Perry Fry Co. v. Gould
| Decision Date | 15 March 1932 |
| Docket Number | No. 41302.,41302. |
| Citation | 214 Iowa 983,241 N.W. 666 |
| Parties | PERRY FRY CO. v. GOULD. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Polk County; F. S. Shankland, Judge.
Action on a foreign judgment rendered by the circuit court of Buffalo county, Wis., which had jurisdiction of the subject-matter of the suit and of the person of the defendant. In this action in the district court of Polk county, the defendant appeared and pleaded a counterclaim as a set-off to the amount due on the judgment, which counterclaim or set-off is based upon fraud, more specifically referred to in the opinion. Trial to the court and a jury. Verdict and judgment for the defendant. The plaintiff appeals.
Reversed.
Maxwell & Ryan, of Des Moines, for appellant.
A. D. Pugh, of Des Moines, for appellee.
On February 6, 1925, a partnership composed of W. S. Carver and the defendant, John H. Gould, was the owner of certain real estate situated in Trail county, N. D. On that date, H. J. Maxfield was the record owner of approximately 2,400 acres of land in Buffalo county, Wis. The North Dakota land was incumbered by mortgage indebtedness in the sum of $13,900 and the Wisconsin land by mortgage indebtedness in the sum of $23,000, consisting of six separate first mortgages upon different tracts thereof. On the aforesaid date, a contract was entered into between the aforesaid parties for the exchange by Carver & Gould of the North Dakota land with Maxfield for the Wisconsin real estate. A deed was executed by Maxfield to Carver & Gould for the Wisconsin real estate, referring to the mortgages thereon, and containing an assumption clause and an agreement by the grantees to pay the same. The amount remaining due upon one of these separate mortgage notes is what is involved in the Wisconsin judgment, upon which this suit is brought. Said note and mortgage were executed on June 1, 1923, by one Calvin to E. P. Keenan and J. W. Clarey, and the plaintiff in this action became the owner and holder of the note by indorsement, and of the mortgage by assignment. This mortgage indebtedness, as hereinbefore stated, was assumed by the grantees under the provisions to that effect in the deed executed by Maxfield.
Action was brought in the proper court in Wisconsin, asking judgment upon the note and foreclosure of the mortgage. The defendant, Gould, personally appeared in the action in the Wisconsin court and filed an answer, in which he alleged that the assumption clause was inserted in the deed contrary to the provisions of the agreement of exchange and through a mistake of the scrivener who drew the deed, that he never agreed with any one to assume and pay said mortgage indebtedness ($23,000) or any part thereof, and asked that the plaintiff's petition be dismissed as to him. On the issues joined, the Wisconsin court found against the defendant as follows: “That the defendant John H. Gould has ratified the aforesaid assumption clause in said deed, and that he is estopped from questioning his liability under such assumption clause, and that plaintiff is entitled to judgment of foreclosure and sale herein as prayed for, and that in case of deficiency upon such sale, judgment for such deficiency may be entered in the usual and regular course against said defendant Gould.”
The result of the Wisconsin suit was that, in June, 1930, a judgment was entered against the defendant, Gould, in the sum of $7,425.34. No appeal was taken from the Wisconsin judgment.
As hereinbefore stated, the instant suit is upon the Wisconsin judgment. The defendant, Gould, appeared in the instant suit and pleaded as a counterclaim, in substance, that on or about June 1, 1923, E. P. Keenan and J. W. Clarey, partners under the firm name and style of Keenan & Clarey, were engaged in the real estate and loan business in Minneapolis, Minn., and held the title to the Wisconsin real estate; that they, and officers of the plaintiff corporation, and other parties constituting assignees of Keenan & Clarey and assignors of the plaintiff corporation, entered into a fraudulent scheme to defraud the public generally and the defendant in particular; that the method employed in the perpetration of said fraud was the conveyance of the Wisconsin land by Keenan & Clarey to one or more stool pigeons, who executed notes secured by mortgages thereon to Keenan & Clarey; that said Keenan & Clarey would then transfer the notes to another confederate in the fraud; that the note and mortgage in suit were executed by Arthur M. Calvin to Keenan & Clarey, which note, by indorsement, came into the hands of the plaintiff corporation, and the latter became the owner of the mortgage by assignment; that in February, 1925, Keenan & Clarey were the holders or guarantors of mortgage indebtedness against the Wisconsin real estate in the sum of $23,000.00; that Keenan & Clarey proposed to trade the equity in the Wisconsin real estate for the equity in the aforesaid North Dakota real estate, the former being subject to $23,000 incumbrance and the latter to $13,900 incumbrance; that Keenan & Clarey, assuming to act as the agent of the defendant, without his knowledge or consent, prepared and had executed by Maxfield and wife a deed to the Wisconsin land, which recited therein that Carver & Gould assumed and agreed to pay the $23,000 incumbrance on the Wisconsin land, thereby betraying and defrauding defendant into assuming, or appearing to assume, said $23,000 incumbrance upon the Wisconsin land; that, by reason of said assumption clause in the deed thus fraudulently obtained, the defendant has been damaged by the amount of said incumbrance, as increased by interest and costs, in the sum of $33,000. He further alleges in his counterclaim or set-off false and fraudulent representations by E. P. Keenan, of the firm of Keenan & Clarey, as to the condition of the Wisconsin land as an inducement for the contract, and that he was induced thereby to enter into the exchange whereby he has been defrauded by Keenan and his associates into an apparent and seeming assumption of said incumbrance on the Wisconsin land, subjecting him to liability for judgments thereon, amounting to $33,000, including interest and costs; that the cause of action set forth in the counterclaim or set-off arose out of the transaction set forth in plaintiff's petition and is connected with the subject of plaintiff's action; that, because of the false and fraudulent representations by Keenan, which he believed and upon which he relied, he was induced to enter into the exchange contract for the North Dakota land and the Wisconsin land, and was defrauded by said Keenan and his associates into an apparent and seeming assumption of said incumbrance on the Wisconsin land, subjecting him to a liability in the amount of $33,000, including interest and costs; that, because of said representations, he, in trying to make said land suitable, productive, and usable, expended about $10,000 more; and that he has been damaged in the total sum of $44,000, which he pleads as a set-off against plaintiff's claim on the judgment.
The plaintiff in its reply pleads, in substance, that the matters set up in defendant's counterclaim or set-off inhered in the original cause of action in Wisconsin, and that the Wisconsin court found against the defendant and in favor of the plaintiff, and that, because of the Wisconsin judgment, the defendant is estopped from urging the matters alleged in his counterclaim or set-off; that the defendant is individually liable upon said judgment; that, if there is a claim for damages, the same is not the property of the defendant, John H. Gould, but is either the property of the partnership composed of W. S. Carver and John H. Gould, or of the trustees for said partnership, to wit, Paul Hewitt and Chas. L. Snyder; and that the defense alleged in the counterclaim or set-off was barred by the statute of limitations at the time this action was brought.
The pleadings of the respective parties constitute seventy-three pages of the abstract, but we deem the foregoing as the meat thereof and a sufficient statement upon which to base our conclusion.
At the close of all the evidence, the plaintiff moved for a directed verdict on various grounds, among which are that there is no competent evidence upon which the jury could find for the defendant and against the plaintiff; that, if the jury should return a verdict for the defendant, it would be the duty of the court, under the issues and evidence presented, to set the same aside; that the plaintiff's action is based upon its judgment rendered by a court in Wisconsin having full jurisdiction of the subject-matter and of the person of the defendant; and that said judgment is entitled to full faith and credit under the Constitution of the United States (article 4, § 1); and that the matters alleged in the counterclaim or set-off could not constitute a defense to plaintiff's action upon the judgment.
The court instructed the jury that the judgment sued upon is a valid and legal judgment, and that the plaintiff is entitled to enforce said judgment against the defendant, unless he has established by a preponderance of the evidence that he has a legal defense or set-off against the same as alleged by him.
[1][2][3] A careful examination of defendant's counterclaim or set-off discloses that the damage therein asserted by him arises because of the assumption clause in the deed and his seeming or apparent liability thereunder, and because of money expended by him in an endeavor to make the Wisconsin land “suitable, productive and usable.” There is no evidence in the record from which the jury could find any conspiracy as among the plaintiff and its assignors. Any amount expended by the defendant to make the Wisconsinfarm “suitable, productive and usable” could not be recovered in an independent action based upon fraudulent...
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