Van Gorden v. Lunt

13 N.W.2d 341, 234 Iowa 832, 1944 Iowa Sup. LEXIS 411
CourtSupreme Court of Iowa
DecidedMarch 7, 1944
DocketNo. 46426.
StatusPublished
Cited by13 cases

This text of 13 N.W.2d 341 (Van Gorden v. Lunt) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Van Gorden v. Lunt, 13 N.W.2d 341, 234 Iowa 832, 1944 Iowa Sup. LEXIS 411 (iowa 1944).

Opinion

Garfield, J.

This is another of several suits to come before us involving the Henry W. Lunt trust. See In re Trust of Lunt, 232 Iowa 397, 4 N. W. 2d 231, which cites the previous cases. Plaintiffs are Mattie Lunt Van Gorden and Elba Lunt Van Gorden, each the owner of a one-fifth beneficial interest in the trust. Defendants are Walter L. Lunt and Edward L. Butler, trustees, Walter L. Lunt, individually, Gordon R. Lunt, and *834 Willie C. Lunt. Gordon owns two-fifths and Walter the remaining one-fifth beneficial interest in the trust.

I. Count I is based on payment by plaintiffs of a deficiency judgment against the trust in favor of the Aetna Life Insurance Company. The facts are these: In March 1925, Willie C. Lunt. owned a one-fifth, beneficial interest in the trust. (In 1937 Gordon acquired that interest.) Willie became financially involved and in 1923 had assigned or mortgaged his interest in the trust real estate to secure his debt of $7,500 to a bank. On March 11, 1925, the trustees and the four children of Henry W. Lunt who were then living (owners of four fifths of the beneficial interest) made a note for $7,500 to the Aetna Life Insurance Company, secured by a mortgage on a farm of 126 acres known as the Gable farm, owned by the trust and occupied by Willie. Application for the loan, signed by the trustees and Willie, was made to raise funds to pay off Willie’s debt to the bank. Proceeds of the loan were immediately used for that purpose. The trustees endorsed the draft from the Aetna over '.to the bank.

The Aetna mortgage was foreclosed. Decree of foreclosure was entered on June 21, 1937. At the execution sale on this foreclosure, the mortgagee bid in the Gable farm at $7,600 and acquired sheriff’s deed thereto. A deficiency judgment was left of $2,107. The Aetna caused general execution to be issued and levied on 515 acres of trust real estate to satisfy this deficiency. The trustees had no funds with which to pay it. Cole R. Yan Gorden, then one of the trustees and husband of one of the plaintiffs, asked plaintiffs to pay off the deficiency, which they did i-n May 1939.

Oh Count I, plaintiffs’ prayer is that their claim for $2,389 (the $2,107, with interest and costs) be established against the trust, the trustees pay the same, plaintiffs be subrogated to the lien of the Aetna upon the lands of the trust, and the lien be established. No other relief is asked. Gordon R. Lunt contends plaintiffs are not entitled 1o recover because the Aetna loan was made without his-knowledge or consent, the transaction was of no benefit to the trust but was for the accommodation of Willie, for whose benefit the proceeds of the loan were used. Plaintiffs rely strongly upon the adjudication in the mortgage foreclosure *835 as establishing the liability of the trust on the Aetna note and contend they were required to prove only that the Aetna judgment was a debt of the trust which they paid at the request of a trustee because he could not pay. The lower court granted the relief asked on Count I.

The only defendant to the mortgage foreclosure who filed answer in that suit is Gordon R. Lunt. His principal contention in that suit was that the Aetna note and mortgage were not valid obligations of the trust because not signed by him nor made with his consent. The court held, however, in the foreclosure, that under the trust agreement it was necessary that only the trustees and the living children of Henry W. sign the note and mortgage. Gordon is not a son of Hemry W. but of Johnson R. Lunt, who, in turn, was a son of Henry W. In 1922 Johnson died and Gordon later acquired‘his interest in the trust.

Unquestionably, it was adjudicated in the foreclosure, as between the Aetna on the one hand and the trustees and beneficiaries on the other, that the trust was liable to the Aetna on the note and mortgage. All that was determined in the foreclosure was the liability of the mortgagors to the mortgagee. The rights of the defendants as between themselves were in no way involved or adjudicated. No issue was raised as between them. The trastees and the beneficiaries were coparties, not adverse parties, in that suit. Generally, a former judgment held to be res adjudicata in a subsequent suit is rendered in an action in which the parties to the subsequent suit were adverse parties and not merely eoparties. While a judgment is res adjudicata as to issues between the judgment creditor and judgment debtors, it is not so as to issues which were not litigated or determined between the debtors themselves. 13 Am. Jur. 55, 56, section 60; 30 Am. Jur. 966, 967, section 233; 34 C. J. 1040, 1041, section 1478; Kemerer v. State Farm Mut. Auto. Ins. Assn., 201 Minn. 239, 276 N. W. 228, 230, 114 A. L. R. 173, and cases cited; Estate of Ryan, 157 Wis. 576, 147 N. W. 993, 994, L. R. A. 1917A, 443, Ann. Cas. 1916D, 840. See, also, First Nat. Bk. v. City of Emmetsburg, 157 Iowa 555, 569, 138 N. W. 451, L. R. A. 1915A, 982.

AVhile perhaps this is not strictly a suit for contribution, it is of that nature. A judgment against a number of defendants *836 does not prevent a defendant from showing, in- a subsequent action between them, that as between themselves he was not liable and therefore not bound to make contribution.' 13 Am. Jur. 55, 56, section 60; annotation 101 A. L. R. 104, 120; Kennedy v. Independent Sch. Dist., 48 Iowa 189, 193; Hedges v. Mehring, 76 Ind. App. 496, 130 N. E. 423, 424. There is not such a merger of the debt in the judgment that the relation of the parties upon the issue of contribution is fixed by the judgment. 13 Am. Jur. 54, 55, section 59. Further, plaintiffs’ cause of action here did not arise until they paid the deficiency judgment. 18 C. J. S. 7, section 4; 13 Am. Jur. 14, section 10; Novak v. Dupont, 112 Iowa 334, 336, 83 N. W. 1062; Hedges v. Mehring, supra. At the time of the foreclosure decree it was not even known there would be a deficiency. It can hardly be claimed here that the rights of the parties between themselves, on a cause of action which had not yet arisen, were then adjudicated.

It is .our conclusion that the foreclosure decree in favor of the Aetna did not adjudicate the liability which plaintiffs now seek to enforce against the trust. If such liability does not exist independent of the foreclosure decree, it does not exist at all.

The trial court held that, even if the doctrine of res ad-judicata were not available to plaintiffs, the Aetna note and mortgage were ‘ given to secure a loan which was used for trust purposes” and that the trust is liable to plaintiffs upon Count I. We are unable to agree. True, execution of the note and mortgage by the trustees, with the consent of the living children, was authorized by the trust deed. This was determined in the foreclosure. Liability to the Aetna was thereby established. But the trustees had no right under the trust deed, as against a beneficiary who did not consent, to borrow money for the purpose of paying the individual debt of Willie. Trustees can exercise only such powers as are specifically conferred by the terms of the trust or necessary or appropriate to carry out the purposes of the trust and not forbidden by its terms. Restatement of the Law, Trusts, section 186. See, also, sections 254, 255, and comments thereunder, dealing with overpay-ments and loans by the trustee to one beneficiary.

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Bluebook (online)
13 N.W.2d 341, 234 Iowa 832, 1944 Iowa Sup. LEXIS 411, Counsel Stack Legal Research, https://law.counselstack.com/opinion/van-gorden-v-lunt-iowa-1944.