Valley National Bank v. Des Moines National Bank

Waterman, J. — A brief analysis of the facts will disclose the following situation: “The Clinton Woolen Manufacturing Company held a paramount lien, through levy of execution, on the stock of goods, worth $14,923.80, and a first lien by mortgage on the Kansas land. Subject to the lien of the levy, the Valley National Bank had a mortgage on the goods, Avhich was the second lien thereon. The Des Moines National Bank held a mortgage on the stock of goods, which was the third lien, and a second mortgage on the Kansas land. The goods ■ were not of sufficient value to satisfy the two first liens. With matters in this condition, a receiver was appointed, and the court undertook a general adjustment of interests. Bor the purpose of protecting or aiding the security of its mortgage, the Valley National Bank purchased the judgment of the Clinton Woolen Manufacturing Company, including, of course, its lien by levy, and also its mortgage on the Kansas land, and the decree in the case, in effect, gives said bank the right to resort to the Kansas land for satisfaction of the judgment so purchased; thus abandoning the levy on the personalty, and leaving the stock 546 of goods free to be applied in payment of such bank’s original claim, which was the second lien thereon. It is this shifting process which is objected to by defendant bank. It claims the levy of the execution of the goods by the Clinton Woolen Manufacturing Company satisfied the latter’s lien. The soundness of this contention is the question we are to determine. I. The levy of an execution upon personal property does not always operate to satisfy a judgment. Sometimes, however, it does, and the rule, as it is usually stated, is that such a levy is a satisfaction sub modo. It is held to amount to satisfaction when to abandon it would work an injury to the execution debtor or any subsequent lienholders. We do not understand this proposition to be in serious disprrte between counsel. The cases from this court, while not expressing the rule in the terms we have adopted, support it in principle. Sherraden v. Parker, 24 Iowa, 28; Bowen v. Thresher Co., 109 Iowa, 255, and cases therein cited. The cases from other courts give it unqualified support. Newson v. McLendon, 6 Ga. 392: Chisholm v. Chittenden, 45 Ga. 213; Bank v. Rogers, 13 Minn. 407 (Gil. 376), (97 Am. Dec. 239) ; Harris v. Evans, 81 Ill. 419; Green v. Burke, 23 Wend. 490. We have now to examine and determine whether the abandonment of the levy on the stock of goods will cause injury to the defendant bank. It is not within reach of any returns under its levy on the stock, and can look only to the Kansas land for satisfaction of its claim. If what is attempted here by plaintiff bank can be successfully accomplished, defendant bank will get nothing. It will hardly be contended that if the Clinton Company still owned the judgment it could abandon the levy on the goods, which are ample in amount to satisfy its claim, and proceed against the land, to defendant bank’s prejudice. We cannot see that its assignee is vested with greater rights in this respect. In Barber v. Reynolds, 44 Cal. 519, the point decided was 547 this: If a judgment is a first lien on real estate, mechanics’ liens second, and other judgments third, in point of time, and an execution is levied under the senior judgment on personalty sufficient to satisfy it, and executions on the other judgments are levied thereafter on the same personalty, the proceeds of the sale under the first judgment cannot, by consent, be applied on the junior judgments, without giving the mechanics’ liens a first place against the real estate. As to them, the senior judgment will be deemed satisfied. Other cases quite in point, and holding in accord with the California case, are Woods v. Torrey, 6 Wend. 564; Hunt v. Breading, 12 Serg. & R. 37 (14 Am. Dec. 665). If the Valley Bank had received the money on its claim purchased from the Clinton Company, under the levy on the stock, it certainly could not return it and then proceed against the land, to the prejudice of the defendant bank; and yet in practical effect that is what it is attempting to uphold. The case last cited is an authority directly on this proposition. Another feature of the case presents the equities of the Des Moines National Bank in even stronger light. It obtained the mortgage on the Kansas land after the levy of the Clinton Company’s execution on the stock of goods. Presumably it relied on that levy to satisfy the Clinton Company’s claim, and thus leave its own lien first on the land. It relied on a «status created by the assignor of plaintiff bank in securing its rights, and we do, not see why it may not insist that such status be not voluntarily altered to its prejudice. We think defendant bank was entitled to have its lien on the land declared paramount, and in not doing so the trial court erred. The decree in this respect should be changed. — Modified and affirmed.