,
The Larson Company’s account is made up of two separate jobs: the first $60, for a balance due on a job completed January 5, 1920, and the other, $52.40, being completed on August 11th of that year. The company filed its lien November 15, 1921.
1. We ought not to, and shall not, take very much time in discussing the proposition as to whether, as against the landowner, Carter, plaintiffs were entitled to a lien. The statute, Section 3089, Code, 1897, provides that every person who shall furnish any materials for any building or other improvement
2. It is further contended by appellant that the taking of Carter’s note by the plaintiff Lovell Company, and the fact that at that time the manager of the company considered Carter financially responsible, and took no steps to enforce the lien until after the company was compelled to take up the note, show that the lumber company, in taking the note, intended thereby to waive its lien. There appears to be no waiver or estoppel pleaded, and appel lees contend that this is necessary. State Bank v. Brown, 142 Iowa 190. Appellees cite Ford v. Ott, 186 Iowa 820, at 830, to
3. Coming now to the question which we regard as the vital point in the case. The statute, Section 3092, Code, 1897, fixes the time within which liens must be filed with the clerk,— 30 and 90 days, — and then says:
“But a failure to file the same within said periods shall not defeat the lien, except against purchasers or incumbrances in good faith, without notice, whose rights accrued after the 30 or 90 days, as the case may be, and before any claim for the lien was filed. ’ ’
Plaintiffs’ liens were not filed within the 90 days, and not until after the execution and recording of appellant’s mortgage. It is alleged by appellant in his foreclosure case that the mechanics’ lien claims were junior and inferior to the lien of his mortgage; while appellees say that the mortgage is inferior. There is some controversy between the parties as to who has the burden of proof on the question as to whether appellant is an incumbrancer in good faith, without notice. 'Without discussion of the cases, it is enough to say that we are of opinion that the weight of the evidence is with the appellees on this proposition, as found by the trial court.
Taking up first the claim of the lumber company that appellant had notice of its claim, we shall take up and review some of the circumstances tending to establish notice. Union is a small town of about 650 people. The lumber company is located about four blocks from the Reynolds bank, and in hauling lumber to Carter’s place, they would pass the bank. The 80-acre tract is about six or seven blocks south from the bank. Reynolds testifies:
“I knew of Carter building the big barn; knew of his building the house; knew that lumber and building material was all the Lovell Company had to sell, and I shouldn’t think that they would have his note for any other things; and I knew, when the Lovell people presented a note to me for purchase, with Roy Carter’s signature, that it was for lumber and building material ; knew that, just prior to March 9, 1920, he had been making improvements on the 80. I knew of his building the henhouse. The Lovell Company is the only firm handling lumber in Union. It is a customer at our bank. Mr. Heryford [the Lovell manager at Union] is a personal friend of mine. ' Having charge of credits and loans made in the bank, I, as a banker, know the*247 business transactions being conducted and handled, to a greater or less extent, by our customers. I do not want the court to understand that, when this $2,392.49 note was presented to me originally for sale by the Lovell Company, bearing the signature of Eoy Carter, that I didn’t know it was for lumber furnished for his house. That would be a very natural supposition. I knew that; yes, sir, I knew that. Do not know when the house and barn were constructed. I did know of his building the house, at the time the house was built; knew that Carter had made substantial improvements on the 80 acres; and I knew that he was not making substantial improvements anywhere else at that time. * * * I knew Carter was building these improvements on the 80 south of town. I would estimate the improvements in the neighborhood of $15,000.”
The bank owned the $2,390 Carter note on March 1st, at the time the renewal notes were given. This note was renewed in January, 1921. It was originally sold to the bank by the manager of the lumber company, March 6 or 9, 1920, who testifies that at that time he told Eeynolds that he had between $1,200 and $1,500 on the garage and chicken house against Carter, and asked if the bank would buy it if he could get a note from Carter; and Eeynolds said he didn’t want it. He also told Eeynolds that the $2,390 note was for material that went into the house, and that his company is the only company in that territory selling lumber. Eeynolds says that he remembered talking about purchasing another Carter note, and that he told the manager he didn’t Want any more Carter paper; but he would not testify that the manager did not tell him that Carter ovred for lumber that went into the henhouse and garage. Eeynolds had charge of the entire matter from the beginning. According to plaintiffs’ theory, Eeynolds was to .look after the security. There was some duty resting upon Eeynolds to look after the character of the security and the liens.
It seems quite clear that the trial court rightly found that the mortgagee, through his agent, Eeynolds, had notice of the claim of the lumber company, and that such notice covered all the claims of the lumber company, and that the mortgagee knew that the company had furnished' material and that it had not
At prior times, Reynolds had secured for Carter the $14,000 mortgage and a loan at the bank; but, under the evidence as to this transaction, there was no dual agency on the part of Reynolds for both appellant and Carter, so as to prevent the notice to Reynolds from being imputed to appellant. Crumb v. Davis, supra. See, also, Donaldson v. Kenegy, 197 Iowa 893, as having a bearing on this question. Appellant cites Watt v. German Sav. Bank, 183 Iowa 346; Hummel v. Bank of Monroe, 75 Iowa 689, and other cases; but they were cases where the allegiance of the agent was conflicting, or where the agent committed a fraud.
Having this knowledge; appellant should know that plaintiffs had a lien, and the right, as between them and Carter, to file their liens even after 90 days. This being so, and appellant having notice thereof, he is not a subsequent incumbrancer in good faith, without notice. Lee & Jameson v. Hoyt, 101 Iowa 101, 106.
4. Another question presented is as to whether appellant is a mortgagee in good faith and for value, and protected under Section 3092 of the Code. This involves the question- as to whether appellant’s mortgage is of date of March 1st or June 1st. Appellant pleaded his mortgage as one of March 1st, and prayed that his lien be established as of that date. If of that date, the mortgage would be within the 90-day period on the job other than the house account. In appellant ’s original argument, he abandons that theory, and concedes that the mortgage was June 1st. It is appellees’ thought that this is the reason for the change of position. If the mortgage is to be considered as of June 1st, then it must appear that appellant was an incumbrancer'in good faith and without notice.
We think there was no mortgage or no lien on behalf of appellant until June 1st. While the evidence shows that there was some talk on March 1st about payment or security, or that, if part of the note was paid, it would be carried, there is no evidence of any agreement between appellant and Carter that he should give a mortgage on this particular 80 or that he should give security. Especially is this true as to the wife, who was not asked to give a mortgage on the homestead until about the time it was executed, June 1st. The debt had been renewed, the extension made, and the old notes surrendered, March 1st. Clearly, then, it was a pre-existing debt at the time the mortgage was given, and there was no new consideration or any extension of time granted on the indebtedness at the time the mortgage was given. This being so, appellant is not a good-faith purchaser, and is not protected by the statute. Walker v. Abbey, 77 Iowa 702, 705; Cambria Sav. Bank v. La Nier, 135 Iowa 280; Senneff v. Brackey, 165 Iowa 525; Phelps v. Feckler, 61 Iowa 340, 341; 39 Cyc. 1697.
5. Finally, as to the proposition raised by appellant in the reply argument: While it is true that Reynolds, in one part of his testimony, says that the note and mortgage were drawn at ^ same an<l that there was an agree-ment on March 1st with Carter that Carter and wjfe WOuld give a mortgage on this 80 acres, we have seen that such is not the fact. The evidence, practically undisputed, is that it was not signed until June 1st, and Carteras wife knew nothing of it until about that time, or a few
Other questions, which we consider of minor importance, are argued. There may be other circumstances in the record not mentioned in detail. To do so would unduly prolong the opinio^. The case has been fully considered, and we reach the conclusion that the decree of the trial court was in accordance with the facts and the law, and that the decree is right.— Affirmed.
Dissenting Opinion
(dissenting). I cannot concur in the result announced by the majority. As I read the record, Reynolds was