Citizens First Nat. Bank v. Hoyt

• Decision Date: 15 October 1980
• Docket Number: No. 63297,63297
• Citation: 297 N.W.2d 329
• Parties: CITIZENS FIRST NATIONAL BANK, Appellee, v. Millard L. HOYT, M.D., Appellant, and Paul V. Koffman, Defendant.
• Court: Iowa Supreme Court

Page 329

297 N.W.2d 329

CITIZENS FIRST NATIONAL BANK, Appellee, v. Millard L. HOYT, M.D., Appellant and Paul V. Koffman, Defendant.

No. 63297.

Supreme Court of Iowa.

Oct. 15, 1980.

Rehearing Denied Nov. 6, 1980.

John A. Pabst of Pabst & Pabst, Albia, for appellant.

John P. Duffy of Connell & Duffy, Storm Lake, for appellee.

Considered en banc.

ALLBEE, Justice.

Defendant Millard L. Hoyt appeals from adverse judgments awarded to plaintiff Citizens First National Bank on Hoyt's promissory note, and to defendant Paul V. Koffman on his cross-petition against Hoyt. Two separate written agreements underlie the matters in controversy. The first, a farm management agreement effective November 1, 1971, was between the bank and Hoyt. By this agreement the bank was to undertake the management of certain of Hoyt's properties in Iowa. Following execution of the management agreement, Hoyt borrowed $25,000 from the bank to purchase cattle in which the bank perfected a purchase money security interest. The second agreement, a maintenance agreement entered into in the fall of 1973, was between the bank, acting as Hoyt's agent, and defendant Koffman. This agreement provided for Koffman to keep and care for a cattle herd owned by Hoyt and managed by the bank; it required Koffman to provide care for the cattle in accord with the accepted practices in the "best cow-calf operations." Both the management agreement and the maintenance agreement were to run from year to year unless either party notified the other on or before September 1 of their intention to terminate the agreement, in which case the agreement would expire on the following November 1.

The bank terminated its management agreement with Hoyt by notice mailed on August 27, 1974. While Hoyt did not timely act to terminate the maintenance agreement, early in 1975 he did attempt to renegotiate the contract to provide for less compensation for Koffman. These negotiations failed, the cattle remained with Koffman, but Hoyt did not pay Koffman the fees required by the maintenance agreement.

On October 30, 1975, Koffman gave notice of the proposed sale of the cattle to satisfy his agistor's lien. See ch. 579, The Code. Hoyt obtained temporary enjoinment of the sale in order to challenge the validity of the lien. Shortly thereafter, the lien's validity was upheld, the temporary injunction dissolved and on December 5 the cattle were sold at auction. The sale netted proceeds in the amount of $22,038.35, which were placed on deposit in escrow at a bank in Oskaloosa.

The plaintiff bank commenced the present action in January 1976 for judgment on Hoyt's renewed and overdue $25,000 promissory note, bearing the date January 7, 1975 and due December 1. The bank, having also joined Koffman as a defendant, asked that its security interest be confirmed as against Koffman's claim to the proceeds of the sale of the cattle, that those proceeds be applied in partial satisfaction of the bank's judgment and that execution issue against Hoyt for the deficiency. Koffman filed a cross-petition alleging that Hoyt owed him $16,618.25 for the care of Hoyt's cattle. In response to the claims of the bank and Koffman, Hoyt asserted a series of counterclaims, setoffs and affirmative defenses.

After an extended trial, on September 23, 1977, the trial court filed abbreviated findings and conclusions in which it determined that the bank and Koffman had established their respective claims and that there was "no competent or credible proof" to support Hoyt's various counter assertions. Hoyt then filed a timely motion, under Iowa R.Civ.P. 179(b), asking the court to enlarge or amend its findings and conclusions. This motion consisted of sixty-seven numbered paragraphs, some of which contained several sub-paragraphs. Hoyt also moved for a new trial. Both motions were summarily overruled, and Hoyt appealed.

In an unpublished opinion filed October 18, 1978, 274 N.W.2d 741, this court reversed and remanded the case with directions that it be resubmitted on the record originally made for rendition of new findings of fact, conclusions of law and judgment. This was done because the trial court's meager findings and conclusions, coupled with its summary disposition of Hoyt's rule 179(b) motion, did not provide an adequate record for appellate review, leaving us unable to pass upon the issues presented without assuming the function of the trial court.

Because the district judge who originally tried this case had since retired, resubmission was undertaken by Judge James D. Jenkins, who was serving in Monroe County when the procedendo and the original papers and exhibits were received by the county clerk. On January 11, 1979, Judge Jenkins filed comprehensive findings of fact and conclusions of law which were also in favor of both the bank and Koffman. Hoyt's subsequent motion for a new trial was overruled, and this appeal followed.

In this appeal, Hoyt asserts that (1) the bank's cancellation of the management agreement constituted a breach of its fiduciary duties to him; (2) this action by the bank on the promissory note is barred by estoppel, laches and waiver; (3) the loan from the bank evidenced by the promissory note was a consumer credit transaction, and the bank by its legal action and conduct violated the Iowa Consumer Credit Code; (4) the cross-petition of Koffman is barred by the doctrines of res judicata and/or issue preclusion; (5) he should have been awarded damages for mental distress; (6) he is entitled to be indemnified by the bank for the judgment in favor of Koffman; (7) trial court erred in not granting him a new trial on grounds that Judge Jenkins should have disqualified himself from deciding this cause; (8) Koffman failed to provide notice of the sale of the cattle under the agistor's lien, thereby invalidating the sale; (9) Koffman breached the maintenance agreement.

We have closely examined each of Hoyt's assigned errors, mindful that in this law action trial court's findings of fact have the force of a special verdict, Iowa R.App.P. 4, and are binding on us if supported by substantial evidence, Iowa R.App.P. 14(f)(1). We are unable to find reversible error in any of Hoyt's assignments, and our opinion will address only the third and seventh assignments.

I. As stated above, Hoyt contends that the loan from the bank, evidenced by the $25,000 promissory note of January 7, 1975, constituted a consumer credit transaction. Consequently, he argues, certain actions on the part of the bank were violative of the Iowa Consumer Credit Code (ICCC), chapter 537, The Code 1975. Specifically, he alleges that the bank failed to provide notice of his right to cure default as per the format in section 537.5111, sent to him for his signature an authorization to confess judgment in violation of section 537.3306 and engaged in misrepresentations concerning his debt and in other "unfair collection practices" prohibited by subsections 537.7103(4)(e) and (5)(e).

Trial court held that the loan was not a consumer credit transaction, and that accordingly the provisions of the ICCC were not applicable. Trial court predicated its determination upon the premise that the transaction which culminated in the promissory note lacked the statutorily required attributes of a consumer credit transaction. See §§ 537.1301(11)-(13), (15)(a). However, in First Northwestern National Bank v. Crouch, 287 N.W.2d 151 (Iowa 1980), filed subsequent to trial court's decision in this case, this court held that a transaction otherwise lacking in the definitional attributes of a consumer credit transaction may nonetheless be governed by the ICCC where the parties have contracted to make the transaction subject to the coverage of that code. That is precisely the situation before us.

The promissory note executed by Hoyt, like the note in Crouch, included the language "This loan is subject to the provisions of the Iowa Consumer Credit Code applying to consumer loans" and "THIS IS A CONSUMER CREDIT TRANSACTION." In Crouch, we held that where a promissory note on its face provides that it is subject to the provisions of the ICCC, it will be assumed the parties intended that that code govern the transaction, at least in the absence of admissible evidence to the contrary. Crouch, 287 N.W.2d at 153. As in Crouch, while the transaction here arguably lacks all the characteristics statutorily required of a consumer credit transaction, see §§ 537.1301(4), (15), there is no evidence that, despite the language employed on the face of the note, the parties did not intend that the provisions of the ICCC should govern. Consequently, Crouch dictates that we find that the transaction falls within the purview of that code.

Trial court's erroneous conclusion with respect to the inapplicability of the ICCC does not, however, require that we disturb its judgment, because we are satisfied that it nevertheless did reach the correct result. See Schnabel v. Vaughn, 258 Iowa 839, 845, 140 N.W.2d 168, 172 (1966). Under the record before us, we conclude that the bank did not violate any provision of the ICCC in bringing this action against Hoyt, and hence was entitled to judgment on the promissory note...