Raub v. General Income Sponsors of Iowa, Inc.

Jessie Raub (plaintiff) sought to set aside a deed transferring her property to General Income Sponsors of Iowa, Inc. (General Income) (defendant), arguing the deed was obtained by fraud. Raub was a tenant on the property after she was fraudulently induced to transfer it, and she did not discover the fraud until almost a year later. Raub sought to invalidate two mortgages placed on the property by General Income before Raub learned of the fraud. The mortgages were held by First National Bank of Fort Dodge, Iowa (First National) and Manson State Bank of Manson, Iowa (Manson) (defendants). The trial court declared the deed void because of fraud and that neither mortgage was a valid lien on Raub’s property. General Income did not appeal the decree that the deed was void. However, First National and Manson appealed to the Supreme Court of Iowa from the declaration that the mortgages were invalid. First National and Manson argued they were bona fide purchasers who were not put on notice to inquire into the circumstances of General Income’s acquisition of the property, and their mortgages consequently were valid. Raub argued her continued occupancy of the property after its transfer to General Income put First National and Manson on notice to make inquiry about Raub’s rights to the property and the circumstances of General Income’s acquisition of the property.