Jewell v. Nuhn

• Decision Date: 16 December 1915
• Docket Number: No. 27691.,27691.
• Citation: Jewell v. Nuhn, 155 N. W. 174, 173 Iowa 112 (Iowa 1915)
• Parties: JEWELL v. NUHN ET AL.
• Court: Iowa Supreme Court

173 Iowa 112

155 N.W. 174

JEWELL

v.NUHN ET AL.

No. 27691.

Supreme Court of Iowa.

Dec. 16, 1915.

Appeal from District Court, Black Hawk County; Franklin C. Platt, Judge.

For many years, Boehmler, a shareholder, was the secretary of the defendant association, and had unlawfully appropriated and converted to his own use its moneys paid in by its members. The 20 shares owned by him were of par value of $100 a share when fully matured. While owning these, Boehmler, in July, 1905, borrowed of the plaintiff $2,000, giving his promissory note therefor, and pledging as collateral security for the payment thereof his certificate representing said shares. The misappropriations by Boehmler amounted to over $4,000 at the time he made this loan, and he continued them until his death, in 1907, at which time he was indebted to the association on that account to the extent of nearly $8,000. At the time of his death all dues and assessments necessary to mature the 20 shares of stock, and make them of the paid-up value of $2,000, had been paid in except $40, which, after Boehmler's death, the plaintiff tendered to the defendant association. Before this action was commenced, and before any effort had been made by the association to assert its alleged lien, defendant notified it of his assignment and requested transfer on the books of the association. This was refused on the ground that it had been discovered after the death of Boehmler he was indebted to the association in a sum greater than the value of the shares, on account of misappropriation of its funds. The $2,000 loan made by appellee is unpaid. The trial court ruled that the association had no lien for a defalcation by an officer. Reversed on rehearing.

For former opinion, see 138 N. W. 457.

Evans, J., dissenting.William H. Merner, of Cedar Falls, and Mullan & Pickett, of Waterloo, for appellant.

Alfred Grundy, of Los Angeles, Cal., and H. B. Boies, of Waterloo, for appellee.

SALINGER, J.

1. The paragraph of the defendant's article of incorporation under which it now claims a lien on the shares of stock for Boehmler's indebtedness to it for moneys misappropriated is as follows:

“Art. XV. Liens. This association shall have a lien on the shares of each shareholder for any sum due it from said shareholder, either on account of the subscription to its stocks or for money loaned by the association to said shareholder, or for any other indebtedness due from the shareholder. No stock shall be transferred unless all debts due the association are first paid, except that in the sale of property upon which the association has a mortgage the stock may be transferred to a purchaser, provided that there are no other claims due the association.”

[1] Appellee urges that the judgment below is right because, even if the article applies to anything other than the debt of a shareholder as such, it applies to nothing but debt, and that one who embezzles does not on that account owe a debt; that the words of the article should be strictly construed against the association; and that, so appellee was advised when he made the loan to the shareholder, there was no lien except for what is, in strictness, a debt, and may not now be made subject to a liability for embezzlement.

If the law on the point is in such state as that the word “debt” in the article means debt, in strictness, then appellee had the right to treat the language as meaning that, and may now object to a different interpretation. If the law is clearly against the construction insisted on by appellee, he must now suffer an interpretation opposed to his. If the state of the law does not with decisive force give one construction preference over the other, it is for us to determine whether appellee has adopted that interpretation which is the reasonable one in the absence of preponderating law. Appellee is a stockholder in the defendant association, and so was advised of said article. The question, then, is, taking the law as it is, was appellee justified in believing that the language used by the association meant debt, in strictness? The books advised both ways. Which advice was the more persuasive or mandatory? Which should a reasonable man have headed?

2. As a general proposition, the term “debt” is applied to a sum of money due under certain and express agreement. Reilly's Case, 46 Mich. 459, 9 N. W. 494; 8 Am. & Eng. Encyc. (2d Ed.) 986; Hill's Case, 35 Mich. 191; Bouvier's Law Dict.; 3 Black Com. 54; 2 Black Com. 264; Rodman's Case, 13 Barb. (N. Y.) 77; Parker's Case, 74 Tenn. 406-408; Finch's Case, 9 S. D. 255, 68 N. W. 740; Hotchkiss' Case, 68 Fed. 76, 15 C. C. A. 264. Still speaking generally, debt “looks to contract relations, express or implied.” White's Case, 105 Iowa, 176, 74 N. W. 928; Thornburg's Case, 13 Ind. App. 446, 41 N. E. 85, 86; Bac. Abr.; Watson v. McNairy, 4 Ky. (1 Bibb) 356; Melvin's Case, 121 Cal. 16, 53 Pac. 419. And it is a money demand for which an action of indebitatus assumpsit will lie. Lindsay v. King, 23 N. C. 403;Dowling v. Stuart, 3 Scam. (4 Ill.) 195;In re Radway, 20 Fed. Cas. 154-162. A line of authorities holds that, generally, to constitute a debt there must be a demand “for a sum certain.” Baum's Case, 110 Pa. 569, 1 Atl. 535; In re Adams, 67 How. Prac. (N. Y.) 284, 286; Id., 12 Daly (N. Y.) 454, 457; Rhodes' Case, 2 Nev. 60, 61. And that an uncertain or unliquidated demand, as for damages, is not a debt. Jackson's Case, 31 N. J. Eq. (4 Stew.) 554, 558; Duncan's Case, 3 Johns. Ch. (N. Y.) 357, 8 Am. Dec. 513;McElhaney's Case, 96 Ga. 174, 22 S. E. 895; Clark's Case, 6 Nev. 203, 208; Lindsey's Case, 23 N. C. 401, 403; Dowling's Case, 4 Ill. (3 Scam.) 193, 195; Finch's Case, 9 S. D. 255, 68 N. W. 740. That a contingent and unliquidated demand is not a debt is affirmed by Wentworth's Case, 1 Mass. 471; Hammond's Case, 144 Mass. 151, 10 N. E. 751; Arguello's Case, 37 Cal. 524; Taylor's Case, 64 Hun, 636, 19 N. Y. Supp. 533, 535; Hall's Case, 45 Conn. 350, 353; Davenport's Case, 6 Mont. 502, 13 Pac. 249; Tapalje & L. Dict. To the contrary are Berg's Case, 6 Johns. Ch. (N. Y.) 302; Medberry's Case, 7 Ohio St. 535; Edwards' Case, 84 Ill. 632.

A statute that a guardian may, with leave of court, compound a debt or demand owing to the ward, does not include an unliquidated claim for damages for a tort on behalf of the ward, where the question is whether a settlement of such a claim by the guardian, if made in good faith, is binding on the ward. Manion's Case, 99 Ky. 504, 36 S. W. 530, 531. On the other hand, the Berson Case, 84 Cal. 89, 23 Pac. 1112, 1114, holds that, in a statute authorizing a partner to act in liquidating, “debt” is synonymous with “claim,” and includes a demand for damages arising from a tort. And, as to fundamental provisions against imprisonment for debt except in cases of fraud, it has been held that a judgment ex delicto is not a debt. Moore's Case, 73 N. C. 394, 21 Am. Rep. 470; Long's Case, 88 N. C. 3, 4. And so of taxes or unliquidated claims. Bolden's Case (D. C.) 69 Fed. 745, 746. These are, however, not controlling because the very language of the provision indicates, by excepting fraud, that contractual debt only is contemplated. But even as to imprisonment for debt there is conflict. Stroheim's Case, 77 Fed. 802, 806, 23 C. C. A. 467. As to required statements of debt, the word “debt” is used in strictness, because the purpose of such statements is to advise what credit the corporation is entitled to. The thought is that those who suffer from a tort do not do so from any reliance on the solvency and credit of the corporation, and that hence the word as used in such statements does not cover such things as unliquidated claims for a tort. Cable v. McCune, 26 Mo. 371, 72 Am. Dec. 214;Cable v. Gaty, 34 Mo. 573, 86 Am. Dec. 126; Doolittle's Case, 11 Neb. 243, 9 N. W. 54; Esmond's Case (N. Y.) 16 Hun, 65, 68. And as to municipal corporations, the word “debt” or “indebtedness,” as used in limitations placed on municipal power, is almost universally given a meaning much less broad and comprehensive than it bears in general usage. Swanson's Case, 118 Iowa, at 170, 91 N. W. 1048, 59 L. R. A. 620.

For present purposes, it suffices to state, merely, that other cases hold that to constitute a debt the obligation must be due or presently payable; others, that the obligation is not a debt until reduced to judgment.

We do say in Bailies' Case, 127 Iowa, at 126, 102 N. W. 813, that “a debt is a sum of money due by certain and express agreement, and originates in or is founded upon contracts express or implied”; but that is purely by way of argument and illustration; the point decided being that the term “debt,” as used in Code, § 1311, does not include delinquent taxes in the sense that the statute authorizes a taxpayer to set off against the assessment of his moneys and credits the unpaid taxes of a previous year as a debt in good faith owing by him. According to Webster's Case, 8 Vt. 135, 139, “debt,” in its more limited sense, is substantially synonymous with “contract,” and in this sense it is more generally used in statutes relating to the execution of process. Wherefore the several acts of Congress exempting soldiers from arrest for any debt or contract do not bestow on a soldier an exemption from arrest for nonpayment of taxes. Lane's Case, 74 U. S. (7 Wall.) 71, 80, 19 L. Ed. 101, citing Camden's Case, 26 N. J. Law, 398, holds that a tax, in its essential characteristics, is not a debt, nor in the nature of a debt; but is an impost levied by authority of government upon its citizens or subjects for the support of the state; that it is not founded on contract or agreement, but operates in invitum. And Hinchman's Case, 29 W. Va. 673, 2 S. E. 863, 871, that a special tax or assessment is not an ordinary debt arising out of contract, express or implied, though partaking somewhat of the nature of a debt, and is not a debt within the rule that a debt may be...