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A horse is a horse, of course, of course. But is it collateral?
Banks foreclosing on homes have become a common enough tale. But that sad story took an unusual twist for Fremont County, Iowa, resident Pamela Morgan when a bank president seized her horses two years ago this week.
Jay Longinaker, president of Randolph, Iowa's Tri-Valley Bank, goes on trial for one count of felony theft and one count of misdemeanor trespassing in Sidney, Iowa, today.
Longinaker is accused of stealing horses belonging both to Morgan and to Morgan's neighbor, Kim Becker.
In September 2007, about two months after Morgan's home was sold at auction, Longinaker and agents of the bank took about 13 horses belonging to the women and kept them as payment for what they said was an outstanding portion of Morgan's loan, according to documents filed in a related civil court case.
Whether taking the horses was justified under the law or just a good old-fashioned horse-napping will be decided this week by a Fremont County District Court judge. Longinaker declined a jury trial.
Assistant Iowa Attorney General Stephen Reno is prosecuting the case because the Fremont County attorney is a longtime acquaintance of Longinaker's.
Longinaker, who is still employed by the bank, declined to comment Wednesday.
His attorney, Michael Murphy of Council Bluffs, said Longinaker had every right to take the horses. He plans to argue that a bank can legally pursue not only the real estate involved in a debt, but the collateral as well. He also plans to argue that Morgan still owes the bank money.
A civil court jury did not agree. The jury awarded Morgan about $96,000 and Becker about $126,000 in punitive damages in February. The jury estimated Becker's horses to be worth $30,000 and Morgan's horses to be worth $40,000.
In that case, Morgan said her debt to the bank was satisfied when her home was sold at auction.
In court records, Morgan and Becker contended that Longinaker and agents of the bank took the horses and did not return them until they received the $8,000 they demanded.
Attorneys for Longinaker and the bank filed a response saying that Morgan had pledged her horses as collateral for the loan on her house and that those animals were needed to satisfy a remaining $8,000 that Morgan had refused to pay.
Longinaker didn't intend to take both Morgan's and Becker's horses, Murphy said. Bank officials didn't realize horses owned by both women used the same pasture. When the error was discovered, the women wouldn't tell bank officials which horses belonged to whom, Murphy said.
Murphy compared it to mistaking someone else's coat for your own at a party.
“You had no intention to steal a coat,” said Murphy. “It's just a simple mistake.”
District Court Judge J.C. Irvin didn't agree. In his ruling denying Longinaker's request for a new civil trial, he wrote that the evidence and the law were not on Longinaker's side.
Bank agents knew that “no debt or obligation” was owed to the bank by Morgan, wrote Irvin. “There was no legal right to repossess the horses.”
Bank officials also knew Becker lived next door and owned horses, Irvin wrote. “The bank made no effort to identify or segregate the horses.”
Several witnesses, including Morgan and Becker, are expected to testify in the trial, which could wrap up as early as this afternoon.
Contact the writer:
444-1310, elizabeth.ahlin@owh.com
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