Davis v. Comito, 55177

• Decision Date: 21 February 1973
• Docket Number: No. 55177,55177
• Citation: 204 N.W.2d 607
• Parties: John F. DAVIS, Appellee, v. William J. COMITO, Appellant.
• Court: Iowa Supreme Court

Page 607

204 N.W.2d 607

John F. DAVIS, Appellee, v. William J. COMITO, Appellant.

No. 55177.

Supreme Court of Iowa.

Feb. 21, 1973.

Scalise, Scism, Gentry, Brick & Brick, Des Moines, for appellant.

William D. Baker, Des Moines, for appellee.

Heard before MOORE, C.J., and MASON, RAWLINGS, REES and HARRIS, JJ.

MASON, Justice.

This appeal by defendant, William J. Comito, stems from a summary judgment for John F. Davis, plaintiff, in a law action seeking judgment on Comito's promissory note executed September 10, 1964 and delivered to plaintiff December 11. It presents the question whether there was a genuine issue as to any material fact generated by the record before the trial court thus precluding it from finding Davis was entitled to judgment as a matter of law.

Rule 237(c), Rules of Civil Procedure, provides in part: '* * * The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to itnerrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'

The purpose of the summary judgment is to enable a party to obtain judgment promptly and without expensive trial where there is no fact issue to try. Jensen v. Voshell, 193 N.W.2d 86, 88 (Iowa 1971). See also Gruener v. City of Cedar Falls, 189 N.W.2d 577, 580 (Iowa 1971). However, where a fact issue is generated by the pleadings, depositions, affidavits or other instruments before the court a motion for summary judgment should not be sustained. Sherwood v. Nissen, 179 N.W.2d 336, 339 (Iowa 1970) and Northwestern Nat. Bank of Sioux City v. Steinbeck, 179 N.W.2d 471, 475 (Iowa 1970).

The record before this court, that is, the pleadings, plaintiff's motion for summary judgment, defendant's resistence to the motion, plaintiff's affidavits, defendant's testimony and the trial court's decision, presents the background giving rise to this litigation.

William J. Comito was president of the Premium Service Company from the date of its incorporation until December 13, 1963. On that date he was removed from the office by his father, the majority stockholder, who then became president of the company.

John Burch purchased 1000 shares of Premium Service Company stock for $10,000. Later, Burch approached defendant accusing him of misfeasance in the discharge of his duties as president and threatened to disclose this fact. Defendant later testified no such charge had been made. However, defendant executed a promissory note in the amount of $5000 on September 10, 1964, payable to Burch and/or plaintiff. Defendant further testified the note was not made to appease Burch but simply was done because he 'wanted to buy the stock.'

At the time the note was made plaintiff, defendant and defendant's lawyer, Louis Anania, executed an escrow agreement. It provided the note be placed in escrow until plaintiff 'delivered' to the escrow agent the stock certificate representing the 1000 shares of stock in Premium Service Company owned by Burch. When this certificate was delivered the escrow agent would then deliver defendant's note to plaintiff. Both the escrow agreement and note were prepared by Anania and he was named as the escrow agent.

It was the original agreement that 'delivery' of the stock certificate would be made before January 1, 1965. This was the date payment on the note at the rate of $200 per month would begin. Both parties knew the Premium Service Company was to be dissolved on December 16, 1967. Defendant was aware that if he received title to the certificate prior to December 16, 1964 he would be entitled to his proportionate share of the company's assets remaining to be distributed at the time of dissolution. Further, should there be no assets in the company, the loss represented by the stock certificate would result in an income tax advantage over the following five years as a capital loss advantage. With this in mind, defendant requested the final date of delivery be changed to December 15, 1964 in place of January 1, 1965. This was done.

Plaintiff then retained possession of the stock certificate until December 11, 1964 when he gave the certificate to Anania without endorsing or assigning the certificate to defendant. In accordance with the escrow agreement, Anania then gave plaintiff the promissory note. The interest of John Burch had been assigned to Davis.

In the ensuing years, any effort on the part of plaintiff to collect payment of the note was met with defendant's claims of inability to pay. At no time did defendant raise the question of proper endorsement of the stock or assignment of it until after plaintiff filed his petition February 19, 1971 seeking to recover on the note.

May 14 plaintiff filed motion for summary judgment pursuant to rule 237, R.C.P., alleging substantially the same factual matters stated in the petition. In his personal affidavit attached to the motion plaintiff asserts the amounts stated in his petition and motion are due and unpaid and he believes no defense exists against the claim since 'the note was entered into with due and full consideration and in the legal course of business.'

May 20 defendant filed answer to plaintiff's petition. He admitted execution of the note and plaintiff's ownership thereof but denied the note was past due. As an affirmative defense he alleged execution of the escrow agreement and attached a copy to his pleading. He further alleged plaintiff's failure to assign the certificate of stock to defendant rendered the note null and void; that no consideration for defendant's note was ever furnished by plaintiff; and since defendant was under medication at the time the note and escrow agreement were executed he did not understand his actions.

In resistance to plaintiff's motion for summary judgment defendant repeats his denial of consideration for the note and plaintiff's failure to assign the stock certificate to defendant. He further stated that at the direction of a Dr. From, who was treating defendant as a result of a nervous breakdown, he signed the note and escrow agreement to avoid litigation threatened by Burch for alleged misappropriation of funds from the Premium Service Company.

Plaintiff filed a second personal affidavit in support of his motion asserting:

'At no time prior to the filing of defendant's resistance, has any complaint been made to plaintiff that the defendant did not receive the stock as contemplated by the escrow agreement. Although contact has been made a number of times with defendant in regard to payment of the note, no defense or excuse has been given by defendant other than defendant's alleged inability to pay. Plaintiff is reliably informed that defendant did not even ask the escrow agent for said stock certificate until after this action, as a suit on the note, was commenced. Plaintiff's records show that on January 29, 1965, plaintiff wrote the first letter to Mr. Comito requesting he commence payments. At that time, on or about February 17, 1965, Mr. Comito called plaintiff stating that he was unable to pay at that time and that he would need more time before he could commence payments.'

On June 8, 1971, the trial court overruled plaintiff's motion for summary judgment.

Thereupon, plaintiff filed a motion to reconsider which was sustained by the trial court June 18 and a hearing on the motion for summary judgment was held June 29. Plaintiff elected to rely on his pleadings and affidavits but defendant testified as to the situation of the parties, the circumstances under which the note and escrow agreement were executed and the objects the parties were striving to attain.

Mr. Louis Anania was in the courtroom during the hearing but was not called as a witness.

The court sustained the motion and entered judgment against defendant in which it stated:

'After hearing the evidence in this case to the extent of what the understanding of the parties is, it seems to the court that the agreement has to speak for itself. Mr. Anania by everybody's admission was representing Mr. Comito at this time. He initialed and signed the escrow agreement. If they had wanted a transfer of the certificate, they could have obtained it. The evidence is there never was a request for a transfer. There is no dispute in the evidence but what the certificate itself was delivered into the hands of the attorney or Mr. Comito, and at that time the note was turned over to the plaintiff, Mr. Davis. While Mr. Comito had unfortunate health and has not cared about what was being done and possibly cannot remember many of the details of this transaction as he testified, while this is unfortunate for him, it should not affect the rights of Mr. Davis, who was in good faith and did turn the stock certificate over in time, that is, to the attorney for Mr. Comito in time that if it was necessary at the time of dissolution to have got a transfer, it could have been requested and done. Mr. Anania is an attorney and knowledgeable in these matters, knew what was going on and represented his clients. For these reasons the court is constrained to sustain the motion for summary judgment at this time and judgment is entered on the note, or will be when Mr. Davis presents a judgment entry.'

Judgment was entered against William J. Comito by the trial court's judgment entry dated and filed June 30, 1971.

I. In the two errors...