Lovejoy v. Euclid Avenue M. E. Church
| Decision Date | 10 December 1940 |
| Docket Number | 45272. |
| Citation | 294 N.W. 911,229 Iowa 803 |
| Parties | LOVEJOY v. EUCLID AVENUE METHODIST EPISCOPAL CHURCH et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Polk County; Russell Jordan, Judge.
In this action at law to recover upon a promissory note the individual defendants filed cross-petitions praying reformation of the instrument. From the decree granting defendants that relief, plaintiff has appealed.
Reversed and remanded.
Herrick, Sloan & Langdon, of Des Moines, for appellant.
Emmert, James & Lindgren and Guy Miller, all of Des Moines for appellees.
The Euclid Avenue Methodist Episcopal Church of Des Moines is an Iowa corporation not for profit. In 1926 it contracted with plaintiff, J. E. Lovejoy, for the construction of a church building, agreeing to pay him therefor between $34,000 and $35,000. Lovejoy completed the building and it was occupied by the church in the fall of 1927. But approximately $9,000 of the contract price remained unpaid. Three promissory notes aggregating this amount were made to Lovejoy, and were assigned by him to the Valley National Bank as collateral. The evidence is controversial as to who were the obligors on these notes Lovejoy testified that in the early part of 1929 the bank required that a new note be procured to take up the three the bank still held as collateral and which were past due. The aggregate amount remaining due on April 1, 1929, was $8,500. A new note was drawn bearing that date, in the principal amount of $8,500 payable to Lovejoy. Though drawn a few days later than April 1, it was dated as of April 1, the day to which the interest had been computed. Subsequently to its date the note was signed and delivered to Lovejoy and by him was assigned to the bank as collateral. Later Lovejoy reacquired the note from the bank and instituted the case now before us to recover thereon. It was drawn upon a printed form in common use by the bank. It was signed as follows: " R. R. Maxson, Pres." and underneath that signature appeared " Alma C. Eide, Sec'y" . On the back of the note were the signatures of R. R. Maxson, Peter Eide, Alma C. Eide, W. H. Heath, Geo. E. Schroeder, G. H. Killinger, J. C. Rusterholz, Frank Dart, H. E. Sorenson, without more, and in the order named. All these whose signatures so appeared, as well as the church corporation, were made defendants. Against all these defendants plaintiff demanded judgment upon the note. Cross-petitions were filed by all the defendants, excepting the corporation, in which were these averments: that at the time the note was signed R. R. Maxson was the president and Alma C. Eide the secretary of the board of trustees of the corporation, and the cross-petitioning defendants were the entire membership of that board; that their signatures were obtained to the note upon the representation that they were incurring no personal liability, but that their signatures as said officers and trustees were necessary on behalf of the corporation; that it was represented to them that they were signing the note as such officers and trustees; that they signed the instrument upon said representations. In an amendment it was alleged that the note was signed on the condition that it would not be delivered until properly completed as an obligation only of the corporation; that there was never any authorized or legal delivery of the note. Crosspetitioners prayed that the note be reformed by inserting immediately following the last signature on the back of the note the words " As the Board of Trustees of the Euclid Avenue Methodist Episcopal Church by" preceding the names of R. R. Maxson, Pres., and Alma C. Eide, Sec'y on its face. Transferred to equity for hearing the case was tried upon the issues presented in the cross-petition. The court found for cross-petitioners and decreed that the note be reformed substantially as prayed by them, and ordered the cause transferred back to the law division of the court for entry of judgment in conformity with the decree and its findings. From the decree plaintiff has appealed.
Upon the trial of the equity issues, the cross-petitioners other than Rusterholz, Dart, and Peter Eide, testified that they placed their signatures on the note at a meeting at which they as well as one Rev. Pettit were present. Rev. Pettit testified that he told those present that, according to Methodist discipline, in signing instruments involving church property the trustees signed as trustees of the church; that it was the wish of the church that they should not involve themselves in personal responsibility and were signing as trustees. He testified that those present would not sign the note without that statement from the witness; that the word " Trustees" does not appear on the note following the signatures because of an oversight on part of witness. This testimony was admitted subject to objections plaintiff made thereto. The others of cross-petitioners who were present testified that they heard and relied on what Pettit and Maxson said, that is, the matters shown above in the testimony of Pettit and Maxson, and testified that Maxson assured them that before the note would be delivered to Lovejoy he would fill in the spaces in the note. Maxson also testified that, prior to this meeting the plaintiff, at his office, had handed the then unsigned note to the witness saying that he, Lovejoy, wanted the signatures of the proper officials of the church, and also the trustees; that Lovejoy did not ask witness or anyone to sign the note personally; that Lovejoy did joke about it and said he would like it that way but that witness told him " nothing doing" . Neither Maxson nor any other witness testified that in 1929, at the aforementioned meeting, Maxson mentioned the alleged transaction with Lovejoy in his office, or mentioned what Lovejoy allegedly there stated.
Lovejoy as a witness denied that there ever had been any such a transaction in his office as related by Maxson, and testified that in fact the note, before being signed, had left his hands on April 17, 1929, by mail, when it was enclosed in a letter, duly stamped and directed and mailed to Building Committee, Euclid Ave. M. E. Church, Des Moines, Iowa, and that the letter was never returned. Lovejoy identified and there was introduced in evidence what he testified was a carbon copy of this letter, barring the signature on the original. A notice to defendants to produce the original had previously been given. The carbon copy is in these words:
Des Moines, Ia.
Gentlemen:
Enclosed herewith find new note in the sum of $8,500.00, with interest due April first in the amount of $167.50, covering the following:
| $2,500.00 due July 1st, 1928, Int. to April 1, 1929 | $112.50 |
| $2,500.00 due Sept. 1, 1928, Int. to April 1, 1929 | 85.00 |
| $4,000.00 due Dec. 1, 1928, Int. to April 1, 1929 | 80.00 |
| $178.00 |
| Payment of $100.00 paid Sept. 10, 1928 |
| Payment of $400.00 paid Dec. 14, 1928 |
| The above payments reduce the Interest by | 10.50 |
| Interest due | $167.50 |
This leaves balance of new note $8,500.00
New note must be signed by the following:
R. R. Maxson
J. C. Rusterholz
Geo. E. Schroeder
Peter Eide
W. H. Heath
G. H. Killinger
Frank Dart
Alma C. Eide
also endorsed by all on back as personal guarantee.
It is understood by mutual agreement that the above note and endorsements do not invalidate my right to a Mechanics Lien.
Please understand that the Valley National Bank holds these notes with my endorsement as collateral, and they insist that I have the same parties endorse on back as additional security.
Yours very truly,"
The testimony of Lovejoy was that as he recalls it the note as now...
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