from the Iowa District Court for Clayton County, John J.
appeal a district court decree granting foreclosure of
mortgages on farm property in favor of Farmers Savings Bank.
C. Riley and Patrick J. Riley of Tom Riley Law Firm, PLC,
Cedar Rapids, for appellants.
Flint Drake and Samuel M. Degree of Drake Law Firm, PC,
Dubuque, for appellee.
Considered by Danilson, C.J., and Mullins and McDonald, JJ.
Appellants appeal a district court
decree granting foreclosure of mortgages on farm property
located in Clayton County, Iowa, in favor of Farmers Savings
Background Facts and Proceedings
our de novo review of the record, we make the following
factual findings. In the fall of 2005, Richard Wessels
approached FSB's senior vice president, Mike Funke, for
refinancing services in relation to debts secured by
Wessels's Clayton County farm, on which another lender
was preparing to foreclose. On April 21, 2006, Wessels
granted FSB a mortgage on the farm to secure a loan in the
amount of $371, 000.00. The mortgage defined "secured
debt" as, among other things:
All . . . future obligations of Mortgagor to Lender under any
promissory note, contract, guaranty, or other evidence of
debt existing now or executed after this Mortgage whether or
not this Mortgage is specifically referred to in the evidence
of debt and whether or not such future advances or
obligations are incurred for any purpose that was related or
unrelated to the purpose of the Evidence of Debt [and] [a]ll
obligations Mortgagor owes to Lender which now exist or may
later arise, to the extent not prohibited by law . . . .
few years, Wessels generally made his payments under this
loan in a timely fashion.
fall of 2008, Wessels approached Funke about financing to
purchase a bar in Linn County. At this point in time, Wessels
still owed on the 2006 loan and the farm was still encumbered
by the 2006 mortgage. Funke advised Wessels the farm would be
the primary collateral for the bar loan while the bar itself
would serve as secondary collateral. On January 20, 2009,
Wessels, on behalf of Wessels Land, LLC, executed a
promissory note in the amount of $300, 448.84. Wessels signed
a personal guaranty of payment and granted FSB a second
mortgage on the farm to secure the 2009 bar loan. The 2009
mortgage defined "secured debt" in the same manner
as the 2006 mortgage. In February 2010, Wessels signed a
second promissory note in the amount of $27, 201.00 to obtain
a loan to remodel the bar. The note provided the 2010 loan
would be secured by the previously granted mortgages on the
began to fall behind on his payments in late 2009. Problems
with Wessels's ability to meet his obligations on the
loans continued through 2012. In June 2012, the FDIC
inspected FSB's loan files as to Wessels and recommended
that FSB be much more aggressive in collecting from Wessels
or foreclose on the mortgages. Shortly thereafter, Funke met
with Wessels to discuss the situation and recommended that
Wessels sell a portion of the farm and use the proceeds to
get current with his loan obligations. At this point, Wessels
advised Funke he had deeded the farm to his son, Robb, and
directed Funke to contact Robb to get it sorted
This was the first time FSB had any knowledge the farm had
been deeded to Robb. Funke contacted Robb and advised
foreclosure was looming if progress on the loans was not made
by the end of September. Robb, the title holder of the farm
at this time and fearing foreclosure, advised Funke he
desired to refinance the original farm debt into his name and
bring the bar debt current.
to offering Robb refinancing services, FSB had a title
opinion prepared as to the farm. The title opinion found good
and merchantable title to be held by Robb. On September 27,
Robb executed a promissory note in the amount of $146, 000.00
and granted FSB a mortgage on the farm to secure the loan.
The same day, Robb paid off the original 2006 loan and paid
enough on the 2009 and 2010 bar loans to bring them