Asbury v. Rowe

124 N.W. 865, 146 Iowa 162

• Court: Supreme Court of Iowa
• Decided: February 18, 1910
• Status: Published

Opinion

McClain, J.

The controversy here presented is one branch only of a suit brought by the receiver of the building and loan association against many stockholders, to set aside settlements made by the secretary with stockholders and others in which an allowance of some assumed value of shares of stock had been made, notwithstanding the fact that the association was, and for a long time prior had been, insolvent, so' that its shares of stock were of no actual value. As to this particular defendant, it was alleged that he was not a member of the association, but as the heir of his mother, who was a member, he had made a settlement by which the association surrendered to him the bond and mortgage given by his mother to the association as evidence of a loan to her of $1,200 on her stock, and that said settlement was made through mutual mistake. For the purpose of this appeal it is conceded that at the time of the alleged settlement the association was insolvent and its stock was worthless, and that the credit of $240 given in the settlement on account of the value of the stock of Mrs. Rowe was so given through error and mistake. On the trial the defendant testified that the bond and mortgage representing Mrs. Rowe’s loan from the association were assigned to him as a part of the settlement by the secretary, and after this transaction with the secretary, in which the amount of his mother’s alleged indebtedness to the association after the credit thereon of the assumed value of her shares of stock had been paid by him, he procured complete title to the property by quitclaim deeds of their respective interests from his co-heirs. By the concession of counsel the sole question as to the correctness of the action of the lower court is whether the transaction between the secretary and this defendant was in fact an assignment of the bond and mortgage to defendant or a settlement with the secretary of the amount of the indebtedness of Mrs. Rowe.

1. Building and loan associations: cancellation of contract: rights of persons not members. Notwithstanding the testimony of defendant that the amount which he paid to the secretary was in satisfaction of his mother’s indebtedness to the association, we reach the conclusion under the evidence that the real object of the payment was to get an assignment of the bond and mortgage which would protect defendant in his title to the property. He testified that the instruments assigned to him, and there is no evidence to It is true that across the face of his mother’s stock was at the same time written a state-were in fact the contrary, certificate of ment that such certificate was paid in full and canceled hy the cancellation of the mortgage which had been paid in full, but if in fact the defendant became the assignee of the bond and mortgage, it would be wholly immaterial, as between him and the association, whether or not the obligations of his mother to the associátion were fully satisfied. Defendant was not a stockholder, and he was under no obligation to pay any assessments due from his mother to the association. If the bond and mortgage were in fact assigned to defendant, then, so far as appears, there was no liability on the part of this defendant to satisfy any claim of the association against his mother.

2 Same: unathorized act of agent: ratification. It is contended by counsel for appellee that the secretary had no authority to make settlement with defendant and assign to him the bond and mortgage. But the association received in pursuance of this settlement a sum of money from the defendant which he was under no obligation to pay, and, having failed to repay or tender to him the return of the money thus received, it has ratified the acts of its secretary, and can not now insist that they were without the scope of his authority. In any event, the settlement was made with the secretary in the usual course of business, and it would seem that under such circumstances the association would be bound. Bohn v. Boone Building & Loan Association, 135 Iowa, 140.

The court erred in entering a decree against the defendant, and such decree is therefore reversed.