In re Assignment of Windhorst

Ladd, J. 2 The mortgage- of the Gauss, Shelton Iiat Company was valid. It was signed and delivered in St. Louis, Missouri, January 13, 1896, in good faith, and to secure a valid indebtedness. That the company was not then advised of any intention on the part of the mortgagor to make a general assignment for the- benefit of his creditors appears from the testimony of its secretary, who settled the account and received the security, and of Windhorst, who swears that no such intention existed until the following day. This evidence is uncontradicted, and is not inconsistent with the circumstances disclosed by the record. As the mortgage had been signed and delivered in good faith on the thirteenth, what Windhorst did on the following day, or what the company’s attorney then learned, could not affect its validity. The acknowledgment was only essential for the purpose of recording, and imparting notice. The fact of [61] the attorney traveling with Windhorst from St. Louis, and acquiring knowledge of the preparation of the deed of assignment, is not inconsistent with the entire good faith of the transaction. The company, then, was in the rightful possession of the stock of goods for the purpose of foreclosing a valid mortgage from the fourteenth day of January, 1896, until February 3d of the same year, when its agent delivered it to the assignee. 3 II. By yielding possession of the goods, the mortgagee did not necessarily waive its lien. Had the validity of the mortgage been in dispute, or had the assignee obtained the stock under any claim inconsistent with the existence of the lien, then there might be some force in such a contention. The deed to the assignee conveyed the stock subject to the mortgage. Meyer v. Evans, 66 Iowa, 184. Had it been invalid, the right of the assignee to arrange for its satisfaction might well be questioned. As it was a lawful lien on the assigned property, he was authorized, in conserving the estate for the benefit of the creditor to arrange for its payment out of the proceeds derived from the sale of the property. Rode Island Plow Co. v. Breese, 83 Iowa, 558. It is quite immaterial whether he agreed to pay it under the order of the court, or out of the first sales. That he knew of the lien, and recognized it in obtaining possession, and that the company did not intend to relinquish or waive such lien, and the assignee did not so understand, there is not the slightest doubt. True, Bogart insists he made no promise to pay the mortgage. He knew, however, that Windhorst was in possession under the mortgage, and the direction of the company to turn the goods over to the assignee was certainly given in reliance on Windhorst’ s representation that such a promise had been made. The latter testified it was so agreed, and Vandervoet that upon demand of payment Bogart promised to pay the balance due as soon as a landlord’s lien was satisfied. If an unequivocal promise was not made, Windhorst was led by the assignee to believe the interests of the mortgagee would be protected, else [62] he would not have yielded possession. But, in view of the circumstances, we must hold that the promise is established by a fair preponderance of the evidence. It is optional with a mortgagee whether he forclose or rely on appropriate orders of court for the protection of his security. Garner v. Fry, 104 Iowa, 520. In such a case the lien follows the fund derived from the sale of the mortgaged property by the assignee. Lindemann v. Ingham, 36 Ohio St. 1; Gibson v. Warden, 14 Wall. 244; In re Dupont, 76 Mich, 676 (43 N. W. Rep. 582). See In re Guyer, 69 Iowa, 586. This is because the assignee is an officer of court, and the sale of the property directed by law. The principle is recognized in Waters v. Bank, 65 Iowa, 234, where the property was sold by a person not an officer, and it was held in such a case the fund could not be followed. 4 III. The claim was never filed with the appellee, nor do we think this was necessary. The mortgagee was not claiming under the assignment, but payment of its lien independent thereof. See Allen v. Moer, 16 Iowa, 307; Moores v. Ellsworth, 22 Iowa, 299; Cocke v. Montgomery, 75 Iowa, 259. 5 IV. The appellant includes in the item of expenses that of a trip in foreclosing the mortgage. This is not explained, nor shown to have been necessary or reasonable. The other expenses, amounting in the aggregate to eighty-seven dollars and five cents, will be allowed. The proceeds of the sales, less the expenses, should be indorsed on the note as of the date received, and the balance paid from the fund in the hands of the assignee. — Reversed.