Hawkeye Securities Fire Insurance v. United Investment Co.

The property involved in this transaction was what is known as the Tudor Apartment building located in the city of Des Moines. On November 24, 1920, the Commercial Building Securities Company, an Iowa corporation of which H.R. Howell was president, was the owner of said property, and on that date a first mortgage in the amount of $85,000 was executed on said property to the appellant, the Hawkeye Securities Fire Insurance Company, and a second mortgage to the Central State Bank. The fee to *Page 646 this property was later sold to the appellant, and appellant subsequently acquired the interest of the Central State Bank. The Hawkeye Securities Fire Insurance Company later instituted proceedings for foreclosure against the United Investment Company which went to decree and foreclosure on January 16, 1931. Sheriff's sale was held February 21, 1931; plaintiff being the purchaser at such sale.

As a part of this proceedings, H.R. Howell was appointed receiver and took possession of said property, cared for the same, and collected the rents therefrom. On September 30, 1931, Howell, as receiver, filed a final report and asked for his discharge. On October 10, 1931, plaintiff filed a resistance to the final report and application for discharge, and an application was filed by the plaintiff for the appointment of a new receiver, and a resistance filed thereto, and on February 10, 1932, Howell filed another final report and application for a discharge. On February 18, 1932, plaintiff filed a resistance thereto, in which, among other things, it claimed that there were certain unpaid taxes which should have been paid by the receiver, and asking an order requiring the receiver to pay said taxes.

Plaintiff then amended its resistance to the final report, setting up the claim that there were certain repairs which should have been made by the receiver amounting to $755.10, and asked that the receiver be required to pay to the plaintiff said sum for necessary repairs on said property.

Howell then filed a supplemental report, in reply to plaintiff's resistance to the final report, and the issues thus made came on for trial, resulting in a holding that the Hawkeye Securities Company was entitled to $107.98 in full compensation for failing to maintain the mortgaged premises, and denying the claim of the plaintiff that the receiver should pay the taxes in controversy, amounting to $2,395.91; hence this appeal.

There is no dispute that the taxes and assessments against said property for the year 1931 (payable in 1932) were the amounts specified, and that the receiver refused to pay the same. The original foreclosure decree, among other things, provided:

"The court further finds that a receiver was appointed by this court on the 29th day of December A.D. 1930, to take charge of the mortgaged property as such receiver and that by agreement of the parties, H.R. Howell was found to be an acceptable person as such *Page 647 receiver. * * * It is therefore ordered, adjudged and decreed by the court that the receivership herein be made permanent, and that the receiver take charge of said mortgaged premises, rent the same, collect the rents and profits, pay necessary expense connected therewith, pay taxes and assessments as they become due, * * * make necessary repairs under the order of this court and do such other duties as usually devolves on the receiver in such cases under the orders of this court.

"That said receivership shall continue * * * from the date of appointment to the end of the year of redemption of said property. * * * The court retains jurisdiction of the action and the receivership during the pendency of said receivership and the year of redemption."

The central point of this controversy has to do with that part of the decree which provides that the "receiver shall * * * pay taxes and assessments as they become due," etc.

The original mortgage, among other things, provides:

"Said party of the first part further agrees to pay any and all prior liens of every kind whatsoever that may at any time exist upon said property, paramount to the lien of this mortgage, and any and all taxes and assessments that may at any time be or become a lien upon said premises, including any and all special assessments before they become delinquent."

[1] After the foreclosure had been commenced, the question of the receivership was a subject of discussion between the parties. The evidence makes fairly satisfactory proof that several conferences were held between the interested parties as to the receivership. Howell, who was connected with the defendants, was a candidate for this receivership, and it was agreed between the parties that he should be chosen for this position; that the plaintiff would bid in the property at the execution sale for the full amount of the judgment, interest, and costs so there would be no deficiency. It was agreed that the plaintiff would bid in the property at the execution sale, and it seems to be fairly evident from the testimony that in these conversations the question of taxes was discussed, and it was understood that the property was to pass to the plaintiff free from incumbrance (except a certain mortgage) and taxes.

The mortgage on this property which was foreclosed did not *Page 648 contain a receivership clause, and neither did it provide for a pledging of the rents, incomes, and profits, but, regardless of this, all the parties interested had the right to and did make the agreement above referred to. We know of no provision of the law which would prevent these parties from making such an agreement, and, having done so, they ought to be held in law to abide the provisions thereof. The court in its decree recognized the fact that an agreement had been made between these parties with reference to this receivership, and it is our conclusion that same should be enforced. But the appellant insists that the testimony with reference to the understanding between these parties, which took place before the appointment of Howell as receiver, was incompetent and immaterial and a violation of the parol evidence rule.

[2] It appears from the record that the taxes for 1930, payable in 1931, were paid by the receiver. The taxes for 1931, payable in 1932, are unpaid, and the question is whether or not the receiver should pay these latter taxes.

The claim of the appellant is that the use of the word "due" in the portion of the decree above set out is ambiguous, and therefore subject to oral explanation. Defendant argues that, under the statutes of this state, these taxes were not "due" at the time of the expiration of the year of redemption, which was February 21, 1932. The first question for determination is whether or not the decree is ambiguous because of the use of the word "due."

In 19 C.J. 818, it is said:

"According to the concensus of judicial opinion, the word has a double meaning: (1) That the debt or obligation to which it applies has by contract or operation of law become immediately payable; (2) a simple indebtedness, without reference to the time of payment, in which it is synonymous with `owing,' and includes all debts, whether payable in praesenti or in futuro."

Turning now to the statutes of the state, section 7210, Code 1931, provides:

"No demand of taxes shall be necessary, but it shall be the duty of every person subject to taxation to attend at the office of the treasurer, at some time between the first Monday in January and the first day of March following, and pay his taxes in full, or one-half *Page 649 thereof before the first day of March succeeding the levy, and the remaining half before the first day of September following."

According to section 7147, it is the duty of the county auditor to make up the tax list and deliver the same to the county treasurer on or before the 31st day of December, and such list is sufficient authority for the treasurer to collect taxes therein levied.

It is evident, therefore, under these two sections of the Code, that, from the 1st day of January to the 1st day of March following, such taxes are "owing" by the property owner and may be paid at any time during said period. Under one definition, therefore, as above set out, it may be properly said that these taxes are "due." The words "due" and "duty" are derived from the same root, according to Webster's International Dictionary, and "duty" is equivalent to "payment due." So far, therefore, this question is easy to answer.

But section 7211 provides:

"In all cases where the [first] half of any taxes has not been paid before the first day of April succeeding the levy, the amount thereof shall become delinquent from the first day of April after due; and in case the second installment is not paid before the first day of October succeeding its maturity, it shall become delinquent from the first day of October after due."

We conceive that section 7211 was enacted for the purpose of fixing a delinquent date, and in fact does not in any way conflict with section 7210; thus distinguishing between "due" and "delinquent."

Section 7214, a later enactment, reads as follows:

"If the first installment of taxes shall not be paid by April first, said installment shall become due and draw interest, as a penalty, of one per cent per month until paid, from the first day of April following the levy; and if the last half shall not be paid by October first following such levy, then a like interest shall be charged from the date such last half became delinquent."

The purpose of this section, if we are able to determine the intent of the legislature, was not intended in any way to conflict with sections 7210 and 7211, but was enacted for the purpose of fixing a date after which the penalty should be charged against one who fails to pay his taxes by the 1st day of April; or, in case taxes are *Page 650 paid in two installments, to put a penalty for a failure to pay the first installment by the 1st of April and the second installment by the 1st of October. Thus construed, these sections of the statute are not in conflict with each other, and, under such construction, the taxes in controversy were due before the expiration of the year of redemption; hence should have been paid by the receiver.

[3] II. Much attention is devoted in the briefs and arguments to the question of whether or not the plaintiff was entitled to prove the agreement between the parties in relation to the matter of taxes as against the parol evidence rule.

It is, of course, the general rule that parol evidence is not admissible to modify or contradict a judgment. See 22 C.J. "Evidence," section 1388; 34 C.J. "Judgments," 803.

But there is an exception to this rule where ambiguous words are used in the decree and parol evidence is admissible to establish what the court actually decided. Porter v. Sigler, 1 G. Greene, 261; Weaver v. Stacey, 105 Iowa 657, 75 N.W. 640; In re Estate of Burmaster, 161 Iowa 116, 141 N.W. 55; Paul v. Barnbrook, 58 Ind. App. 607, 106 N.E. 425; Jones v. Robb,35 Tex. Civ. App. 263, 80 S.W. 395; Bente v. Sullivan, 52 Tex. Civ. App. 454, 115 S.W. 350; Taylor v. McCowen, 154 Cal. 798, 99 P. 351; Jordan v. McDonnell, 151 Ala. 279, 44 So. 101; Watson v. Lawson, 166 Cal. 235, 135 P. 961; 22 C.J. 1173, 1177, 1279; 10 Enc. of Evidence 972; 34 C.J. 506.

But, having reached the conclusion above set out, as to the interpretation of our statutes, we do not deem it necessary to pursue this subject further.

III. There were certain items of repairs claimed by the plaintiff, a part of which were allowed by the court and others rejected, and appellant insists that the rejected items should have been allowed. We are disposed to agree with the ruling of the district court at this point in relation to such items.

Reversed in part; affirmed in part.

STEVENS, CLAUSSEN, KINTZINGER, and DONEGAN, JJ., concur.

EVANS, KINDIG, ANDERSON, and MITCHELL, JJ., dissent.