Hayne v. Cook

• Decision Date: 02 May 1961
• Docket Number: No. 50275,50275
• Citation: 109 N.W.2d 188,252 Iowa 1012
• Parties: Robert A. HAYNE, Appellee, v. Edmond M. COOK, Trustee for Ann Shuler Chase, and Harold L. Hansen, Appellants.
• Court: Iowa Supreme Court

Page 188

109 N.W.2d 188

252 Iowa 1012

Robert A. HAYNE, Appellee, v. Edmond M. COOK, Trustee for Ann Shuler Chase, and Harold L. Hansen, Appellants.

No. 50275.

Supreme Court of Iowa.

May 2, 1961.

Rehearing Denied June 13, 1961.

Duncan, Jones, Hughes, Riley & Davis, Des Moines, for appellant Edmond M. Cook, trustee for Ann Shuler Chase.

Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, for appellant Harold L. Hansen.

Herrick & Langdon, Des Moines, for appellee.

LARSON, Justice.

Plaintiff, in seven counts, brought this suit in equity for specific performance of an alleged contract for the sale of residentially-improved real estate in Des Moines, Iowa. The defendant Cook and his agent and attorney Blair of Davenport, Iowa, whom we shall refer to herein as the 'trustee' held the legal title to the real estate. The defendant Hansen was made a party because of an alleged subsequent contract with the trustee for the purchase of the real estate.

Defendants both denied the existence of any contract with the plaintiff, counterclaimed for a decree quieting their title as against the claims of plaintiff, and each asked damages for slander of title.

The trial court determined both issues adversely to defendants, and they appealed.

As stated in defendants' joint brief and argument, the issues before us are (1) whether there was any specifically-enforceable obligation by which the trustee was required to convey to plaintiff, and (2) whether the claims of plaintiff to the real estate were barred by the subsequent contract of the defendant Hansen who claimed to be a bona fide purchaser without notice. We shall deal with them in that order.

The general rules of contract law applicable to this case are not new or difficult, and for the most part are not in dispute. However, the surrounding facts and circumstances which so often determine the issues in such matters are in dispute and are somewhat more complicated than usual. We may even say they bring to mind the warnings that 'too many cooks spoil the broth' and that 'the longest way around is often the shortest way home.' However, the following facts are either undisputed or, under satisfactory evidence, were factually determined by the trial court.

The defendant Cook, as trustee under a trust created by John Shuler for the benefit of his daughter, Ann Shuler Chase, owns the legal title to the involved property. Blair, his attorney and agent, acted for him in this matter. Ann and her husband, Mabis Chase, prior to their divorce, occupied the real estate under the terms of the trust. By stipulation between Ann and Mabis in connection with their divorce, the property was to be sold by the trustee and the net proceeds were to be divided between them. The stipulation further provided that, should the trustee determine to accept an offer for less than $50,000, he would notify Mabis of that intention and Mabis would have three days to purchase the property for that amount and an additional seven days to pay the entire amount to the trustee. Although not a party to that stipulation, the trustee was advised of it terms and honored it. Ann, acting for and with the approval of the trustee, listed this property for sale with Murray Work & Co., a licensed real estate broker in Des Moines. Their salesman Iverson was active in obtaining an offer to buy from the plaintiff. However, the first offer considered by the trustee was brought in by an independent real estate salesman Sumner Macomber. Under date of April 29, 1960, Hansen, the defendant herein, signed an offer for $47,000 which Macomber left with Shuler. Shuler advised the trustee of the offer by phone, and the trustee immediately wrote a letter to Mabis and his attorney Gibson advising them of his intention to accept the offer and of the time limit for Mabis to exercise his option to purchase the property at that figure.

On April 30th Iverson obtained an offer of $48,000 from the plaintiff, but this offer addressed to the trustee was not sent to him because plaintiff himself decided to make a larger offer to Mabis of $49,000, with the hope that Mabis would exercise his option and then sell to plaintiff. This offer was made through Iverson on May 2, 1960. Iverson had told Mabis and his attorney Gibson on Sunday, May 1st, of the plaintiff's $48,000 offer. On May 2nd a letter of acceptance on behalf of Mabis was prepared to buy the property from the trustee at $47,000. It disclosed that an offer had been made to Mabis of $49,000 and noted that two real estate commissions would be due for these sales. This letter was not mailed, for it appears that Gibson, Mabis and his mother decided they would prefer to have plaintiff's $49,000 offer submitted direct to the trustee, thereby avoiding two transfers, and would allow Ann to share in the increased receipt from the real estate. It was apparent that, to accomplish this short cut, some changes had to be made with the approval of the offerer and of the trustee. Mabis' option expired May 2nd, and in an effort to obtain the trustee's immediate approval Gibson took plaintiff's offer and the required $5,000 check payable to Murray Work & Co. to Shuler's office. After talking the matter over with Shuler, Gibson conferred with Iverson and they changed the offer so as to make the trustee the offeree and inserted some suggested clauses relative to patio, cushions, and interior damages to be repaired by insurance carriers. Pursuant to these changes, Gibson and Shuler talked to the trustee by telephone. Gibson suggested, in view of the circumstances, including the fact that the plaintiff's offer expired May 2nd, that the trustee authorize someone in Des Moines to accept on his behalf the plaintiff's offer as altered. Blair refused that request stating that the written offer would have to be sent to him at Davenport for inspection and approval. The trustee did say the amount offered and the terms recited to him by Shuler were satisfactory and acceptable, and agreed that 'if the instrument was satisfactory I would sign it and send it back to Mr. Shuler.' Feeling the deal was closed, Gibson then sought Iverson's approval to change the date of expiration and, being assured it was all right, did change it to expire May 5th. The offer was then left with Shuler to send to the trustee at Davenport. Iverson saw the plaintiff that afternoon and obtained his approval of the changes in the written offer. Upon being advised that this offer was being accepted and that under the contract another $5,000 was due, a second check was made to the Murray Work & Co. and delivered to them on the 3rd of May, 1960. This offer (Exhibit '1') dated April 30, 1960, provided for a $5,000 payment with the offer, a $5,000 payment upon acceptance of the offer, and the balance of $39,000, upon delivery of warranty deed.

Blair received the written offer May 3rd and, after talking to Shuler on the telephone, wherein they discussed the custody of the down payments provided and plaintiff's financial ability to carry out the contract, the contracts were signed by the trustee without modification and mailed back to Shuler. In the same envelope Blair placed the abstracts of title, insurance policy, and a personal letter (Exhibit '7') to Shuler. Late that night Macomber solicited a new offer from the defendant Hansen, who had been told of the plaintiff's negotiations for the property through Mabis and the arrangement to handle the deal direct with the trustee. Macomber called Shuler, who in turn called Blair to determine whether the trustee could still accept a new offer. It was Blair's opinion that he could, and he then told Shuler not to open the letter containing the signed agreement when it arrived, that he would come to Des Moines and negotiate the sale with Hansen himself the next day. This was done. The trustee 'retrieved' the letter from Shuler's desk, signed the agreement of sale with the defendant Hansen and accepted his checks for the full payment therefor. No effort was made to advise plaintiff or Mabis or Murray Work & Co. of this transaction, and when plaintiff learned of it he procured and filed an affidavit of P. M. Work to the effect that Dr. Robert A. Hayne, by due offer and acceptance, purchased the property under dispute for $49,000. This suit followed, and a few days prior to the trial the trustee delivered a deed to the property to Hansen, but it was not recorded.

Although the defendant Hansen has no present interest in the real estate, as he has by quitclaim deed conveyed his interest to the trustee and the trustee has paid him for work done upon the premises prior to the decision below, he maintains he has retained his right of action for slander of title and that his counterclaim to that extent is not moot.

The trial court, who had before it the witnesses and heard the testimony and observed their demeanor on the stand, came to the conclusion that the equities were with the plaintiff, that the interested parties intended to and did accept his offer of $49,000, and that in return for the extra $2,000 above the original $47,000 offer, the trustee agreed on May 2nd to transfer the title direct to plaintiff, and that no acceptance of the written offer was necessary. It further concluded that the defendant Hansen had knowledge of sufficient facts to put him on inquiry as to plaintiff's rights, and cannot be regarded as a good-faith purchaser for value without notice. It decreed specific performance of plaintiff's contract and denied defendants any relief upon their counterclaims. We agree with the result and the conclusion as to defendants' counterclaims. We do, however, agree with defendants' contention that this case, reduced to its simplest elements, can and should be resolved on the basic principles of contract law. We decide it on that basis.

I. Being in equity, this suit is triable de novo, and while we are not bound by the trial court's findings or conclusions, serious...