Kilpatrick v. Smith
| Decision Date | 27 July 1945 |
| Docket Number | 46656. |
| Citation | 19 N.W.2d 699,236 Iowa 584 |
| Parties | KILPATRICK et al. v. SMITH et al. |
| Court | Iowa Supreme Court |
Edward J. Dahms and Jordan & Jordan, all of Cedar Rapids, for appellants.
Stewart Holmes, of Cedar Rapids, for appellees.
On March 16 1942, plaintiffs and defendants as vendees and vendors respectively, executed a written contract for the purchase and sale of a residence property in Cedar Rapids. The consideration was $4250, of which $400 was paid in cash on the execution of the contract, and the balance was to be paid in monthly sums of $30 until the contract price was paid. The first installment was due April 16, 1942. The contract was on a printed form and contained the provision that the times of payment and of performance were the essence of the contract and that upon any default therein, the vendors, at their option, by the service of the statutory 30-day notice, might declare the contract null and void and thereby forfeit all rights of the vendees under the contract, including any money paid by them. Plaintiffs went into possession of the property on April 13, 1942, and continued in possession until about May 4, 1942. On or about April 19, 1942, defendants called plaintiffs' attention to their failure to make the payment of April 16th, and were told by plaintiffs that the house had been misrepresented to them, and that they did not intend to perform the contract, but they would occupy the property until the $400 was used as rental. On April 22 1942, defendants served on plaintiffs a notice that because of their failure to make the payment due April 16th, the contract would stand forfeited and cancelled, unless within thirty days from the service of the notice the payment in default and the costs of service were made. On May 5, 1942, plaintiffs served notice on defendants that they had elected to rescind the contract 'on account of misrepresentation, fraud and deceit practiced at and prior to the execution of said agreement.' The notice demanded return of the cash payment of $400, and tendered possession of the property to defendants. Plaintiffs moved from the property at about the time of the service of the notice of rescission, and surrendered the keys of the house to defendants on May 8, 1942. Before the expiration of the 30-day period specified in the notice of forfeiture, and on May 14, 1942, the defendants orally leased said property to a tenant, whom they placed in possession thereof on May 15, 1942. A written lease of the property, terminating September 1, 1943, was prepared at this time but it was not executed until September 1, 1942.
On or about May 8, 1942, plaintiffs filed their petition in this suit, alleging that the execution of the contract was induced by the fraud and misrepresentations of defendants, in that they falsely represented: the house to be sixteen years old, when its age was forty years; the roof to be a year old, when it was ten years old; that the floors were very good, when they were sagged and had large cracks in them which were concealed by the rugs and coverings thereon; that the house was well constructed throughout with good foundation and heavy sills, when it was not so constructed and was out of plumb. The petition alleged the service of the notice of forfeiture, and the service of their notice of rescission, their surrender of the property, and that they were 'willing to cancel the contract at any time defendants should require, and they offer to do equity or whatever may be required of them by the court in connection with the rescission of said contract.' On May 18, 1942, the injunction, prayed for in plaintiffs' petition, staying further action in the forfeiture proceedings, was served on the defendants. Defendants' motion filed May 19, 1942, stating that the allegations in the petition were not misrepresentations but were 'mere puffing and sales talk,' was overruled. In their answer, filed June 11, 1942, defendants admitted the execution of the contract, the payment of $400, the service of the notice of rescission and surrender of the property, all as alleged, and denied all other allegations. Defendants also filed a counterclaim, in count one of which they alleged the facts respecting the forfeiture of the contract and all rights of plaintiffs thereunder including all money paid by them, and prayed for decree cancelling the contract and forfeiting all rights of plaintiffs. In count two of the counterclaim, they alleged and prayed that in the event the court found for plaintiffs, they have judgment against plaintiffs for $40 for their occupancy of the property.
The trial was had in June, 1943, and the court's findings and decree were entered July 6, 1943. There is no controversy over the facts. Under the oral lease made on May 14, 1942, and the written lease for a year, made on September 1, 1942, the defendants collected monthly rent of $35 from May 14, 1942. The defendants refused to refund the down payment of $400 to plaintiffs. The plaintiffs made no monthly payments and did not comply with the notice of forfeiture. There is nothing in the record before us indicating that the defendants ever filed in the office of the county recorder the notice of forfeiture with proofs of service, as provided by section 12393 of the 1939 Code of Iowa.
On June 4, 1943, defendants amended their answer by alleging that all defects in the property complained of by plaintiffs were apparent and easily discoverable and were known or should have been apparent to plaintiffs as they had unrestricted opportunity to examine the property. By reply filed June 7th and by amendment to petition to conform to proof filed June 10, 1943, plaintiffs alleged that the defendants in leasing the property to a third party and placing him in possession thereof during the period granted the plaintiffs by the contract and the notice of forfeiture and chapter 527 of the 1939 Code, in which to mend the breach in the contract complained of by defendants, the latter, by their conduct, estopped themselves to proceed by forfeiture, and to retain the purchase money paid, and thereby accepted and assented to the rescission of plaintiffs and received the property thereunder. They further alleged in said pleadings that from May 18, 1942, until the decree of court the defendants were stayed by injunction from proceeding with the forfeiture, yet they exercised dominion over said property during all of this time under lease, and by their said conduct since May 14, 1945, defendants lost any right to the down payment of $400, except such equitable sum that they might be entitled to for the short time plaintiffs occupied the property, which sum the plaintiffs offered to credit to defendants.
On June 11, 1943, defendants amended their answer by alleging that in leasing said property they did not intend to accept plaintiffs' rescission, but considered that plaintiffs had surrendered the property in compliance with the notice of forfeiture.
Defendant Harold Smith testified that:
The trial court in its finding and decree adjudged that plaintiffs had failed to establish the allegations of fraud and misrepresentation in their original opinion, and that they were not entitled to the relief prayed for in the amendment to the petition to conform to the proof. The temporary injunction was dismissed. The decree adjudged that defendants had established the allegations in count one of their counterclaim, and under the forfeiture the contract was cancelled, and title to the property was quieted in defendants, 'as against any rights, claims or interests therein and thereto of plaintiffs.' No specific mention is made respecting the $400 in the decree.
While the appellants apparently appealed from the decree they have limited the appeal to a specific matter. In the record filed in this court they state that it does not embrace the whole record. It omits the evidence pertaining to the fraud and misrepresentations alleged in the original petition. They do not appeal from the court's holding that they had failed to establish these allegations. The appeal is limited to the claimed error of the court in holding against them on the allegations of the last amendment to the petition, which allegations of fact, on which their conclusions are based, are not denied by pleading nor proof and are fully established. Appellants contend that appellees, by leasing the property and giving possession thereof to the tenant within and for a part of the 30-day period, during which appellants would have had the opportunity and the right to perform that part of the contract in which they were in default and thus prevent a forfeiture, thereby placed themselves where they could not have performed the contract by giving possession of the property to appellants had they cured and removed the default. By such deliberate act of encumbering the property by lease and possession, the appellants contend that appellees nullified their...
To continue reading
Request your trial