Lutton v. Baker
| Decision Date | 11 November 1919 |
| Docket Number | 31991 |
| Citation | 174 N.W. 599,187 Iowa 753 |
| Parties | W. W. LUTTON, Appellee, v. LOUIS BAKER, Appellant |
| Court | Iowa Supreme Court |
Appeal from Johnson District Court.--R. P. HOWELL, Judge.
THE plaintiff asserts that he is an "innocent purchaser" of a note made by Baker to LeGrand, and that he is entitled to have a lien established to secure payment of said note. The trial court gave him judgment against Baker, and established the lien as prayed. Baker appeals. LeGrand made default.
Reversed.
Crosby & Fordyce, for appellant.
J. L Swift and Dutcher & Davis, for appellee.
I.
Plaintiff filed what he styles "Petition in equity." It states his claim of title to the note. It alleges that, subsequent to the making of the note, Baker made a written assignment to LeGrand, assigning to him:
"$ 475.00 and interest out of my share of the estate of my father Joseph Baker, deceased, of Johnson County, the same being to secure a certain note for the amount of $ 475.00 and interest, and hereby agree that the said amount shall be paid out of the proceeds of the estate of my said father that shall be due to me and I also agree that the administrator of the estate of my father shall pay from my portion of the said estate the amount of the note above referred to with interest."
It is further alleged that the father of Baker left surviving nine children and heirs at law, including Louis Baker as one; that Baker, by inheritance from his father, became the owner of an undivided one ninth of described real estate, and is still the owner thereof; that the note and the assignment are the property of the plaintiff; and that the assignment was intended to convey the interest of Baker in said real estate, to secure payment of said note; and that said assignment should be given the force and effect of a mortgage upon said real estate. Added to the prayer for judgment on the note, plaintiff prayed that such judgment be decreed to be a lien upon said described real estate, and that said lien be foreclosed, and for general equitable relief.
At the conclusion of the testimony for plaintiff, defendant Baker moved the court to continue the cause for further hearing, to submit the question of liability on the note to a jury. The reason stated was that "plaintiff has failed to make out any showing for equitable relief." The overruling of this motion is now complained of.
There is no difficulty with the law. It is settled by Fisher v. Trumbauer, 160 Iowa 255, at 261, 138 N.W. 528, that one may not plead himself into chancery. To keep a case on the equity side, equities must be alleged and proved. The petition at bar did set forth a cause of action over which the court of equity had jurisdiction; wherefore, defendant was not called upon to move a transfer before answering. It would have been idle to address such a motion to this petition, because such motion was foredoomed to be rightly overruled. There was no right to obtain a transfer while nothing existed except a good petition in equity. In such case, attack must be deferred until, notwithstanding the allegations of such petition, it is made to appear that no right to equitable relief exists. Nor is it material that the form of the motion, instead of asking a transfer in so many words, asked that the cause be continued for further hearing, and that the liability on the note be submitted to a jury. At the time the motion was made, the jury had been excused for the term, and a continuance was necessary, to get a jury. And we are of opinion that the motion, in fair effect, was one to transfer the cause to the law side, on the ground that, though the plaintiff had pleaded an equitable cause of action, he had failed to prove one. But presentation has not enlightened us as to why it is claimed that there was a failure "to make out any showing for equitable relief." And that is the vital question. It matters little that defendant's complaint is well taken if there be such failure, unless it be made to appear that there was such failure. It appears, too, that, after the motion was overruled, the defendant himself adduced evidence. It is quite doubtful whether the point made is tenable, in view of the fact that the motion was not repeated at the close of all the evidence. See Robinson v. Hawkeye C. M. Assn., 186 Iowa 759, 171 N.W. 118. But passing that, aside from the statement in the petition that the assignment was intended to be security for the note, and should be given the effect of a mortgage, it is made plain that the assignment itself is the basis upon which the equitable relief is sought; and it is a sufficient basis. Indeed, its sufficiency was not challenged. If it was not a proper basis for the equitable relief sought, that was as true and as apparent when the petition was filed as it was at the time when the motion was made. Under familiar rules, failure to attack the petition amounted to an agreement that plaintiff was entitled to the relief prayed, if he proved what he had pleaded. He did prove that much. He did show that such an assignment existed, and that the plaintiff had become its owner. It follows that the overruling of the motion was not reversible error. See Gardner v. Kerlin, 184 Iowa 793, 169 N.W. 177. It follows that the suit must, on this appeal, be treated as a suit in equity.
II. It is assigned the court erred in holding that the note sued on could be enforced, notwithstanding failure to attach revenue stamps, as required by act of Congress in force at the time, and argued that it is inconsistent with the policy of this state to enforce the payment of a note as to which there has been a failure to comply with said revenue laws. The appellee responds that no such issue is made in the pleadings, and must be; that there is no evidence that the failure to stamp was due to fraudulent intent; and that, in the absence of such intent, inter parties, at least, such failure is of no materiality. That does not quite meet the case. The appellee asserts himself to be an innocent purchaser for value, and has the burden of proof on that allegation. The defendant expressly denied that plaintiff was such purchaser, and his argument is that, when a note which the revenue laws require to be stamped is not stamped, it ought not to be held "complete and regular on its face." In support, appellant relies on Section 3060-a52 of the Code Supplement, 1913; In re Estate of Philpott, 169 Iowa 555, 151 N.W. 825; Blackwell v. Denie, 23 Iowa 63; Sperry v. Horr, 32 Iowa 184; and Hugus v. Strickler, 19 Iowa 413. So, appellant tenders the question whether one is an innocent purchaser where he takes a note which is not duly stamped.
In Hugus v. Strickler, 19 Iowa 413, a statute was construed which required certain documents to be stamped. That statute provided a penalty for failure to stamp, if there was "intent to evade the provisions of this act." It was contended that failure to stamp was not fatal to the validity of an instrument, because there was no "intention to evade." We held that this intent was necessary only to the infliction of the penalty; that such intent was immaterial, so far as the validity of the instrument is concerned, --and it was held that the paper was void. The Hugus case was approved in O'Hare v. Leonard, 19 Iowa 515, 516; Miller v. Bone 19 Iowa 571; Botkins v. Spurgeon, 20 Iowa 598; Barney v. Ivins, 22 Iowa 163, at 165; and City of Muscatine v. Sterneman, 30 Iowa 526, at 528. Then the Supreme Court of the United States held, in Campbell v. Wilcox, 77 U.S. 421, 10 Wall. 421, 19 L.Ed. 973, that the fraudulent intent was essential to declaring the unstamped instrument to be void. In deference to this, the Hugus case was overruled, in Mitchell v. Home Ins. Co., 32 Iowa 421, 425. The later case of Ricord v. Jones, 33 Iowa 26, at 27, overruled the Hugus case and all cases that had followed it. The overruling is approved in State v. Shields, 112 Iowa 27, at 29, 83 N.W. 807, and is recognized in State v. Glucose S. Refining Co., 117 Iowa 524, at 530, 91 N.W. 794. But it does not appear that cases upon which we shall presently comment have been overruled. In McBride v. Doty, 23 Iowa 122, we held that the record of an instrument insufficiently stamped does not give constructive notice to third parties. In Blackwell v. Denie, 23 Iowa 63, in Gage v. Sharp, 24 Iowa 15, at 18, and in Anderson & Co. v. Starkweather, 28 Iowa 409, it is ruled that a buyer of paper is protected if the same was duly stamped when bought, and the buyer was ignorant that it was not stamped when issued. We held, in Sperry v. Horr, 32 Iowa 184, at 187, that the buyer is protected if it does not appear the buyer knew the paper had not been duly stamped by the maker;...
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