Meincke v. Northwest Bank & Trust Company

2007 WL 4553476 (Iowa Ct. App. Dec. 28, 2007)

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Nature of the Case

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Facts

Meincke Plumbing and Scramm Enterprises are owned by Sandra Marti and Craig Meincke. P is Sandra's mother and is Craig's aunt. She is eighty-two years old. In July 2002, Sandra and Craig asked P for a loan for the businesses. P's husband was in the hospital and very poor health. Sandra and Craig visited the hospital and made the request. P and her husband refused. After Sandra and Craig told them they would go bankrupt without the money, P loaned Scramm Enterprises $90,000. Ps husband died two months after the loan was made. Scramm gave P a mortgage on the business's land and buildings. Scramm had already granted two mortgages on this property to secure loans from Rock Island Bank. Sandra and Craig had also mortgaged their personal homes to secure loans to the businesses. In 2003, Scramm obtained loans from D and granted yet another mortgage on the property. In 2004, Sandra and Craig sought another loan from D. D agreed on the condition that D acquired the first lien on the mortgaged property. Rock Island Bank had first priority, and P had second priority, and D had third priority. D would not provide additional funding unless P was willing to subordinate her priority position. P signed the agreement with no explanation. D loaned approximately $716,907. Rock Island was paid off, and the balance applied to refinance other D loans. Two months later, the plumbing business ceased operations. The mortgaged property was sold, and due to the subordination agreement, the proceeds from the sale were applied to the D loans first. P received nothing toward the debt owed her. P sued D claiming the subordination agreement was invalid, and D intentionally interfered with P's contract with Scramm Enterprises. The trial court ruled in favor of D, and P appealed.