Case ID: iowa_204/html/1338-01.html
Source: Caselaw Access Project
Author: {"author": "Faville, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

M. C. Keenan, Appellee, v. T. H. Jordan et al., Appellants.
    MORTGAGES: . Foreclosure — Rents—Adjudication Against Chattel Mortgage. On the issue,in real estate -mortgage foreclosure, whether an outstanding lease between the owner and his tenant (parties to the.action) -was superior to tlie mortgagee’s right tb a ' receiver for' said’ premises Arid' ’for the rents thereof,' An unax>pealed decree which orders the' appointment of ■ such’ receiver works ■ an emotion of said -tenant and the: consequent nulUfloatidn - of a cha-ttel mortgage by the landlord 'on his share of the crop rent under said lease, it appearing that the. real estate mortgagee had no notice or knowledge of such chattel mortgage until after the entry o£ his decree'-of foreclosure. (See Book of Anno., Voí. I, Sec. 12376, ' Anno.-85 et 'seq.) ’ ' ’ ' " ’ ■ " ■
    
    Headnote X: 42 O. j. p. 3.28.
    
      Appeal from Ma/rshall District Court. — J. W. Widlett, Judge.
    January 10, 1928.
    Action to foreclose a chattel mortgage. The court granted the relief', sought. The facts ¿re set. forth in. the ' opinion.—
    
      Reversed.
    
    
      Jolinson, Donnelly & Lynch,'for appellants.
    17. D-. Kearney ánd E. N. Farber.rloi' appellee.
   Faville, J.

Taylor o.wned a farm of.-200 acres-in Ppwe•shiek -County. He1, gave -a real estate.mortgage on said farm to the appellant Midland .Mortgage. Company. • This mortgage; was duly -recorded in Poweshiek. County on- January 31, 1922. The mortgage did not, by its granting; clause, pledge the rents and profits of the said premises-from the date .of the mortgage,. but it did provide that, upon the bringing of suit, a receiver should be appointed, to collect the-rents--and-profits thereafter accruing: from said real estate and; ¡apply the same* upon the ■.mortgage' indebtedness.' ■ On July -25;'1924--Taylor, conveyed.-said premises by-quitclaim-'déed to Jordan'.-.'On August-,11,■■ 1924,- Jordan leased'said premises to Taylor for theJerm-of-one year, begin-: ding on-Marchll,’:1925b' Said-lease, provided for ¡a--share, of the crop as rental;;,,The quitclaim .deed was;recorded-¡in.PoweshiekCounty. £)n or about October 21, 1924, tbe Midland Mortgage C’ompaiiy began suit-in Poweshiek County for the. foreclosure of its.said-mortgage, -and im-i-ts petition filed in- said.cause,-it-asked-for. The appointment;of- a receiver-to take', possession of; said: property 'and to-collect-the-rents'and profits arising therefrom. The-originalnotice-in s'aid action-was duly- served on Taylor ¡and on Jordán in October, 1924.: ¡ .Each-of said parties-appeared in' baid action, and.filed .answer.in’November,-1924. 'Jordan alleged that-he-had-acquired-title to said-premises, and that he had leased the same' to- Taylor- for the year commencing March. 1, 1925, 'to -March: 1,-1926.■ -Taylor- answered,-, alleging that-he-had deeded the-premises to Jordan, -and-that-he. had leased the. same: from Jordan for the said term. The. canse was- tried, and the decree -was'¡ entered on December ,10, 1924, foreclosing the-' said mortgage; of -the- Midland' Mortgage: Odmphiiy and1 establishing th^-same-.-as a lien on said premises from the date of the mortgage; The decree, not-only'foreclosed said mortgage,-, but. ap-; pointed'a- receiver,: with orders-to, take possession of said real-estate and collect-the.'rents;and-profits-and hold-possession of said-re.al-estate, until the.expiration-of the rédemptionl-period. No ■ appeal-was prosecuted from-said-.action, and-sh'o-rtly-after said decree,- — to wit,,¡on-January'¡5¡. 1925,-bthe receiver-leased-said premises to.Taylor. .-Thelease which Jordan, gave.to Taylor- and the lease which; The receiver -executed to Taylor each pro-, •vided for. the payment of á sha-re ¡of '.the grain, raised.upon- said.premises,- as rental-.'- The -receiver: took- possession of-tlie.share of said grain;due-!'as rental-under said’lease, android a portion of it, and-held’the.-balance in his possession at the .time this action was-commenced;’ I . ••

The;record shows that, under- dateof Augüst;15,- 1924- 'J.oj?-. dan;:gave' to-Keenan-.-a chattel-.mortgage upon Jordan’s-share-of said rent under the lease which he had made" with!-Taylor before the; action in,- Poweshiek County was 'commenced. This -chattel mortgage was recorded in Poweshiek County on November 6, 1924, which was shortly after the foreclosure action had been begun in said county, and after the original notices in said" action had been served upon both Taylor and Jordan."-There is no claim in the case that the mortgagee, who was plaintiff in said foreclosure action, had any knowledge of the existence of said chattel mortgage until this action was commenced in Marshall County. •

On January 12, 1926, Keenan began this action in Marshall County, where Jordan resides. The mortgagee in the real estate foreclosure proceeding in Poweshiek County and the receiver who had been appointed in said proceeding were made .parties to this action. Issues were tendered which substantially present the foregoing record, and upon trial,' the court in Marshall County decreed that said chattel mortgage was senior and superior to any rights of the holder of the real estate mortgage or the receiver appointed in said foreclosure action, and ordered and decreed that a special execution issue for the sale of said property in the hands of the receiver. It is from this decree that this appeal is prosecuted.

This case is strikingly similar to the case of Browne v. Willis, 199 Iowa 453. In that case it appeared that Haltom owned a farm upon which there was a real estate mortgage. Haltom leased the farm to one Willis, and received rent notes therefor. He sold said rent notes to the plaintiff Browne. By analogy to the instant case, Browne stood in the shoes of the appellee Keenan. The real estate mortgage was foreclosed, as in this case.- Browne (Keenan) was not a party to the foreclosure. Haltom, the landlord, and Willis, the tenant, were made parties to such foreclosure. The mortgage provided for the appointment of a receiver. The decree, by its terms, appointed a receiver to take possession of the premises and collect rents.

In the foreclosure proceedings involved in the instant case, the landlord and the tenant both appeared and filed answers resisting the mortgagee’s claim for the appointment of a receiver, and setting up the existing lease between the landlord ■ Jordan and the tenant Taylor. The court held that the mortgage was superior to any claims of the landlord Jordan and the" tenant Taylor, and, as in the Browne case, the decree in effect evicted the tenant. In the cited case, as in the instant case, the receiver leased the premises to' the same tenant. We held that the mortgagee' had an adjudication as against the tenant of the owner in the: decree of foreclosure. This is also true in the instant case.In the Browne case we said:

‘ ‘ The leasing contract was- executory-. The sole considera-’ tión moving1 to Willis as lessee was the executory - undertaking of the lessor that he would maintain the lessee’s right- of possession of the premises 'during the period of the lease: If Haltom had sought recovery upon the lease, he would have-had to show performance of his undertaking in that respect. True, he would be entitled to some initial presumption in the first instance. But if it were made to- appear, as against him, that he had failed to maintain the right of possession in his tenant, and that the ten-' ant had been evicted, it would be a complete defense as' against him. It would be no less a defense as against his assignee.' The assignment of the lease by Haltom did not terminate -his obligation to perform its covenants, both expressed and implied; His' assignee took with knowledge that a failure of his assignor tó perform such covenants would amount to a failure of consideration, and would destroy the right of recovery against the tenant. He was, therefore, bound to see that such covenants were performed, either by Haltom or by himself in Haltom’s behalf. Todd v. State Bank of Edgewood, 182 Iowa 276: But the tenant was not required to look further than to his own landlord for the performance of such covenants. The decree against Willis and against Haltom worked a legal eviction. It is no answer to say that Browne was not a party to the decree. Willis and Haltom were parties. The mortgagee Stewart, as plaintiff, served as defendants all parties who appeared to have any interest in the premises, either upon the public records or by possession of the property. He does not appear to have had either actual or constructive notice of the right of Browne.- He was not-bound to discover him as a condition to the assertion of his claim against Willis and against Haltom. Having thereby accomplished an eviction -of both the tenant and his landlord, it was immaterial to whom the receiver should thereafter rent the land for the season of 1923. If he had rented to a stranger, this' plaintiff could not have recovered rent from him, nor could he have regained from him the possession which had been taken away from Willis and Haltom. The receiver did x'ent the premises to Willis. This-was considerate to Willis,- but it-involved him in newrela*' tións; and put him under new obligations.'. -It' did not. enlarge the rights ¡of;this plaintiff-,■ nor did-it restore to.him.the rights--that-he had lost. These questions are decisive--of -the-case..- Granted that-The -adjudication pleaded was not binding upon. Browne in a-cénclusive sense, it. was-enough that'it be -binding upon Willis- and Haltom; in order to- constitute an- eviction. . 'Granted that the plaintiff, under the lease, bad a. potential lien, npon .-the-'crops tobé grown-during.the.season-, and that the mortgagee had none, prior to-default and foreclosure, yet such-lien, could not surviye a dead cause of action-on the'lease. ”• : ' -■.....

• • ■ I-n .the instant rase,: the mortgagee ■ in- the -foreclosure pío-, ceedings had no-notice-or knowledge of the. appellee?s- ‘chattel mortgage npon .the rentals, to accrue under the- lease which Jordan had given to Taylor. He made Jordán and Taylor parties defendant in.-the. foreclosure proceedings, and, as--before stated, they pleaded the resisting lease between them, and in that action it was: adjudicated that the appellee’s rights-to the -rents and profits of .said land', under, the- receivership - were senior and superior t'o the- rights of- either Jordan or Taylor, under .their lease. This was, in effect, an eviction of Taylor. -, By said decree Jordan was -adjudicated -to have no rights in said-, premises- under his lease-With:Taylor., It<was also -adjudicated that Taylor .had no-, rights underihis lease with .Jordan.- There was-,' therefore,- a-total failure of the subject-matter of the chattel mortgage held by appellee Keenan, — -namely,.'Jordan’s share .of rentals. -There was-nothing upon which.it could operate. There had .been-an-adjudication as against both Taylor and-Jordan that neither of said parties had any rights under said lease, as -against the mortgagee.' : - ' • . ■ :

,. 'This being true, other questions.argued,by appellant do-not-demand our. consideration. .The decree of the district court was. erroneous... The property-in.the hands of, the-receiver,-under the facts in' this, case, was not subject to the appellee’s chattel mortv gage... The liability:of.-:Taylor.as .a.tenant under-two leases is. not involved,- He has paid:his rent by producing-the:landlord’s, share of the crop, and that share, is in the custody of the court. That- rental belongs to the receiver. ■ The subject-matter of ap.pellee’s claim, — to wit, the rental, — -has failed. The decree of the district ’court must be, and it is, — Reversed.

Stevens, .0. J., and .Evans, Kindig, and Wagner, JJ., concur.