Murphy v. First Nat. Bank of Chicago

• Decision Date: 16 April 1975
• Docket Number: No. 2--56578,2--56578
• Citation: 228 N.W.2d 372
• Parties: Ray W. MURPHY et al., Plaintiffs-Appellants, v. FIRST NATIONAL BANK OF CHICAGO, Illinois, A National Banking Association, et al., Defendants-Appellees.
• Court: Iowa Supreme Court

Page 372

228 N.W.2d 372

Ray W. MURPHY et al., Plaintiffs-Appellants, v. FIRST NATIONAL BANK OF CHICAGO, Illinois, A National Banking Association, et al., Defendants-Appellees.

No. 2--56578.

Supreme Court of Iowa.

April 16, 1975.

Steven A. Carter, Sioux City, for appellants.

Corbett, Corbett & Anderson and Jacobs, Gaul, Nymann & Green, Sioux City, Swarr, May, Smith & Andersen and William E. Morrow, Omaha, Neb. and George Hansen, Chicago, Ill., for appellees.

Heard by MOORE, C.J., and MASON, REES, UHLENHOPP and REYNOLDSON, JJ.

REES, Justice.

Plaintiffs appeal from orders of trial court sustaining special appearances of defendants First National Bank of Chicago and First National Bank of Omaha and sustaining a motion to dismiss filed by defendants First National Bank of Sioux City and Morningside State Bank. We reverse and remand for further proceedings.

Plaintiffs Murphy and Meacham are the sole shareholders of Power Engineering Co., Inc., (hereinafter Power) an Iowa corporation, Electrical Contractors, Inc., an Illinois corporation, and Alec Ferguson Electrical Contractors, a California corporation. Plaintiffs originally brought this suit in their own names and later as assignees of Edward F. Samore, Trustee in bankruptcy of the estate of Power, its subsidiaries and related corporations. W. Jefferson Giles, III, whom Samore succeeded as bankruptcy trustee, is designated as a plaintiff in the caption of the case but it is apparent Giles has no interest in the action.

Power is the sole shareholder of Kenny Brown & Associates, Inc., an Ohio corporation, and M & M Equipment Co., Inc., an Iowa corporation. A petition in bankruptcy was filed against Power on June 20, 1969 in the United States District Court for the Northern District of Iowa by the First National Bank of Omaha, the First National Bank of Chicago and Morningside State Bank.

Plaintiffs instituted this action against all of the defendant banking associations in Woodbury District Court in November, 1970, alleging in their petition defendants wrongfully, maliciously and without justification conspired to file and did file an involuntary petition in bankruptcy against Power and as a result caused the destruction of Power, its subsidiaries and related corporations. Plaintiffs sought $10,000,000 in damages, including $2,000,000 for contracts and profits allegedly lost when defendants filed the bankruptcy petition, and $8,000,000 as punitive or exemplary damages.

In December 1970 defendants First National Bank of Omaha and First National Bank of Chicago filed special appearances. In January, 1971 plaintiffs filed interrogatories to be propounded to the two banks, and in February, 1973 made application to the court for permission to take depositions of the banks. Objections to the interrogatories and depositions were filed by the banks and plaintiffs filed resistance to their special appearances.

The Woodbury District Court entered orders in February and May, 1973 sustaining the objections of the First National Banks of Chicago and Omaha to the interrogatories and application to take depositions filed by plaintiffs. The court entered an order sustaining the special appearances of the banks on June 18, 1973.

First National Bank of Sioux City and Morningside State Bank moved to dismiss plaintiffs' original petition in January, 1971. Trial court sustained the motion in a ruling entered April 11, 1973 and dismissed plaintiffs' cause of action against the Sioux City and Morningside banks. Two weeks later, plaintiffs filed a substituted and amended petition, but defendants' motion to dismiss that petition was sustained by the court's ruling entered June 18, 1973.

Plaintiffs here appeal the several rulings and orders entered in trial court sustaining the special appearances of defendant First National Banks of Omaha and Chicago, sustaining objections by those banks to plaintiffs' interrogatories and application to take depositions, and sustaining the motion filed jointly by defendants First National Bank of Sioux City and Morningside State Bank to dismiss plaintiffs' substituted and amended petition for failure to state a cause of action. The issues presented for review derive from plaintiffs' contentions:

(1) Trial court erred in sustaining the motion of First National Bank of Sioux City and Morningside State Bank to dismiss plaintiffs' substituted and amended petition.

(2) Trial court erred in denying plaintiffs' application to take depositions of defendants First National Bank of Omaha and First National Bank of Chicago.

(3) Trial court erred in sustaining objections of defendant First National Banks of Omaha and Chicago to plaintiffs' interrogatories.

(4) Trial court erred in sustaining special appearances of defendant First National Banks of Omaha and Chicago.

I. We consider first plaintiffs' contention trial court erred in sustaining the motion to dismiss their substituted and amended petition filed by First National Bank of Sioux City and Morningside State Bank. The substituted and amended petition contains four divisions, each of which purports to state a separate cause of action. Trial court's ruling on defendants' motion expressly dismissed the entire petition and each division thereof for failure to state a cause of action. Plaintiffs did not plead further. Trial court's order dismissing the substituted and amended petition therefore constitutes a final adjudication from which plaintiffs have properly appealed under the Iowa Rules of Civil Procedure. See Rules 86, 331, Rules of Civil Procedure. See also Vermeer v. Sneller, 190 N.W.2d 264 (Iowa 1971); Allied Concord Financial Corp. v. Hawkeye Lbr. Co., 172 N.W.2d 264 (Iowa 1969). Compare Bigelow v. Williams, 193 N.W.2d 521 (Iowa 1972).

We follow several gidelines in determining whether a given petition states a cause of action. When considering a motion to dismiss, well pleaded, relevant and issuable facts are deemed true, but conclusions not supported by pleaded ultimate facts are not admitted. See Allied Concord Financial Corp. v. Hawkeye Lbr. Co., Supra; Hinrichs v. Iowa State Highway Comm., 260 Iowa 1115, 1128, 152 N.W.2d 248, 256 and citations.

When a pleading is attacked before issue is joined by motion to strike out a specified portion of the pleading asserted to contain improper or unnecessary matter as permitted by rule 113, R.C.P., the pleading will be resolved against the pleader.

However, a motion to dismiss a pleading for failure to state a cause of action is sustainable only when it appears to a certainty the pleader has failed to state a claim upon which any relief may be granted under any state of facts which could be proved in support of the claim asserted. In making this determination the pleading should be construed in the light most favorable to the pleader with doubts resolved in his favor and the challenged allegations accepted as true. See Freese v. Lemmon, 210 N.W.2d 576, 580 (Iowa 1973) and citations.

A motion to dismiss is a waiver of any ambiguity and uncertainty in the pleading. Bigelow v. Williams, Supra; Case v. Sioux City, 246 Iowa 654, 659, 69 N.W.2d 27, 30; 71 C.J.S. Pleading § 563c, p. 1128 et seq. A motion to dismiss is sustainable only where it appears to a certainty a plaintiff would not be entitled to any relief under any state of facts which could be proved in support of the claims asserted by him. Allied Concord Financial Corp. v. Hawkeye Lbr. Co., Supra at 266; Newton v. City of Grundy Center, 246 Iowa 916, 920, 70 N.W.2d 162, 164.

As noted above, plaintiffs' substituted and amended petition contains four divisions, each purporting to state a separate cause of action. The divisions overlap and none is a model of clarity. In Division I, paragraph 10, plaintiffs allege defendants 'were engaged in a conspiracy to wrongfully and maliciously, and without probable cause file an involuntary petition in bankruptcy against Power Engineering Co., Inc. . . ..' Elsewhere in Division I plaintiffs allege defendant First National Bank of Sioux City, in furtherance of the conspiracy, induced Power to close a certain checking account it maintained with the bank by drawing and having certified checks payable to unsecured creditors, and then notified the remaining defendant banks, who were secured creditors of Power, of the action taken. Plaintiffs further allege in Division I that on or about the same day the checks were drawn and certified the remaining three banks, in conspiracy with First National Bank of Sioux City, filed without probable cause an involuntary petition in bankruptcy against Power, alleging the corporation committed an act of bankruptcy by drawing and having certified checks payable to unsecured creditors.

Read in the light most favorable to plaintiffs, Division I of their substituted and amended petition attempts to state a cause of action based on allegations defendants conspired to entice Power into a state of temporary insolvency, whereupon they immediately filed an involuntary petition in bankruptcy charging the corporation committed an act of bankruptcy when it had checks certified and made payable to unsecured creditors, the very act apparently giving rise to its claimed temporary insolvency.

Division II of plaintiffs' amended and substituted petition realleges and incorporates by reference the first eight paragraphs of Division I. In paragraph 15 plaintiffs allege 'defendants . . . were engaged in a conspiracy to wrongfully use the processes of the Federal Bankruptcy Act by causing an involuntary petition in bankruptcy to be filed against Power Engineering Co., Inc., after themselves inducing the alleged act of bankruptcy . . ..'

In Division III of their substituted and amended petition plaintiffs allege Inter alia that as a result of the bankruptcy petition being filed by defendants, Power 'was caused to default on its outstanding construction contracts . . . against (its) will.' Unlike Division I, Division III contains no...