MEINCKE V. NORTHWEST BANK & TRUST COMPANY
2007 WL 4553476 (Iowa Ct. App. Dec. 28, 2007)
NATURE OF THE CASE: Meincke (P) appeals a ruling in favor of Northwest (D) where P
contends the trial court erred by finding the subordination agreement between the P and D
was supported by consideration
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 in 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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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