North v. Manning Trust and Sav. Bank
| Decision Date | 24 July 1969 |
| Docket Number | No. 53505,53505 |
| Citation | 169 N.W.2d 780 |
| Parties | Tracy NORTH, Appellant, v. MANNING TRUST & SAVINGS BANK, Westside State Savings Bank, Kiron State Bank, James R. Lodwick, Walter H. Noack, Sears North, Lloyd Yankey and Clyde McCullough, Appellees. |
| Court | Iowa Supreme Court |
Fred Louis, Jr., and David B. Moore, Harlan, for appellant.
Wunschel & Schechtman, Carroll, for appellees.
By action in equity plaintiff, Tracy North, prayed that title to three farms be quieted in him against defendants (except for security interests). In substance he wanted to regain title to land he had transferred by deed. In the alternative if the relief prayed for could not be granted plaintiff sought judgment in the sum of $120,000. Plaintiff attacked three deeds executed by him, subsequent sales of the land and the disbursement of the proceeds. From adverse findings and decree plaintiff appealed.
Our review is de novo. We give weight to but are not bound by the findings of the trial court. Rule 344(f) 7, Rules of Civil Procedure.
We have reviewed the pleadings, the record, transcript, depositions, the trial court's findings and conclusions and decree. The trial court's findings and conclusions are supported by the record. We affirm.
Much of the following is from the trial court's findings.
Tracy North, age 75, has lived most of his life in Crawford County, Iowa. Allen North is his son and Leonard Baker, his stepson. Leonard Baker was not a defendant in this case, but by intervention he resisted plaintiff's claims. Just prior to the execution of the deeds involved herein Tracy North owned over 1800 acres of farm land in Crawford County, Iowa. In addition he had other substantial holdings and investments. Tracy treated Leonard Baker as one of his family and over the years Tracy, Leonard Baker, and Allen North engaged in numerous and substantial business entures together.
The evidence indicates that these men worked together, loaned each othr large sums of money and guaranteed each others obligations. On one occasion Leonard Baker loaned Tracy North some $50,000 on an open note. Another time Mr. Baker and Allen lost over $100,000 as a result of a sheep transaction in which both were involved. Leonard paid the bank $50,000 on this note by mortgaging his farm.
Walter Noack is president of the Westside State Savings Bank, Westside, Iowa, and has done business with Tracy North since 1938. He was only one of Tracy North's bankers.
James R. Lodwick is president of the Kiron State Bank located at Kiron, Iowa, and holds the same office with the Manning Trust and Savings Bank at Manning, Iowa. These latter banks have done business with Tracy, Allen and Leonard over the years.
Several years ago Allen North was operating an elevator at Westside, Iowa. He apparently incurred liability of about $90,000. Tracy North had signed as a surety on Allen's bond issued by Merchants Mutual Bonding Company of Des Moines, Iowa. The bonding company took a judgment against Tracy North in the sum of $89,547.79. In order to pay this judgment Tracy in 1967 deeded his interest in a 320 acre farm (owned by his deceased first wife) to Walter Noack. Mr. Noack was to sell the farm and apply the proceeds. Tracy's children, except Leonard, and their spouses, also conveyed their interests in the land. Prior to September 10, 1967 Leonard Baker and his wife had not conveyed their interest. Mr. Noack made sale of the farm to people by the name of Collison for $80,000. Title problems were encountered because the estate of the deceased first wife had not been probated. Walter Noack employed attorney Allan Nash of Denison to clear the title. Title to the Collison farm was finally cleared and the sale of the farm was completed during the early part of November 1967. There was not enough money to pay the judgment in full so Mr. Noack financed the balance himself and took an assignment of the judgment from the bonding company. On September 10, 1967 there was a balance due Noack of about $14,000.
On September 10, 1967 Tracy North was indebted to the Manning Trust and Savings Bank and the Kiron State Bank in sums in excess of $46,000. These loans were secured by liens on livestock.
On September 10, 1967 Leonard Baker was obligated to the Manning Trust and Savings Bank on a security note in the sum of $5,275. He was also indebted to the Kiron State Bank in the sum of $58,615.21 which represented the balance due on the unsecured sheep note which he owed together with Allen North. In addition he owed about $6,950 to the Westside State Savings Bank on a secured note.
On September 10, 1967 Allen North owed the banks about $25,000 on secured notes.
During the first part of September 1967 the bankers determined that Allen North, Tracy North and possibly Leonard Baker were engaged in a check floating or check kiting scheme. As one of the bankers testified, 'We had a beautiful kite going or large kite going, kiting of checks.' The exact amount of money involved was not known, but the bankers were alarmed. Because of this a meeting was arranged for Sunday morning September 10, 1967 at the office of attorney Allan Nash in Denison, Iowa. Present at this meeting were Walter Noack, James Lodwick, Allan Nash, Tracy and Allen North, Leonard Baker and several other banks officials. The check float scheme was discussed, also the bonding company judgment now assigned to Noack, the Baker sheep note, the other unsecured indebtedness owed by Tracy, Allen North and Leonard Baker. The meeting commenced about 9:30 a.m. and ended about 3:00 p.m. There was evidence that plaintiff first volunteered to deed three farms and suggested possible buyers. Pursuant to the discussion a written instrument in words and figures as follows was prepared and executed:
'AGREEMENT
'IT IS AGREED between the Manning Trust & Savings Bank of Manning, Iowa, Westside State Savings Bank of Westside, Iowa, and the Kiron State Bank of Kiron, Iowa, Tracy North of Vail, Iowa, Allen North of Vail, Iowa, and Leonard Baker of Vail, Iowa, as follows:
'That Tracy North is to transfer by warranty deed three (3) farms located in Crawford County, Iowa, and generally designated as the Dow City Farm, the Duffy Farm and the Mason Farm, said deeds having been executed and delivered as of the date of this agreement. '2.
'The parties hereto agree that said transfer shall be made to Walter H. Noack, and that the parties hereto do by this agreement appoint the said Walter H. Noack to act as agent for all of the parties hereto, and to accept said titles in his individual name.
'3.
'That the said Walter H. Noack is hereby specifically authorized to sell said farms, and to deliver the proceeds therefrom to the banks heretofore mentioned, to apply on present indebtedness of the said parties, Tracy North, Allen North and Leonard Baker, and to pay expenses incurred in connection with this agreement.
'4.
'The parties hereto understand and agree that the present indebtedness of the parties cannot at the time this is written be fully determined, but that the indebtedness hereto referred to is indebtedness owing from the said Tracy North, Allen North and Leonard Baker as of the date of this agreement, including however promissory notes of Leonard Baker totalling $30,000.00 dated September 11, 1967, and that proceeds are to be applied on said indebtedness as may be determined by the Manning Trust & Savings Bank, Westside State Savings Bank and Kiron State Bank, and it is further agreed that in the event said indebtedness is paid in full, the balance of proceeds is to be paid in full to Tracy North of Vail, Iowa.
'5.
'This agreement shall be binding upon the heirs, administrators and assigns of the parties hereto, and in the event of the death of Walter H. Noack prior to completion of this agreement, transfer agent for said properties shall be then the parties, Manning Trust & Savings Bank, Westside State Savings Bank and Kiron State Bank.
'6.
'It is understood by the parties hereto that these farms are sold subject to present outstanding leases, including leases to the Government, and that physical possession of said properties cannot be given until March 1, 1968.
'Dated this 10th day of September, 1967.
(s) Leonard Baker
'ACCEPTANCE OF AGENCY RESPONSIBILITY
'The undersigned, Walter H. Noack, hereby accepts the above responsibility to act as agent with respect to this agreement and with respect to the transfers of title.
'Walter H. Noack'
The agent was duly acknowledged by all parties.
A warranty deed was prepared by Allan Nash and executed by Tracy North. The deed was taken to Tracy North's residence at Vail, Iowa, where his wife's signature was obtained and notarized. As shown the agreement provides that Tracy would on that date (September 10, 1967) deed three farms to Walter Noack as agent and with authority for Noack to sell them. The contract provided for distribution of the proceeds.
At the close of this meeting Leonard Baker and his wife executed a deed (Leonard drove him to get his wife's signature) releasing their interest in the farm sold to the Collisons, (title problem referred to supra), and at the meeting Leonard also executed two $15,000 notes to the two banks which were holding the 'kite' checks. Apparently it was necessary that the 'kite'...
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