Mills County State Bank v. Roure
| Decision Date | 23 April 1980 |
| Docket Number | No. 62803,62803 |
| Citation | 291 N.W.2d 1 |
| Parties | MILLS COUNTY STATE BANK, Appellee, v. Rafael A. ROURE and Jeannine M. Roure, Appellants, v. MILLS COUNTY STATE BANK, Hawkeye Bancorporation and Paul D. Dunlap, Appellees. |
| Court | Iowa Supreme Court |
William J. Koehn of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, James A. Thomas of Thomas, McGee & Thomas, Glenwood, Michael O. Johanns of Peterson, Bowman & Johanns, Lincoln, Neb., and Emmet Tinley of Stuart, Tinley, Peters, Thorn, Smits & Sens, Council Bluffs, for appellees.
Considered by REYNOLDSON, C. J., and HARRIS, ALLBEE, McGIVERIN and LARSON, JJ.
This controversy arose out of Dr. Roure's indebtedness to the Mills County State Bank, which had financed his construction of a medical clinic and the purchase of two tracts of unimproved land. Actions in foreclosure and for attachment were commenced by the bank, and the defendant responded with a counterclaim for malicious prosecution and abuse of process. The bank's claims were dismissed pursuant to a settlement, and the bank was granted summary judgment on the counterclaims. Dr. Roure, as defendant-counterclaimant, appeals from the order of summary judgment. We affirm in part, reverse in part and remand.
In early 1974, four of Dr. Roure's obligations to the bank were consolidated. They included (1) a $10,000 demand note secured by a purchase-money mortgage on the unimproved land, (2) a $14,000 demand note secured by a purchase-money mortgage on other unimproved land, (3) an unsecured $6,936.93 note and (4) a $65,896.97 commercial loan secured by approximately $25,700 worth of personal property. These loans were consolidated into a single $95,540.35 obligation with a maturity date of February 20, 1975. In addition to the existing mortgages, Dr. Roure executed an additional mortgage on the clinic and pledged the clinic's inventory and accounts to secure this obligation.
The monthly payment provided for in the new note did little more than meet the accruing interest. Therefore, a loan agreement was executed contemporaneously with the making of this note setting out alternative methods of reducing the indebtedness. Dr. Roure was to refinance his home "at no more than 8% interest," refinance the medical clinic and his apartment complex and sell the two tracts of unimproved land and 1000 shares of stock. The proceeds were to be applied to the principal of the loan. The loan agreement provided further that the loan was "subject to renewals of the then existing balance until fully paid provided the (aforementioned) terms are met."
The year of 1974 did not provide a favorable economic climate, and the only term of the agreement Dr. Roure was able to meet was the sale of the stock. Nevertheless, as of February 7, 1975, Mills County State Bank planned to renew the note. Shortly before the maturity date of the loan, Dr. Roure requested a transcript of his loan payments, which revealed a $1080.04 error in the bank's favor. The bank readily corrected the error, but it was brought to the attention of the Iowa Department of Banking anyway. A March 5 meeting between Dr. Roure and the bank's officers was scheduled to discuss this error and renewal of the loan. The meeting was heated and short-lived; by its end the bank was committed to foreclosing their mortgages.
In its initial petition, the bank alleged that the failure of Dr. Roure to meet the terms of the loan agreement constituted a default and entitled them "to declare all unpaid indebtedness immediately due and payable." Dr. Roure answered that he was excused from performing the conditions because their performance was rendered impossible by an unfavorable economic climate which was unanticipated at the time of the agreement. The bank then amended its petition to assert that the terms of the loan agreement were not contractual in nature but, rather, were only indicia of whether the note would be worthy of renewal. It asserted that Dr. Roure's failure to fulfill the terms of the agreement caused it to "believe itself insecure and (able) to elect to declare that the entire amount is immediately due and payable" under the provisions of the security agreements. Dr. Roure answered that there was "no factual basis for (Mills County State Bank) to consider itself insecure and in danger of losing its security."
The bank then filed an application for attachment of the clinic, one of the unimproved properties, the clinic inventory and accounts and all other non-exempt personal property of Dr. Roure. After hearing, Dr. Roure was able to get the attachment of his household goods vacated because the value of the other attached goods already exceeded 150% of the bank's claim. See § 639.7, The Code.
Dr. Roure counterclaimed in four divisions that (1) the foreclosure action constituted malicious prosecution, (2) the foreclosure action constituted abuse of process, (3) the excessive attachment constituted abuse of process and (4) the "proceedings for a personal judgment against (Mrs. Roure who had not signed any of the promissory notes) were instituted maliciously, abusively and for the purpose of inflicting injury upon her . . . ." At this point he brought in Hawkeye Bancorporation and Mr. Dunlap, its president, and sought discovery of documents from the bank.
Dr. Roure sold one of the tracts of unimproved land and applied $10,000 of the proceeds to his obligation to the bank. He was able to negotiate a sale of his clinic for $205,000. The bank released its encumbrance on the clinic and equipment; Dr. Roure sold them, and applied the proceeds to completely satisfy his indebtedness to the bank. The bank then dismissed its petition, leaving only Dr. Roure's counterclaim to be litigated.
The bank filed a motion for summary judgment, which was consolidated for hearing with Dr. Roure's motion to produce. Summary judgment was granted on each division, and the motion to produce was denied as moot. Judgment was granted on each cause of action for the bank.
Dr. Roure alleges many grounds in attacking the trial court's ruling. We believe resolution of the following issues is necessary: (1) Were defendants entitled to judgment as a matter of law on the claim of malicious prosecution? (2) Were defendants entitled to judgment as a matter of law on the claims of abuse of process?
I. Malicious prosecution. The trial court granted summary judgment on this claim both on the ground that there was no termination of the original proceeding favorable to Dr. Roure and that the damages he asserted did not meet the "special injury" rule set down in our prior cases. We believe defendants were entitled to judgment on the first ground and, therefore, have no need to address the second.
"The basis of an action for malicious prosecution consists of the wrongful initiation of an unsuccessful civil or criminal proceeding with malice and without probable cause." Sarvold v. Dodson, 237 N.W.2d 447, 448 (Iowa 1976). While that is the essence of the tort, our cases recognize six distinct elements of the cause of action: (1) a previous prosecution, (2) instigation or procurement thereof by defendant, (3) termination thereof by an acquittal or discharge of plaintiff, (4) want of probable cause, (5) malice in bringing the prosecution on the part of the defendant and (6) damage to the plaintiff. Id. The third element has also been phrased as "terminat(ion) in favor of the person against whom they are brought." Restatement (Second) of Torts § 674(b) (1977).
The facts which led to the dismissal of the foreclosure action are not in dispute; dismissal followed Dr. Roure's payment of the accelerated note in full. We have said that "a compromise and settlement of (the original) suit by the payment of money, either upon (the original) defendant's procurement or by a settlement understandingly made and without duress, is a distinct admission of liability . . . , and the dismissal of that suit pursuant to such a settlement is not a termination thereof in defendant's favor, but, on the contrary, a distinct admission on his part that something is due." White v. International Text Book Co., 156 Iowa 210, 221, 136 N.W....
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...an essential element. The initial use of process itself may constitute the required overt act under the facts. See Mills County State Bank v. Roure, 291 N.W.2d 1 (Iowa 1980); Fishman v. Brooks, 396 Mass. 643, 487 N.E.2d 1377 (1986). We believe the trial court's instruction, drawn from Farme......
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...and continued mental anguish."The majority holds that the complaint does not allege special injury. Cf., Mills County State Bank v. Roure, 291 N.W.2d 1 (Iowa, 1980) (loss of medical practice or business income sufficiently alleges special injury).2 "(T)he general rule is that the common law......
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...there was no favorable termination to serve as the basis for the debtor's malicious use of process claim.20 See Mills County State Bank v. Roure, 291 N.W.2d 1, 4 (Iowa 1980). The court reasoned, "It could not have been a more unfavorable result for [the debtor], unless, perhaps, the matter ......
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...itself may constitute the required overt act under the facts.... We thus are in agreement with the court in Mills [County State Bank v. Roure, 291 N.W.2d 1, 5 (Iowa 1980) ], when it The existence of this cause of action recognizes that even in meritorious cases the legal process may be abus......