Evans v. Herbranson, 47586

• Decision Date: 07 February 1950
• Docket Number: No. 47586,47586
• Citation: 41 N.W.2d 113,241 Iowa 268,15 A.L.R.2d 925
• Parties: , 15 A.L.R.2d 925 EVANS et al. v. HERBRANSON et al.
• Court: Iowa Supreme Court

Page 113

41 N.W.2d 113

241 Iowa 268, 15 A.L.R.2d 925

EVANS et al. v. HERBRANSON et al.

No. 47586.

Supreme Court of Iowa.

Feb. 7, 1950.

Frank R. Miller, Floyd S. Pearson, of Decorah, for appellants.

Isadore Meyer, of Decorah, for appellees.

BLISS, Chief Justice.

Since judgment and decree was rendered on the pleadings, and without evidence introduced, the facts stated herein are from allegations and admissions in the pleadings, and some statements of fact in the printed arguments of defendants. On February 23, 1949, plaintiffs filed their verified petition in equity, alleging that: on March 10, 1948, the Herbransons executed and delivered to plaintiffs their promissory note of said date for $1000, bearing annual interest at 4%, of which $200 was payable March 10, 1949 and the balance on August 10, 1949, with the written proviso on the note that 'if store is sold before said date, this note becomes payable at once' (copy of note was attached to petition); the Herbransons operated the store and maintained its stock from about March 15, 1948 to about January 8, 1949, when they sold and transferred said store, stock and fixtures to the defendants, Bergesons, thereby maturing plaintiffs' said note; on which there was due and unpaid on February 21, 1949, the sum of $1037.85; the Bergesons have since kept possession of said property; the said sale and transfer in bulk to the Bergesons was void as against the creditors of the Herbransons and a violation of the Bulk Sales Law of Iowa, ch. 555, Code 1946, I.C.A., in that, said buyers did not demand and receive of said sellers a complete written list, certified and sworn to by them as true, of the names and addresses of all their creditors with the amounts owing to each, and, in that, the sellers did not, at least seven days before the sale, make a full, detailed, inventory showing the quantity, so far as possible, with the exercise of reasonable diligence, and the cost price of each item to be included in the sale, and, in that, the said buyers did not give notice to each creditor of the sellers of the proposed sale and of the price, terms, and conditions thereof, as provided by the terms of said Bulk Sales Law; the said buyer, without complying with the provisions of said Law, paid to the sellers the purchase price of said property; under said Law, the plaintiffs have an interest in and a lien upon said stock and fixtures now in the possession and control of said buyers, which interest is in danger of being materially impaired, unless a receiver is appointed by the court to take charge of same; the value of said stock and fixtures, as plaintiffs are informed and believe, is $7500. Plaintiffs prayed judgment on their note against the Herbransons, with costs and statutory attorney fees, and for the appointment of defendant, Edward Bergeson, or other suitable person in the event Bergeson should not qualify, as receiver, under duly approved bond of $3000, to take charge of said property and properly account therefor to the court for the benefit of the sellers' creditors, and that upon final hearing the plaintiffs have judgment against defendants for the amount of their claim, and that their lien and right to said property, or the proceeds or value thereof, be established and confirmed as prior and paramount to that of any other persons, and that the receiver be required to account to plaintiff for said property or its proceeds or value, and that the same be applied in payment of its claim, and for general relief.

The defendants, Bergesons, filed verified answer, admitting the sale of the store, stock, and fixtures by the Herbransons on January 8, 1949, and denying all other allegations of the petition and amendment. In the answer they affirmatively alleged that: plaintiffs knew of said sale prior to January 27, 1949, and employed attorneys, who, on said date, filed petition for plaintiffs in a law action against the Herbransons on said note for $1000, to which they (Bergesons) were not made parties, and had no notice or knowledge of the indebtedness declared upon; on February 23, 1949, plaintiffs dismissed said cause of action without prejudice, and on the same day commenced this action at bar and served notice thereof on these answering defendants (the Herbransons neither appeared nor pleaded); the defendants had in their possession the balance of the purchase price of said property owed by them to the sellers, in the sum of $2500, from January 8, 1949 to January 14, 1949, when it was reduced by $1500, leaving an unpaid balance of $1000, which was paid to the sellers on January 31, 1949, at which time the defendants had no notice or knowledge of the pendency of the law action or of the indebtedness on which it was based; prior to defendants' notice or knowledge of this pending action or of the claim therein, the sellers moved out of Iowa with all of their property into Minnesota, and by said inexcusable delay of plaintiffs in asserting any rights under the Bulk Sales Law the defendants were deprived of all opportunity to commence appropriate legal proceedings against the sellers to protect their interests, and were irreparably prejudiced; the plaintiffs waived any alleged failure on the part of the sellers to comply with the Bulk Sales Law, and are estopped from claiming any lien upon the property, and have no right, title, lien or interest of any kind in and to said property and are entitled to no lien as creditors of the sellers under the said Law, and they are left to their ordinary remedies; the filing of the petition in the law action constituted an election by plaintiffs to hold only the sellers for the sum alleged to have been advanced and secured by said note; plaintiffs failed to pursue their remedies, if any, against these answering defendants with due diligence and within a reasonable time, and have waived any such alleged remedies; and that when defendants purchased the property from the sellers they had no notice or knowledge of any indebtedness from the sellers to plaintiffs, and these defendants were purchasers in good faith.

To the amended answer of defendants, the plaintiffs filed a motion to strike therefrom all affirmative allegations for the reason that they were 'irrelevant, immaterial, redundant, pleading of legal conclusions and opinions and not the pleading of ultimate facts, and for the further reason that the same are not proper defensive pleading.' The court sustained this motion to strike in all its parts.

In answer to plaintiffs' second amendment to their petition, which broadened the prayer of the latter, to ask that the lien of plaintiffs on the property be made prior and paramount to claims of other creditors, the defendant alleged that other creditors of the sellers had filed claims and each had equal rights with every other claimant, including the plaintiffs.

Plaintiffs filed motion for judgment on the pleadings on four grounds, to wit: that defendants' answer and amendment thereto presented no defense to plaintiffs' action; that defendants' said pleadings do not deny the signatures on the promissory note sued on, nor is an affidavit filed that the signatures are not genuine or authorized, in conformance to Iowa Rule of Civil Procedure 100; that said pleadings present no issue to the court; and that plaintiffs are entitled to judgment on the allegations of their petition as amended, and the admissions and allegations of defendants' answer as amended, which present no defense thereto.

Upon submission of said motion and oral argument by opposing attorneys, the court, on August 1, 1949, filed its findings, judgment and decree, in substance as follows: It found that the equities were with plaintiffs and that the allegations of their petition were material and true; that defendants wholly failed to comply with the Bulk Sales Law, and that the sale of the Herbransons to the Bergesons on January 8, 1949, was wholly void as to plaintiffs, and their claim was established in the amount alleged, together with costs including statutory attorney fees; that Edward Bergeson should be held as receiver and accountable to plaintiffs for all stock and fixtures which came into the possession of himself and Marvel Bergeson, or the proceeds therefrom, and that the lien of plaintiffs thereon should be established and equitable relief given for the enforcement thereof.

The court ordered, adjudged and decreed in accordance with said findings. It established plaintiffs' claim as a lien on the property in the possession of the Bergesons, and on the proceeds thereof, and appointed Edward Bergeson as receiver of said property or its proceeds under approved bond of $2000 to be accountable to the creditors of the Herbransons, and require him to make a full and detailed inventory of the property and its proceeds, and make a true and accurate report of his doings to the court. Judgment was directed to be entered against the Herbransons for the sum of $1037.85 with interest at 7% per annum from February 21, 1949, with costs, and that judgment be entered in favor of plaintiffs against the Bergesons in the same amount, 'which when paid by them shall be credited upon the judgment against Henry and Isabeth Herbranson with full rights of subrogation against them' to the Bergesons. The decree held the case open for any further proceedings.

Defendants urge a reversal upon two propositions: First, the court erred in striking parts of defendants' answer and amendment; second, it erred in granting judgment and decree for plaintiffs on the pleadings.

I. In their printed argument defendants state that 'unless otherwise stated the propositions and argument shall apply without repetition to both the court's ruling on the motion to strike and motion for judgment on the pleadings'. We will, in general, follow this method of discussion. The motions have some kinship and the grounds for each are basically similar. The allegations of defendants' answer and amendment...