Northrup v. Miles Homes, Inc. of Iowa
| Decision Date | 21 February 1973 |
| Docket Number | No. 55147,55147 |
| Parties | Oliver J. NORTHRUP and Klara Northrup, Appellees, v. MILES HOMES, INC. OF IOWA and Land Contracts, Inc. of Iowa, Appellants. |
| Court | Iowa Supreme Court |
Shea & Jackson by John J. Shea, Cedar Rapids, for appellants.
Simmons, Perrine, Albright & Ellwood by Tom Riley, and James E. Shipman, Cedar Rapids, for appellees.
Heard before MOORE, C.J., and MASON, RAWLINGS, REYNOLDSON and McCORMICK, JJ.
Law action tried to jury on causes of action arising out of a pre-cut home sale. Following judgments on plaintiffs' verdicts defendants appeal and we affirm.
In 1968 plaintiffs Oliver J. Northrup (Oliver) and Klara Northrup (Klara), husband and wife, lived on a 60 acre tract they were purchasing on contract near Ely, in Linn County, Iowa. Both had only a seventh grade education. Klara came from Ukraine, Soviet Russia. She was in a concentration camp for three and one-half years, arriving in the United States in 1946. Oliver had been employed by a utility company for 16 years. Prior to that he had worked for a company constructing family residences and believed he could build his own house.
The Northrup house on the homestead tract was very small. Three of their eight children were still at home. Seeking a larger residence, Northrups responded to a local newspaper advertisement described by Klara:
They received a catalog, and a credit application which they completed and returned. John Pope, salesman for defendant Miles Homes, Inc. (Miles Homes) then called at the Northrup residence about 6:00 p.m. on April 24, 1968. Oliver and Klara testified they became interested in and selected the 'St. Paul' home described in the catalog which they then had before them:
They testified Pope first quoted them a price of $4600 for the 'shell' of the St. Paul home, and, at their request, a figure of $6876 as a total price (for materials) including the cabinets, plumbing, heating, electrical, tile and paint. The catalog received by Northrups stated:
The Northrups testified the purchase agreement was read to them by Pope, whom they trusted completely. Pope testified they read this instrument. He denied he told them the contract price was for the 'complete package.' The purchase agreement was signed by Northrups. It provided for a total payment of $6876, a down payment of $2, and monthly payments of $55 at six percent for three years, at which time Northrups were to secure other financing. Pope also had these buyers sign a blank mortgage note. He asserted (but Northrups denied) they also signed a blank Iowa mortgage form and a blank assignment of their land purchase contract.
Miles Homes is an Iowa corporation with headquarters at Minneapolis, Minnesota. It specializes in furnishing pre-cut house materials for persons willing to construct their own home. Defendant Land Contracts, Inc. of Iowa is a corporation formed and controlled by Miles Homes as a vehicle or agent to take real estate title in certain transactions in which Miles Homes has an interest. Executive officers for Land Contracts, Inc. are general counsel for Miles Homes. Northrups knew nothing of the latter corporation until that name appeared on instruments later recorded. Land Contracts, Inc. was not mentioned in the sales agreement. The sales agreement provided the $6874 'mortgage note' was to draw interest at six percent and was to be secured by an open-end mortgage.
On May 22, 1968, defendants caused a document entitled 'Assignment of Land Contract' to be recorded in the Linn County Recorder's office. This instrument purported to assign plaintiffs' real estate interest as contract purchasers to Land Contracts, Inc. of Iowa. Plaintiffs claimed their signatures on this assignment were forgeries. The acknowledgment purportedly made before one June Ellingson, Miles Homes employee, in Hennepin County, Minnesota on April 24, 1968, was admittedly false. Neither did the Northrups know or ever see the 'Judy Wheeler' whose name appears on the assignment as a witness to their signatures, nor was this person identified by anyone else.
The Northrups first knew of this assignment in July 1968 when the Linn County Assessor notified them in writing they had lost their homestead exemption because their homestead had been sold. Their numerous and frantic telephone calls to the agent, Pope, were ignored and unreturned.
On October 21, 1968 plaintiffs traveled to Minneapolis, Minnesota, the principal place of business of Miles Homes and Land Contracts, Inc. Their purpose was to attempt to straighten out their difficulties. They visited at length with one Casimer 'Cash' J. Burzynski, manager. Plaintiffs contend, at that time, they signed only a 'release' of the land contract assignment so their land would be placed back in their names.
On or about October 25, 1968, Northrups received a letter from Miles Homes, written by Burzynski as manager, stating he was enclosing 'a copy of the Release of Assignment of Land Contract and the copy of the Real Estate Contract.'
The 'release' enclosed evidently did not refer to the Northrup-Miles Homes deal, but to an unrelated transaction. Klara, anxiety-ridden, again went to the Linn County Recorder's office. She found there recorded a second 'Assignment of Land Contract' to Land Contracts, Inc.; a 'Real Estate Contract--Installments,' from Land Contracts, Inc. to Northrups for $15,165.20; and a 'Real Estate Mortgage' to Miles Homes for $6874 but open-ended to $20,000. All these instruments were notarized by Burzynski in Minnesota. Plaintiffs testified the only instrument they signed while in Minneapolis was a 'Release of Land Contract.' There was also of record a prior real estate mortgage from Northrups to Miles Homes for $6874, dated April 24, 1968, and purportedly acknowledged before June Ellingson on that date, in Minnesota.
There was ample evidence from which the jury could have found that following the receipt of notice of loss of homestead exemption Klara Northrup suffered mental anguish occasioned by the fright and fear of having lost the equity in their real estate. She cried frequently, broke down on occasions at the courthouse, lost 40 pounds of weight, consulted a doctor, received medication for her nerves, and suffered abdominal pains and cramps. On one occasion she was forced to sit on some steps along a downtown street, vomiting, while her husband went for a car to take her to a hospital for emergency room treatment.
The first division of plaintiffs' petition was for damages in the amount of $5000 for breach of express and implied warranties of fitness and quality with respect to materials furnished under the contract. In the second division plaintiffs alleged defendants had willfully and maliciously forged plaintiffs' signatures to the various described instruments affecting their real estate and had caused false notarial acknowledgments to be affixed thereto, all to defraud them of their equity rights in said property. Plaintiffs further alleged mental anguish and medical expense incurred as a result and prayed for $10,000 actual and $15,000 punitive damages for Klara Northrup.
The jury trial, commencing October 26, 1970, resulted in a verdict of $3500 in favor of Oliver and Klara on the division I breach of warranty claim; and a verdict for Klara for $5000 actual damages and $15,000 punitive damages on the division II claim. Appealing, defendants assign errors which shall be treated in subsequent divisions of this opinion.
By motion in limine defendants moved the court to forbid plaintiffs under any circumstances from referring to other business dealings between defendants and 'other residents of Linn County and the results of said dealings.' Trial court ruled it would not permit such evidence if it tended to prove a pattern of fraudulent inducement to secure signatures of witnesses on certain instruments, however,
Failure of trial court to sustain the motion in its entirety, followed by evidence of similar conduct and claimed forgeries, is assigned as prejudicial error.
Such evidence of similar transactions was, in the court's own language, allowed on the ground it had bearing on the issue of intent to commit forgery. Trial court apparently was relying on the following rule articulated in 32 C.J.S. Evidence § 580, at pp. 708--709:
'(E)vidence of similar acts may frequently be relevant, especially in actions based on fraud and deceit, because of the light which it throws on the state of mind of a person, as, for example, his knowledge, or because of the insight which such evidence of similar acts may provide into such person's motive or intent * * *.'
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