Baxter v. Baxter

A prerequisite for an understanding of the questions involved is a statement of the facts leading up to and forming the issues.

For many years, Baxter Brothers Company, a copartnership, operated a private banking institution at Ida Grove. On the 19th day of January, 1925, that concern was declared insolvent, and a receiver appointed by the district court of Ida County. Appellee I.N. Shearer was named and qualified as such receiver. Before this time, however, on the 17th day of December, 1923, a certain business establishment consisting of Howard Deal, appellant herein, and Melvin Bright, customers of said financial organization, to secure a loan therefrom amounting to $7,000, gave thereto a chattel mortgage covering a stock of implements and hardware contained in a retail store, which contract of incumbrance was not recorded until the 17th day of January, 1925.

Next in order of events were the sale and transfer of the interest of said Bright to the appellant Deal, subject to the indebtedness. Then, March 13, 1925, an attempt was made by appellant Deal to sell a one-half interest in said personal property to Paul A. Karo, Jr., subject to compliance with the Bulk Sales Law. Rescission was made by Karo, because he feared future trouble from creditors. The receiver, on June 18, 1925, made application the district court for authority to foreclose the mortgage through public or private sale, by taking possession of said personalty, with the understanding that he cancel and redeliver the said note to appellant Deal when the sale of said chattels was accomplished, regardless of the price obtained. Judicial order was entered accordingly on that day, and possession was taken by the receiver thereunder. Appellant Deal delivered the door keys to the receiver. Pending the location of a purchaser for this stock as part of the process of "foreclosure," the receiver employed appellant Deal as temporary custodian thereof, at a salary of $25 per week; and for a time, Karo was given a similar position.

Meanwhile, on September 30, 1925, the receiver commenced moving the goods and fixtures to another location, when appellant Deal intermeddled, and attempted to dispossess this court official; whereupon permission was sought from the district court to bring suit in equity for a temporary and permanent injunction restraining appellant Deal from interfering with such "possession," and the relief was granted on October 1st of that year. Consequently, the next day, petition for the injunctions was duly filed, and appellant Deal appeared in the cause, filing his answer, praying, among other things, for "possession" and general equitable relief. Interveners then filed their "petitions." Evidence was introduced, and trial had, culminating in a defeat for appellants.

I. Objection is urged against the jurisdiction of the trial court, on the theory that the main action should have been at law in replevin, rather than in equity. Under the facts and 1. ACTIONS: circumstances here involved, we cannot sustain form: appellants' contention in this regard. They waiver. appeared, filed their separate pleadings, and went to trial, with the prayer for "equitable relief," without moving to transfer the cause. Section 10949 of the Code of 1924 provides:

"An error as to the kind of proceedings adopted in the action is waived by a failure to move for its correction at the time and in the manner prescribed in this chapter; and all errors in the decisions of the court are waived unless excepted to at the time * * *."

II. Moreover, this was not a contest on the part of the receiver to obtain "possession" of the "property," but rather, it was an effort by him to prevent appellant Deal from molesting him in that already had. No other conclusion can result from a fair reading of the record. Some conflict in the testimony may appear; but the greater weight thereof, as well as other surrounding facts and circumstances, preponderates in favor of the receiver's claim; and even the disputed statements relate rather to what would amount to purported concessions of the receiver made out of court, without previous authority or subsequent confirmation. Such indicated compromises, even if fully established, could not be binding. In Sherman v. Linderson, 204 Iowa 532, we said:

"* * * the receiver being an officer of the court, he had no power to make a compromise and settlement of this character, without either having an order of the court, in the first instance, to make such settlement, or the approval of the court of the settlement, after so made."

Therefore, the receiver had a right to continue the "foreclosure" and retain "possession" for this purpose, in accordance with the authority granted in the "mortgage" itself.

III. Special redress is sought by interveners on the theory that the "mortgage" in question was held from record by Baxter Brothers Company for the purpose of defrauding creditors, and that the sale items upon which their respective claims are based were contracted without knowledge of this particular lien.

If such withholding was under an arrangement to enable the obtaining of credit by the debtor, those who became creditors in ignorance thereof may avoid the transaction. Snouffer v.Kinley, 96 Iowa 102. On the other hand, mere failure to record 2. CHATTEL will not amount to fraud against subsequent MORTGAGES: "creditors." In re Assignment of Lemert v. recording: McKibben, 91 Iowa 345; In re Assignment of withholding Bloomfield Woolen Mills, 101 Iowa 181; from record: Groetzinger Co. v. Wyman, 105 Iowa 574. See, effect. also, Palo Sav. Bank v. Cameron, 184 Iowa 183.

So, in the case at bar, the instrument was not kept from the "record" because of any prior agreement, but rather for other reasons, foreign to the acquirement of "credit." True, there is a conflict in the "record" about this, but, after full and careful consideration, we agree with the district court that the scales balance in favor of appellees.

The judgment of the district court should be, and hereby is, affirmed. — Affirmed.