Adam v. Mt. Pleasant Bank & Trust Co., No. 69291

CourtUnited States State Supreme Court of Iowa
Writing for the CourtConsidered by REYNOLDSON; HARRIS
Citation355 N.W.2d 868
PartiesRobert D. ADAM, et al., Appellants, v. MT. PLEASANT BANK & TRUST CO., et al., and Blake Phelps, Appellee.
Docket NumberNo. 69291
Decision Date19 September 1984

Page 868

355 N.W.2d 868
Robert D. ADAM, et al., Appellants,
v.
MT. PLEASANT BANK & TRUST CO., et al., and Blake Phelps, Appellee.
No. 69291.
Supreme Court of Iowa.
Sept. 19, 1984.
Rehearing Denied Oct. 15, 1984.

Page 869

James P. Hoffman, Keokuk, and James Walker, Bloomington, Ill., for appellants.

G.R. Krekel of Hirsch, Link, Adams, Hoth & Krekel, Burlington, for appellee.

Considered by REYNOLDSON, C.J., and UHLENHOPP, HARRIS, LARSON, and SCHULTZ, JJ.

HARRIS, Justice.

We granted further review of a decision of the court of appeals which reversed a partial summary judgment entered by the trial court in favor of defendant Blake Phelps. The facts were well stated by the court of appeals:

The case arose out of the financial collapse of the Prairie Grain Company at Stockport, a company of which Phelps was an officer. Plaintiffs are farmers who had stored grain at the elevator and were unable to obtain its return. On appeal, plaintiffs assert that the trial court erred in granting summary judgment because (1) a creditor may attempt to 'pierce the corporate veil' of a business being run as a corporation, and (2) a genuine issue of material fact exists as to whether the corporate veil should be pierced in this case. In response, defendant Phelps asserts that (a) the 'piercing the corporate veil' theory was not raised in resistance to his motion for summary judgment so error was not preserved on that contention, and (b) the partnership theory argued by plaintiffs in trial court is not pursued on appeal and is therefore waived.

................................................................................

* * *

Page 870

Plaintiffs are one hundred and four farmers who delivered grain to the elevator which could not be returned due to shortages. They have sued the grain company, the officers and directors, two banks, an accounting firm, and the state of Iowa. Most of these claims have been disposed of in various ways, but the claim against the state of Iowa, among others, remains. See Adam v. Mt. Pleasant Bank & Trust Co., 340 N.W.2d 251 (Iowa 1983). This appeal involves the portion of the case against defendant Blake Phelps, allegedly an 'owner' of the company.

Plaintiffs pleaded that Phelps and the other individual defendants 'owned and operated' Prairie Grain Company and that 'the business was owned and operated by a partnership of [the individual defendants, including Phelps].' The plaintiffs asserted that the individual defendants were 'liable for the debts of the partnership.' These allegations were denied in Phelps' answer.

On August 16, 1982, Phelps moved for summary judgment, contending that there was no genuine issue of material fact as to whether he was involved in Prairie Grain Company because he was only involved with Prairie Company, Inc., in its capacity as a legal corporation. Phelps also filed an amendment to his answer in which he denied he was a partner with the other individual defendants in a 'business known as "Prairie Grain Company" in Stockport, Iowa.' The answer stated that Prairie Grain Company, Inc., is a properly organized and authorized corporation. In resistance to this motion, plaintiffs asserted that the individual defendants were co-owners of the business, and were therefore liable as partners for the obligations of the business unless the company was properly incorporated. Plaintiffs asserted the company was not a legal corporation because of various violations of Iowa corporation law as to the operation of the corporation, such as holding annual meetings, and because the corporation's existence had expired before the time of the relevant events. The resistance also contains allegations that Raymond Keller dominated the business, that the board of directors and shareholders never set policy, and that Raymond Keller used Prairie Grain funds for his own purposes.

The court granted the motion for summary judgment, holding that a corporation can be challenged on the ground that formalities have not been satisfied only by means of a quo warranto proceeding. The court also found that the corporate existence of Prairie Company, Inc., was properly revived by filing 'Restated Articles of Incorporation' in 1980. The motion for summary judgment of Phelps was therefore granted, and the claim against him ordered dismissed. This appeal followed.

I. The court of appeals recognized a serious preservation of error problem and resolved it in favor of plaintiffs. On appeal plaintiffs assert that Phelps can be found personally liable by piercing the corporate veil of Prairie Grain. It must be conceded that no such theory is apparent from a reading of the petition. Plaintiffs can point only to the following allegations:

1. Raymond D. Keller, Blake Phelps, Boyd Kisling, and Janet M. Keller owned and operated a grain, fertilizer, and feed business known as Prairie Grain Company in Stockport, Iowa.

2. As of August 14, 1978, if not before, the business was owned and operated by a partnership of Raymond D. Keller, Blake Phelps, Boyd Kisling, and Janet M. Keller.

....

7. Defendants are liable for the debts of the partnership.

With the advent of notice pleading under Iowa R.Civ.P. 69, as amended in 1976, our pleading requirements were drastically reduced. To raise or preserve a claim, the petition need not plead ultimate facts, Schmidt v. Wilkinson, 340 N.W.2d 282, 283-84 (Iowa 1983), or identify a specific legal theory. I.G.L. Racquet Club v.

Page 871

Midstate Builders, Inc., 323 N.W.2d 214, 217 (Iowa 1982). Although our opinions on the question have not been unanimous, it is now well established that a petition is sufficient if it apprises the opposing party of the incident from which the claim arose and the general nature of the action. Northwestern Nat. Bank of Sioux City v. Metro Center, Inc., 303 N.W.2d 395, 401 (Iowa 1981). Northwestern Nat. Bank of Sioux City even supports the proposition that pleading the wrong theory is not necessarily fatal. There, the cross-petitioner sought an in rem judgment when he should have brought an action on contract. The opposing party argued that the effect was to limit the cross-petitioner to the contract theory. We responded:

[R]egardless of whether the judgment sought was described as 'in rem,' the real thrust of the cross-claim is clear: it asks for foreclosure of the lien and a declaration of its priority. We must view the cross-claim in a common-sense manner.

303 N.W.2d at 401...

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52 practice notes
  • J.M. Lynne Co., Inc. v. Geraghty, No. 12958
    • United States
    • Supreme Court of Connecticut
    • July 14, 1987
    ...Moore v. Occupational Safety & Health Review Commission, 591 F.2d 991, 995-96 (4th Cir.1979); Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 873 (Iowa 1984); Kessler Distributing Co. v. Neill, 317 N.W.2d 519, 522 (Iowa App.1982); 16A W. Fletcher, Cyclopedia Corporations (Perm.Ed.197......
  • McCall Stock Farms, Inc. v. U.S., No. 93-5077
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • December 23, 1993
    ...793 (1944) (fraud not a prerequisite for veil-piercing); Pisani, 646 F.2d at 88 (same); accord Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 872 (Iowa 1984) (adopting the Lakota court's articulation of the alter ego test); Jablonsky v. Klemm, 377 N.W.2d 560, 563 (N.D.1985) (citing ......
  • DeLapp v. Xtraman, Inc., No. 86-1364
    • United States
    • United States State Supreme Court of Iowa
    • December 23, 1987
    ...only whether a genuine issue of material fact exists and whether the law was incorrectly applied. Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 872 (Iowa 1984). We examine the record in a light most favorable to the party opposing the motion for summary judgment to determine if mov......
  • Jablonsky v. Klemm, No. 10921
    • United States
    • United States State Supreme Court of North Dakota
    • November 21, 1985
    ...liable. See, e.g., Lyons v. Stevenson, 65 Cal.App.3d 595, 135 Cal.Rptr. 457, 464-465 (1977); Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 870-871 (Iowa 1984); Druding v. Allen, 122 N.H. 823, 451 A.2d 390, 393 Our next inquiry is whether or not the evidence is sufficient to support......
  • Request a trial to view additional results
52 cases
  • J.M. Lynne Co., Inc. v. Geraghty, No. 12958
    • United States
    • Supreme Court of Connecticut
    • July 14, 1987
    ...Moore v. Occupational Safety & Health Review Commission, 591 F.2d 991, 995-96 (4th Cir.1979); Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 873 (Iowa 1984); Kessler Distributing Co. v. Neill, 317 N.W.2d 519, 522 (Iowa App.1982); 16A W. Fletcher, Cyclopedia Corporations (Perm.Ed.197......
  • McCall Stock Farms, Inc. v. U.S., No. 93-5077
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • December 23, 1993
    ...793 (1944) (fraud not a prerequisite for veil-piercing); Pisani, 646 F.2d at 88 (same); accord Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 872 (Iowa 1984) (adopting the Lakota court's articulation of the alter ego test); Jablonsky v. Klemm, 377 N.W.2d 560, 563 (N.D.1985) (citing ......
  • DeLapp v. Xtraman, Inc., No. 86-1364
    • United States
    • United States State Supreme Court of Iowa
    • December 23, 1987
    ...only whether a genuine issue of material fact exists and whether the law was incorrectly applied. Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 872 (Iowa 1984). We examine the record in a light most favorable to the party opposing the motion for summary judgment to determine if mov......
  • Jablonsky v. Klemm, No. 10921
    • United States
    • United States State Supreme Court of North Dakota
    • November 21, 1985
    ...liable. See, e.g., Lyons v. Stevenson, 65 Cal.App.3d 595, 135 Cal.Rptr. 457, 464-465 (1977); Adam v. Mt. Pleasant Bank & Trust Co., 355 N.W.2d 868, 870-871 (Iowa 1984); Druding v. Allen, 122 N.H. 823, 451 A.2d 390, 393 Our next inquiry is whether or not the evidence is sufficient to support......
  • Request a trial to view additional results

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