Clinton Savings Bank v. Underhill

Waterman, J. [293] We granted a rehearing in this case, which was reversed in the opinion first filed (84 N. W. Rep. 667), because of an argument in support of the trial court’s judgment, which was first presented by appellee in the petition for rehearing. Every argument presented on the original submission was disposed of, and, as we think, properly, in the first opinion written. But as it is doubtless our duty to sustain the trial court if there is any reason upon which it can be done, even though such ground may not be presented by counsel, we have reopened the case to give the new matter consideration. As plaintiff states its cause of action, it holds a mortgage executed by Hiram Underhill and his wife, Ada E., on lot 2 in Underhill’s Second addition to the city of Clinton, but which, by mistake of the scrivener, describes the property as lot 1 in Underhill’s Eirst addition to said city. This action is to reform'the description and foreclose the mortgage. It is also averred that after the execution of plaintiff’s mortgage one W. C. Grohe took a mortgage from said Underhill and wife on lot 2 of Underhill’s Second ad■dition, but that said mortgage was without consideration, and taken with full notice of plaintiff’s prior lien, and is inferior and subject thereto. Hiram Underhill, his wife, Ada E., and Olive C. Grohe, executrix of the' estate of said W. C. Grohe, deceased, are made parties defendant. Under-hill and his wife defaulted, and a decree was taken against them as prayed. The questions we have to consider arose on the trial of the issue of priority of liens between plaintiff and Olive S. Grohe, executrix, and relate solely to the competency of certain witnesses. As against Olive S. Grohe, executrix, it was incumbent on plaintiff, in order to establish the prioriy of its lien, to prove: (1) The mistake in its mortgage; and (2) that W. C. Grohe had notice of the fact that its mortgage was in fact on lot 2 in Underhill’s Second addition when he took his mortgage, or that Grohe’s mortgage was without consideration. The mistake in the [294] mortgage, we think, is established by the testimony of the' witness Seaman, whose competency is not questioned. But as to the matter of notice to Grohe, or the want of consideration in his mortgage, a different condition of affairs exists. The only evidence of these facts-comes from Hiram Underhill and wife, who were witnesses for plaintiff, and who testify also as to the mistake. Their testimony makes plaintiff’s case, if it can be considered. Objection was duly made to these witnesses under section 4604 of the Code, which prohibits a party to an action, or any person interested in the event thereof, or the husband or wife of any such party or person, giving evidence in relation to any personal transaction or communication between such witness and a person deceased at the time of the examination against the executor of such deceased person. It is insisted on behalf of the executrix that Underhill and his-wife were doubly disqualified, for that they were both parties to the action, and persons interested in its results. A mere nominal party, or one who has no substantial interest-in the -action, is disqualified under this section. Williams v. Barrett, 52 Iowa, 637; Burton v. Baldwin, 61 Iowa, 283. But he must be in fact a party at the time of giving-testimony, in order to render him incompetent to testify. If the action has been dismissed against him, he may give such evidence. Campbell v. Mayes, 38 Iowa, 9. So also, if he is bound to a stipulation to a judgment against himself, although the judgment has not been entered, the disqualification is removed. Conger v. Bean 58 Iowa, 321. In this case this court said: “If James M. Bean was a party to the action within the meaning of the statute (section-3639, Code 1813; present Code, section 4604), his deposition was improperly admitted. That he was technically a. party cannot be denied. But, after the filing of the stipulation referred to, his rights were virtually concluded. It is-.true, judgment does not appear to have been rendered against him, as the stipulation provided, but it could have295 been rendered. After tbe filing of tbe stipulation, tbe rendition of judgment was a mere formality. It appears to us that the case was not essentially different from wliat it would have been if judgment bad already been rendered. Now, if it had been rendered tbe action from that time would have been simply an action against tbe other defendants, It would have been no- more an action against James M. Bean than if it bad been dismissed as to him. In our opinion, be was not a party within tbe meaning of the statute, and tbe court did not err in admitting tbe deposition.”' This bolding, we think, disposes of tbe question now before us in tbe case at bar. Tbe action bad gone-to judgment against tbe Underbills before they were placed upon the witness stand. They were not parties to the-issue between plaintiff and tbe Grohe estate. Tbe situation, for all practical purposes, was tbe same as though a new action bad been brought to settle the order of liens after judgment obtained against tbe principal debtors. 4 II. Were tbe Underhills interested in the issue upon which they testified? Tbe Grohe mortgage against them bad been previously foreclosed, and their liability to tbe estate fixed by judgment therein. No fact established in this case could affect such liability to appellant. In tbe matter of priority of liens they had no interest or concern, and it was- only that matter which was on trial. Tbe interest which will disqualify a witness under this section must be present, certain and vested. It is not sufficient' that be at one time bad an interest. Zerbe v. Reigart, 42 Iowa, 231. Tbe true test of such interest is, will the witness gain or lose by the direct legal effect of the judgment, or will tbe record be' evidence for or against him in some other action? Wormley v. Hamburg, 40 Iowa, 22. Applying this test, and we think it manifest these witnesses-were not interested. [295] III. We come now to the new arguiiient presented. Tbe statute referred to. excludes not only 'the testimony of [296] parties and persons interested, but also of those “from through, or under whom such party or interested person derives any interest or title by assignment or otherwise,” and the husband or wife of any such per- son is also included in the prohibition as to transactions or communications with the witness. Under this clause, it is said, the objection to the Underhills’ testimony was rightly sustained by the trial court. We think the claim well founded. Plaintiff’s interest was derived from the Under-hills, and this puts them clearly within the statutory prohibition. O’Brien v. Wieller, 140 N. Y. 281 (35 N. E. Rep. 587). The property in question was the homestead of the Underhills. Plaintiff’s interest was derived from both of them, and both were therefore disqualified to testify to the matters upon which they were called to speak. Without the testimony of the Underhills, which we now hold cannot be considered plaintiff has made no case. The decree of the district court is therefore affirmed.