156 Iowa 6 | Iowa | 1912
These actions were originally brought as actions to foreclose purported mortgages. The plaintiff is a 'corporation. The' alleged mortgages purported to have been executed by the plaintiff itself. They were executed to its own secretary as mortgagee, and the same secretary joined in the execution thereof as an officer of the company. They were executed by the president and secretary as officers of the corporation, but were acknowledged by the secretary alone. These mortgages purported to cover certain real estate then owned by the plaintiff company and which it later conveyed subject to the mortgages. The defendants acre the present owners of such real estate.
. The defendants appeared and answered the petitions respectively. The 'substance of each defense was an attack upon each mortgage as being inherently and absolutely void in its inception because of the facts already stated, and praying that the mortgages be decreed to be a nullity. It was also claimed that the mortgages were necessarily merged in the legal title while both were held by the plaintiff, and further that the assignment of the mortgages to the plaintiff corporation by its secretary amounted to a satisfaction and discharge thereof.
Being confronted with this defense, the plaintiff shifted its position and amended its petitions and set up the certain transactions, including a contract, which furnished the occasion and the consideration for the mortgages and the apparent liens which plaintiff seeks to enforce against the real estate. The substance of such amendment was that on August 14, 1909, the plaintiff
The contract also provided that the conveyances should be made of the respective properties on August 23, 1909. The mortgages sued on were executed on August 21, 1909. There was 'an existing valid mortgage of $1,500 at that time on the “thirty-acre” tract. The plaintiff executed another mortgage. thereon for $4,500 to its secretary, and a mortgage of $4,000 on the “twenty-acre” tract to the same mortgagee. This made a sum total of $10,000 of incumbrance against the property. The last two named mortgages are those upon which suit was originally brought herein. The purpose of their execution was to conform with -the contract entered into with the Paul Land Company on August 14. On August 23, 1909, the property was conveyed by the plaintiff to the Paul Land Company in pursuance of the contract of August 14th, and by an appropriate deed containing the following provision: “subject to mortgages to the amount of ten thousand ($10,000) dollars at 6 percent annual interest due January, 1914, with optional payments also to taxes and interest now due.”
Turning now to the contract between the plaintiff and the Paul Land Company and the deed executed by plaintiff in. pursuance thereof, the’ effect of "these instruments vyas clearly in equity a reservation to the plaintiff of an interest or lien to the amount of $10,000. This was the intent of the parties to that contract. A court of equity looks at the substance, and not at the form, and we see no reason why such provision could not have been enforced in a court of equity as between the original parties to such contract, even though through mistake, inadvertence, or oversight, no mortgages had in fact been executed.
In this case, even though the mortgages be deemed a nullity as suable obligations, they may still be resorted to as items of evidence tending to throw light upon the intention of the parties.
It must be said, therefore, that the Paul Land Company accepted from plaintiff a conveyance of the property, which, by its terms, made the property the primary fund for the payment of $10,000 with 6 percent interest payable on or before January, 1914. If, therefore, this suit had
We reach the conclusion that -tire decree of the trial court must be affirmed.