Himmelberger v. Cent. State Bank (In re Talbott's Estate)
| Decision Date | 02 April 1929 |
| Docket Number | No. 39460.,39460. |
| Citation | 209 Iowa 1,224 N.W. 550 |
| Parties | IN RE TALBOTT'S ESTATE. HIMMELBERGER v. CENTRAL STATE BANK. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Polk County; Lester L. Thompson, Judge.
Action in probate to establish a claim against the estate of the decedent upon certain promissory notes. A verdict was rendered in behalf of the plaintiff, and from the judgment rendered thereon the defendant appeals. Affirmed.Nourse & Nourse, of Des Moines, for appellant.
Lehmann, Seevers & Hurlburt, of Des Moines, and Oliver & Oliver, of Cape Girardeau, Mo., for appellee.
This is the third time that this cause has been in this court. The opinions in the former appeals are found in 200 Iowa, 585, 203 N. W. 303, and 204 Iowa, 363, 213 N. W. 779. The main facts are sufficiently set forth in the opinions in the former appeals, and it is only necessary that we refer to them very briefly to present the questions submitted on this appeal.
In 1905, four parties, Talbott, Himmelberger, Beach, and McConnell, formed a partnership, under the name of “M. A. Talbott & Company.” Later the same parties organized a corporation called “The M. A. Talbott Company.” The general business conducted by both was the construction of public improvements. The personnel of the partnership changed. Beach and McConnell passed out of the partnership. The notes in suit were all made payable to the order of the appellee Himmelberger. They were signed by the partnership M. A. Talbott & Co., and by Talbott and Himmelberger. There is no substantial dispute of the fact that the original notes that were so executed were given to appellee for the purpose of raising funds to be used in the partnership business, that they were negotiated by the appellee, and that the proceeds were so used, and that subsequently the appellee took up said notes and now holds them.
I. Appellant moved for a directed verdict on the ground that the evidence upon the instant trial discloses that there was a complete novation respecting the notes in suit, and that the appellant was relieved of liability thereon by virtue of the assumption of the same by the said corporation. As we understand the record, a minute book of the corporation was produced upon this trial, which had not been offered in evidence at the former trials, and under date of July 6, 1907, said minute book contained an entry by which the corporation assumed and agreed to pay, at the maturity thereof, all of the indebtedness of the said copartnership. It is contended that this proposition was accepted by the corporation, and a contract was entered into on July 8, 1907, in accordance therewith.
More than four years later, to wit, on September 12, 1911, the partnership and the corporation entered into a written contract, which is, in part, as follows:
“This agreement made and entered into this 12th day of September, 1911, by and between M. A. Talbott and Company a partnership consisting of M. A. Talbott of Rome, New York and John H. Himmelberger, of Cape Girardeau, Missouri, hereinafter referred to as the Partnership and The M. A. Talbott Company, of Baltimore City, a corporation organized and existing under the Laws of the State of Maryland, hereinafter referred to as the Corporation,
Witnesseth: * * * It is now hereby agreed by said Corporation, that in consideration of the acts, services, and agreements of said Partnership as hereinbefore enumerated, said Corporation hereby assumes and takes over as its own, all the liabilities and obligations of said partnership and also agrees to convey to said partnership eight hundred fifty four (854) shares of the Common Capital Stock of said Corporation, heretofore held as Treasury Stock.
[Signed] M. A. Talbott & Company,
By Morris A. Talbott.
The M. A. Talbott Company,
By Morris A. Talbott.
John M. Himmelberger.
Morris A. Talbott.”
It is not contended by appellant that the transaction of July, 1907, constituted a novation or anything more than an assumption of the debt by the corporation. But appellant insists that the contract of September 12, 1911, went further and contains all the essential elements of a novation.
[1] It is the general and well-recognized rule that the necessary legal elements to establish a novation are parties capable of contracting, a valid prior obligation to be displaced, the consent of all parties to the substitution, based on sufficient consideration, the extinction of the old obligation, and the creation of a new one. Kirchman v. Standard Coal Co., 112 Iowa, 668, 84 N. W. 939, 52 L. R. A. 318;Benton v. Morningside College, 202 Iowa, 15, 209 N. W. 516;Foster v. Paine, 63 Iowa, 85, 18 N. W. 699;Harrington-Wiard Co. v. Blomstrom Mfg. Co., 166 Mich. 276, 131 N. W. 559;Parsons Mfg. Co. v. Hamilton Ice Mfg. Co., 78 N. J. Law, 309, 73 A. 254;McAllister v. McDonald, 40 Mont. 375, 106 P. 882;Hemenway v. Beecher, 139 Wis. 399, 121 N. W. 150;Miles v. Bowers, 49 Or. 429, 90 P. 905. With these rules in mind, we turn to a consideration of the record in this case to determine whether or not the contract of September 12, 1911, constituted a novation.
[2] II. At the time of the execution of the contract of September 12, 1911, the appellee occupied a double rôle; he was a creditor of the partnership by virtue of his having taken up the notes in suit from the indorsee, and he was a member of the partnership and liable as such for his proportionate share of the indebtedness evidenced by the notes.
Was the appellee, as a creditor, a party to the contract of September 12th, so that as such creditor it constituted a novation? It is contended that the appellee was not a party to the contract except as a member of the partnership. By the introductory recitals quoted supra, the contract purports to be an agreement between the partnership and the corporation only. Appellee is described therein as a member of the partnership. He signed it personally. It is contended that such signature was only as a witness and not as a party to the instrument. He testified:
We are disposed to hold that, under the record, the appellee became a party to the contract and consented to its terms and provisions and acquiesced therein.
[3] III. We are still confronted with the question: Did the contract effectuate a discharge of the partnership liability to the appellee on the notes in suit, and a substitution of the corporation as the debtor thereon?
One of the essential elements of a novation is the extinction of the old obligation, the discharge of the old debtor, and the creation of a new obligation from a new debtor. In the recent case of Reimers v. Tonne, 221 N. W. 574, we said:
“It is a familiar rule that the mere fact of the making of a new contract by which a third party becomes obligated to pay to the creditor the previous existing indebtedness of a debtor does not alone give rise to a presumption that the creditor accepts the new debtor and releases the original debtor, and the question as to whether or not there was such a release is one of fact to be determined by all the evidence in the case.
In Michigan Stove Co. v. [A. H.] Walker [& Co.], 150 Iowa, 363, 130 N. W. 130, Ann. Cas. 1912D, 505, we said:
‘Such release may, of course, be established, like any other agreement, by proof of facts and circumstances from which the implication of such release would reasonably arise.’
See, also, Walker v. Wood, 170 Ill. 463, 48 N. E. 919;Cutting v. Whittemore, 72 N. H. 107, 54 A. 1098;Dunbar v. Steiert (Ariz.) 253 P. 1113;De Witt v. Monjo, 46 App. Div. 533, 61 N. Y. S. 1046;Parish Manufacturing Corporation v. Martin-Parry Corporation, 285 Pa. 131, 131 A. 710;Union Central Life Insurance Co. v. Hoyer, 66 Ohio St. 344, 64 N. E. 435.”
Applying this rule to the instant case, we are confronted with the necessity of determining whether or not the appellee released the partnership as his debtor and accepted the corporation as his new debtor.
Stress is laid upon the use of the words “hereby assumes and takes over as its own all the liabilities and obligations of said...
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