Harris v. Barnes City Savings Bank

• Decision Date: 23 June 1922
• Docket Number: 34484
• Citation: 188 N.W. 862,194 Iowa 492
• Parties: BERT HARRIS, Appellant, v. BARNES CITY SAVINGS BANK et al., Appellees
• Court: Iowa Supreme Court

188 N.W. 862

194 Iowa 492

BERT HARRIS, Appellant, v. BARNES CITY SAVINGS BANK et al., Appellees

No. 34484

Supreme Court of Iowa, Des Moines

June 23, 1922

REHEARING DENIED SEPTEMBER 30, 1922.

Appeal from Mahaska District Court.--D. W. HAMILTON, Judge.

ACTION at law, to recover damages for fraud and breach of contract. The material facts are stated in the opinion. There was a judgment on directed verdict for defendants, and the plaintiff appeals.--Reversed and remanded.

Reversed and remanded.

S. V Reynolds, A. J. Walsmith, and McCoy & McCoy, for appellant.

Irving C. Johnson, for appellees.

WEAVER J. STEVENS, C. J., PRESTON and DE GRAFF, JJ., concur.

OPINION

WEAVER, J.

On July 13, 1914, the plaintiff executed and delivered to the defendant bank a warranty deed for a certain farm of 154 acres owned by the grantor in Mahaska County. The expressed consideration for such conveyance was $ 1.00; but it is conceded of record that the real purpose and intent of the transaction was to secure payment to the bank of an indebtedness of about $ 4,000 to $ 5,000, subject, however, to prior mortgage liens of $ 26,000 and interest. The defendant Williams was cashier of the defendant bank, and as such represented it in its transactions with the plaintiff. On June 29, 1917, plaintiff made and delivered to the bank a quitclaim deed of "all his right, title, and interest in and to" said real estate. At the same time, and as part of the same transaction, the parties also made and signed a writing reading as follows:

"Oskaloosa, Iowa, June 29th, 1917.

"This memorandum: Witnesseth, that a complete settlement of all accounts has this day been made by and between the Barnes City Savings Bank of Barnes City, Iowa, and Bert Harris, of Oskaloosa, Iowa; and each party does acknowledge full settlement of all amounts and claims due from the other to this date. This includes all claims and accounts of whatever nature that either party has had up to this date. (Signed on the date above given.)

"Barnes City Savings Bank.

"Bert Harris."

Thereafter, on May 10, 1919, the bank sold and conveyed the land in question to one David Lester for $ 210 per acre, or an aggregate price of $ 32,340, an amount substantially equal to the sum of the mortgage liens on the property. Some months later, this action was begun.

Plaintiff's amended and substituted petition was stated in two counts. By the first count, it is alleged that the defendants conspired together to cheat and defraud the plaintiff, and that, in pursuance of said wrongful purpose, defendant Williams stated and represented to plaintiff that, if he would secure the payment of his indebtedness to the bank by a warranty deed of his farm, the bank would receive it as security only, and would withhold it from record; and that, relying upon said promise, plaintiff did make and deliver the deed; but that defendants, in violation of their promises, and with intent to cheat and defraud him, caused the instrument to be recorded. It is further alleged that defendants thereafter assured the plaintiff that the recording of the paper had been made necessary, to satisfy the demand of the bank examiner, and that the bank would continue to hold the title as security only, in accordance with the original agreement; that thereafter, defendants, on the same plea of satisfying the demands of the bank examiner, asked plaintiff to execute the quitclaim deed; and that plaintiff complied with the request, upon the express understanding and agreement that the title should still be held by the bank as security only for the payment of plaintiff's indebtedness to it; but that, in violation of such agreement, and to cheat and defraud the plaintiff out of his equity in the land, the bank sold and conveyed it to Lester, a family relative of the owners of the bank, at a price below its actual value.

Plaintiff further alleges that, by reason of the wrongful and fraudulent acts so stated, he has been damaged in the sum of $ 23,000, for which he demands judgment. The second count of the petition restates the alleged facts set up in the first count, omitting therefrom the charges of fraud and conspiracy, and demands recovery of damages for violation of the alleged contract by which the defendants agreed to hold the title to the land in trust, for security only.

The defendants do not deny that the conveyance by warranty deed was for security only, but allege that, plaintiff having failed to pay the debt so secured, and the bank being about to foreclose its lien, the parties entered into an agreement of compromise and settlement, by which plaintiff should quitclaim the land to the bank, thereby vesting the latter with the absolute ownership of the property, and the bank should cancel and release all its claims and demands against the plaintiff; and that, in performance of such agreement, plaintiff made and delivered said quitclaim to the bank, and the bank canceled all its claims against the plaintiff and surrendered to him the notes which had evidenced his said indebtedness. These allegations are denied by the plaintiff.

The issues were tried to a jury, and when the testimony had been closed, the court sustained defendants' motion for a directed verdict in their favor. From this ruling and from the judgment entered on the verdict, the plaintiff appeals.

I. The action being at law, it is the first complaint of the appellant that the issues of fact were for the jury, and that the court erred in directing a verdict for the defendant.

We are of the opinion that this assignment of error is well made and that the court erred in directing a verdict. The action is at law, for the recovery of damages. It being conceded that the original conveyance was given and received as a mortgage only, its character as such is fixed, for the purposes of this case, and is not to be given any other effect, as between the parties, than would be accorded to it had it been executed in the usual form of a mortgage in fact. As to the quitclaim deed and the accompanying receipt or statement afterwards made, it is plaintiff's claim that they were executed and delivered on the same terms and for the same purpose for which the warranty deed was given,--that is, for security only,--the bank agreeing to hold the title in trust for the plaintiff, subject to its security for payment of plaintiff's indebtedness. The bank denies that this last conveyance was in trust or as security, and avers that it was received in payment and discharge of the said indebtedness, and that, in pursuance of such agreement, the bank did, in fact, cancel and discharge its claims against plaintiff and returned to him the promissory notes which he had given to evidence such debt. This the plaintiff expressly denies, and upon ...