Cox v. Cline

• Decision Date: 12 May 1910
• Citation: Cox v. Cline, 147 Iowa 353, 126 N.W. 330 (Iowa 1910)
• Parties: COX v. CLINE ET AL.
• Court: Iowa Supreme Court

147 Iowa 353

126 N.W. 330

COX

v.CLINE ET AL.

Supreme Court of Iowa.

May 12, 1910.

Appeal from District Court, Johnson County; R. P. Howell, Judge.

Action on a promissory note resulted in the dismissal of the petition. The plaintiff appeals. Affirmed.

See, also, 139 Iowa, 128, 117 N. W. 48.

Wade, Dutcher & Davis, for appellant.

Holbert & Kimball and Milton Remley, for appellees.

LADD, J.

The note sued on was executed by defendants and one Stover to William T. Tracy, and by him indorsed to plaintiff, “Without recourse.” With two others of like amounts, it was executed May 24, 1904, for $666.66. These were given in pursuance of a contract signed by the parties thereto, by the terms of which each subscriber agreed to pay $200 for a share in a stallion (there being ten shares), payable in cash or “one-third in one year, one-third in two years and one-third in three years after July 1st, 1904, secured by joint and severable negotiable notes with interest.” W. P. and John Bradley acted as agents for Tracy, and, as a help to obtaining subscribers for shares, proposed to Joe E. Stover that he head the list on the subscription paper and join in the execution of the notes, and promised that, if he would do so, a share in the horse would be transferred to him without cost, and that he would be released from payment of the notes. Stover yielded to the temptation, though apparently unconscious that in so doing he was assisting in the preparation of a fraud on his neighbors, and, in pursuance of the arrangement, headed the list of subscribers as well as the signers of the notes. The day after the execution of the latter the Bradleys indorsed on each note “May 25, 1904, Joe Stover, released, credited by $66.66.” On the representation that Stover had subscribed for a share, and would join in the execution of the notes, becoming liable thereon, the other defendants subscribed, when, had they known he was to receive a share for the use of his name merely, and to be released from the note, they would not have done so. That this was a fraud on his associates appears from the opinion on the former appeal. 139 Iowa, 128, 117 N. W. 48. The plaintiff acquired the note June 21, 1905, nine days prior to maturity, and it is insisted that the evidence was insufficient to sustain the finding of the jury that he was not a holder in good faith. We held otherwise on the former appeal, and an examination of the record as made on the last trial has confirmed the correctness of that conclusion.

2. To avail themselves of the fraud mentioned as a complete defense, the contract must have been rescinded, and appellant contends that rescission was neither pleaded nor proven. It may be, as said by appellee, that the allegations in the answer were sufficient, but these were withdrawn by the amended and substituted answer, which, though specifically alleging the fraud, omitted any reference to rescission. The trial, however, proceeded on the theory that whether there had been a rescission was in issue. No objection to the evidence bearing thereon because not alleged was interposed, and the plaintiff requested an instruction that, “in order to rescind a contract, the party seeking to do so must return to the other party everything of value which he received under and by virtue of said contract. You are instructed, therefore, that unless you find from the evidence that defendants returned to said Tracy, or offered to return to him, everything of value which they received under and by virtue of said contract, they will be deemed to have accepted the terms of said contract, and be bound thereby, and your verdict must be for the plaintiff.” Though there were other representations said to have been fraudulent, none of these were submitted to the jury, but plaintiff requested that the jury be instructed that, unless the representations with respect to Stover were material and operated as a fraud on defendants, the verdict should be for plaintiff, thereby treating that issue as properly raised when this were not possible under the pleadings in the absence of rescission being alleged. We are satisfied that the defect in the amended and substituted answer was overlooked at the trial which proceeded as though rescission of the contract had been averred therein. In these circumstances the omission cannot be urged as a ground of reversal. McLeod v. Thompson, 138 Iowa, 304, 115 N. W. 1105;Hanson v. Kline, 136 Iowa, 101, 113 N. W. 504;Marengo Savings Bank v. Kent, 135 Iowa, 386, 112 N. W. 767;Fenner v. Crips, 109 Iowa, 455, 80 N. W. 526.

3. Nor can it be said that the evidence was insufficient to support a finding that a rescission was effected. Letters written by Maxin to Tracy in 1904 related to a breach of the contract, and not to fraud in procuring it. Maxin, acting for defendants, wrote a letter in April, 1905, saying the purchasers chose to rescind the contract, and that they held the horse as his property. But there was no evidence showing how or to whom the letter was addressed, nor where Tracy then resided. He had previously written Maxin that he had changed his location from Galesburg, Ill., to Martin, Tenn., but about this time Holbert ascertained that he had left there and had gone to southeastern Missouri and was “moving from place to place.” Evidently the circumstances were not such as to raise a presumption that this letter was ever received by Tracy. In a prior communication, the date of which does not appear, Maxin had written that the horse was not up to the contract, and inquired what was to be done with him. To this Tracy had responded by offering to furnish another horse, but advising that the stallion be tried another year....