178 Iowa 104 | Iowa | 1916
F. A. Godsey and wife executed their promissory note, dated August 17, 1912, to plaintiff for $1,000, payable February 1, 1914, with interest at- the rate of 8 per cent per annum, and also a chattel mortgage securing payment thereof, covering designated personal property and “all crops grown during 1913” on a quarter section of land therein described. Later on, they executed another promissory note for $320, dated September 23, 1913, and payable February 2, 1914, with interest at the same rate as the previous note. A chattel mortgage was executed at the same time, covering all the crop of corn then in the field on the farm. About November 21, 1913, defendants purchased corn raised on said premises during the season of. 1913, valued at $558.77. Plaintiff learned of this a day or two afterwards, and notified defendants that they would be held for the corn. Thereupon, defendants telephoned Godsey to “come in and' settle” with plaintiff. They had mentioned obligations to the bank, when paying Godsey for the corn, and he had promised to take care of them as far as he could, but he used a part for other purposes and paid plaintiff $120, on November 24th following. The cashier of plaintiff bank testified that nothing was said concerning the source of this money, and he did not know, though he surmised that it was a part of the proceeds of the corn, as Godsey had no other source from which to draw it. The latter testified that, when he took the money in, plaintiff’s cashier “was a little bit miffed. I told him I had to pay some debts that I had. He was a little angry because I did not fetch it all over to him. ’ ’ Thereafter, by an arrangement between plaintiff and Godsey, all other property covered by the chattel mortgages was sold at auction and the proceeds applied on the notes, leaving a balance un
Surely a lienholder may not knowingly accept, the proceeds of the sale and at the same time lay claim to the property sold. But this was not all that happened. Upon the purchase of the corn, defendants mingled it with their own, thereby putting it beyond the reach of the lienholder. The bank then could not have asserted its mortgage lien against the specific property. It must have relied on damages eonsequent on the conversion of the property covered by its mortgage. Upon ascertaining that defendants had appropriated the corn, it promptly advised them that it would hold them liable. Both the mortgagor, Godsey, and defendants, as the purchasers of the mortgaged property, then were liable to the bank, the former on the indebtedness evidenced by the notes, and the latter because of the conversion of property pledged for their security. This was the situation when defendants telephoned to Godsey to ‘ ‘ come in and settle ’ ’ with the bank, and later, when the bank received the money.
The rights and liabilities of the parties had become fixed. Receipt of the payment satisfied the obligation of the debtor pro tanto-, and to that extent reduced the liability of defendants. The course of the -bank was beneficial to them, and within its right to receive anything owing to it. Ratification of the unauthorized sale might not be inferred from acquiescence therein or assent thereto, for the bank previously had expressly repudiated it by advising defendants that they would be held for the conversion of the mortgaged property. As against such repudiation, the subsequent receipt of money, though derived from the sale of the corn converted by defendants, cannot and ought not to be construed as an acquiescence therein or ratification thereof, but the rather by way of satis