German State Bank v. Nw. Water & Light Co.

• Decision Date: 06 April 1898
• Parties: GERMAN STATE BANK v. NORTHWESTERN WATER & LIGHT CO. ET AL.
• Court: Iowa Supreme Court

104 Iowa 717

74 N.W. 685

GERMAN STATE BANK

v.NORTHWESTERN WATER & LIGHT CO. ET AL.

Supreme Court of Iowa.

April 6, 1898.

Appeal from district court, Plymouth county; F. R. Gaynor, Judge.

Plaintiff brings this action upon two promissory notes, executed by the defendant the Northwestern Water & Light Company. These notes were secured by certain shares of stock of said water and light company, which were deposited with plaintiff. The shares were owned by J. H. Winchell, who, as president of the water and light company, executed the notes, and were by him transferred to plaintiff, as collateral security for the payment of the notes. The first answer of the water and light company denies a part of the indebtedness claimed. By an amendment to its petition, plaintiff states that said Winchell deposited, as collateral security for the payment of said notes, 80 shares of stock in said defendant company; that thereafter Winchell, by written contract, sold and transferred to one J. F. Rogers 439 shares of stock in the defendant company, and, as a part consideration for said transaction, Winchell agreed in writing with Rogers to pay all indebtedness of defendant company except its mortgage debt of $60,000. Plaintiff alleges that it has accepted the benefit of such contract, and asks that Winchell be made a defendant, and that it have judgment against him, as well as against the water and light company. The water and light company filed a cross petition, making plaintiff, Winchell, and one M. W. Richey defendants. It recites the agreement of Winchell with Rogers, whereby the former agreed to pay the water and light company's indebtedness. It states further the pledge by Winchell of his shares of stock to plaintiff, to secure the notes of the water and light company. It claims that it has accepted and is entitled to the benefit of Winchell's promise to Rogers; and it is then alleged that, with the consent of Winchell, plaintiff has transferred the shares of stock it held to said M. W. Richey. It prays that Winchell may be considered the principal debtor to plaintiff, and that it be held only a surety, and that Winchell's property, including said shares of stock, be first exhausted before plaintiff be allowed to proceed against the property of cross petitioner. Said Richey answers also, claiming that he gave a valuable consideration for the stock, and says, in effect, that he took the same subject to plaintiff's claim thereto. He pleads also an estoppel, the details of which we need not consider. There was a reply by the water and light company to Richey's answer, and then was made this stipulation: “It is hereby stipulated between the parties to the above-entitled cause that judgment may be entered in said cause on the first and second counts of the petition herein filed in favor of the German State Bank, and against the Northwestern Water & Light Company, for the sum of $4,950, costs and attorney's fees to be paid by the plaintiff. It is further stipulated that execution in said cause shall be stayed, without bond or further proceedings, until the trial and termination of the issues joined in the amendment to the petition in said cause and the cross petition and answer thereto; and that in case it is adjudged and ordered by the court that plaintiff first exhaust certain eighty shares of stock of the Northwestern Water & Light Company, held by plaintiff as collateral security of the indebtedness sued on in this action, that said stock shall be first sold, and the proceeds of said sale applied on said indebtedness, before levy shall be made upon the property of the defendant Northwestern Water & Light Company. Dated this 20th day of May, 1896. German State Bank, by John Zurawrki, Vice Pres. Sammis & Scott, Attorneys for Defendant Northwestern Water & Light Company.” The judgment below awarded plaintiff a recovery for the stipulated amount, dismissed the cross petition of the water and light company, and ordered that plaintiff exhaust the property of defendant water and light company before proceeding against the shares of stock assigned to Richey. From this judgment the water and light company appeals.Sammis & Scott, for appellant.

Zink & Roseberry, for appellee Richey.

P. Farrell, for appellee Winchell.

WATERMAN, J.

The question to be determined, as we have extracted it from this volume of pleadings and multiplicity of claims, is, in its statement at least, a very simple one. It is this: How far, if at all, is the liability of the water and light company affected by the contract between Winchell and Rogers? The provisions of this contract, so far as material here, are as follows: “This agreement, made and entered into and executed in duplicate this 17th day of May, A. D. 1894, by and between J. H. Winchell and J. F. Rogers, both of Le Mars, Iowa, witnesseth: First. That the said J. H. Winchell agrees to sell and transfer to the said J. F. Rogers four hundred thirty-nine and one-half shares of the stock of the Northwestern Water & Light Company, of Le Mars, Iowa, at and for the sum of thirty thousand dollars, which stock is to be transferred to the said Rogers upon the execution and delivery of this contract; and the transfer of the same shall carry with it the right to have and receive from the said company the full amount of all dividends to be paid thereon by the company from and after the 1st day of May, 1894. * * * Fifth. And the said Winchell also agrees and covenants that he will pay...