Iowa Cord Tire Co. v. Babbitt

• Decision Date: 13 March 1923
• Docket Number: 35095
• Citation: 192 N.W. 431,195 Iowa 922
• Parties: IOWA CORD TIRE COMPANY, Appellant, v. VANCE J. BABBITT, Appellee
• Court: Iowa Supreme Court

192 N.W. 431

195 Iowa 922

IOWA CORD TIRE COMPANY, Appellant, v. VANCE J. BABBITT, Appellee

No. 35095

Supreme Court of Iowa, Des Moines

March 13, 1923

Appeal from Winnebago District Court.--JOSEPH J. CLARK and M. F EDWARDS, Judges.

TWO actions are consolidated and submitted together. One is an appeal from a judgment by default. The other is an appeal from an order of the district court refusing to vacate and set aside the said default in said original action.--Affirmed on both appeals.

Affirmed on both appeals.

Chester J. Eller, Tom Boynton, and L. E. Francis, for appellant.

Thompson Loth & Lowe, for appellee.

FAVILLE J. PRESTON, C. J., EVANS and ARTHUR, JJ., concur.

OPINION

FAVILLE, J.

I.

On or about March 13, 1919, the appellee subscribed for certain shares of stock in the appellant company. The subscription was obtained by one of the stock salesmen of the appellant. Said subscription contract was as follows:

"Subscription for Stock.

"Fully paid and Nonassessable Par Value $ 25.00.

"To Iowa Cord Tire Co.: I hereby subscribe for 16 shares preferred and 8 shares common of the capital stock of the Iowa Cord Tire Co. (Incorporated under the laws of Iowa) agreeing to pay therefor at Des Moines, Iowa, $ 25,00 per share, upon the following terms: Cash $ 150.00 Note for $ 450.00 Sept. 1st. It is understood that no representations other than those herein set forth shall be recognized or considered, and that all payments shall be made by check or draft payable to Iowa Cord Tire Co. Executed at Forest City this 13th day of Mch., 19 This subscription subject to approval of the board of directors.

"Vance J. Babbitt."

On the back of said stock subscription appeared the following, in writing:

"I hereby agree to dispose of the stock as shown on the opposite side of this contract at a profit of $ 2.50 per share at any time after ninety days if dissatisfied, or money refunded at any time within that time. Iowa Cord Tire Co., By E. Willoughby, Agt. for County."

About one year after the execution of said contract, the appellee notified the appellant that he was dissatisfied with his stock subscription, and demanded a return of the $ 600 he had paid under said written contract. Correspondence was had between the parties and their attorneys, which will be referred to more in detail hereafter. Subsequently, action was commenced by the appellee, to recover the said sum of $ 600, with interest. Service of the original notice in said action was accepted by the appellant. The petition was duly filed, and judgment was obtained by default in said proceeding on the 12th day of September, 1921, said judgment being entered for the said sum of $ 600, with interest and the costs of said action. No exceptions were taken by the appellant to the judgment. No motion was made for a new trial, no evidence was preserved of record of the trial of said action, and no bill of exceptions was filed in said cause. The appeal is from the judgment so entered by default. The court had jurisdiction of the subject-matter and of the defendant in said action. No irregularity is claimed in regard to the jurisdiction of the court. Matters are now urged on appeal which might have been urged by way of defense to the appellee's claim in said action, but these matters cannot now be considered by us in this appeal. The petition stated a cause of action. The original notice was in proper form, and duly served in proper time. The trial court found the proof sufficient to sustain the allegations of the petition, and entered judgment accordingly. We cannot review such judgment so entered by default, where no bill of exceptions has been filed, no evidence preserved, and where the proceedings are all regular, and within the jurisdiction of the court. Until the judgment so entered is vacated or set aside by proper proceeding, it must stand as a verity. Belknap v. Belknap, 154 Iowa 213, 134 N.W. 734.

II. Appellant, however, sought to set aside said judgment by default, by a petition filed in the lower court. An order was entered by which the court refused to vacate and set aside said judgment. This brings to our consideration the second proposition involved in the consideration of these cases.

As previously noted, the stock contract was entered into on March 13, 1919. On March 2, 1920, the appellee wrote a letter to the appellant, referring to the subscription for stock and expressing his dissatisfaction therewith, and requesting a remittance for the amount paid by him. On March 6, 1920, the appellant replied to said letter, refusing to recognize the conditions claimed by the appellee, and claiming that appellant had paid a commission to the salesman on said sale, and refusing to recognize any obligation under the written contract indorsed on the subscription. On March 8th, the appellee replied to this letter, threatening to commence action against the appellant. Other correspondence passed between the parties, and on January 7, 1921, the attorneys for the appellee wrote the appellant in regard to said matter, and correspondence was thereafter exchanged between the counsel for the appellant and counsel for the appellee. This correspondence was quite extensive, and it appears therefrom that the attorneys discussed the facts and the law pertinent to the matter in hand, and exchanged briefs on the subject. On March 8, 1921, counsel for appellee sent an original notice to counsel for the appellant, with the request that the latter obtain an acceptance of service thereon. It appears also that there was a conference between the attorney for the appellant and the attorney for the appellee at Des Moines, in April, 1921, at which time counsel for the appellant delivered the said original notice to counsel for the appellee, service of said notice at said time having been duly accepted by the appellant. The petition in said action had been filed March 11, 1921. On April 26, 1921, counsel for appellee wrote counsel for appellant as follows:

"We have not decided definitely just what steps we will take and it is possible that after we have an opportunity to investigate the matter a little further we will institute different proceedings, as we have been advised and requested to do by some other people who seem to be interested. Before doing anything further with our suit instituted here we will advise you as we have not definitely decided whether we will continue the same or proceed in an entirely different manner."

Other correspondence passed between the attorneys for the parties, in the months of April, May, and June of 1921, and on July 28, 1921, the attorneys for the appellee wrote to the attorney for the appellant as follows:

"Nearly two months ago you wrote us to the effect that you would forward us the Babbitt letters, or copies thereof, which you have referred to two or three times in your correspondence as indicating that Babbitt raised the question of this contract with the company before he paid for his stock. We have been postponing any further action in this connection until we received this correspondence, which you say in your letters of May 28th and June 4th that you expect to forward immediately. We don't seem to be getting anywhere in this connection and this is to advise you that we expect to proceed with our suit and shall expect you to take such steps as you see fit to defend yourself, but that we hereby withdraw our agreement to withhold any further action, and you will therefore govern yourself accordingly. In our opinion we have a valid claim that is entitled to consideration and we shall get it before the court at the very earliest opportunity."

On August 5, 1921, the attorney for the appellant replied to said letters, as follows:

"I received yours of July 28, 1921. I owe you an apology for not answering your letter sooner with respect to the correspondence, but sometime the latter part of June I had to be out of the office due to an operation and it laid me up about four weeks so that I practically attended to no business of any kind and since that time have been attempting to catch up. I had recently, however, thought of my obligation to write you relative to the correspondence referred to. The advice I had received was somewhat confused with their correspondence and I find that the stock was paid for in November, 1919, and the letter written in March, 1920. The letter of August, 1920, thereafter reads as follows, to wit: 'Please ship me the following order as soon as possible in accordance with my "Dealers' Co-Operative Sales Plan" which I received at the time I subscribed for stock. 1 30x3 1/2 CL non-skid Wrapped Tread Fabric casing. 1 30x3 1/2 CL non-skid Trade Maker casing. Yours very truly, [Signed] V. J. Babbitt.' This letter of course, indicates that he has waived all claims on his stock and elected to keep the same free from any claim as against the Iowa Cord Tire Company as his Dealers' Co-Operative Sales Plan was a part of his purchase and, of course, he would not have any right to his Dealers' Co-Operative Plan and make orders thereunder unless he was a stockholder. I trust that this answers your letter. As far as appearing to the case, that matter was dropped, as you said when you were here before you did not know what you would do and your letter thereafter so stated that you did not know what proceedings you would take up. However, if you have changed your mind and now desire to contest the case you better prepare an original notice for your next term of court and forward to me and I will have it served. Then I can make my appearance and contest jurisdiction of the court or otherwise, as in my judgment seems best to protect the company. I would not want to consent to jurisdiction by agreement or otherwise under the...