Moser v. Thorp Sales Corp., 68451

• Decision Date: 15 June 1983
• Docket Number: No. 68451,68451
• Citation: 334 N.W.2d 715
• Court: Iowa Supreme Court
• Parties: Clifton G. MOSER and Caryls C. Moser, Appellees, v. THORP SALES CORPORATION, Thorp Credit, Inc., Hoth and Willman Real Estate and Auctions, Col. Chuck Hoth, Col. Gay Oelke, Marguerite Schmitt, Richard Schmitt, Thorp Finance Corporation of Wisconsin, ITT Thorp Corporation, Lola Jean Woods and Donald J. Woods, The Federal Land Bank of Omaha, and Gary Woods, Intervenor, Appellants.

Page 715

334 N.W.2d 715

Clifton G. MOSER and Caryls C. Moser, Appellees, v. THORP SALES CORPORATION, Thorp Credit, Inc., Hoth and Willman Real Estate and Auctions, Col. Chuck Hoth, Col. Gay Oelke, Marguerite Schmitt, Richard Schmitt, Thorp Finance Corporation of Wisconsin, ITT Thorp Corporation, Lola Jean Woods and Donald J. Woods, The Federal Land Bank of Omaha, and Gary Woods, Intervenor, Appellants.

No. 68451.

Supreme Court of Iowa.

June 15, 1983.

John D. Gnagy of Ehrhardt & Gnagy, Elkader, for appellant The Federal Land Bank of Omaha.

Larry F. Woods, Oelwein, and Frederick G. White, Waterloo, for appellants Lola Jean Woods and Donald J. Woods.

Kathleen Neylan and Kevin C. Neylan, of Neylan Law Office, Elkader, for appellees.

Considered by HARRIS, P.J., and McCORMICK, SCHULTZ, CARTER, and WOLLE, JJ.

WOLLE, Justice.

Twice before this court has reviewed de novo the complicated circumstances which have embroiled in controversy and litigation these multiple parties and the 285-acre Clayton County farm in which they have claimed an interest. The facts of the first appeal appear in Moser v. Thorp Sales Corp., 256 N.W.2d 900 (Iowa 1977) (Moser I), while other detailed facts and our resolution of most issues appear in Moser v. Thorp Sales Corp., 312 N.W.2d 881 (Iowa 1981) (Moser II).

The issues now before us concern the parties' entitlement to a fund (the Fund) of $45,479.14 plus accumulated interest which has been held by the clerk of court since it was paid by Mosers following our decision in Moser I. In Moser II, we expressed no opinion as to who should have priority of payment from the Fund, though we did hold that the Fund does not represent an amount required for redemption, as had been implied in Moser I. See 256 N.W.2d at 912. We remanded the issue of priority of payment to the trial court for decision on "the existing record and such additional evidence as may be appropriate," with the parties "allowed to amend their pleadings to allege any additional matters that may have occurred since the last trial that may bear on entitlement to the [F]und." 312 N.W.2d at 898. The Fund now includes over $16,000 in interest which has accumulated by reason of the parties' wise decision to have the principal amount of $45,479.14 fully invested during the pendency of this case.

Following remand, the trial court first held a pretrial conference and was informed by the parties that there was no remaining evidentiary contest of consequence. The parties agreed and the court ordered that the remaining issues be submitted by written brief and argument. The court received briefs and decided the issues now before us in a several-paragraph order and decree.

First, the trial court found that the Fund held by the clerk of court constituted Mosers' payment of the purchase price of $42,180 under their contract with Schmitts to purchase the farm. Mosers were therefore awarded a refund of their $3,299.14 overpayment ($45,479.14 less $42,180) plus interest earned on the $3,299.14 while it was in the hands of the clerk.

Second, the trial court awarded Mosers from the Fund the sum of $18,827.41, plus interest on that amount, as an offset of Schmitts' indebtedness to Mosers, in effect treating that debt for rent as an abatement of the purchase price for the farm.

Next, the trial court determined that court costs of $49.12 charged to Mosers from the appeal in Moser II should be paid from Mosers' share of the Fund, and that other court costs should be taxed to Woods and the Federal Land Bank (FLB), with those costs being paid from the Fund.

The trial court denied the Mosers' claim for attorneys fees, deciding that the defendants' conduct was not such as to justify such an award "in view of the Supreme Court's appraisal thereof," quoting the following language from Moser II:

The reasons for the rather stilted form of the transfer are unclear and we hesitate to imply illegality or fraud on the part of any of the parties.

Id.

Finally the court denied the FLB claim against the Fund, finding that it had neither sought nor obtained any judgment against any parties herein and that its conduct, like that of the Woods, deprived it of the status of a good faith mortgagee.

The trial court's decree provided that the clerk of court should first pay court costs, including witness and referee fees, and then pay the balance in the fund to Mosers, with Mosers' judgment against Schmitts satisfied in full and Mosers' judgment against Woods satisfied in the remaining amount of $32,915.37. (Because Woods had already paid the Mosers' judgment, the net effect of the decree was to provide payment to Woods of the sum of $32,915.37 as the balance left in the Fund. Mosers have remitted that amount to Woods.)

The parties' appeals and cross-appeals from the trial court's decree raise several issues, some of which are new and some of which have already been decided in Moser I and Moser II. We here address those issues which have not previously been decided.

I. Appeal of Woods and FLB.

A. Defendants Woods and FLB contend that the Mosers ought not be allowed to receive payment from the Fund to satisfy their judgment against the Schmitts, because the Schmitts and their mortgagees (Thorp Sales Corporation, Thorp Credit, Inc., Thorp Finance Corp. of Wisconsin and ITT Thorp Corp.) had conveyed their interest in the farm to Woods before the Fund was created. Woods and FLB argue that they thereby acquired legal title to the real estate and were entitled to the proceeds of Schmitts' sale to Mosers, proceeds which are now represented by the Fund. Defendants' contention might have merit if the Mosers' judgment against Schmitts was unrelated to their purchase of the farm. That judgment, however, was for rent for the property for the years 1972 to 1974 when Schmitts were in possession of the farm. Moser II, 312 N.W.2d at 901. The Fund does represent Mosers payment of the purchase price to Schmitts, but Mosers have received less than complete ownership and use of the farm since their effective date of January 15, 1972. Moser II, 312 N.W.2d at 900. The trial court correctly found that Mosers are equitably entitled to receive back, as a priority offset against the purchase-money Fund, the rentals for 1972 to 1974 which are now represented by their judgment against Schmitts. In an action for specific performance, the vendee may compel the vendor to convey his defective title or deficient estate and have a just abatement out of the purchase price for the deficiency of title, quantity or quality of the estate to compensate for the vendor's failure to perform the contract in full. Shell Oil Co. v. Kelinson, 158 N.W.2d 724, 730 (Iowa 1968).

B. Woods also raise a question of "standing," contending that Schmitts make no claim to the Fund and have no standing, so Mosers ought not obtain funds in their place. Mosers, however, have no "standing" problem. The trial court correctly allowed Mosers to receive from the Fund the Schmitts' rentals which, in effect, abate by that amount what Mosers were required to pay to Schmitts as vendors for the lesser quality of estate which Schmitts actually conveyed.

C. Defendant FLB also contends that it is entitled to priority as a purchase money mortgagee because funds provided by it were directly used by Woods to purchase Schmitts' interest in the farm. The FLB argues that the lien of its 1975 mortgage attaches to the Fund (which replaced the farm as the bank's security interest) and takes priority over the later judgments obtained by Mosers against Schmitts and Woods. The trial court properly denied the FLB claim to priority. The record supports the court's finding that the...