Kowalke v. Evernham
| Decision Date | 21 October 1930 |
| Docket Number | 40407 |
| Citation | 232 N.W. 670,210 Iowa 1270 |
| Parties | W. H. KOWALKE, Appellant, v. LOTTA B. EVERNHAM et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Woodbury District Court.--A. O. WAKEFIELD, Judge.
This was a proceeding brought by the plaintiff, in order to obtain against the defendants one or more of three alternative reliefs. They were: First, the specific performance of a real estate contract; or, second, the foreclosure of said agreement; and, or, third, judgment for the amount due under the written compact. All the relief was denied, and the plaintiff appeals.
Affirmed.
Milchrist Schmidt, Marshall & Jepson, for appellant.
W. V Steuteville, for appellees.
In effect, as stated in the preamble, the proceeding hereunder reviewed was an action by the plaintiff-appellant for alternative relief against the defendants-appellees as follows: First, the specific performance of a real estate contract; or, second, the foreclosure thereof; and, or, third, judgment for the amount due thereunder. Two written agreements are involved, but the latter is really supplemental to the former, and the instruments do not in any material way conflict. Both Lotta B. Evernham and Furman H. Evernham, appellees, together with the appellant, Walter H. Kowalke, signed the first contract; while the appellee Lotta B. Evernham, the appellant, Walter H. Kowalke, and his wife, Mary Kowalke, signed the second agreement. Furman H. Evernham, the appellee, therefore, did not become a party to the second writing. The real estate involved consists of two lots, and they are located in Leeds, a suburb of Sioux City. There is a garage building upon the lots.
Lotta B. Evernham, the appellee, is the mother of Furman H. Evernham, a minor, 18 years of age. For a period of approximately nine years, the appellee Lotta B. Evernham was the duly appointed guardian of the minor. The guardianship proceedings were pending in the district court of Mills County.
After graduating from the Central High School, in Sioux City, during January, 1928, Furman desired to enter business for himself. He had taken a three-year course in automobile mechanics at the high school, and furthermore, the boy had actual experience in garage work for a period of about nine months. Appellees lived at Leeds. So, also, did the appellant. Their respective homes were 10 or 12 blocks apart. A Mr. Mammen operates a bank in Leeds, and the guardian went to the bank for the purpose of making inquiry concerning the purchase or leasing of a garage. Thereupon Mammen stated that the appellant had a garage for sale, which could be purchased for about $ 5,000. At Mammen's suggestion, he was to investigate the possible purchase. Following an interview with appellant, Mammen reported to the guardian that the garage could be purchased for $ 7,500, plus the invoice price of the equipment. Mammen knew of the guardianship, and had assisted the guardian in making her reports. During her interview with Mammen, the guardian made it plain that she intended to invest the ward's funds. Appellant also, according to the testimony of the appellees, understood that the guardian was buying this property with the ward's money. Finally appellant's proposition was accepted, and the contracts aforesaid entered into.
As previously stated, the first agreement was signed by the minor. This was done at the request of Mammen, who explained that the signature was desirable because the boy was going to run the business. When the second agreement was executed, appellees made inquiry regarding whether the ward was to sign it, and Mammen suggested that, he being a minor, it was not necessary. Each contract was drawn by Mammen, and, after the transaction was completed, appellant paid Mammen $ 200 for his services.
It was the ward who made the principal inspection of the property, and likewise he assisted with the invoice. $ 1,000 was paid by the guardian on the real estate, and approximately $ 1,942.09 on the personal property. Thus the aggregate sum paid by the guardian to the appellant under the contract was approximately $ 2,942.09. According to the written agreements aforesaid, the balance of the purchase price for the lots, over and above a first mortgage of $ 2,500 thereon, was to be paid at the rate of $ 500 semiannually, payable September 2, 1929, and every six months thereafter. An assumption by the guardian was made of a first mortgage on said real estate, amounting to $ 2,500, as before indicated. Soon after the invoice was completed, the appellant delivered the keys for the garage to the ward, who then took possession thereof. Thereafter, for a period of four months, the ward continued to operate the garage, after which time he and the guardian learned that the price was excessive, and that the action of the guardian in making the purchase had not been authorized or approved by the district court having charge of the guardianship. Hence the appellees offered to return the real estate and the personal property remaining at that time, which, under the evidence, was practically the same as when purchased.
The district court denied the specific performance prayed, and absolved appellees from any liability on the contract. Moreover, that court permitted the ward to recover from appellant $ 2,600, plus interest, to compensate for the guardianship funds used in the premises. No claim is made by the appellees that the amount thus awarded was not sufficient, and the appeal, therefore, does not involve the apparent discrepancy between the amount thus awarded and the $ 2,942.09 paid, as previously shown. Consequently we do not discuss that proposition.
I. Concession is made by appellant that the contract does not bind the minor. Likewise, appellant concedes that he is not entitled to relief of any kind against the minor, because the guardian acted without authorization from any court. With that concession on appellant's part, it is evident that further discussion of the proposition is not necessary.
II. Objection is made by the appellant, however, because the district court allowed the minor to recover the $ 2,600 aforesaid. Such recovery in behalf of the ward, appellant suggests, should be made from the sureties on the guardian's bond. For authority to support his proposition, appellant relies upon Smith v. Crawford County State Bank, 99 Iowa 282, 61 N.W. 378, and Harris v. Warner, 199 Iowa 1000, 203 N.W. 279. Manifestly, the facts in the cited cases are not similar to those in the controversy before us.
In Smith v. Crawford County State Bank (99 Iowa 282, 61 N.W. 378), supra, there was a contest between first and second mortgagees over the proceeds of cattle covered by the respective mortgages. Apparently the first mortgagee agreed with the mortgagor that the cattle should be sold by the latter, and the proceeds therefrom deposited in the second mortgagee bank, for application on the note covered by the first mortgage. Succeeding the sale, the proceeds were deposited with the second mortgagee bank, but that institution did not know the purpose of the deposit, and applied such proceeds on the second mortgage. While discussing the proposition, we said (99 Iowa, reading at the bottom of page 291):
"* * * we [the court] are still of the opinion that the defendant bank [the second mortgagee bank] had no notice of such a trust relation [that described above, between the mortgagor and the first mortgagee], nor of facts that should be held to have put it upon inquiry."
Harris v. Warner (199 Iowa 1000, 203 N.W. 279), supra, likewise is readily distinguishable. There, an agent for the actual owner of the note became the payee therein, and, without the actual owner's consent, indorsed and sold the note. The contest was waged between the actual owner and the indorsee. During the discussion, the following quotation was given approval, at page 1003:
"Equity will not impress a constructive trust upon property that has passed into the hands of a good-faith purchaser for value, without notice."
Continuing, we further said in the Harris case that a purchaser without value was not protected as against the beneficiary under the trust.
Obviously, the facts in the Smith and Harris cases are entirely different from those involved in the present dispute. Before us in the case at bar is the situation where the appellant knew that the guardian was attempting to purchase real estate with funds belonging to the ward. This action on the guardian's part amounted to the management of the ward's estate, and could not be done without an order of court. Section 12581, 1927 Code; Andrew v. Farmers Sav. Bank, 207 Iowa 394, 223 N.W. 249; In re Estate of Wisner, 145 Iowa 151, 123 N.W. 978; Easton v. Somerville, 111 Iowa 164, 82 N.W. 475 (local citation 172, 173). Necessarily, then, the purported contract was absolutely void, so far as the minor is concerned. Under this record, so far as the minor is concerned, appellant is presumed to know that the guardian did not have authority to purchase the property and the garage equipment. Bates v. Dunham, 58 Iowa 308, 12 N.W. 309; Easton v. Somerville (111 Iowa 164, 82 N.W. 475), supra. Our declaration in the Easton case, supra, was:
"He [the party with whom the guardian dealt] is presumed to have known that the guardian had no authority to make the purchase. "
Because of the foregoing facts and circumstances, the appellant must "hold the money received [from the guardian] in trust for the benefit of the ward." Easton v. Somerville (111 Iowa 164, 82 N.W. 475), supra.
Within the purview of this record, then, it is apparent that the district court rightfully gave the ward and his guardian judgment...
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