Kraetsch v. Stull, 47050.

CourtUnited States State Supreme Court of Iowa
Citation29 N.W.2d 341,238 Iowa 944
Docket Number47050.
PartiesKRAETSCH v. STULL et al.
Decision Date14 October 1947

29 N.W.2d 341

238 Iowa 944

STULL et al.

No. 47050.

Supreme Court of Iowa

October 14, 1947

[29 N.W.2d 342]

[238 Iowa 946] Brammer, Brody, Charlton & Parker, John P. Harper, and Newton L. Margulies, all of Des Moines, for appellant.

Bump & Bump, of Des Moines, for appellees.

BLISS, Justice.

In 1925 plaintiff was the owner of the south 82 1/2 feet of the north 100 feet of Lot 12 in Greenwood Park, now a part of the City of Des Moines. It is located at the southeast corner of the intersection of Ingersoll Avenue and 40th Street. At that time there was a frame two-story residence on the east 38 1/2 feet of the property. In 1925 plaintiff built a brick apartment on the west 132 feet of the property. Back of the apartment and along the south line of the property, he laid a concrete driveway extending east from 40th street 132 feet. It was about ten feet wide at 40th street and until it passed the east line of the apartment building, where it widened into a court about thirty feet square. Along the north side of the court plaintiff built four garages and along the east side three garages. All opened into the court. The north one of the three on the east side was attached to and partly built into the southwest corner of the frame residence. The sewer and water pipes which serviced their residence extended therefrom west under the driveway to the mains in 40th street.

On September 18, 1929, plaintiff by written contract sold to the defendants the east 38 1/2 (except 16 X 20 feet in the southwest corner) with the frame residence for $7500, payable $75 monthly commencing October 1, 1929, and an additional $1000 on January 1, 1930, with interest at 6 and 7 per cent on deferred payments. Included in the sale was the garage attached to the house and an easement from the garage over the driveway to 40th street, and also the west 3 1/2 feet of the south 82 1/2 feet of the north 100 feet of Lot 13, which strip abutted on the east line of the Stull property in Lot 12. Defendants took possession of the property. They contend that as a part of the consideration for the purchase, plaintiff agreed to build a new roof on the house and to repair the chimney. He never did this, and defendants made the improvements, and in the counter-claim they ask damages for the cost of the improvements.

[238 Iowa 947] On September 26, 1931, plaintiff and wife executed a mortgage to the Bankers Life Company for $3500 on the property sold to the defendants, who joined in the execution thereof. This mortgage covered and described defendants' easement over the driveway, and in connection therewith stated: 'With the right of ingress and egress of the same to and from the garage located on the north 9 feet of the south 29 feet of the west 16 feet of the east 38 1/2 feet of the south 82 1/2 feet of the north 100 feet of said Lot 12.' No mention was made that the use of the easement was to be but temporary.

On August 13, 1925, plaintiff and wife executed to the Bankers Life Company a mortgage for $25,000 on all of said Lot 12 lying west of the part later sold to defendants. This mortgage was on the ground on which the apartment was built. The principal of this mortgage was reduced a number of times by payments and the maturity extended until it was paid in full and released on June 26, 1945.

We come now to the real controversy in this litigation. The parties are in direct contradiction on several matters but where the truth lies is of little importance or materiality with respect to the decisive matters. They disagree as to which of them proposed taking advantage of the Home Owners' Loan Act of 1933, 12 U.S.C.A. § 1461 et seq. Plaintiff testified that defendants had difficulty in meeting the monthly payments on the purchase contract, and Mr. Stull solicited his co-operation in procuring a H.O.L.C. loan. Mr. Stull testified that about September 1, 1933, when no monthly payment was in default, plaintiff told him he needed a substantial sum of money, and suggested that the obligation owing him be refunded through the H.O.L.C. Which of them was the instigator is of no consequence. They each participated in the refunding, and its benefits. [29 N.W.2d 343]

On February 10, 1934, defendants made the loan application. Plaintiff computed the amount of defendants' indebtedness, including interest and taxes, as $5,116.15. The H.O.L.C. appraised the property somewhat in excess of $4000, which was insufficient to sustain a bond issue which would liquidate the [238 Iowa 948] debt. Under the Act it is optional with the creditor whether he will reduce the debt owing him to the amount of the bond issue. Unless he consents to so scale down his claim the H.O.L.C. is unable to aid the debtor. The instrument entitled 'Mortgagee's Consent To Take Bonds' is a printed form with certain blanks in it, which the H.O.L.C. furnishes. The one furnished in this case was as follows:

'Mortgagee's Consent To Take Bonds
'The undersigned is a holder of a first mortgage or other obligation, which constitutes a lien or claim on the title to the home property of C. B. Stull located at 3910 Ingersoll Des Moines Iowa in the (number) (street) (city) (state) sum of $5116.15 including unpaid balance of principle and interest, to date
'Being informed that said owner had made application to Home Owners' Loan Corporation to refund his said indebtedness, the undersigned has considered the method of refunding mortgages provided in Home Owners' Loan Act of 1933, as passed by Congress and approved by the President, and the undersigned hereby consents if said refunding can be consummated, to accept in full settlement of the claim of the undersigned the sum of $4014.99, face value of the bonds of Home Owners' Corporation, to be adjusted with not exceeding $25 cash and therefrom to release all claim of the undersigned against said property.

* * *

* * *

'This the 15 day of March, 1934.
C. H. Kraetsch.'

(The italicized words and figures indicate the blanks that were filled.)

Plaintiff admitted that he signed this 'consent,' but asserted that he never read what he signed, and that the blanks were not filled, and he trusted Mr. Stull to fill them. Just what insertions he thought would be placed in the blanks other than what were placed there is not explained. He knew the exact amount of the debt, and the amount of the appraisal, and he knew the bond issue would not exceed the appraisal, and that there would be a deficit between the issue and the amount of [238 Iowa 949] the obligation. At all times he had insisted that he was merely accommodating the defendants and that he would take no loss. He knew when he signed the 'consent' just what the deficit would be, because he and the defendants had previously agreed that they would take care of the deficit by giving him their note for $600 secured by a chattel mortgage on their household goods, and by releasing their driveway easement in return for a $400 credit on their obligation. This release was typewritten, and was worded thus:

'Des Moines, Iowa, March 12, 1934.
'It is hereby mutually agreed by and between the parties hereto that Carl H. Kraetsch and Elizabeth E. Kraetsch, his wife, do hereby credit C. B. Stull and Lenore M. Stull, his wife, with the sum of Four Hundred Dollars on a contract of date Sept. 17, 1929, between these parties and for said credit C. B. Stull and Lenore M. Stull, his wife, hereby release from said contract the easement for driveway over the property of Carl H. Kraetsch and at the same time agree to allow Carl H. Kraetsch the use of the garage on his property to Oct. 1, 1934.
'C. B. Stull,
'Lenore M. Stull.'

No copies of the note for $600 and the chattel mortgage, executed by defendants to plaintiff at the time the easement release was executed, appear in the record. But both parties admit their execution, and the payment of the chattel note in 1937.

On March 16, 1934, the $3500 real estate mortgage heretofore mentioned was released of record. On March 14, 1934, plaintiff and wife, executed a warranty deed of the property to C. B. Stull which had been purchased by him, described as hereinbefore set out. It made no mention of the driveway easement. It will be noted that all of these instruments were executed a day or two before plaintiff signed the 'consent' on March 15, 1934, to take the bonds. [29 N.W.2d 344]

To say that plaintiff did not know what he was signing, or what the paper contained, or that he was duped or misled into signing it, is the merest quibbling. He knew every fact and every amount stated therein. He knew [238 Iowa 950] that the Home Owners' Loan Corporation was relying upon the statements contained in it to be the facts and the truth, and that it believed that he was accepting its bonds at their face value of $4000 and $14.99 in cash in full settlement and payment of his claim. He also knew that as to the last stated matter the 'consent' was not true.

Mr. Stull testified that the consent paper was complete when plaintiff signed it; that he filled in the blanks in the body of it at the local office of the H. O. L. C. and then called plaintiff, and he came over there and signed it. Stull in his testimony denied that plaintiff signed the consent in blank, saying: 'I know him well enough to know he wouldn't sign it in blank.' Plaintiff is a member of a learned profession, experienced in business affairs, apparently successful therein. To sign a paper of its importance without reading it does not comport with sound reason or common practice. His testimony is not convincing.

I. If he did as he said he did he was very negligent, and he is bound by his conduct. Such was the holding in Bealkowski v. Powers, 310 Ill.App. 662, 35 N.E.2d 386 against a creditor who made a similar contention in regard to signing a consent to take H. O. L. C. bonds.

In section 1467 (a) of said Home...

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