Home State Bank v. Martin
| Decision Date | 11 December 1923 |
| Docket Number | 35556 |
| Citation | 195 N.W. 977,196 Iowa 1092 |
| Parties | HOME STATE BANK, Appellant, v. GORDON B. MARTIN et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Clay District Court.--JAMES DELAND, Judge.
ACTION upon a negotiable promissory note. Verdict for defendants, by direction of the court. Plaintiff appeals.
Reversed.
Helsell & Helsell and Cornwall & Cornwall, for appellant.
Heald Cook & Heald and Morling & Morling, for appellees.
STEVENS J. PRESTON, C. J., DE GRAFF and VERMILION, JJ., concur.
This is an action upon a negotiable promissory note for $ 10,000, which was executed April 20, 1920, contemporaneously with a written contract or proposal for the purchase of 80 acres of land near Garden City, in Scott County, Kansas. The note is made payable to the makers, and, when offered in evidence, bore the following indorsement on the back: .
Appellant alleged in its petition, and claims, that it purchased the note of the State Bank of Kansas City, before maturity, in good faith, for a valuable consideration, and without notice of any defects in the title thereof. Appellees admitted the execution of the note, and alleged that same was without consideration; that there was a total failure of consideration; and that they were induced to execute the same by fraud practiced upon them by the Francis C. McCarty Land Company and its representatives, with whom the contract or proposal for the purchase of the Kansas land was negotiated and entered into. The contract referred to, on its face, purports to be a proposal by appellees to Francis C. McCarty, as the Francis C. McCarty Land Company, of Chicago, Illinois, to purchase the south half of the southwest quarter of Section 24-19-33. The following excerpts from the contract are essential to a clear understanding of the facts and of the legal propositions requiring decision:
"I, the undersigned, hereafter styled 'the purchaser,' of the town of Peterson, county of Clay, state of Iowa, hereby propose to Francis C. McCarty, as Francis C. McCarty Land Company, of Chicago, Illinois, hereafter styled 'the company,' to purchase the following described real estate, to wit: * * * This proposal if accepted shall become a part of the contract evidenced by the notes and shall be considered as incorporated in and made a part of the notes, and upon default in the payment of any of such notes, or any part thereof, or interest thereon, when the same becomes due and payable, then the entire series of notes given herewith, with interest thereon, shall forthwith become due and payable. The said cash and notes being tendered and received hereunder as earnest money and earnest money notes, given to evidence a portion of the purchase price of the above described property. 'The purchaser' shall not be entitled to the possession of said lands, without written consent, until he has received deed thereto, 'the company' agreeing when one half of the fixed purchase price with interest, has been fully paid by 'the purchaser' to deliver deed to said lands, as hereinafter provided. * * * This agreement is made subject to the approval of the owner of said land, and in the event of the disapproval hereof on the part of the owner, or in case 'the company' is unable for any reason, to deliver deed to said land, then and in that event, 'the company' shall have the right to cancel this contract upon returning to such purchaser, the amount of money so paid hereunder by him, together with all notes executed by 'the purchaser,' and thereupon 'the company' and the owner shall be released and discharged from all liability and responsibility hereunder. * * * For the balance of said purchase price, namely $ 12,000, 'the purchaser' agreed to execute and deliver upon demand 'the company's' regular form of mortgage and purchase-money notes, said notes being payable in five annual installments thereafter of approximately even amounts with interest at 6 per cent per annum payable semiannually. 'The company' will thereupon convey or cause to be conveyed to 'the purchaser' the said lands above described, by deed of general warranty excepting as to any taxes or assessments of whatsoever kind or nature hereafter becoming due, and subject to existing leases, if any, and to any and all water or easement rights appurtenant to said lands. 'The company' further agrees to furnish 'the purchaser' a certified abstract of title to the said lands, which abstract will show a merchantable title in the grantor in the deed conveying title thereto. 'The purchaser' agrees to receive and within ten days from the receipt of such abstract, to examine the title to said land as shown by such abstract, and return the same to 'the company' together with whatever objections, if any 'the purchaser' may have to such title, and a reasonable time shall thereafter be allowed to remedy and remove such defects or objections; further agreeing that all objections to said title shall be considered as waived, unless made within such time. * * *"
It will be observed at once that the contract is materially different in its terms and provisions from the usual and ordinary contract for a deed, entered into by an owner with a purchaser of real property. Appellant is a banking corporation, located at Royal, in Clay County, this state. Appellees, who are husband and wife, reside on an 80-acre farm in the vicinity of Royal. In July, 1920, they, in company with a friend and his wife, at the request of an agent of the McCarty Land Company, went to Garden City, to look at some land which the company claimed to have for sale near that place. When they reached Kansas City, they joined an excursion party of about 300, all bound for the same destination. Upon arrival, they were treated for two days to automobile trips and lectures upon the country to which they had gone, by someone interested in or procured by real estate men or by the sugar beet factory at Garden City. This is, however, immaterial. Appellees were finally induced to purchase the land described, at $ 300 per acre. The land was unimproved, and incapable of successful cultivation without irrigation. The price of the land was fixed with the understanding that the land would be irrigated. Appellees paid $ 1,500 cash on the consideration, and executed two notes: one for $ 500, and the note in controversy, for $ 10,000. The $ 500 note was to take the place of liberty bonds for that amount, which appellees agreed to, and which they subsequently did, deliver to a representative of the land company. The remaining $ 12,000 was to be paid by the execution of notes and mortgages upon the land. The McCarty Land Company neither owned nor pretended to own the land. It was proved upon the trial that they were not even agents for the sale thereof. One 40 of the land was owned by a resident of Indiana, and the other 40 by a resident of New York. The transaction with appellees was never made known to the owners of the land. The first, according to their testimony, that they knew of the note and contract was imparted to them in January, 1921, by a letter from appellees' attorneys. The owner of one of the 40's testified that the fair value of the tract did not exceed $ 5,000, which, as it appears, was $ 19,000 less than the consideration fixed in the contract.
No abstract of title was ever furnished appellees; but, in further exemplification of the McCarty Land Company's capacity to identify and deal with victims, its representative made a visit to the home of appellees, a few days after they returned from Kansas, and sought to obtain payment of the $ 10,000 note, representing that this money was necessary, in order to improve the land by irrigation.
At the conclusion of all the testimony, the court directed the jury to return a verdict in favor of the defendants. The questions presented for decision all go to the correctness of this ruling. Appellee Gordon B. Martin testified...
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