Harrington v. Foley

Dbeiier, J.- 1 — Rosanna Foley and John C. Foley were for many years prior to tbe time this controversy arose the owners of the subject of the litigation, — a farm of about three hundred acres, — situated in Woodbury county, Iowa. They mortgaged the same to one Ormsby, trustee, to secure the sum of four thousand one hundred and seventy-five dollars. This mortgage matured June 1, 1892. About the time this mortgage matured, one Burd, who was Mrs. Foley’s attorney, induced her to make a new loan of' the Security Company of Hartford, Conn., for the avowed purpose of taking up the Ormsby mortgage. Burd received the money advanced by the Security Company, and afterwards absconded, without paying the Ormsby mortgage. The holder of the Ormsby mortgage was threatening foreclosure, and Mrs. Foley, anxious to defeat the Security Company, consulted another attorney, who advised her that the Ormsby mortgage should be secured by some one who was friendly to her, and a foreclosure made in such manner as to practically defeat the Security Company’s mortgage. Acting upon this suggestion, Elizabeth Foley, a daughter of Hosanna, induced the plaintiff to furnish four thousand dollars, which, with six hundred and sixty-two dollars and eighteen cents, to.be furnished by the Foleys, would procure the Ormsby mortgage. At the time a contract was drawn up beltiween the parties, which reads as follows: “Whereas, an assignment has been made by R. S. Ormsby, trustee, and W. T. Tilford, beneficiary, of a certain mortgage executed by Rosanna Foley and John C. Foley, wife and husband, covering certain lands therein described, in Woodbury county, Iowa, which mortgage is recorded in Book 43 of Mortgages, page 285, in Woodbury County Records, to Albert Harrington, for the sum .of four thousand six hundred sixty-two and 18-100 ($4,662.18) dollars; and whereas, the mortgage bond covered by said mortgage has also been transferred to said Harrington; and whereas, Elizabeth — 290 — G. Foley has, in fact, furnished some of said money: This memorandum is made as evidence of tbe respective rights of said Harrington'and said Elizabeth 0. Foley, viz.: (1) Of the moneys so furnished as aforesaid the said Harrington has furnished the sum of four thousand ($4,000) dollars, and the said Elizabeth O. Foley the sum of six hundred sixty-two andl8-100 ($662.18) dollars; that being the amount due upon the said bond and mortgage to the first day of February, 1895. (2). That the said Harrington is to foreclose the said bond and mortgage, and has employed Chase & Dixon as attorneys for such foreclosure, and said foreclosure shall be had without expense to said Harrington. (3) For the four "thousand ($4,000) dollars paid by^ said Harrington he is to have back the principal and interest thereon at the rate of 8 per cent, per annum on or before one year from date, and upon payment of that sum he will assign the said bond and mortgage, or the judgment into which they may be merged, or the certificate of sale which he may have taken, as may be necessary, upon the payment to him of the said amount, and the said Elizabeth O. Foley is to have all excess of the amount received upon the said foreclosure. In case the premises should have been redeemed by the second mortgagee, or other party, the redemption money shall be proportioned as aforesaid. The said Harrington shall receive four thousand ($4,000) dollars, with interest on said sum at eight per cent. (8 per cent.) per annum to the time of such redemption, and the said Elizabeth O. Foley shall receive all moneys in.excess of such amount. The above-named parties have signed the memorandum this 2nd day of February, 1895. Albert Harrington. Elizabeth O. Foley.” The money thus procured was paid to the holder of the Ormsby mortgage, and the note which it was given to secure, as well as the mortgage itself, was assigned to plaintiff Harrington. Shortly thereafter two actions were commenced by Messrs. Chase & Dickson, who Were attorneys for Mrs. Foley, one to foreclose the Ormsby mortgage, and the other to set aside the mortgage given to the — 291 — Security Company. Tbe foreclosure suit went to judgment on March 22, 1895, and the property was sold to plaintiff Harrington under special execution April 23, 1895. After the sale, and before the equity of redemption had expired, the Security Company, which was made a party to the foreclosure suit, and served with notice by publication, appeared, and filed a pleading, in which it claimed that its mortgage was superior to that of the Ormsby mortgage. Thus matters stood until February 8, 1897, when a stipulation was- entered into, by the terms of which the Security Company withdrew its answer and disclaimed any interest in the premises in controversy. All litigation with reference to the mortgages being thus closed, plaintiff Harrington, on the eleventh day ¡of February, 1897, took a sheriff’s deed to the property. The Foleys made an effort to secure money with which to repurchase the land, or to repay plaintiff the amount of his investment, but, failing in this, plaintiff, on September 20, 1897, commenced this suit, in which he claimed to be the absolute owner of.the property; that defendants were committing waste, and destroying the property, were making claim to the crops growing thereon, and otherwise injuring his estate. The defendants, as we have seen, deny the plaintiff’s ownership, plead that he holds the title only as security for the repayment of the four thousand dollars advanced, and they also pray for damages done their property by the receivership. 2 ■ It will thus be seen that the- primary question for solution is, how does the plaintiff hold the title acquired under the sheriff’s deed? ' The evidence leaves no doubt in our minds that plaintiff, at the instance of Elizabeth C. Foley, who was at all times acting for her mother, Hosanna Foley, advanced four thousand, dollars to assist in procuring an assignment of the Ormsby mortgage, to the end that the mortgage of the Security Company might be defeated, and the land preserved to- the Foleys. Plaintiff did not intend to take title to the land.. He advanced .the money as a loan, and took the assignment of. the '.mortgage — 292 — as security. True, be expected, aud it was in effect, provided that be should be repaid witbin a year, but there is no provision in the written contract, nor is there any verbal evidence, that there should be a forfeiture of title in the event the money was not repaid. All parties expected that plaintiff should foreclose the Ormsby mortgage, as they were advised that this was the most effective method of attach upon the Security Company’s incumbrance. The attach was succesful; and plaintiff finally obtained title through the sheriff’s deed. These facts demand the application of the old equitable doctrine, “Once a mortgage, always a mortgage.” See 3 Pomeroy Equity Jurisprudence, section 1193, and 3 . cases cited. Appellant contends that, as Elizabeth Eoley furnished part of the consideration for the assignment of the Ormsby mortgage, the interest which Hosanna Eoley has in the land, if she has any, is a trust, which cannot be established by parol evidence. Were we required to determine who in fact furnished these six hundred and some odd dollars, we would have some difficulty in arriving at a satisfactory conclusion; but this we are not called upon to do. Elizabeth Eoley acted as the agent of her mother, and this fact was well known to plaintiff. The money maj have belonged to Miss Eoley, but, as she treated it as belonging to her mother, there is no legal objection to our so considering it. If she had made a gift of this to her mother, none of the parties to this suit would have any right to complain. And we may so treat it for the purpose of meeting the argument made by counsel. No one contends that there was any change in the arrangement or contract between plaintiff and defendants after the written contract was entered into; and as equity looks to the substance, rather than the form, of the transaction, we have no difficulty in concluding that plaintiff holds the sheriff’s deed as security for the amount of money advanced by him, as well as for counsel fees and expenses incurred in the litigation to defeat the Security Company mortgage. As sustaining our conclusions, — 293 — see Bank v. Coonrod, 97 Iowa, 106; Rogers v. Davis, 81 Iowa, 730; Pond v. Eddy, 113 Mass. 149; Libby v. Clark, 88 Me. 32 (33 Atl. Rep. 657). 4 Appellant further contends that, if it be found that he holds the title as security, then a definite time should be fixed in which Kosanna Foley shall pay him the amount of his claim, and the trial court erred in giving her the statutory period of redemption; and he relies upon the case of White v. Lucas, 46 Iowa, 319. In that case the vendor brought action to have an absolute deed declared to be a mortgage, offered to pay the amount due to the vendee, and ashed that his title to the premises be quieted. He asked to be allowed to pay his debt, and the court ordered him to do so. Defendant in that case asked no equitable relief, and we there said that equity required plaintiff to make payment of the amount due before he could have the deed transformed into a mortgage. Yet further we said that the petition asked no such relief as an equitable period of redemption, and that,' under the circumstances, it would be inequitable to give-it. The case is more nearly like that of Brush v. Peterson, 54 Iowa, 243, wherein it -is held that a mortgagor, who had given an absolute deed as security, was entitled to the statutory period of redemption. That action was very similar to the one at bar, and is conclusive of the question now under consideration. See, also, Radford v. Folsom, 58 Iowa, 473; Fish v. Stewart, 24 Minn. 97. 5 Again, plaintiff claims that he is entitled to the crops grown upon the premises during the year 1897, This all depends on whether or not the sheriff’s deed should be treated as a mortgage. If a mortgage, then defendants were entitled to possession until after the expiration of the period of redemption from a proper foreclosure of plaintiff’s equitable mortgage. Code 1873, section 1938. There was no stipulation that plaintiff should have possession, and he never demanded it until about the time — 294 — of tbe commencement of tbis suit. We do not think tbe parties at any time contemplated that plaintiff should bave possession of tbe land as security for bis loan. Tbe receiver was appointed, and a temporary writ of injunction was granted, on tbe theory that defendant Rosanna Foley was guilty of waste and destroying tbe value of tbe premises. Defendants filed no motion to discharge tbe receiver, nor did they move to vacate tbe injunction. In their answer they asked damages, due to tbe fact that they were prevented from preparing tbe land for the crops of 1898, for time and money expended in procuring counsel and in attending court, and for loss in being prevented from harvesting, caring for, and marketing tbe crops of tbe year 1897. 6 Tbe trial court found that Rosanna Foley was tbe owner and entitled to the possession of tbe crops raised during tbe year 1897, which were taken possession of and sold by tbe receiver, and to the proceeds thereof now in tbe bands of tbe said receiver; awarded judgment against plaintiff in tbe sum of. forty dollars, and directed said receiver to pay defendant tbe sum of four hundred and thirty-eight dollars and eighty-five cents, the amount received by him from tbe property taken into bis possession, without deduction for expenses or for compensation to tbe receiver; discharged tbe receiver; and taxed all costs to plaintiff. Under tbe issues, tendered, tbis was error. Tbe receiver made a report in which be showed that be bad sold tbe property pursuant .to an order of tbe court, that bis expenses connected therewith amounted to tbe sum of one hundred and fifty-nine dollars and eighty-seven cents, and be asked for tbe sum of ninety dollars as compensation for bis services. As no attack was made on tbe validity of bis appointment, and no objections were filed to bis report, be should bave been allowed tbe sum asked; and, with tbis allowance deducted from bis receipts, tbe available balance in bis bands will be one hundred and eighty-eight dollars and ninety-eight cents, which sum should be paid to defendant by tbe receiver, as — 295 — there is no provision in tbe contract giving plaintiff a lien on the crops. 7 The award of damages to defendant as against the plaintiff was for pasturage on the premises during the fall and winter of 1897 and 1898. No Such claim was made in the answer, and it was error to allow it. The receiver accounted for the straw and cornstalks which were upon the land, and there is no evidence of any damage done to the land. As the plaintiff had no lien upon the crops, the court should have ordered the receiver to turn over the balance above found in his hands to the defendant Nosaima Foley, and should have dismissed the defendants’ counterclaim for damages. It should also have approved the receiver’s report, and allowed him the compensation asked, and further ordered that upon turning over to Hosanna Foley the balance thus found due, and filing her receipt for the same, the receiver should be discharged, and his bond exonerated. If there had been a. direct attack upon the appointment of the receiver, a different question would arise, and the case might be ruled by French v. Gifford, 31 Iowa, 428. But, as there was no such attack, the case is governed by How v. Jones, 60 Iowa, 70; Radford v. Folsom., 55 Iowa, 276; Gallagher v. Gingrich, 105 Iowa, 237; St. Paul Title Insurance & Trust Co. v. Diagonal Coal Co., 95 Iowa, 551; Jaffray v. Raab, 72 Iowa, 335. The trial court was also in error in taxing the costs of the receivership to plaintiff. These fees and expenses should be paid out of the funds in the receiver’s hands. The decree in so far as it finds the sheriff’s deed a mortgage, and decrees a foreclosure and sale of the premises, is approved. The order made upon the receiver is reversed, and the judgment against plaintiff for damages for pasturage is also reversed. The case will be remanded for a decree in harmony with this opinion. It follows that the decree is, on plaintiff’s appeal, modified and affirmed; on the receiver’s appeal, REVERSED.