Dolan v. Buckley

• Decision Date: 24 June 1924
• Docket Number: 35694
• Citation: 199 N.W. 302,197 Iowa 1363
• Parties: H. R. DOLAN, Appellee, v. E. P. BUCKLEY et al., Appellants
• Court: Iowa Supreme Court

199 N.W. 302

197 Iowa 1363

H. R. DOLAN, Appellee, v. E. P. BUCKLEY et al., Appellants

No. 35694

Supreme Court of Iowa, Des Moines

June 24, 1924

Appeal from Linn District Court.--JOHN T. MOFFIT, Judge.

ACTION on a promissory note. Defendants pleaded a counterclaim. A demurrer to the counterclaim was sustained. Defendants elected to stand upon the counterclaim, and judgment was entered dismissing the counterclaim and in favor of the plaintiff for the amount due on the note.

Reversed.

Johnson Donnelly & Lynch, for appellants.

C. J Haas, for appellee.

FAVILLE J. ARTHUR, C. J., EVANS and PRESTON, JJ., concur.

OPINION

FAVILLE, J.

Appellee sues on a promissory note signed by appellant E. P. Buckley as principal and Delia C. Buckley as surety. By way of counterclaim, appellants allege that appellant E. P. Buckley entered into a written contract with appellee for the purchase of a certain farm. A copy of the contract is attached to the answer. The contract provided for the conveyance of the premises at a future date, and that the conveyance was to be subject to a certain mortgage, to run for a period of five years, with interest at five and one-half per cent per annum, payable annually. It is alleged in the counterclaim that, at the time of final settlement, appellee represented to the vendee (appellant E. P. Buckley) that he had placed a mortgage on the premises, conforming to the terms of the written contract as to the interest rate and date of payment. It is alleged that the said E. P. Buckley relied on the representations so made by appellee, and had no knowledge that they were not true; that he accepted the deed, assuming the mortgage then upon the premises. It is alleged that the representations were untrue. Appellants sought to recover damages in the sum of $ 1,600.

The demurrer is based upon several grounds.

It is alleged that the counterclaim does not appear to arise out of the transaction pleaded in the petition, and is not connected with the subject-matter of the action. It is not necessary that a counterclaim so arise or be so connected. Code Section 3570.

It is contended that the counterclaim does not plead a cause of action existing in favor of all of the appellants against the appellee. The transaction out of which the counterclaim arose was between appellee and appellant E. P. Buckley only. Appellant Delia C. Buckley was not a party to that transaction. Is the counterclaim in favor of E. P. Buckley now available to both appellants in this action?

It is alleged in the counterclaim that Delia C. Buckley is a surety only on the obligation sued upon by appellee.

Under Code Section 3570, a counterclaim may be "any new matter constituting a cause of action in favor of the defendant, or all of the defendants, if more than one, against the plaintiff." It is contended that no cause of action existed in favor of the defendant Delia against the plaintiff, and that, therefore, the demurrer was well taken. Both appellants joined in the counterclaim. Was it available to Delia? As stated, she was but a surety on the note sued on by appellee. Assuming that she alone had been sued in this action, could she have pleaded in her behalf the counterclaim available to her principal?

The question was before us in Reeves v. Chambers, 67 Iowa 81, 24 N.W. 602, wherein suit was brought against the principal and surety on an injunction bond. A counterclaim was pleaded, growing out of matters between the plaintiff and the principal on the bond only. It was contended that such a counterclaim was not available to the other defendant, the surety. We recognized the fundamental rule that a surety may set up any defense which would be available to his principal. If sued alone, the surety may, with the consent of the principal, avail himself, by way of counterclaim, of a debt due from the plaintiff to his principal. Code Section 3572.

The surety in this case has no personal claim against appellee; but the policy of the law is to avoid a circuity of actions. In the Reeves case, we said:

"The position of the surety is such that the principal should...