Opinion
Decided June 11, 1934.
Mortgages — Executed by parent to daughter for services to be rendered — Priorities — Claims of banks later securing judgments on prior note indebtedness — Mortgage cannot be set aside, when — Written contract between parent and child admissible in evidence, when.
1. A mortgage given by an aged widower to his daughter accompanying a note in consideration of services rendered and to be rendered by the daughter pursuant to written contract theretofore made with her father entitles her to a lien on the mortgaged property of the since deceased parent for the amount accruing for services performed to date of mortgage, prior to the claims of banks which later secure judgments on certain note indebtedness owed by the father prior to his contract with the daughter, and the mortgage having been made without intent to hinder, delay, or defraud creditors, can not be set aside.
2. In an action by a creditor to set aside a mortgage executed as security for a note and in pursuance of a written contract between parent and child for services to be rendered, such written contract is admissible in evidence to show the nature of the consideration and to explain any ambiguity in the note and mortgage.
APPEAL: Court of Appeals for Wood county.
Mr. Alva W. Bachman and Mr. Charles L. Foster, for plaintiff.
Mr. L.D. Hill, for defendants.
This action is here on appeal from a decree of the Court of Common Pleas fixing and marshaling liens on certain real estate located in Wood county, owned by the defendant, James F. Stump, prior to his death, he being alive at the time the action was brought in the Court of Common Pleas.
On January 1, 1926, Stump, an aged widower, who died on March 20, 1934, entered into a written contract with his daughter, the defendant Gertrude Hiser, by the terms of which he agreed to pay to her the sum of $200 per year, payable out of his estate at his death for services to be rendered to him by Gertrude Hiser in furnishing him with food, lodging and care throughout and during the remainder of his natural life; his real and personal property to be kept intact for the performance of the contract, or if sold, such part of the proceeds of sale as might be necessary to be immediately applied to the payment of the obligations to said Gertrude Hiser for services rendered by her under the terms of the agreement to date of such sale. This contract was filed for record in the office of the county recorder of Wood county on April 11, 1933, and was thereafter recorded in Vol. 214 at page 471 of the record of deeds of that county. On August 18, 1932, the defendant James F. Stump executed and delivered to his daughter, Mrs. Hiser, his promissory note in the sum of $5,000 due on or before 15 years after date, and to secure its payment executed to her a mortgage on the premises in question, which was filed for record on the day of its date and thereafter recorded in Vol. 91, at page 607 of the mortgage records of Wood county. The note was payable on or before 15 years after date without interest and recited that the consideration therefor "is keep, care and funeral expenses." Mrs. Hiser performed her part of the agreement to the time of her father's death.
In the mortgage it was recited that:
"Whereas Gertrude Hiser has agreed to keep and care for the Grantor in every way in as good style and comfort as he now lives in for the sum of $5000 and further to pay the funeral expenses and last sickness and in consideration of above covenant on part of Gertrude Hiser the grantor has given to said Grantee his note for $5000 in settlement of said care, board and so forth which note is due on or before 15 years after date or before if grantor dies before that time; it being understood that grantee assumes and agrees to furnish such care, board and so forth for the balance of the life of Grantor be it 15 years or more or less.
"This note does not bear interest."
At and prior to the date of the foregoing note and mortgage to Mrs. Hiser, James F. Stump was indebted to The Sun Savings Bank of Rising Sun, Ohio, and to The Farmers Bank Company of Wayne, Ohio, on certain promissory notes executed by him. The Rising Sun bank notes were reduced to judgment on April 4, 1933, and the Farmers bank notes were put in judgment on May 6, 1933. Ira J. Fulton, coming into possession of both of these banks for liquidation purposes, commenced an action in the Court of Common Pleas seeking to set aside the mortgage deed given by Stump to Mrs. Hiser on the ground that its purpose was to hinder, delay and defraud creditors of Stump. Mrs. Hiser, by cross-petition, claims that the mortgage is a valid first lien on the property in question for the services performed by her prior to the date thereof "and for such further sums as may accrue to her hereafter," all of which she prays "may be decreed to be the first and best lien on said premises and shall be first paid out of the proceeds of the sale of said real estate." From the decree of the Court of Common Pleas, the plaintiff appeals to this court.
The language used as to the consideration for the note and mortgage given by Stump to Mrs. Hiser, we think may equally well refer to the services theretofore performed by her in accordance with the agreement of January 1, 1926, and to the services to be performed thereafter until the maturity of the note and mortgage, or until the decease of her father; and the written agreement of January 1, 1926, was admissible in evidence for the purpose of showing the nature of the consideration, and if the meaning of the language used in the note and mortgage might be said to be uncertain and ambiguous, then the written agreement would be proper evidence to explain the ambiguity. The agreement of January 1, 1926, provided that payment for the services was to be paid "out of the estate of James F. Stump at his death" and the note and mortgage provided that she was to be paid for the services to be performed by her "on or before 15 years after date" or, as stated in the mortgage, "before if grantor dies before that time." Taking the evidence in its entirety, we think it clearly appears that Mrs. Hiser had no knowledge of any intent to defraud, hinder or delay the creditors of her father and was not guilty of any actual fraud, and therefore, by virtue of the mortgage from her father to herself, she is entitled to have a prior lien upon the premises described therein, after payment of costs and the taxes and assessments thereon, for the amount accruing for services performed by her to the date of the mortgage, viz.: August 18, 1932. Were Mr. Stump still alive, she would be entitled only to the present worth of that sum based on his expectancy of life. He, however, being deceased, and the agreed amount for the services now being due and payable, she is entitled to the entire sum due and payable at the time of the death of Mr. Stump, of which sum, so much thereof as had accrued at the date of the mortgage is a lien as before stated on the property described therein, with interest thereon from March 20, 1934, until paid.
The judgments hereinbefore referred to of the aforesaid mentioned banks are the next best and prior lien on said mortgaged premises after the lien thereon of the amount herein found due said Gertrude Hiser.
Decree accordingly.
RICHARDS, WILLIAMS and LLOYD, JJ., concur.