Eckhardt v. Bankers Trust Co. ( 1933 )

[1] Defendant, in a petition for rehearing, claims sufficient consideration was not given to the error assigned in overruling its motion to strike the allegations of the petition asking the cancellation of certain notes. It is claimed that such allegations state a separate and personal action, triable only in the county of defendant's residence.

The notes referred to, however, with all other indebtedness owing the defendant by plaintiffs, were secured by a trust deed. Plaintiffs' petition asks to cancel this trust deed and quiet their title in the real estate therein described, situated in Scott county, where the action was commenced.

It is true that, if this action was brought solely for the purpose of canceling the notes, it should have been brought in the county of the defendant's residence, and in such event a motion for a change of venue should have been granted. This action, however, is brought to cancel a trust deed and to quiet plaintiffs' title in the real estate in question. The trust deed makes the obligation on these notes a lien upon the real estate in question, and creates a cloud on plaintiffs' title therein. It would be impossible to have plaintiffs' title in the real estate quieted without cancelling the trust deed and removing the cloud therefrom.

Under section 11034 of the Code,

"Actions for the recovery of real property, or of an estate therein, or for the determination of such right or interest, or for the partition of real property, must be brought in the countyin which the subject of the action or some part thereof issituated." (Italics ours.)

This action is brought for the determination of plaintiffs' interest in real estate in Scott county, and to quiet their title therein. Defendant claims that the petition contains two causes of action, but made no motion to separate. The allegation to cancel the obligation on the notes is joined with the allegation to cancel the trust deed and quiet plaintiffs' title in the property. If the cloud on plaintiffs' title created by the trust deed includes plaintiffs' obligation on the notes, it is necessary for plaintiffs to secure a cancellation thereof to quiet their title. This is one of the elements necessary for a determination of plaintiffs' rights in the real estate.

As stated in the original opinion, the trust deed in question is equivalent to a mortgage. If the whole, or any part, of the consideration of the mortgage is invalid, a determination of that question is necessarily involved in an action to quiet plaintiffs' title in the property.

An action for the determination of a right or interest in real property must be brought in the county in which the subject of the action is situated. An action to quiet title to real estate is necessarily an action to determine an interest therein, and we have held that the venue of such an action is in the county in which the real estate is situated. McEvoy v. Cooper, 208 Iowa 649, 226 N.W. 13. In that case, page 654, we said:

"Plaintiffs' action is to quiet the title to the real estate in both Guthrie and Cass counties. Under section 11034 of the Code, actions for the recovery of real property or an interest therein, or for the determination of such right or interest, must be brought in the county in which the real estate or some part thereof is situated. Therefore the action to quiet title to the real estate was properly brought in Guthrie county."

It is true there are cases holding that, although they involve the determination of an interest in land, they involve it merely as a collateral inquiry to granting the relief sought, and in such cases the courts, following the historic test of equity jurisdiction, hold the action transitory, notwithstanding the terms of the statute. 40 Cyc. 58. Notwithstanding the rule in such cases, it is also the rule "that the action must be brought where the land lies if these two things concur: (1) If the subject of inquiry is a right or interest in the land; and (2) if the judgment in the case will operate directly upon this right or interest." 40 Cyc. 59.

A part of the relief sought in this action may be personal against the defendant, and, if brought independently of an action to quiet title in the land, it should have been brought in the county of defendant's residence.

The allegations asking the cancellation of the notes are, however, a part of the present action to cancel the trust deed and quiet plaintiffs' title in the real estate. It is therefore a necessary element to be established in this action for the purpose of determining plaintiff's interest in the real estate. When so connected and joined with the application to determine plaintiffs' interest in the land and quiet their title thereto, the whole matter is properly triable in the county where the land is situated under section 11034 of the Code.

The general rule is that an action to cancel a deed or mortgage and to have plaintiffs' title quieted in him is local, and should be brought in the county where the land is situated. State ex rel. Goodin v. District Court, 184 Minn. 504, 239 N.W. 143; Kommer v. Harrington, 83 Minn. 114, 85 N.W. 939; First National Bank of Electra v. Guyer (Tex. Civ. App.) 40 S.W.2d 212; Moore v. Byars (Tex. Civ. App.) 47 S.W. 752; Thomason v. Sherrill (Tex. Civ. App.) 47 S.W.2d 865; Pioneer Savings Loan Co. v. Peck,20 Tex. Civ. App. 111, 49 S.W. 160, Clarke v. A.B. Frank Co., (Tex. Civ. App.) 168 S.W. 492; Palmer v. Jaggaers (Tex. Civ. App.) 180 S.W. 907.

An action by the vendee of land for rescission of a land contract, for personal judgment against the defendant, and for the establishment and foreclosure of a lien on the land for the purchase money paid under mutual mistake, is properly brought in the county in which the land is located, irrespective of the residence of the defendant. Lee v. American Trust Savings Bank,209 Iowa 609, 228 N.W. 570. In that case the defendant filed a motion for a change of venue to the county of defendant's residence. This motion was overruled. We there said:

"Was this action in equity maintainable in Story county, Iowa, where the land was situated? We answer in the affirmative. Under the provisions of section 11034, Code, 1927, `actions for the recovery of real property, or of an estate therein, or for thedetermination of such right or interest, must be brought in the county in which the subject of the action or some part thereof is situated.' The instant suit, * * * is an action for the establishment and foreclosure of a vendee's lien resulting from the inability of the defendant to perform the real contract between the parties. The plaintiffs were not, under the circumstances, compelled to resort to a court of law for the recovery of money damages. An action brought to enforce a lien onland which results from a rescission is and becomes local. [Italics ours.] 40 Cyc. 67. Johns v. Orcutt, 9 Iowa 350. * * * The trial court correctly ruled that plaintiffs were entitled to enforce their action in the jurisdiction in which the land was situated." Epperly v. Ferguson, 118 Iowa 47, 91 N.W. 816; Urmston v. Evans, 138 Ind. 285, 37 N.E. 792; Miles v. Martin,103 Neb. 261, 171 N.W. 907; Bullitt v. Eastern Kentucky Land Co., 99 Ky. 324, 36 S.W. 16.

In Epperly v. Ferguson, supra, loc. cit. 48, we said:

"Had it been an action by the defendant vendee, there can be no question as to his right to invoke the jurisdiction of the rem, because such action would have concerned the title to the land, and he had the right to have a conveyance thereof decreed by the court, and performed by its proper officer, if found so entitled. It is the general rule that an action for specific performance is primarily in personam, and that a party to such a contract may be sued wherever found. But it does not necessarily follow that such actions must be brought at the residence of the defendant, whether the court there has jurisdiction of the property or not; and, while the general rule is as stated, the action is transitory, unless made local by statute, and may be brought in a court having jurisdiction of the property, or in one having jurisdiction of the person only, at the option of the plaintiff."

So in the case at bar the defendant could have sued the plaintiff upon the promissory notes and could thereafter have enforced a lien for the amount of the judgment against the real estate in question in the county in which the real estate is located.

We think the rule in the case of Lee v. American Trust Savings Bank, 209 Iowa 609, 228 N.W. 570, and other cases cited is controlling of the question raised in this case, and that the trial court correctly ruled that the plaintiffs were entitled to enforce their action in the county in which the land was situated. If a vendee can properly bring an action to rescind a contract for the sale of real estate in the county where the land is situated, the converse must also be true, that the vendor can also bring an action for the cancellation of a deed of trust, for fraud or misrepresentation in procuring notes secured by such trust deed, making them a lien upon the real estate. In the case of Lee v. American Trust Savings Bank, supra, plaintiff was not only authorized to bring an action for rescission of the contract of sale, but was also permitted to recover judgment for the money wrongfully received.

Under a similar statute in Minnesota, it was held that an action to restrain a mortgage from foreclosing his mortgage joined with an action to cancel the mortgage upon real property must be brought in the county in which the property is situated. Kommer v. Harrington, 83 Minn. 114, 85 N.W. 939. In that case the court said:

"It is contended that the court erred in retaining the case in Chippewa county, and in overruling the plaintiffs' objection, properly made to a trial of the case in that county. This contention is without merit. Under the provisions of Gen. St. 1894, section 5183, all actions for the recovery of real property, or of an estate or interest therein, or for the determination in any form of such right or interest, are to be brought and tried in the county in which the subject of the action is situated, subject to the power of the court to change, in a proper case. This being an action tocancel a mortgage on real property situated in Chippewa county, and to expunge the record thereof, it involved the determinationof a right or interest in real estate in that county, within the meaning of the statute fixing the place of trial of civil actions. No one would claim that an action to foreclose a real-estate mortgage could properly be brought or tried in any county other than that in which the real estate is situated. No valid distinction can be made as to the proper county wherein an action to set aside and cancel a real-estate mortgage and its record is to be instituted, and an action brought to foreclose such a mortgage."

As seen by the original opinion and the authorities there cited, the trust deed, so far as the plaintiff is concerned, is equivalent to a mortgage against the real estate in question. If foreclosure proceedings were brought upon this trust deed, it must necessarily be brought in the county in which the real estate is situated. For the same reason an action brought to cancel or rescind the lien of the trust deed must be brought in the same county. In this case the plaintiff seeks to cancel the lien of the trust deed which includes the obligations arising under the notes sought to be canceled. If the consideration for a mortgage is invalid, the mortgage can be canceled. The greater part of the consideration for the lien created by the trust deed in question consists of the notes sought to be canceled. If the notes are invalid, it necessarily follows that the mortgage or trust deed to the extent of the notes sought to be canceled is also invalid.

This trust deed includes land in the county in which the action was commenced. The validity of the trust deed involves a determination of an interest in real estate, and, if the validity of the trust deed depends upon the validity of the notes given as a consideration therefor, then the allegations with reference to the invalidity of the notes are merely incidental to, and are necessarily involved in, determining the validity of the trust deed. Therefore these allegations in connection with plaintiffs' claim to cancel the trust deed and quiet their title in the land necessarily involves a determination of an interest in real estate. The allegation of facts set out in the petition bring it within the terms of section 11034 of the Code.

In addition to the allegations and prayer for the cancellation of the notes and trust deed referred to, plaintiffs ask to have their title to the property, described in the trust deed, quieted in them. It cannot be said that an action to quiet title in the plaintiff does not call for the determination of an interest in real estate.

[2] We think the motion to strike the allegations with reference to the notes, which, by the trust deed, were secured thereby, was properly overruled.

For the above reasons, we believe the entire action should be tried in the county in which the action was commenced. With this additional consideration of the point raised, we adhere to the conclusion reached in the original opinion. The petition for a rehearing is hereby overruled.

CLAUSSEN, C.J., and ANDERSON, MITCHELL, and STEVENS, JJ., concur.