Middleton Savings Bank v. City of Dubuque , 15 Iowa 394 ( 1863 )

Weight, J.

Complainant seeks to foreclose a mortgage made by the City of Dubuque, to Jessup & Company, upon several parcels of real estate, to secure certain bonds for money loaned, amounting in the aggregate to the sum of thirty thousand dollars. The respondents, claiming to be subsequent purchasers of a portion of the lands thus encumbered, set up the following matter in defense. That at the time of the execution of said mortgage, the City of Dubuque was a municipal corporation acting under and by virtue of a charter from the Legislature of the State of Iowa, section 25 of which was as follows, to wit: “That the said City Council shall have the custody, care and management of all real, personal and mixed estate, and other corporate property of said city, and all the real, personal and mixed estate, money, funds and revenues, which from time to time may be owned by, or of right belonging to said city, with full power to purchase, hold, possess and occupy, and to sell and convey the same for the use and benefit of said city and the inhabitants thereof; provided, that tbe City Council shall not have power to sell any real estate belonging to the said City of Dubuque, unless the qualified voters thereof, in pursuance of ten days’ previous notice given by order of the City Council, and published in one or more newspapers printed in said city, setting forth the time, place and purpose of voting, and there shall be a majority of written or printed ballots given expressing their assent thereto.” It is then averred that prior to the date of said mortgage, the qualified voters of said city did not by a majority of written or printed ballots express their assent to the making of the same; nor was- the question ever submitted to the voters of said city whether the said City Council should have power to execute and deliver said instrument.

Plaintiff’s demurrer to this portion of the answer, makes the point, that while the City Council could not sell the real estate of the city without a vote, such vote was not necessary to authorize the execution of a mortgage or other instrument encumbering such property as security! for money loaned.

The question whether a power to sell does or does not include a power to mortgage, discussed to some extent by counsel, we do not deem it necessary to examine. For from the view we take of the case it has no practical importance. Nor do we give weight to the thought that the City Council may convey, but cannot sell, without a vote of the qualified electors. If there is a restriction upon selling, then until the conditions of the statute are complied with there can be no valid conveyance, for such conveyance is but the consummation of, or the evidence of the sale. A power to an agent to sell and convey property upon certain terms or conditions, is a restriction upon the conveyance as well as the sale, unless the conditions are followed. A sale and conveyance, under such circumstances, or within the purview of such a power, are one and the same act. The conveyance is simply the formal act necessary to complete or carry out the previous sale or contract.

But the intention of a donor of a power (as in all conveyances) is the great or cardinal principle that governs in its construction. (4 Kent, 8 ed., 863.) And this intention is to be arrived at primarily from the language employed, and the object and purpose in view in its execution. With this general proposition in view, we remark that the words “ sell and convey,” in that portion of the section (above quoted), giving the power, when taken in connection with the entire language, were intended to invest the council with, the full control of the city property, real, personal and mixed, and to express a complete grant of power; such power or control of course being exercised for the use and benefit of the inhabitants. The power to execute a mortgage to secure a loan made for the benefit of the city, is found in the character of the incorporation, the general powers conferred, and the object and purpose of the Legislature. In other words, if this proviso was not in the act, the City Council would clearly have the power to make a mortgage, as well as an absolute conveyance. What is the meaning then of the restriction contained in the proviso ? For this, after all, is the very question to be determined. Is a mortgage an alienation within the meaning of the words: “ The City Council shall not have qpoioer to sell any real estate, unless, Sc. ?”

In The City of Dubuque v. Miller, 11 Iowa, 583, construing a corresponding section in the charter of this city, passed in 1857, it is said that this “ inhibition has reference to transactions which shall result in parting with the title and vesting it permanently and entirely in another. It never was intended that a stall in the market-house could not be leased, without the authority of a majority of the legal voters.” And the proposition is equally true, in our opinion, when applied to a mortgage. The sale contemplated in the restriction, refers to an alienation, not a mere incumbrance. Under our law, the legal title remains in the mortgagor. The mortgagée acquires no right to the property, which can be attached, reached by the levy of an execution, nor that can be inherited. The mortgage is but a lien upon the land to secure the payment of the debt. The thought that the city property might thus indirectly be sold without a vote of the people, is entitled to but little weight, for the same thing might be accomplished by incurring a simple debt, upon which judgment might be recovered and the property sold under execution. And that a debt might be contracted without a vote, is undenied. The publicity of the judicial proceedings and Sheriff’s sale would give ample opportunity for the detection of any fraud and the protection of the interest of the city by anjr one interested. But in the case of a private, absolute sale, it was deemed wiser and safer to first take the opinion of the inhabitants, and thus remove the opportunity for fraud and speculation on the part of the city authorities. (De Ruyter v. St. Peter's Church, 3 Comst., 238.)

II. Another question made arises upon the following facts: The mortgage (and this is the character of the security, though sometimes spoken of by counsel as a deed of trust), contains this provision: “ The said city reserves the right, whenever the real estate herein conveyed exceeds in value the amount of the within named consideration, to dispose of such excess, the valuation to be determined at any time by mutual agreement, or by a reference to three disinterested persons as the parties may agree; and the said city also hereby reserves the right to release the aforesaid real estate from the incumbrance herein created, at any time, by giving such other security in lieu thereof, for the payment of the within named sums of money, as shall be deemed sufficient by three disinterested persons, mutually chosen by the respective parties.”

The answer of The Harbor Company sets up that the city, in 1857 (the mortgage was made in 1853), sold and conveyed to said respondents a portion of the property so incumbered, and then follows this averment: “At the time the above mentioned land was conveyed to this defendant by said city, the real estate mentioned in said deed of trust exceeded in value the amount of the consideration named in said trust deed, and after a part of said land had been conveyed to this defendant (as set forth above), there was still enough of the land mentioned in said first trust deed left to amount in value to thirty thousand dollars.”

To this portion of the answer complainant demurred, upon the ground that in order to constitute a defense, it should allege that there was now, or at the time of pleading, enough property left to pay said thirty thousand dollars.

A demurrer must distinctly specify and consecutively number as the grounds of objection some matter of error intended to be argued as a defect in the pleading. Revision of 1860, § 2877. A party will not be allowed to state one ground of objection, and argue and obtain judgment for another. 15 How. Pr., 500.

We have, therefore, nothing to do with any other objection than the one specified. Counsel for appellee makes this point, -and we think it is well taken.

Passing any other objection to this clause of the answer, then, is it defective for the reason specified ? It seems to us not. If at the time of such sale the unsold portion was sufficient to meet the debt, its value at the time of pleading or at any period subsequent to such sales, would be immaterial. The after appreciation or depreciation in the value of the property could make no difference. Whether the valuation should have been determined by mutual agreement or by a reference — whether a failure to have such valuation could interfere with complainant’s security— whether an averment that the portion left was of the value of thirty thousand dollars (leaving out of the account the interest) or whether for any other cause the answer is objectionable, we need not determine. We only decide that for the cause stated, the demurrer was not well taken.

The point last discussed did not arise upon the answer of Pennock & Hart. The rulings of the Court below are affirmed, complainant and respondents (Pennock & Hart) each paying half the costs of this appeal.