Hannan v. Murphy

• Decision Date: 24 October 1924
• Docket Number: No. 36025.,36025.
• Citation: 198 Iowa 827,200 N.W. 418
• Parties: HANNAN v. MURPHY ET AL.
• Court: Iowa Supreme Court

198 Iowa 827

200 N.W. 418

HANNAN

v.MURPHY ET AL.

No. 36025.

Supreme Court of Iowa.

Oct. 24, 1924.

Appeal from District Court, Dallas County; W. G. Vander Ploeg, Judge.

Action to foreclose a mortgage upon real estate, and for personal judgment against certain of the defendants who in contracts to purchase the mortgaged premises are alleged to have agreed to pay the mortgage. From a decree dismissing the petition as to all the defendants except the mortgagors, plaintiff appeals. Affirmed.Cardell & Willis and H. S. Dugan, all of Perry, for appellant.

Wilson & Harris, of Jefferson, and White & Clarke, of Adel, for appellee Meinecke.

W. H. Winegar, of Perry, and J. A. Henderson, of Jefferson, for appellees Borop and Adams.

VERMILION, J.

There is no substantial dispute as to the facts. Plaintiff, the appellant, entered into a written agreement with the defendant Meinecke whereby he agreed to sell to Meinecke certain land. As a part of the purchase price Meinecke agreed to assume and pay, in addition to a first mortgage on the land, a second mortgage of $3,400, which appellant agreed to put on the premises. Final payment was to be made on March 1, 1920, at which time a deed was to be delivered. A few days after the execution of this contract Meinecke contracted in writing to sell the land to the defendants Adams and Borop, who assumed and agreed to pay a second mortgage of $3,400 on the premises. This contract was also to be consummated by final payment and delivery of a deed on March 1, 1920. Shortly thereafter Adams and Borop agreed in writing to sell the land to the defendant Murphy, who likewise assumed and agreed to pay a second mortgage of $3,400 on the premises; and this contract was also to be consummated on March 1, 1920. Appellant did not place a second mortgage of $3,400 on the premises, as his contract with Meinecke contemplated. On March 1, 1920, Murphy made the cash payment required by his contract with Adams and Borop. The appellant and Meinecke each received such part thereof as they were entitled to under their respective contracts of sale. Appellant executed and delivered direct to Murphy a deed for the land, and Murphy and his wife executed and delivered to appellant a note for $3,400 secured by a second mortgage on the land. This mortgage appellant accepted, and in this action seeks to foreclose. In addition to a judgment and decree of foreclosure against the Murphys, which he secured, and which is not now in question, he asks, in amendments to his petition for personal judgments against Meinecke, Adams, and Borop, for the amount due on the mortgage by virtue of their respective contracts referred to above. He claims to be entitled to recover upon their respective agreements to assume and pay the mortgage, and also as for an unpaid portion of the purchase price of the land.

[1] Taking up first the claim against Meinecke on his contract of assumption, we are clear there was a novation both of contract and debtor. The essentials of a novation are: (1) A previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the extinguishment of the old contract; (4) the validity of the new one. 29 Cyc. 1130. The presence of all of these essentials in the transaction in question is plain, unless it be the agreement to extinguish Meinecke's obligation under his contract of purchase.

There can be no question that the transaction of March 1, 1920, was with the consent of all parties. Appellant's contract with Meinecke required appellant to place a mortgage upon the land which Meinecke agreed to pay. The result of this, had it been carried out, would have been that appellant would have received the $3,400 for which the mortgage would have been given, and been himself liable to the mortgagee to repay it. As between himself and Meinecke, however, appellant would have been but a surety for Meinecke, who would have been primarily liable for the debt. Under the arrangement that was actually carried out appellant, instead of receiving the $3,400 and becoming liable to repay it, with a right to compel reimbursement from Meinecke if he was required to pay, accepted Murphy's obligation and mortgage for the amount, and become himself the creditor and mortgagee.

The actual transaction of the completion and performance of these various contracts was carried on between the appellant, Murphy, and one Atkinson, who represented Meinecke, and Adams, and Borop. Atkinson testified that he had a conversation with appellant in which he told appellant the land had been sold two or three times, and proposed that he deed from himself to Murphy and accept Murphy's note and mortgage in substitution for the note and mortgage of Meinecke, and that appellant agreed to that; that he asked appellant if he would accept Murphy's note and mortgage in substitution for Meinecke's, and he said he would. Appellant testified that Atkinson asked him if, as a matter of convenience, and to save time and recording fees and revenue, he would deed the farm across to Murphy; that he repliedhe would think it over; that later he saw Atkinson and told him he would pay only his share of the revenue; and that there was nothing said about releasing Meinecke, Borop, or Adams on their contracts, and nothing said about his surrendering his contract with Meinecke.

[2] It is not necessary that the release or discharge of the prior contract be in express terms. It may be established by proof of facts and circumstances from which the implication of such release would reasonably arise. Lester v. Bowman, 39 Iowa, 611;Michigan Stove Co. v. Walker, 150 Iowa, 363, 130 N. W. 130, Ann. Cas. 1912D, 505;Foster v. Paine, 63 Iowa, 85, 18 N. W. 699;Sioux City Stockyards Co. v. Packing Co., 110 Iowa, 396, 81 N. W. 712.

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