Case Name: Tom Burns et ux., Plaintiffs, v. Joe Burns et al., Defendants; Damien Burns, Appellant, v. Hans Eichhoff et al., Appellees
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1943-10-19
Citations: 233 Iowa 1092
Docket Number: No. 46242
Parties: Tom Burns et ux., Plaintiffs, v. Joe Burns et al., Defendants. Damien Burns, Appellant, v. Hans Eichhoff et al., Appellees.
Judges: Smith, Hale, Wennerstrum, and Garfield, JJ., concur.
Reporter: Iowa Reports
Volume: 233
Pages: 1092–1132

Head Matter:
Tom Burns et ux., Plaintiffs, v. Joe Burns et al., Defendants. Damien Burns, Appellant, v. Hans Eichhoff et al., Appellees.
No. 46242.
October 19, 1943.
Van Allen & Van Allen, of Mt. Pleasant, for appellant.
J. V. Gray and Galer, Galer & Galer, all of Mt. Pleasant, for appellees.
C. M. Vance, of Mt. Pleasant, for plaintiffs and for the referee.

Opinion:
Oliver, J.
On April 16, 1925, Joe Burns and wife executed and delivered to Stark Doan their note for $2,500, due two years after date, together with their mortgage securing the same upon Joe Burns' undivided one-fifth interest in certain land in Henry County, Iowa. Said mortgage was recorded. Appellees hold judgments of Henry County District Court against Joe Burns.
This controversy is one phase of an action to partition said real estate, in which action Joe Burns and his brother, appellant Damien Burns, as owners of undivided interests therein, are parties. The referee in partition filed a report setting out said mortgage and judgments, stating the mortgage appeared to be outlawed, and asking the court to determine the validity and priority of the various liens. Thereafter, on March 7,1942, Stark Doan assigned said note and mortgage to appellant, Damien Burns, for a consideration of $50 cash and a promise of an additional $100 if the lien of said mortgage should be established as prior to said judgments. On March 7, 1942, Joe Burns and wife made to appellant, Damien Burns, their signed written admission of and promise to pay the indebtedness upon said note and mortgage in the sum of $2,000, plus certain interest.
The judgment held by appellee Mitchell was secured March 2, 1936. The judgment of appellee Eichhoff was secured on October 5, 1937, for $2,740.55 and costs.
Pleadings were filed by the contending parties and the matter was tried to and determined by the court. Part of the Mitchell judgment was for rent. The court held the lien of such part was barred by the two-year limitation period of section 11033.1, Code of Iowa, 1939. The remainder, $75.60, with interest and one half the costs of that suit, was held not barred. The order provided that the mortgage owned by Damien Burns should not be allowed as a prior lien on the net share of Joe Burns in the proceeds of the partition sale, and (subject to certain taxes) said order fixed the Mitchell judgment, in the reduced amount, as the first lien, and the Eichhoff judgment as the second lien. From said adjudication Damien Burns has appealed.
There is some disagreement between the members of this court relative to certain legal propositions involved in this case, and dissenting opinions by Chief Justice Mulroney and Justice Bliss have been filed. The latter would overrule Kerndt & Bros. v. Porterfield, 56 Iowa 412, 9 N. W. 322. As a result of our efforts to answer the dissents, this opinion is somewhat overextended. It may be noted that from the practical standpoint of the contending parties the result of this opinion and each of the dissents would be the same.
The general statute of limitations, section 11007, Code of Iowa, 1939, limits the time of bringing actions upon written contracts to ten years after their causes accrue. It is a statute of repose, which simply takes away the right to maintain an action but does not destroy the cause of action. Williams v. Burnside, 207 Iowa 239, 222 N. W. 413. It affects the remedy but not the right. Meek v. Meek, 45 Iowa 294, 297.
There is some diversity of opinion whether a new promise to pay a debt already barred creates a new cause of action so that the suit should be brought upon it and not upon the original promise. 37 C. J. 1140; 34 Am. Jur. 236, 237. However, it is the settled rule in Iowa that the promise does not constitute a new cause of action. It is effective only to revive the original cause of action or to extend its life by tolling the statute of limitations and starting it anew. Mortenson v. Knudson, 189 Iowa 379, 386, 176 N. W. 892, 895; Frisbee v. Seaman, 49 Iowa 95; Bayliss v. Street, 51 Iowa 627, 2 N. W. 437. In jurisdictions adopting this view it is said the statute does not annihilate the debt but merely suspends the remed/y. 34 Am. Jur. 237. See Beckett v. Clark, 225 Iowa 1012, 1016, 282 N. W. 724, 726, 121 A. L. R. 912; 25 Iowa L. Rev. 146-153.
Code section 11018' provides that causes of action founded on contract are revived by a signed written admission of the party to be charged. • Such admission may be made either. before or after the statute has run. In re Estate of Sleezer, 209 Iowa 56, 227 N. W. 644. It operates to waive the defense of the statute. Spilde v. Johnson, 132 Iowa 484, 109 N. W. 1023, 8 L. R. A., N. S., 439, 119 Am. St. Rep. 578.
A mortgage upon real property is not a sale thereof. It does not constitute a pro tanto disposition of the property by the mortgagor. As pointed out by Judge Dillon, in Newman v. De Lorimer, 19 Iowa 244, a mortgage is not an estate in the land but simply a specific lien or charge on the land-to secure a debt.
Clinton County v. Cox, 37 Iowa 570, 571, states:
"Under the laws of this State a mortgage conveys no interest in, or title to, lands, 'but is simply a lien thereon for the purpose of securing the indebtedness which is its foundation. It is an incident — a security, in the nature of a lien — of the debt. It survives until the debt be paid or discharged, or the mortgage is released. It is a convoy bearing a lien for the protection of the debt, and as long as that exists it 'is not relieved of the duty of protection or rendered ineffective for that purpose. When the debt is discharged or, by operation of law, may no longer be enforced its functions terminate, and not before. ' '
Our attention has been called to a statement in Fitzgerald v. Flanagan, 155 Iowa 217, 222, 135 N. W. 738, 740, Ann Cas. 1914C, 1104:
" the mortgage, being considered a mere incident to the debt, is, as a general rule, extinguished when the debt for which it is given is barred by the statute of limitations."
That statement may be subject to an interpretation not entirely accurate. The status of the mortgage and the debt are usually identical. A more accurate statement in Fitzgerald v. Flanagan, 155 Iowa 217, 220, 135 N. W. 738, 740, is:
"It is a general rule that, if there be no debt, there is no mortgage, and consequently, if action for the debt be barred, an action to foreclose' the mortgage is also barred." (Italics supplied.)
And, in the same case, 155 Iowa at page 223, 135 N. W. at page 741:
" we are committed to the doctrine that, if the debt be barred by statute, the right to enforce a mortgage given to secure the debt is also barred
Statements that the mortgage is extinguished when the debt is barred by the statute of limitations mean the condition of the mortgage is the same as that of the debt which it secures. If the debt is unenforceable, the mortgage is in the same situation. But- if the debt is not absolutely discharged or terminated beyond revivor, the mortgage likewise is not extinguished. Our authorities agree that usually the lifting of the suspense of the remedy on the debt, by written admission, also renders the security again enforceable. As was said in Mahon v. Cooley, 36 Iowa 479, 483:
" the mortgage will follow it and will be valid as long as the debt can be enforced. It is then but an incident of the debt; its existence is measured and prolonged by the life of the debt. These are familiar doctrines that do not require for their support the citation of authorities."
Code sections 11602, 11603, make judgments liens upon real estate. A judgment lien is not a specific lien upon any real estate of the judgment debtor but is a general lien upon all his real estate, subject to prior liens or equities. Stiles v. Bailey, 205 Iowa 1385, 1388, 219 N. W. 537, 540. The lien of a judgment is junior to the lien of a prior mortgage even though the mortgage be unrecorded. Chapman v. Coats, 26 Iowa 288. A judgment creditor is not a purchaser for value of the land. Cumming v. First National Bank, 199 Iowa 667, 202 N. W. 556.
I. The dissenting opinion of Chief Justice Mulroney would adopt what it calls the "controlling equities" rule. We are told that whether the subsequent lienholders or grantees "acquired their liens or titles before or after the statutory period expired the true rule is that the revived first lien will be superior if the •controlling equities are in favor of the holder of this lien." As we view this suggestion, it would in effect cast aside the recognized principles and rules by which courts have heretofore been governed in such cases and thus deprive the court of guiding landmarks. We cannot subscribe to this theory.
We think that what the dissenting opinion of Chief Justice Mulroney refers to as the true rule is merely an exception to the general rule and is in the nature of an estoppel.
Kerndt & Bros. v. Porterfield, supra, 56 Iowa 412, 414, 9 N. W. 322, 323, states:
"As between tbe mortgagor and mortgagee it cannot be doubted that a new promise which, is sufficient to revive the debt will also revive the mortgage. It seems that the same rule ought to prevail against all persons interested in the mortgaged property unless there exist reasons which in equity would render it unconscionable to enforce the mortgage lien as against their interest. ' '
Gilman v. Heitman, 137 Iowa 336, 346, 113 N. W. 932, 935, cites the following example:
" *' it has been held that under some circumstances, where an innocent purchaser for a valuable consideration takes conveyance by warranty deed in which the mortgagee joins as a grantor he takes the title free from the lien of the mortgage which the record shows to have been barred by the statute, and that a new promise thereafter made by the mortgagor will not revive the mortgage as against such grantee. Jenks v. Shaw, 99 Iowa 604."
In this case there are no controlling equities which render the Mitchell judgment superior to the prior mortgage. There is no contention that when the lien of the Mitchell judgment attached any conduct on the part of the holder of the prior mortgage led Mitchell to reasonably believe it was not a lien. And had there been such conduct, Mitchell could base thereon no claim to controlling equities because he was not a purchaser. He parted with nothing for his lien.
The dissenting opinion of Chief Justice Mulroney would hold that the rights of Damien Burns are less than those of the original mortgagee because Damien Burns was a brother of the mortgagor and purchased the mortgage for a small consideration prior to the revivor. If the purchase by Damien Burns was not bona fide he acquired no rights, not less rights. But the consideration, though not large, was valid, and the record does not support the surmise that there was not an actual purchase.
II. The Mitchell judgment was secured in 1936. At that time the remedy upon the mortgage was not barred by the statute of limitations. Appellant's mortgage was revived after the statute had run. Kerndt & Bros. v. Porterfield, supra, 56 Iowa 412, 414, 9 N. W. 322, 323, holds that where a note and mortgage are revived after the bar of the statute, the priority of the mortgage lien is preserved as against a subsequent mortgage executed before the ba,r of the statute. In that case the court said:
"An action to foreclose a mortgage is not barred by the statute of limitations so long as the debt remains unpaid and capable of being enforced. Brown v. Rockhold, 49 Iowa, 282; Clinton County v. Cox, 37 Iowa, 570. The mortgage is an incident of the debt and follows it, and its existence as a lien is only terminated when the debt ceases to be enforceable.
"As between the mortgagor and mortgagee it cannot be doubted that a new promise which is sufficient to revive the debt will also revive the mortgage. It seems that the same rule ought to prevail against all persons interested in the mortgaged property unless there exist reasons which in equity would render it' unconscionable to enforce the mortgage lien as against their interest. If such a rule did not prevail the mortgage would not continue as long as the debt existed, and the mortgagee would be deprived of the security provided for the debt. We think, however, that equities may arise which would defeat or suspend the lien in order to protect the interest of others. It may be, but the point we do not decide, that one acquiring an interest in mortgaged property after foreclosure of the mortgage is barred by the statute, and before a new promise is made, would hold by a right superior to the mortgagee after his debt is revived by a new promise. But the case is different where one acquires such an interest before the action upon the mortgage is barred, and after the period of limitation has run the debt is revived by a new promise. In such a case the debt was enforceable when the interest of the adverse claimant was acquired with full notice of the mortgage lien. When his interest was acquired, he took it subject to the mortgage, with the knowledge that the debt could be revived by a new promise and the mortgage lien would stand as long as the debt existed. When the mortgage is foreclosed under a new promise removing the bar of the statute, he is in no different condition than he was in when he acquired his interest. If he was satisfied to acquire his interest while it was subject to the mortgage, he ought to be content to hold it in that condition. He can urge no equity which will relieve his property from the lien of the mortgage. It seems that a different rule is recognized in California."
It has been suggested that the Kerndt case is not supported by later decisions; that its reasoning is faulty, and that it should be overruled. Whether or not subsequent Iowa decisions support the Kerndt case may best be determined by the language of such decisions.
Gilman v. Heitman, supra, 137 Iowa 336, 346, 113 N. W. 932, 935, states:
"In Kerndt v. Porterfield, supra, 56 Iowa, 412, the question presented was whether a new promise of a mortgagor would have the effect to remove the bar of the statute of limitations as against subsequent liens taken before the mortgage became barred, and not foreclosed until after the revival of the indebtedness. This inquiry we there answered in the affirmative. That ruling has since been followed in Bank v. Woodman, 93 Iowa, 668; Heilman v. Kiene, 73 Iowa, 448; Freeburg v. Eksell, 123 Iowa, 464."
In First National Bank v. Woodman, 93 Iowa 668, 678, 62 N. W. 28, 31, 57 Am. St. Rep. 287, the court, after discussing the Kerndt case, said:
"In view of the statute on the subject, and the authorities cited, we regard it as fairly well settled that in the absence of controlling equities, a second mortgagee, where a prior mortgage is uneanceled, must take notice of the fact whether or not the cause of action thereon has been revived."
In Cook v. Prindle, 97 Iowa 464, 474, 66 N. W. 781, 784, 59 Am. St. Rep. 424, the first mortgage was revived before it was barred. The decision refers to the Kerndt and Woodman cases with apparent approval, but turns upon the rule that after the mortgagor has disposed of the land he may not revive the lien of the barred mortgage as against the land. The court said:
"The law is well settled that, after the mortgagor disposes of the mortgaged premises by deed, he loses all control over them. He is then powerless to create or revive charges against such lands. As is often said, as to such' premises, he is a stranger, and his power to revive a mortgage does not exist if, under the circumstances, he has not power to give a new one which would be binding thereon."
The Cook case definitely differentiates a mortgage from a sale or disposition of the property.
See, also, Day v. Baldwin, 34 Iowa 380.
The dissenting opinion of Justice Bliss would hold a mortgage is a pro tanto sale. Were we to so hold, it would follow, under the rule of the Cook case, that no mortgagor could ever revive a mortgage, since it could be said the mortgage was a disposal of the particular interest in the land represented by it and hence the mortgagor had lost all control over it.
• It may be true that under the old common-law rule a mortgage was considered a conveyance of the land or a pro tanto disposition of the property by the mortgagor. But that is not the rule in Iowa. Most American jurisdictions, including Iowa, have definitely abrogated the old common-law rule. Section 10053, Code of Iowa, 1939 (section 1210, Code of 1851); White v. Rittenmyer, 30 Iowa 268; 36 Am. Jur. 690; 41 C. J. 279; 2 Jones on Mortgages, 8th Ed. 1048. As heretofore pointed out, it is not a reduction of his interest in the land. It is merely a lien thereon. The mortgagor may reviye it either before or after the bar, and upon revival it will be superior to all liens to which it was superior when said liens attached to the property. This is the vital difference between the Cook case and those cases in which the mortgagor has not disposed of the mortgaged property.
German American Sav. Bk. v. Hanna, 124 Iowa 374, 379, 100 N. W. 57, 58, states:
"The admission [after the bar] that the notes were unpaid was analogous to a renewal of them, and this certainly would not release the security. It is also the general rule that, where a note is secured by a mortgage,' a revival of action on the note will also revive the mortgage." (Citing the Kerndt and Woodman cases.)
Jenks v. Shaw, 99 Iowa 604, 611, 68 N. W. 900, 902, 61 Am. St. Rep. 256, states:
"In Brown v. Rockhold, 49 Iowa, 285, it is said: 'The general rule is that the mortgage is but a mere incident to the note which it is given to secure, and that nothing short of payment of the debt, or its extinguishment by operation of law, will discharge the mortgage lien. ' This doctrine is announced in Kerndt v. Porterfield, 56 Iowa, 412 (9 N. W. Rep. 322). See, also, Bank v. Woodman, 93 Iowa, 668 (62 N. W. Rep. 30); State v. Stuhtmiller, 94 Iowa, 750 [Robertson v. Stuhlmiller, 93 Iowa 326] (61 N. W. Rep. 986). The principle is well established by these and other cases that an action to foreclose the mortgage is not barred so long as the debt which it secures is enforceable."
Reference will now be made to authorities from other jurisdictions, among which there is much conflict. In Consolidated National Bank v. Van Slyke, 27 Ariz. 501, 506, 234 P. 553, 555, 38 A. L. R. 825, the court discusses the conflicting rules in the following language:
"The question may be stated in the abstract thus: 'When A. gives a mortgage to B. and' thereafter, and before the'running of the statute of limitations, junior liens attach to the lands, does an acknowledgment made by C., a subsequent grantee, before the statute has run, toll the statute as to the junior lienholders?'
"There is an irreconcilable conflict in the authorities on this point, due, apparently, to a difference of opinion as to the relative importance of two principles which are both equitable, but in conflict with each other: .The first principle may be stated thus: 'A junior lienholder, when he acquires his lien, is entitled to assume the rights outstanding against him at the time will not be increased or enlarged without his consent, and a sub sequent waiver of the statute of limitations as to the senior lien constitutes such enlargement.'
"This principle has been adopted as a paramount consideration by the Supreme Courts of California, Washington, Utah and possibly one or two others, and the decisions of these courts have been uniformly consistent therewith. [Citing authorities.]
"The other principle is: 'If a junior lienholder had notice, actual or constructive, of a valid and enforceable prior lien, at the time he acquired his rights, he took the latter subject to a possible extension of the time of payment, and cannot complain thereof, as it is only an incident of the lien. '
"To this effect are the decisions of the Supreme Courts of Iowa, Nebraska, Vermont, Texas, Mississippi and Minnesota." (Citing the Kerndt case and other cases.)
Smith v. Bush, 173 Okla. 172, 175, 44 P. 2d 921, 923, 101 A. L. R. 330, states:
"Two distinct and opposing lines of authority have developed in other jurisdictions. Utah, Kentucky, North Dakota, California, and Arkansas approve the view that the statute of limitations is available as a defense to the subsequent incumbrancers or purchasers of interests in mortgaged premises, notwithstanding the subsequent payment, acknowledgment, or promise by the mortgagors or debtors. [Citing decisions from said jurisdictions.]
"We do not deem it necessary to engage in an exhaustive discussion of the reasoning upon which the result announced in the above cases is based. The general theory running throughout is that the person who acquires an interest in mortgaged premises subsequent to the mortgage may rightfully assume that the obligation secured by the mortgage will not be enlarged; that a partial payment, acknowledgment, or promise by the mortgagor, if it delayed the operation of the statute of limitations as to the subsequent, purchasers or incumbrancers, would amount to such an enlargement of the prior mortgage obligation without their consent, and would therefore be inequitable.
"The opposite view has been announced in Kansas, Arizona, Iowa, Maryland, Texas, Nebraska, New York, Minnesota, Mississippi, Vermont, Oregon, and by the Supreme Court of the United States. [Citing decisions from said jurisdictions, including the Kerndt case.]
"These cases proceed upon the theory that a subsequent purchaser or incumbrancer of an -interest in mortgaged premises, with notice actual or constructive of the mortgage, takes his interest subject to the terms of the mortgage contract and the law applicable thereto; that the mortgage is an incident to the debt; that as a matter of law the period of computation of the statute of limitations may be delayed by a payment on the debt, or by a written acknowledgment of, or promise to pay, the same. The additional burden occasioned by the delay, if any, must be taken to have been within the contemplation of the purchaser by reason of the nature of the contract and the law governing the rights of the parties thereto."
It will be noted that the reasons given in the quoted parts of Smith v. Bush and the Van Slyke cases, supra, as the basis for the majority rule, are substantially the same as those stated in the Kerndt case. True, the cited eases in general refer to revivors prior to the statutory bar. But the principle that a junior lienholder, with actual or constructive notice of a valid and enforceable prior lien, takes his lien subject to the extension or revival of such prior lien, should be equally applicable whether the revivor is before or after the expiration of the statute of limitations.
The minority doctrine - is that after the junior lien attaches, the senior mortgagor, with notice thereof, may not extend or revive his mortgage so as to affect said junior lien, even though such extension or revivor be made before the statute has run. This is directly contrary to the rule of various Iowa decisions.
Some contention has been made that Clark v. Grant, 26 Okla. 398, 109 P. 234, 28 L. R. A., N. S., 519, Ann. Cas. 1912B, 505, and Schmucker v. Sibert, 18 Kan. 104, 26 Am. Rep. 765, are contrary to the Kerndt case. Neither cited case is factually in point. The basis of the decision in the Schmueker case, as stated in the headnote in the American Reports, is:
"A revivor of a note barred by the statute of limitations will revive a mortgage executed to secure it, so far as the interest of the mortgagor in the premises, but not as to a grantee of the mortgagor previous to such revivor."
That is the rule of Cook v. Prindle, supra, 97 Iowa 464, 66 N. W. 781, 59 Am. St. Rep. 424, which cites the Schnrucker case as an authority.
Hughes v. Hess, 141 Tex. 511, 515, 172 S. W. 2d 301, 303, involved in part the status of a junior judgment as against a prior mortgage. The court quoted with approval from Novosad v. Svrcek, 129 Tex. 34, 38, 102 S. W. 2d 393, as follows:
" 'The rule is now settled that the vendee may execute an extension to the holder of the original vendor's lien notes without the consent of a party who holds a subsequent lien on the land, and said agreement is binding on the junior lien holder. [Citing authorities.] It has also been held that where a party acquires a jumor lien when the senior lien was in force, and while the junior lien was in force the first lien became barred by limitation and it was renewed and extended in writing, duly acknowledged and recorded, said renewal of the first lien would be binding on the junior lien holder.' " (Italics supplied.)
Bellah v. Dennis, 129 Tex. 367, 104 S. W. 2d 490, and W. T. Rawleigh Co. v. Terrell, Tex. Civ. App., 171 S. W. 2d 198, enunciate the same rule. In Division III of this opinion are other Texas decisions and a quotation from Wiltsie on Mortgage Foreclosure. These clearly differentiate between the status of subsequent liens which attach prior to the running of the statute and those which attach after the statute has run and before the revivor.
Appellees argue that permitting the revival of mortgage liens, in cases such as this, will cause confusion and uncertainty in connection with titles to real estate. The answer to this argument will be found in Code section 11028'. That section bars the foreclosure of mortgages more than twenty years old unless the record shows that less than ten years have elapsed since the original or extended due date, etc. It is not here applicable because the mortgage is not twenty years old. This statute has been considered in Newgirg v. Black, 174 Iowa 636, 156 N. W. 708; Lackey v. Melcher, 225 Iowa 698, 281 N. W. 225, and other cases. The first legislation of such character was enacted in 1906, subsequent to the decision in the Kerndt case and several later cases which support it. It is proper to assume the legislature was cognizant of these decisions when it acted. That the legislature did not disturb the rule when it was legislating upon the subject is some indication that it was content with such rule.
It is unnecessary to say that the Kerndt case and supporting cases, as decisions of this court, are entitled to great weight and respect. Aside from that, such cases enunciate a rule of property which has been in effect in this state for more than sixty years. This court has always been reluctant to uproot a rule of property once thoroughly embedded in our jurisprudence. Rockafellor v. Gray, 194 Iowa 1280, 1282, 191 N. W. 107, 108; National City Bank v. Fairbank State Bank, 173 Iowa 489, 493, 155 N. W. 963, 965; Montgomery v. City of Des Moines, 190 Iowa 705, 706, 180 N. W. 723.
Our attention has been called to authorities holding the right to set up the bar of the statute of limitations, after the statute has run, is a vested right and cannot be taken away by legislation. We need not consider that doctrine because it is not applicable under the facts of this case. In the case at bar the rights of the junior lienholder never vested. The right to enforce the mortgage was simply suspended subject to revivor. When the Mitchell lien attached, Mitchell was bound to know and consider that, under the law then in effect, the mortgage might thereafter be revived and that this revivor might be before or after the statutory period. First National Bank v. Woodman, supra. In other words, Mitchell took his lien subject to the right to revive the mortgage. The enforcement of this right of revivor will take away from Mitchell no vested rights and he has no ground for complaint. Kerndt & Bros. v. Porterfield, supra.
The principle of the Kerndt case is that one who secures a junior lien upon real estate, with actual or constructive notice of a prior valid and enforceable mortgage, takes his lien subject to the terms of the mortgage contract and the law applicable thereto and subject to the right of extension or revivor of tbe debt secured by tbe mortgage, which revivor may be either before or after the expiration of the statute of limitations. Since the Kerndt ease the precise proposition there involved has not been before this'court but the principle has been recognized by various decisions and has never been questioned. It accords with the rule in the majority of other jurisdictions. It is based upon sound reasoning. To overrule it upon the theory that a mortgage, or other lien, is a pro tanto sale or disposition of the mortgaged property would reinstate the old common-law rule so long abrogated in this state. We adhere to our former decisions and hold the lien of appellant's mortgage superior to the lien of the Mitchell judgment.
III. The status of the Eichhoff judgment differs from that of the Mitchell judgment in that the Eichhoff judgment was. secured after the remedy upon debt and mortgage was barred and before the revivor. At the time the lien of the Eichhoff judgment attached, the debt and mortgage were not enforceable.
The following statement appears in Kerndt & Bros. v. Porterfield, supra, at page 414 of 56 Iowa, page 323 of 9 N. W.:
' ' It may be, but the point we do not decide, that one acquiring an interest in mortgaged property after foreclosure of the mortgage is barred by the statute, and before a new promise is made, would hold by a right superior to the mortgagee after his debt is revived by a new promise."
In First National Bank v. Woodman, supra, 93 Iowa 668, 678, 62 N. W. 28, 31, 57 Am. St. Rep. 287, the court said:
" in the absence of controlling equities, a second mortgagee, where a prior mortgage is uncanceled, must take notice of the fact whether or not the cause of action thereon has been revived."
Hellman v. Kiene, 73 Iowa 448, 450, 35 N. W. 516, 518, 5 Am. St. Rep. 693, holds a debtor who has made an assignment for the benefit of creditors may thereafter revive a barred debt to share in the proceeds of the assignment. The decision points out that the other creditors "possess no lien or priority which is defeated."
Both sides make reference to statements found in the foregoing and other Iowa cases, none of which appears to be directly in point. Nor has this court determined this proposition.
1 Wiltsie on Mortgage Foreclosure, 5th Ed., 149, 150, section 76, states:
"As a general rule where the statute of limitations has entirely run, operating to bar a mortgage, a lien or conveyance subsequently acquired in favor of a third person is not affected by a subsequent payment by the mortgagor made on account of the mortgage or a subsequent acknowledgment by him of the indebtedness. The rights of a lienor whose lien attaches after the indebtedness has become outlawed, or the right of the subsequent grantee, cannot be affected by any act of the mortgagor. But where the indebtedness secured by a prior mortgage is not barred at the time of the attaching of a junior lien, a subsequent written acknowledgment or partial payment in connection with the prior mortgage does operate to extend the statute of limitations with respect thereto, as to the junior lienor and operates to continue it as a valid lien superseding the junior lien for the full statutory period after the acknowledgment or payment."
Johnson v. Johnson, 81 Mo. 331, 336, states, by way of dictum:
"When the bar of the statute is complete, any act of the mortgagor which revives the debt, also revives the lien of the mortgage, unless the parties agree otherwise. [Citing authorities.] Such acts are always binding between the mortgagor and mortgagee. 2 Jones on Mortgages, §1202 (3 Ed:). A well defined limitation of this rule excepts from its effect the rights of purchasers and mortgagees, acquiring title after the bar is complete, and before the acts of revivor."
This same dictum is quoted in Clark v. Grant, supra.
In Holford v. Patterson, 113 Tex. 410, 413, 257 S. W. 213, 214, the court said:
"It cannot be questioned that the note to Hawk, secured by mortgage, was barred at the time defendant in error Patter son became invested with title . Patterson having once acquired title not subject to any enforceable encumbrance, the same could not be affected by a subsequent contract between others to which he was not a party."
It should be noted that the rule in Texas appears to be contrary to the Iowa rule enunciated in Cook v. Prindle, supra, and other cases, that the mortgagor cannot revive the mortgage after he disposes of the land. • Therefore, the decision did not turn upon this latter point, as it probably would have done under the doctrine adopted in this state.
Biggs & Co. v. Caldwell, Tex. Civ. App., 115 S. W. 2d 461, 463, quotes the following from 9 Tex. Jur. 182, section 77:
" 'It seems to be settled that when once a debt is barred by the statute of limitations, the mortgage has expired, and that a subsequent renewal of the debt will have the effect to renew the mortgage as between the parties but will not operate to prejudice the rights of third persons who in good faith acquired rights in the property during the time the debt was barred. The 'point was decided early by the Supreme Court, and has never been overruled; on the contrary, the case has been cited with approval after a very careful reconsideration of the question. ' ' '
In Yates v. Darby, 133 Tex. 593, 603, 131 S. W. 2d 95, 101, the junior lienholder held a judgment lien. The court said :
"We recognize also the rule, established by several cases, that a junior lienholder who acquires his lien at a time when the first lien and the first lien notes are not barred is bound by an extension contract between the owner of the land and the holder of the first lien notes, provided that contract is sufficient as between the parties thereto. [Citing cases.] The important differences between the facts of those cases and the facts of this case are that there was no contract for the extension of plaintiffs in error's note and that defendant in error's rights as lienholder accrued at a time when the note secured by the vendor's lien retained by plaintiffs in error was more them four years past due. Such rights so acquired could not be affected by the subsequent transactions between plaintiffs in error and Peter Smith to which defendant in error was not a party." (Italics supplied.)
In the preceding division of this opinion are quotations from Consolidated National Bank v. Van Slyke, 27 Ariz. 501, 234 P. 553, 38 A. L. R. 825, and Smith v. Bush, 173 Okla. 172, 44 P. 2d 921, 101 A. L. R. 330. These refer to the principles upon which are based the decisions of this court and various other courts which have adopted the majority rule. In the Van Slyke case, it is said, at page 507 of 27 Ariz., page 555 of 234 P.:
"If a junior lienholder had notice, actual or constructive, of a valid and enforceable prior lien, at the time he acquired his rights, he took the latter subject to a possible extension of the time of payment (Italics supplied.)
It will be noted that the rule applies to an enforceable prior lien.
Appellant's mortgage was not enforceable at the time the Eichhoff judgment lien attached. Since there was no enforceable mortgage when the Eichhoff lien attached, he was not bound to anticipate that the mortgage might thereafter be revived. To give the subsequently revived mortgage priority over the Eichhoff judgment lien, in effect would amount to casting upon Eichhoff an additional burden not within his contemplation at the time his judgment lien attached. While the line of demarcation between the status of the Mitchell and Eichhoff liens is not broad, we think it is distinct. We conclude the lien of appellant's mortgage is inferior to the lien of the Eichhoff judgment.
IV. We have already held the lien of the mortgage superior to the lien of the Mitchell judgment. The Mitchell judgment lien attached prior to the Eichhoff judgment lien, and therefore is superior to the Eichhoff judgment lien. Hence, each of the three liens is superior to one of the other liens and inferior to the remaining lien.
This circuity results in a question somewhat analogous to that presented in certain jurisdictions under statutes which provide that failure to take out and levy execution within a year subordinates the lien of the senior judgment to other judgments. 1 Black on Judgments, 2d Ed., 710, section 456, refers to it as ' an extremely interesting and peculiar question — called the 'triangular question' " See, also, 31 Am. Jur. 38. Holliday v. Franklin Bank, 16 Ohio 533, 535, states:
"If it be attempted to settle the question upon the principle of superiority, it runs in a circle and produces no result."
The court in that case adopted the rule which there appeared least objectionable, to wit, that each should have priority according to age.
In McCune v. McCune, 164 Pa. 611, 30 A. 577, Fullerton had three judgment liens followed by five judgment liens held by others. Thereafter, the Fullerton liens were satisfied. Thereafter, Charles McCune secured judgment against the debtor. Thereafter, the court canceled the satisfaction of the Fullerton liens. Then the property was sold under execution and the proceeds constituted a fund which the court said must be distributed "according to law and equity."
The court found Fullerton's liens superior to the five intermediate judgments, since the latter creditors had not been misled by the mistake in entering the Fullerton satisfactions. Fullerton's liens were held junior to the McCune judgment, the latter having attached while the former were not valid and enforceable liens. The intermediate liens were superior to the McCune lien.
The court held the fund should be distributed, first to Fullerton and second to the intermediate judgments, but that if the fund was large enough to have paid the intermediate judgments and leave a surplus, that would have gone to McCune, if Fullerton's judgments had been actually paid, as they appeared to be, McCune could secure the application of the surplus to his lien as against Fullerton.
A solution similar to that worked out in the McCune case is here proper and feasible. We may start with the proposition that the Eichhoff judgment is superior to the mortgage and that it will be fair to the mortgage holder that the amount of the Eichhoff judgment, and no more, be held superior to his mortgage. Nor may Eichhoff complain if the amount of the prior Mitchell judgment is carved from the amount which would have been allotted to Eichhoff had he and the mortgage holder been the only claimants. The result obtained by this • approach is practical and appears equitable to each of the parties under the particular circumstances.
Accordingly, the part of the order establishing the lien of the Mitchell judgment, in the reduced amount, and certain costs, as superior to the liens of Eichhoff and appellant, is affirmed. The part of the order relating to the Eichhoff judgment is modified so that only the lien of so much of said judgment as exceeds the amount of the lien of the Mitchell judgment is fixed as superior to the lien of appellant's mortgage. The lien of the mortgage is established, subject to the foregoing, followed by the lien of the remainder of the Eichhoff judgment. — Modified and affirmed.
Smith, Hale, Wennerstrum, and Garfield, JJ., concur.
Mulroney, C. J., and Miller, Bliss, and Mantz, JJ., dissent.