Federal Land Bank of Omaha v. Woods, No. 90-747

CourtUnited States State Supreme Court of Iowa
Writing for the CourtLAVORATO
Citation480 N.W.2d 61
Docket NumberNo. 90-747
Decision Date22 January 1992
PartiesThe FEDERAL LAND BANK OF OMAHA, A Corporation, Appellant, v. Donald J. WOODS and Lola Jean Woods, Appellees.

Page 61

480 N.W.2d 61
The FEDERAL LAND BANK OF OMAHA, A Corporation, Appellant,
v.
Donald J. WOODS and Lola Jean Woods, Appellees.
No. 90-747.
Supreme Court of Iowa.
Jan. 22, 1992.

Page 62

Dale L. Putnam of Putnam and Strand Law Office, Decorah, for appellant.

Larry F. Woods, Oelwein, for appellees.

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Considered by HARRIS, P.J., and CARTER, LAVORATO, NEUMAN, and SNELL, JJ.

LAVORATO, Justice.

This is the sixth appeal in a continuing saga arising from successive sales of a 285-acre farm with clouded title. It is a textbook example of the hair splitting inherent in protracted litigation: asserting all issues related to the same claim in separate lawsuits. See Moser v. Thorp Sales Corp., 256 N.W.2d 900 (Iowa 1977) (Moser I ); Moser v. Thorp Sales Corp., 312 N.W.2d 881 (Iowa 1981) (Moser II ); Moser v. Thorp Sales Corp., 334 N.W.2d 715 (Iowa 1983) (Moser III ); Neylan v. Moser, 400 N.W.2d 538 (Iowa 1987) (Moser IV ); Woods v. Schmitt, 439 N.W.2d 855 (Iowa 1989) (Moser V ). At issue are several district court rulings in an action on a promissory note secured by a purchase-money mortgage. The note and mortgage were executed and delivered to the plaintiff-bank by the defendants who used the borrowed funds to purchase the farm.

I. Background Facts.

To understand the present controversy, we think it would be instructive to set out some background facts preceding the transaction that generated this latest lawsuit.

In October 1971 Richard and Marguerite Schmitt were in possession of a Clayton county farm under a real estate contract. The district court had decreed a foreclosure of the contract, and the Schmitts' right of redemption against the contract vendors was about to end.

The Schmitts refinanced the farm with Thorp Finance Corporation of Wisconsin. As a condition for the refinancing, Thorp had the authority to auction the farm and all of the Schmitts' livestock, crops, and machinery. To secure the refinancing (a loan evidenced by a note due January 15, 1972), the Schmitts executed and delivered to Thorp a real estate mortgage encumbering the farm.

On December 1 the auction was held and the farm was sold to Clifton G. Moser and Carlys C. Moser for $42,180. The Schmitts and Mosers then entered into an agreement entitled an "offer to buy" incorporating the sale terms and provisions for payment of taxes and commissions. The Mosers paid the down payment of $8430 called for by the agreement.

Closing was set for January 15, 1972. But the Schmitts refused to close and continued to farm the property.

Thorp then foreclosed its mortgage against the Schmitts in July 1973. In late August the Mosers sued the Schmitts for specific performance of the December 1, 1971, offer to buy. Later the Mosers joined Thorp as a defendant and amended their petition to include a count to quiet title. In October the district court enjoined the mortgaging, encumbering, or selling of the farm. But the court refused to enjoin the sheriff's foreclosure sale pursuant to the Thorp foreclosure decree.

In December 1973, the sheriff's sale was held and the sheriff's certificate of sale was issued to Thorp, the highest bidder.

In October 1974 the Schmitts conveyed their redemption rights to a trustee. On December 12, 1974--just one day before the Schmitts' redemption rights were to expire--the trustee accepted an offer to buy the farm from Donald J. and Lola Jean Woods.

That brings us to the transaction in question. The Federal Land Bank of Omaha (FLB) loaned the Woods funds to cover a portion of the purchase price. The Woods had paid $9000 down with the offer on December 12, 1974, and paid an additional $41,000 on February 3, 1975.

FLB and the Woods had separate attorneys. Both attorneys examined the abstract and both noted in their title opinions the specific performance and quiet title actions brought by the Mosers. In addition, a real estate agent who had shown the farm to the Woods on December 8, 1974, told them that the Mosers were claiming ownership of the farm.

In Moser I, this court determined that the Mosers had a valid and enforceable contract to buy the farm. Moser I, 256

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N.W.2d at 907. This court remanded the case. The remand allowed the Mosers to amend their petition so they could add the Woods as defendants in their quiet title action. Id. at 912.

In Moser II, this court found that the Woods were not good faith purchasers of the property because they had notice of the Mosers' claim. Moser II, 312 N.W.2d at 886-90. The Woods' interest in the farm therefore rose no higher than the Schmitts' interest: the right to be paid the purchase price from the Mosers. Id. at 898. As a result of Moser II, title was quieted in the Mosers. The Woods were also ousted from possession and held liable for damages.

In the current brouhaha, FLB seeks reimbursement for funds it lent the Woods to purchase the farm. In this regard the Woods signed two documents in favor of FLB: (1) a promissory note for $76,500, and (2) a purchase-money mortgage. The Woods signed the note and mortgage on February 26, 1975. In late March FLB conveyed the funds and the Woods delivered FLB the note and mortgage.

The Woods put $28,026 of the loan amount into a future payment account. They put the remainder toward the purchase price of the farm and loan costs.

When it became clear that the Woods did not have marketable title to the farm, the Woods discontinued paying on the note. FLB then started this action to collect on the note.

II. Background Proceedings.

FLB filed its petition in July 1982. The Woods answered and asserted several affirmative defenses. The one pertinent here was failure of consideration. The Woods originally alleged a complete failure of consideration. They later amended to allege a partial failure of consideration.

The Woods also counterclaimed. They alleged negligence and breach of contract because of FLB's alleged failure to make sure that the mortgage was a first lien on the farm.

FLB's motions for summary judgment on these issues were overruled.

The Woods filed a jury demand. Later they withdrew it. This withdrawal allowed the district court to determine the validity of FLB's claim for the note balance. The counterclaims and all but one of the affirmative defenses were left for the jury.

The jury ruled in favor of FLB on the counterclaims. It also found in favor of FLB on all of the affirmative defenses except one: partial failure of consideration. The jury found in favor of the Woods on that affirmative defense. The district court found against the Woods on the one affirmative defense tried to the court: unjustifiable impairment of collateral.

After posttrial motions were filed and additional hearings, the court found for FLB on the note for $128,469.57. However, the court offset this figure by the amount the jury found represented the partial failure of consideration. The court calculated the loss to the Woods as the difference between the farmland value they should have received ($90,000 purchase price) and the value of their interest ($32,969.13) as determined in Moser III. See Moser III, 334 N.W.2d at 719-20. This amounted to a set-off of $57,030.87. The district court set off this amount plus interest against the $128,469.57 judgment in favor of FLB, reducing the judgment to $68,571.54.

The district court denied the remaining posttrial motions of the parties, as well as their requests for attorney fees. FLB appealed; the Woods cross-appealed.

The appeal and cross-appeal raise a number of issues. But the result we reach on the appeal requires us to address only four.

III. FLB's Motions for Directed Verdict and Judgment Notwithstanding the Verdict as to the Woods' Affirmative Defense of Partial Failure of Consideration.

FLB moved for directed verdict on the partial failure of consideration defense. It urged there was not sufficient evidence to submit this defense. The district court denied the motion. Following trial, FLB moved for judgment notwithstanding the

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verdict on the same ground. The district court also denied this motion. FLB thinks these rulings were erroneous. We agree.

Iowa Rule of Civil Procedure 243 pertinently provides:

Any party may, on motion, have judgment in his favor despite an adverse verdict ...:

....

b. If the movant was entitled to have a verdict directed for him at the close of all the evidence, and moved therefor, and the jury did not return such verdict, the court may then either grant a new trial or enter judgment as though it had directed a verdict for the movant.

If the district court thinks it was wrong in denying a motion for directed verdict, the court has two options under this rule. It may order a new trial. Or it may enter judgment as though it had directed a verdict.

On appeal, we have similar options. We can remand for a new trial. Or we can order the district court to enter judgment as though it had directed a verdict for the movant. In re Estate of Klein, 241 Iowa 1103, 1119, 42 N.W.2d 593, 602 (1950).

A motion for judgment notwithstanding the verdict must stand or fall on the grounds stated in the motion for directed verdict. And, on appeal, our review is limited to those grounds. Johnson v. Dodgen, 451 N.W.2d 168, 171 (Iowa 1990).

When considering a motion for directed verdict or for judgment notwithstanding the verdict, the district court must view the evidence in the light most favorable to the party against whom the motion is directed. This is so regardless of whether the evidence was contradicted. In addition such party is entitled to every reasonable inference from the evidence. Finally, if reasonable minds could differ on the issue, it is proper to submit it. Larsen v. United Fed. Sav. & Loan Ass'n, 300 N.W.2d 281, 283 (Iowa 1981).

In reviewing the district court's ruling on such motions, we also view the evidence the same way. Simply put, we ask, was there sufficient evidence to generate a jury question? Johnson, 451 N.W.2d at 171.

...

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48 practice notes
  • Chadima v. National Fidelity Life Ins. Co., No. 3-90-CV-30058.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • 25. März 1994
    ...776, 779 (8th Cir.1992) (court must view "evidence in the light most favorable to the prevailing party") with Federal Land Bank v. Woods, 480 N.W.2d 61, 65 (Iowa 1992) (court "must view the evidence in the light most favorable to the party against whom the motion is directed") and Hockenber......
  • Pulla v. Amoco Oil Co., No. 4-91-CV-90085.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • 9. November 1994
    ...776, 779 (8th Cir.1992) (court must view "evidence in the light most favorable to the prevailing party") with Federal Land Bank v. Woods, 480 N.W.2d 61, 65 (Iowa 1992) (court "must view the evidence in the light most favorable to the party against whom the motion is directed") and Hockenber......
  • State ex rel. Farm Credit Bank of Spokane v. District Court of Third Judicial Dist. of State in and for County of Powell, No. 92-480
    • United States
    • 20. Oktober 1994
    ...Federal Land Bank Ass'n v. Superior Court (1991), 227 Cal.App.3d 318, 277 Cal.Rptr. 753; Federal Land Bank of Omaha v. Woods (Iowa 1992), 480 N.W.2d 61; Interstate Production Credit Ass'n v. MacHugh (1991), 61 Wash.App. 403, Page 602 810 P.2d 535; Federal Land Bank of Spokane v. Wright (App......
  • Faber v. Menard, Inc., No. C 03-3034-MWB.
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • 17. Juni 2003
    ...a contract provides for mutual promises, each promise is a consideration for the other promise. Federal Land Bank of Omaha v. Woods, 480 N.W.2d 61, 65 (Iowa 1992). Thus, there is legal consideration in the form of mutual promises. See, e.g., In re Marriage of Ask, 551 N.W.2d 643, 646 (Iowa ......
  • Request a trial to view additional results
48 cases
  • Chadima v. National Fidelity Life Ins. Co., No. 3-90-CV-30058.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • 25. März 1994
    ...776, 779 (8th Cir.1992) (court must view "evidence in the light most favorable to the prevailing party") with Federal Land Bank v. Woods, 480 N.W.2d 61, 65 (Iowa 1992) (court "must view the evidence in the light most favorable to the party against whom the motion is directed") and Hockenber......
  • Pulla v. Amoco Oil Co., No. 4-91-CV-90085.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • 9. November 1994
    ...776, 779 (8th Cir.1992) (court must view "evidence in the light most favorable to the prevailing party") with Federal Land Bank v. Woods, 480 N.W.2d 61, 65 (Iowa 1992) (court "must view the evidence in the light most favorable to the party against whom the motion is directed") and Hockenber......
  • State ex rel. Farm Credit Bank of Spokane v. District Court of Third Judicial Dist. of State in and for County of Powell, No. 92-480
    • United States
    • 20. Oktober 1994
    ...Federal Land Bank Ass'n v. Superior Court (1991), 227 Cal.App.3d 318, 277 Cal.Rptr. 753; Federal Land Bank of Omaha v. Woods (Iowa 1992), 480 N.W.2d 61; Interstate Production Credit Ass'n v. MacHugh (1991), 61 Wash.App. 403, Page 602 810 P.2d 535; Federal Land Bank of Spokane v. Wright (App......
  • Faber v. Menard, Inc., No. C 03-3034-MWB.
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • 17. Juni 2003
    ...a contract provides for mutual promises, each promise is a consideration for the other promise. Federal Land Bank of Omaha v. Woods, 480 N.W.2d 61, 65 (Iowa 1992). Thus, there is legal consideration in the form of mutual promises. See, e.g., In re Marriage of Ask, 551 N.W.2d 643, 646 (Iowa ......
  • Request a trial to view additional results

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