Sullivan v. Murphy

I do not concur in the opinion of the majority. I can best express my views by treating the case as I interpret the appeal.

This case comes on appeal upon the pleadings and a stipulation, from which it appears that on August 6, 1927, Mason Murphy, one of the defendants herein and the then owner of the real estate embraced in this cause of action, and his wife, Mary J. Murphy, mortgaged a tract of land, consisting of about two acres, to one M.I. Pence. The mortgage contains the following language:

"And this mortgage is also expressly made to secure any claims held by the mortgagee against the mortgagors or either of them for any future loans, advances or indebtedness accruing from said grantors or either of them or their assigns to said grantee, or his assigns or beneficiaries, or any claims which may come intothe hands of said mortgagee or his assigns, by purchase orotherwise, against said mortgagors or either of them." (Writer's italics.)

We are here concerned only with the words "or any claims which may come into the hands of said mortgagee or his assigns, by purchase or otherwise, against said mortgagors or either of them."

On December 7th, 1927, Pence assigned the mortgage and $1,200.00 note secured thereby to the appellant Sullivan, a bonafides purchaser thereof, in due course, without any notice of any alleged infirmities in said note or mortgage. The due date of said note was August 6th, 1928, and Sullivan in purchasing the same, paid the full value therefor and took an assignment of the mortgage. On the same day, December 7th, 1927, Sullivan purchased a promissory note given by Mason Murphy, in the principal sum of $1,500.00, payable to B.S. Armstrong, due March 12th, 1928. In the purchase of this $1,500.00 note from Armstrong, Sullivan was a purchaser in good faith, in due course, without any notice of any alleged infirmities in said note and mortgage, and Sullivan paid Armstrong full value for said note.

It is agreed that Sullivan, in the purchase of each of said notes, relied upon the terms and provisions of the mortgage as security for the notes, and but for the terms of the said mortgage the plaintiff would not have purchased either of said notes. The mortgage was duly filed for record and recorded on the 6th of August, 1927, in the office of the Recorder of Deeds, Davis County, Iowa. On behalf of the defendants it is agreed of record that if Mason Murphy and Mary J. Murphy were to testify, they would state that they did not have any intention, in the giving of the mortgage embraced in this cause of action, to secure the payment of the note dated March 12th, 1927, for $1,500.00.

It is conceded that part of the land embraced in the mortgage herein sought to be foreclosed is the homestead of the defendants, that the greater portion of the money necessary to purchase said homestead was furnished by the defendant Mary J. Murphy, and further that at the time of the execution of the $1,200.00 note and mortgage sued upon, the said Mary J. Murphy refused to sign said note and mortgage unless and until the said Mason Murphy, in whose name said property rested at said time, agreed and promised to convey to the said Mary J. Murphy said whole two acre tract; that the said Mary J. Murphy received no part of the money represented by the $1,200.00 note sued on, but the money thereby received went to pay a debt of Mason Murphy. That it was for this reason that the said Mary J. Murphy refused to sign the note and mortgage of $1,200.00 until the said Mason Murphy agreed, in consideration of her signing said note and mortgage, and the further consideration that the said homestead was purchased largely with money belonging to her, to convey to her said property. That said oral agreement was made by Mason Murphy and in consideration thereof the said Mary J. Murphy signed said note and mortgage for $1,200.00. That said Mason Murphy delayed compliance with said agreement until the 14th day of February, 1928, more than two months after the mortgage was given, when the said Mason Murphy executed a warranty deed to the said Mary J. Murphy conveying said two acres, subject to the mortgage. That said deed is now of record in the office of the Recorder of Davis County, Iowa. That said Mason Murphy and Mary J. Murphy will testify that said mortgage was not read to Mary J. Murphy or by Mary J. Murphy before she signed the same. That Mason Murphy had told Mary J. Murphy, not within the hearing of the Notary Public who took the acknowledgment, that said mortgage secured only the $1,200.00 note sued on, herein.

It is further agreed that it was the purpose and intent of said R.D. Sullivan in purchasing the $1,200.00 note and mortgage embraced in this cause of action, to purchase, at the same time, the $1,500.00 note embraced in this cause of action and to bring the said $1,500.00 note under the terms of said mortgage sued upon herein. It clearly appears that no one but Mary J. Murphy and her husband, Mason Murphy, knew either of her refusal to sign the mortgage until the promise to convey was made, or knew that any such promise was in fact made.

The court entered decree and judgment in favor of R.D. Sullivan, in personam, against Mason Murphy and Mary J. Murphy, and in rem against the land involved, in the amount of $1,200.00 and interest figured only up to February 4th, 1929. The court also rendered a decree in favor of the plaintiff, in personam, against Mason Murphy for the amount of $1,500.00 with interest, but finds that the $1,500.00 note is not covered by the mortgage in controversy.

I. One of the main contentions in this case is that the $1,500.00 note is not covered by the mortgage under consideration. Furthermore, the defendants claim they did not understand the mortgage covered the $1,500.00 note. It will be noted that the language of the mortgage is unusually broad: "And this mortgage is also expressly made to secure any claim held by the mortgagee against the mortgagors or either of them for any future loans, advances or indebtedness accruing from said grantors or either of them * * * or any claims that may come into the hands of said mortgagee, or his assigns, by purchase or otherwise, against said mortgagors or either of them." There is nothing ambiguous about this language. It expressly provides, not only for future loans and advances, as between the parties, but expressly provides security for any claims which may come into the hands of said mortgagee or his assigns by purchase orotherwise, against said mortgagors or either of them. It is difficult to conceive how the meaning of the language could be more definitely set forth. To begin with, it is a settled rule that a mortgage may secure not only the amount passing at the time of its execution, but also future advances. Magirl v. Magirl, 89 Iowa 342.

In Collins v. Gregg, 109 Iowa 506, a mortgage on some real estate and a chattel mortgage were given to secure the payment of certain promissory notes and a book account. The instrument contained this language: "`a sum of money equal to all the claims and evidences of indebtedness that said W.H. Gregg shall have against said B.L. and W.M. Collins.'" By parol evidence it was shown and the court found that future advances were included. This court then says:

"It is urged on the part of plaintiffs that the claims set up by defendant as representing money advanced by him were purchased at a discount, and are now put into the account at their face value. This point is disposed of by our finding as to the settlement, which is conclusive on the parties."

By inference at least, this case recognizes the right to cover by a mortgage not only future advances, but claims held by other parties, purchased even at a discount.

In Corn Belt Trust Savings Bank v. May, 197 Iowa 54, this court said:

"The authorities hold that the agreement that future advances shall be secured need not even be reduced to writing, but may be shown by parol evidence. * * * It seems to be well settled that a mortgage to secure future advances, even though it does not disclose such purpose on its face, is valid between the parties, or as against any subsequent incumbrancer not prejudiced thereby."

In Turnis v. Ballou, 201 Iowa 468, a similar mortgage clause was under consideration. It was as follows:

"`It is expressly agreed that this mortgage shall stand as security for any other indebtedness the mortgagee may hold oracquire against the said mortgagor, mortgagors or either or any of them; and also for any future advances made to said mortgagor, mortgagors, or either or any of them.'" (Writer's italics).

It will be noted that this clause not only provides for future advances, but provides security for claims which the mortgagor may acquire against either the mortgagor, the mortgagors, or either or any of them. The suit was brought by the assignee of the mortgagee. A decree in favor of the plaintiff, the assignee, enforcing such a mortgage was sustained by this court.

In Corn Belt Savings Bank v. Kriz, 207 Iowa 11, the covenant in the mortgage reads as follows:

"`The said mortgagor hereby covenants * * * second to pay all other indebtedness that the mortgagee may hold or acquire against said mortgagor, or either of them, and pay any and all notes and other obligations which the mortgagor, or either of them, may at any time be owing the mortgagee during the existence of this mortgage.'" (Writer's italics).

It will be noted that here also the contested language contains the words "may hold or acquire." A decree for the plaintiff was sustained by this court.

It will be remembered that we are not here dealing with any attempt to reform the instrument. The court, by indirection at least, reformed the instrument and made a new contract for the parties, and this notwithstanding the fact that the plaintiff Sullivan is a bona fide purchaser, pleading estoppel against the Murphys.

"* * * as against a subsequent bona fide purchaser for value, a court of equity will not relieve a prior party, on the ground of accident, or mistake, by granting a remedy otherwise appropriate, such as setting aside a conveyance which had been executed by the plaintiff under a mistake or ignorance of his rights, or correcting an instrument executed under a mistake of fact." Pomeroy Equity Jurisprudence, Sec. 776.

In Clasey v. Sigg, 51 Iowa 371, this court said:

"That the bona fide assignee of a note and mortgage, without notice of infirmities, was not affected thereby, was held in Preston, Kean Co. v. Case, 42 Iowa 549. This case was followed in Farmers' National Bank v. Fletcher, 44 Id. 252. In both of these cases, as well as the one at bar, the notes secured by the mortgages were negotiable and had been transferred before due. * * * When the bank obtained the note and mortgage there was nothing of record impeaching the mortgage in any respect. Its title thereto was, therefore, perfect and complete, and we are not prepared to say it could not make with safety future advances thereon."

In Carpenter v. Longan, 16 Wallace (U.S.) 271, the defendants Longan and wife executed a promissory note to the assignee of plaintiff, or order, for a certain sum payable at a certain time, and gave a mortgage on certain real estate conditioned for the payment of the note at maturity. Two months before the maturity of the note, the original owner of the note and mortgage assigned the same to the plaintiff. The note not being paid at maturity, suit was brought for the foreclosure of the mortgage. The defendant raised certain defenses against the mortgage. The Supreme Court said:

"The assignment of a note underdue raises the presumption of the want of notice, and this presumption stands until it is overcome by sufficient proof. The case is a different one from what it would be if the mortgage stood alone, or the note was non-negotiable, or had been assigned after maturity. The question presented for our determination is, whether an assignee, under the circumstances of this case, takes the mortgage as he takes the note, free from the objections to which it was liable in the hands of the mortgagee. We hold the affirmative. The contract as regards the note was that the maker should pay it at maturity to any bona fide indorsee, without reference to any defenses to which it might have been liable in the hands of the payee. The mortgage was conditioned to secure the fulfilment of that contract. To let in such a defense against such a holder would be a clear departure from the agreement of the mortgagor and mortgagee, to which the assignee subsequently, in good faith, became a party. If the mortgagor desired to reserve such an advantage, he should have given a non-negotiable instrument. If one of two innocent persons must suffer by a deceit, it is more consonant to reason that he who `puts trust and confidence in the deceiver should be a loser rather than a stranger.'"

In First National Bank of St. Thomas v. Flath, 86 N.W. 867 (N.D.), the court says, after quoting from Carpenter v. Longan, 16 Wall. 271:

"`All the authorities agree that the debt is the principal thing, and the mortgage an accessory. Equity puts the principal and accessory upon a footing of equality, and gives to the assignee of the evidence of the debt the same rights in regard to both. There is no analogy between this case and one where a chose in action, standing alone, is sought to be enforced. The fallacy which lies in overlooking this distinction has misled many able minds, and is the source of all the confusion that exists. The mortgage can have no separate existence. When the note is paid, the mortgage expires. It cannot survive for a moment the debt which the note represents. This dependent and incidental relation is the controlling consideration, and takes the case out of the rule applied to choses in action, where no such relation of dependence.'"

The $1,500.00 note and mortgage have passed into the hands of an innocent party who purchased both notes for face value and accumulated interest, and who purchased the mortgage when he bought the $1200.00 note. This purchase was made after the mortgage had been placed of record in accordance with law. There is no showing whatever that the original mortgagor knew anything about the difficulties, if any, between Mason Murphy and Mary Murphy, his wife. Whatever was said between the Murphys and whatever verbal agreements, if any were made between Murphy and his wife, were purely secret agreements known to no one else until after this suit was brought. There is no evidence that the plaintiff in this case had any knowledge whatever of any such difficulties, agreements or understandings between the Murphys. The mortgage was duly and properly acknowledged and, as thus acknowledged, it was put on record and was on record at the time the plaintiff purchased the mortgage and the two notes in controversy.

Having thus solemnly executed a written instrument and acknowledged it, and having placed the same on record as notice to the world, they now seek, as a defense to the foreclosure of the instrument, to set up these secret conversations between them and to take advantage of alleged secret agreements between them in reference to the terms of the mortgage and the property covered thereby, and the claim that they did not understand the mortgage covered more than the $1,200.00 note. Included in these claims is the one made on behalf of Mary Murphy that she did not read the instrument. We will deal with this later.

It is clearly shown by the record that no fraud or deceit of any kind was practiced by the original mortgagee upon either Mason Murphy or Mary Murphy. Obviously the plaintiff did not practice any fraud or deceit. At the time of the transaction the property stood in Mason Murphy's name. He was in need of money and as an inducement to Pence, the original mortgagee and plaintiff's assignor, he offered a mortgage to secure the $1,200.00 of money being borrowed, and, as an additional inducement, tendered in the instrument in terms expressly providing that the land covered by the mortgage should also secure the payment of any other indebtedness of Murphy which might come into the hands of Pence, or his assignee, by purchase or otherwise. So far as Pence is concerned, this instrument was of no different character or force than the instruments in Turnis v. Ballou, 201 Iowa 468, or Corn Belt Savings Bank v. Kriz, 207 Iowa 11.

Each of the instruments in said cases covered all indebtedness the mortgagee might hold against the mortgagor or might acquire against the mortgagors, or either of them. The principle having been laid down in the foregoing cases that the mortgagee might foreclose the mortgage not only for the amounts passing at the time of the making of the instrument, but for future advances and also for claims which the mortgagee might acquire against either the mortgagor, or the mortgagors, or either or any of them, upon what principle of law or equity can it be said that an assignee of the mortgage and the note, passing at the time the mortgage was executed; should not have the same rights, particularly when, as in this case, the assignee, in good faith and without notice and before maturity paid full value for both the instrument which passed at the time the mortgage was made and the other instrument which he acquired after he became an assignee. The original transaction was made for the benefit of Murphy; he needed money. The terms of the mortgage were plain and unambiguous. The mortgagee was guilty of no fraud or concealment or deception of any kind, in procuring the instrument.

Moreover, cases may easily arise in which property owners having outstanding indebtedness to one or more parties may be utterly unable to procure additional loans unless the lender may be able to protect himself by including in the security given for the loan the right to buy up all other claims outstanding against the mortgagors in order thus to protect himself in the security given for the last loan. With such a clause, he may protect the mortgagors from vexatious and expensive litigation and from a dissipation of the property involved. The mere fact that the mortgage in express terms named a consideration of $1,200.00 does not control where it plainly appears in the terms of the mortgage that the mortgage was intended to secure future advances and acquired claims. The amount named as consideration of the mortgage does not limit the amount for which the mortgage may stand as security, if, from the whole instrument, the intent to secure future indebtedness is to be gathered. Citizens' Savings Bank v. Kock (Mich.), 75 N.W. 458; Keyes v. Bump's Admr. (Vt.), 9 A. 598.

As previously stated, the property at the time the mortgage was made, stood in the name of Mason Murphy. A part of it was his homestead; the wife joined in the mortgage.

Assuming that the mortgage, if given on property other than the homestead, would be valid and binding as security for the payment of both notes involved, it must be held to be valid and enforceable as against the homestead as well. Here we have an instrument signed by both the husband and wife, and acknowledged by each of them at the same time before the same notary public. This fulfills the statutory requirement as to alienation of the homestead.

As previously stated, it is not claimed that the original mortgagee practiced any fraud, deception or undue influence over either Mason Murphy or his wife, Mary Murphy. The instrument, therefore, was freely executed and delivered for a valuable consideration in the ordinary course of business in the manner prescribed by the law of this state, that is to say; both parties joined in the same instrument and it was properly acknowledged and recorded as by law provided.

II. It is claimed that Mary Murphy did not read the mortgage before she signed it. It is unnecessary to restate, at any great length, what has so often been said by this court on the subject of the duty of the party signing an instrument to read the same, or have it read to him. Having in mind that the mortgagee used no deception or artifice to prevent Mary Murphy from reading the mortgage and that the original mortgagee did nothing which could in any wise be construed as influencing Mary Murphy not to read the instrument before signing it, we quote from Turnis v. Ballou,201 Iowa 468, as follows:

"The rationale of the rule estopping a party to a contract from saying that he did not read it, where no fraud, artifice, or ruse is practiced, is well stated by Judge Sanborn in an opinion concurred in by Justice Brewer and Judge Thayer in Chicago, St. P., M. O.R. Co. v. Belliwith, 28 C.C.A. 358 (83 Fed. 437, 439), as follows: `A written contract is the highest evidence of the terms of an agreement between the parties to it, and it is the duty of every contracting party to learn and know its contents before he signs and delivers it. He owes this duty to the other party to the contract, because the latter may, and probably will, pay his money and shape his action in reliance upon the agreement. He owes it to the public, which, as a matter of public policy, treats the written contract as a conclusive answer to the question, what was the agreement? If one can read his contract, his failure to do so is such gross negligence that it will estop him from denying it unless he has been dissuaded from reading it by some trick or artifice practiced by the opposite party. * * * This is a just and salutary rule, because the other contracting party universally acts and changes his position on the faith of the contract; and it would be a gross fraud upon him to permit one who has received the benefits of the agreement in silence to escape from its burdens by proof that he did not know and did not inquire what these burdens were, when he assumed them. * * * A written instrument cannot be avoided for fraud or mistake unless the evidence of the fraud or mistake is clear, unequivocal, and convincing.'"

See also Houchin v. Auracher, 194 Iowa 606, approving the rule as laid down in McCormack v. Molburg, 43 Iowa 561, as follows:

"The defendant does not state that plaintiffs used any artifice to prevent him from reading the contract, nor does he state that he was unacquainted with the English language, or that he could not read. In fact no excuse whatever is given, except that he signed the contract relying on the representation of plaintiffs as to its contents. This is inexcusable neglect, and the defendant must suffer the consequences of his own folly. The effect of such a rule as that claimed by appellant would be to render written contracts of but little practical value over those existing in parol only."

Here the mortgagee made no representations.

See also First National Bank v. Ten Napel, 198 Iowa 816; Bixler Co. v. Argyros, 206 Iowa 1081, approving the rule laid down in Bonnot Co. v. Newman Bros., 108 Iowa 158, as follows:

"While persons, on the faith of another's word alone, every day sign contracts without reading them, the law has ever adjudged this such indifference as will preclude a remedy in event of deception. This is on the ground that, having the full means of knowledge and of determination, they nevertheless rely upon the representations of another, having no better facilities for knowing, without themselves exercising the means open for ascertaining the truth."

See also Charlson v. Farmers State Bank, 201 Iowa 120. Many other cases might be cited along the same line.

The plaintiff pleads estoppel in this case. Without determining whether estoppel obtains, we quote from a few of our cases on the subject.

In In re Estate of McDonald, 167 Iowa 582, this court said:

"Thus where one asserts a fact to be true, and another, in good faith, relying upon the assertion, acts so that to deny it would be prejudicial to him, the party making this assertion cannot afterwards, under such circumstances, assert to the contrary to the prejudice of the other. But in order to create an estoppel it must appear that the other party relied upon the statements made, believed them to be true, and acted upon them, and that to permit a denial thereafter would work prejudice."

In Sessions v. Rice, 70 Iowa 306, is found the following language:

"Every person will be conclusively presumed to intend to be understood according to the reasonable import of his words; and where a person's words are thus reasonably understood, and justly acted upon by another, such person cannot be heard to aver to the contrary, as against the other. Morgan v. Railroad Co.,96 U.S. 716 (720); Continental Nat. Bank v. National Bank of Com., 50 N Y, 575 (583)."

As was said in Citizens' Savings Bank v. Kock, 75 N.W. 458 (Mich.):

"It is contended, further, that the parties understood that the mortgages were security only for the amount named in each. Theterms of the mortgage must control this question." (Writer's italics.)

In Helwig, Admr., v. Fogelsong, 166 Iowa 715, the court said:

"A fraudulent intention is not essential to the doctrine of estoppel. It is enough if a fraudulent effect would follow allowing a party to set up a claim inconsistent with his former declarations or conduct."

In Blackman v. Carey, 192 Iowa 548, is found the following:

"If a party to a contract or transaction induces another to act upon the reasonable belief that he will waive certain rights or terms, he will be estopped to insist upon such rights to the injury of him who is misled thereby."

In Hamaker v. Johnson, 199 Iowa 1298, the court approved the following language:

"`A party may not deny which he has solemnly asserted to be true, when such denial will prejudice one who has relied upon his former statement.' Criley v. Cassel, 144 Iowa 685."

The defendants in this case, by solemn written instrument, acknowledged before a notary public and placed on file, declared:

"This mortgage is also expressly made to secure any claims held by the mortgagee against the mortgagors or either of them for any future loans, advances or indebtedness accruing from said grantors or either of them * * * or any claims which may comeinto the hands of said mortgagee or his assigns, by purchase orotherwise, against said mortgagors or either of them." (Writer's italics).

Can the parties who jointly signed, executed and delivered this instrument and acknowledged it before a notary be now heard to say what their intentions were in signing it, notwithstanding the clear, unambiguous terms of the instrument, particularly when to do so is to permit them to commit a wrong against an innocent purchaser, who relied upon the written instrument as executed, after he found the same on the public records and who paid full value, principal and interest, for the notes in question, before maturity and without any knowledge whatever of any of the claims now being made by the defendants? What would become of the certainty and stability of written instruments, in the ordinary course of business, under such circumstances?

As was said in Coffin v. Younker, 196 Iowa 1021:

"Equity does not interfere to prevent the enforcement of the express terms of a legal contract, even though, by virtue of circumstances, such enforcement may work a hardship upon one of the contracting parties."

And further as was said in Phillips v. McIlrath, 205 Iowa 1126:

"It is not the province of a court of equity to make contracts for the parties, nor to modify such as may have been voluntarily entered into, merely because the carrying out of their terms may ultimately result in grave injustice to one or the other of the parties thereto."

III. The defendants resist the enforcement of this mortgage on the ground that the clause in controversy is contrary to public policy. In Richmond v. Dubuque Sioux City R.R. Co., 26 Iowa 191, this court said, in commenting on holding contracts void because of public policy, as follows:

"But further than this, the power of courts to declare a contract void for being in contravention of sound public policy, is a very delicate and undefined power, and like the power to declare a statute unconstitutional, should be exercised only in cases free from doubt."

In Cole v. The Brown-Hurley Hdw. Co., 139 Iowa 487, this court approved the foregoing quotation from the Richmond case and further stated:

"This statement has often been quoted with approval by the courts of other States, and, so far as we are aware, its correctness has never been questioned. So long as the corrupting or impolitic character of the agreement is not so clear as to be readily apparent to the intelligent and impartial mind, the just principles of the law, which hold every man to a fair and full performance of his contract, ought not be made to yield to any doubtful construction of that somewhat variable and altogether undefined thing which we call public policy. While protecting the interests of the public, the rights and interests of individuals are not to be unnecessarily sacrificed."

In this Cole case, supra, the court quotes with approval from Kellog v. Larkin (Wis.), 56 Amer. Dec. 164, as follows:

"But I insist that, before a court should determine a contract which has been made in good faith stipulating for nothing that ismalum in se, nothing that is made malum prohibitum, to be void as contravening the policy of the state, it should be satisfied that the advantage to accrue to the public from so holding is certain and substantial, not theoretical or problematical, and I submit that he is the safest magistrate who is more watchful over the rights of the individual than over the convenience of the public, as that is the best government which guards more vigilantly the freedom of the subject than the rights of the state."

This court also approved in said Cole case the language of the English Court in Richardson v. Mellish, 2 Bing. 229, as follows:

"I * * * protest, as my lord has done, against arguing too strongly upon public policy; — it is a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail."

Quoting further from the Cole case:

"Indeed, without extending citations, it may be said that the consensus of judicial opinion as expressed in the cases is that the power to invalidate commercial and business agreements on the grounds of public policy is so far reaching and so easily abused that it should be called into action to set aside or annul the solemn engagements of parties dealing on equal terms only in cases where the corrupt or dangerous tendency clearly and unequivocally appears upon the face of the contract itself, or is the necessary inference from the matters which are expressed. The only apparent exception to this general rule is to be found in those cases where the contract, though fair and unobjectionable upon its face, is a part of a corrupt scheme, and is made to disguise the real nature of the transaction."

In Wilson Subdrainage Dist. v. Richardson, 195 Iowa 345, this court said:

"No court should hesitate to declare void any agreement or contract to corrupt or improperly influence the official conduct of any public servant; but it is an equally sound principle which leads courts to declare that, before applying such remedy, and permitting one who has received a valuable consideration for a promise fair upon its face to escape its performance by pleading the invalidity of his own agreement, such fatal defect therein must be so clear as to be free from doubt."

In Liggett v. Shriver, 181 Iowa 260, this court, speaking through Justice Stevens, said:

"In general, however, it may be said that any contract which conflicts with the morals of the times or contravenes any established interest of society is contrary to public policy. We must look to the Constitution, statutes and judicial decisions of the state to determine its public policy, and that which is notprohibited by statute, condemned by judicial decision, norcontrary to the public morals, contravenes no principle of publicpolicy. Spead v. Tomlinson, (N.H.) 59 A. 376; Lipscomb v. Adams, (Mo.) 91 S.W. 1046; McGuffin v. Coyle Guss, (Okla.) 85 P. 954; Lawson v. Cobban, (Mont.) 99 P. 128; Atlantic Coast Line R. Co. v. Beazley, (Fla.) 45 So. 761; Brooks v. Cooper, (N.J.) 26 A. 978; Veazey v. Allen, (N.Y.) 66 N.E. 103; McClanahan v. Breeding, (Ind.) 88 N.E. 695." (Writer's italics).

Many decisions of various courts on this subject might be quoted. Generally speaking, the rule is that the public policy of a state or nation must be determined by its constitution, laws and judicial decisions, not by the varying opinions of laymen, lawyers, or judges, as to what the interest of the public demands. Furthermore, the party who seeks to put a restraint upon the freedom of contract in any case must make it plainly and obviously clear that the contract in question is against public policy.

Agreements are not to be held void as being contrary to public policy unless they are clearly contrary to what the legislature or judicial decision has declared to be contrary to public policy or that manifestly tend to injure the public in some way. Hartford Fire Insurance Co. v. C.M. St. P.R. Co., 70 Fed. 201, and affirmed by the Supreme Court in 175 U.S. 91. Order of St. Benedict v. Steinhauser, 234 U.S. 640; Cole v. Brown-Hurley Hdw. Co., 139 Iowa 487.

"`The public policy of a state is the law of that state as found in its constitution, its statutory enactments, and its judicial records.'" Hagan v. Cone (Ga. App.), 94 S.E. 602.

"In a judicial sense, public policy does not mean simply sound policy, or good policy, but it means the policy of a state established for the public weal, `either by law, by courts, or general consent.'" Clough v. Gardiner, 182 N.Y.S. 803.

See also Lamoille County Savings Bank Trust Co. v. Belden (Vt.), 98 A. 1002, in which the court held that the clause "and shall pay said bank all further sums we or either of us now owe it in any way" included in the mortgage security for a note given by the mortgagor to a third party, and by the third party sold to the mortgagee.

"In this respect, the question in the instant case is therefore not to be determined on public policy, but on the intention of the parties as gathered from the mortgage itself under rules applicable to the construction of such written instruments."

The note being considered by the court is known as the Pike note, and C.F. Eddy was the mortgagor. The court said:

"In the absence of any finding of conspiracy, as claimed by the appellant, the mortgage must be given the full operation in this respect, notwithstanding C.F. Eddy gave the Pike note notunderstanding or intending that it should be so secured. Theintended scope of the mortgage controls." (Writer's italics).

Lamoille County Savings Bank Trust Co. v. Belden (Vt.), 98 A. 1002, and cases cited; Collins v. Gregg, 109 Iowa 506.

These rules find support in the cases generally. How can it be said that the clause in question found in the mortgage is violative of any public statute either in letter or in spirit? The only statutory limitation pertaining to alienation of a homestead is, in substance, that the husband and wife must join in the same instrument. This was done in this case. As has been already pointed out by citations from the decisions of this court, the clause under consideration, found in the mortgage, does not violate any decision of this court. On the contrary, it is entirely in line with our decisions, and to hold that this clause is contrary to public policy and be consistent, this court must necessarily overrule a line of decisions extending over a period of years, particularly Turnis v. Ballou, 201 Iowa 468, and Corn Belt Savings Bank v. Kriz, 207 Iowa 11.

In the final analysis this case involves but one simple proposition, and that is whether or not two competent people, without any fraud, misrepresentation, deceit, or overreaching of any kind, can legally enter into a contract involving property when such contract is based on a valid consideration. As I read the majority opinion, the ultimate result therein announced is that this cannot be done. I think such conclusion violates familiar, basic, and fundamental principles of the law of contract.

No public policy whatever is here involved. It is the well-established rule of this court that a mortgagor can execute a chattel mortgage to cover after acquired property that is not in existence at the time the mortgage is given, and no one has ever suggested that such a contract is against public policy. If this can be done, I know of no logical or legal reason why a mortgagor cannot as well execute a chattel mortgage on his property to cover "after acquired indebtedness" acquired by the mortgagee. If the latter is against public policy, then the former must be also. I fail to see any question of public policy involved in either instance.

I repeat, two competent people, without any fraud or other illegal act, have a perfect legal right to enter into a contract in regard to their future property and also in regard to their future indebtedness. The majority opinion denies the right to so contract. To this I respectfully but most firmly dissent.

Justices STEVENS, FAVILLE and WAGNER join in this dissent.