Rapp v. Linebarger

• Decision Date: 21 November 1910
• Citation: 128 N.W. 555,149 Iowa 429
• Parties: RAPP v. H. LINEBARGER & SON ET AL.
• Court: Iowa Supreme Court

149 Iowa 429

128 N.W. 555

RAPP

v.H. LINEBARGER & SON ET AL.

Supreme Court of Iowa.

Nov. 21, 1910.

Appeal from District Court, Union County; H. M. Towner, Judge.

The opinion sufficiently states the case. Judgment reversed.

For opinion of former hearing, see 125 N. W. 209.

Wade, Dutcher & Davis, for appellant.

Milton Remley, for appellees.

WEAVER, J.

Plaintiff brings this action at law stating his claim and cause of action substantially as follows: On and prior to June 10, 1903, the Oxford State Bank was a corporation organized under the laws of this state with banking powers and doing business at Oxford. It had a paid-up capital stock of $25,000, divided into 250 shares of $100 each, and 140 of said shares, representing 14/25 of said stock, were owned and held by the defendants herein, Lewis Linebarger and H. Linebarger & Son. On the date named defendants sold and transferred their said shares of stock in said bank in varying amounts to 17 different persons as follows:

+-------------------------------+
                ¦To N. Crow           ¦5 shares ¦
                +---------------------+---------¦
                ¦To Jas. Flannery     ¦10 shares¦
                +---------------------+---------¦
                ¦To Joe Yokum         ¦10 shares¦
                +---------------------+---------¦
                ¦To M. Ackerman       ¦4 shares ¦
                +---------------------+---------¦
                ¦To H. Linebarger     ¦3 shares ¦
                +---------------------+---------¦
                ¦To C. C. Oakes       ¦10 shares¦
                +---------------------+---------¦
                ¦To E. A. Doty        ¦10 shares¦
                +---------------------+---------¦
                ¦To E. D. Jones       ¦3 shares ¦
                +---------------------+---------¦
                ¦To M. McDonough      ¦5 shares ¦
                +---------------------+---------¦
                ¦To L. R. Wolfe       ¦20 shares¦
                +---------------------+---------¦
                ¦To James Burns       ¦20 shares¦
                +---------------------+---------¦
                ¦To J. P. Oakes       ¦10 shares¦
                +---------------------+---------¦
                ¦To Sarah Burnett     ¦5 shares ¦
                +---------------------+---------¦
                ¦To W. G. Williams    ¦5 shares ¦
                +---------------------+---------¦
                ¦To Jas. Stratton     ¦5 shares ¦
                +---------------------+---------¦
                ¦To Fred Rapp         ¦5 shares ¦
                +---------------------+---------¦
                ¦To Carl Gergenheimer ¦10 shares¦
                +-------------------------------+
                

At the time of said sale, Lewis Linebarger was its president, Fred Rapp vice president, and H. N. Linebarger cashier. The sale of said stock was effected at the agreed price or book value of $125 per share. Among the bills receivable of the bank at the date of the sale were two promissory notes representing the aggregate principal sum of $3,500 and accrued interest thereon, which notes were treated by the parties as being good and collectible in computing and fixing the value of said shares of stock. As a matter of fact, the notes were of doubtful value, as was then shown by the defendants and Rapp, the vice president; but that fact was not revealed to the purchasers of the stock; but, for the purpose of protecting such purchasers from any loss which they might sustain if said notes were not collected in full, the defendants made and delivered to Fred Rapp, vice president, and H. N. Linebarger, cashier, a written obligation or instrument in the following form: “Articles of agreement, made and entered into this 10th day of June, 1893, by and between H. Linebarger & Son and Lewis Linebarger, parties of the first part, and Fred Rapp, vice president, and H. N. Linebarger, cashier of the Oxford State Bank, parties of the second part, witnesseth: That the said first parties have this day sold to Jas. Burns, L. R. Wolfe, Fred Rapp, J. P. Oakes, James Sherlock and others, one hundred forty (140) shares of the capital stock of the Oxford State Bank, and they, the said first parties, H. Linebarger & Son and Lewis Linebarger, guarantee to the said purchasers of said stock, or their successors, should all or any of them sell said stock, fourteen twenty-fifths (14/25) of the loss if any occur to said second parties caused by the said bank losing any or all of two certain promissory notes or any part thereof; belonging to the said Oxford State Bank described as follows and indorsed by the Northwestern Guaranty Loan Co. of Minneapolis, Minn. (said corporation being in the hands of a receiver); one dated April 19, 1893, for $1,000, due four months after date without grace, signed by A. B. Morgan and payable at American Exchange National Bank of New York City, and known as discount number 14,456, N. W. Guar. Loan number 10,002; one of $2,500, dated December 16, 1892, due five months after date without grace, signed by Edward H. Carroll and payable at American Exchange National Bank of New York City. Entered upon the books of the said Oxford State Bank and known as discount number 13,423. N. W. Guar. Loan Co. number 8,577. The said second parties agreeing to wait for payment until the affairs of the Northwestern Guaranty Loan Co. have been fully settled. The said second parties agree to transfer to said first parties fourteen twenty-fifths (14/25) interest in said claims after first parties have paid the said 14/25 of loss of any said claims to second parties. The officers of the said Oxford State Bank agree to use due diligence in the collection of the above-described notes. Dated at Oxford, Iowa, this 10th day of June, A. D. 1893, H. Linebarger & Son. Fred Rapp, V. P. Lewis Linebarger. H. N. Linebarger, Cashier.”

It is further alleged that though due diligence has been exercised, it has been found impracticable to make collection of said notes, whereby loss has occurred to the purchasers of said stock, all of whom have assigned their claims arising upon said obligation to the plaintiff. Upon these allegations he seeks to recover an amount equal to the 14/25 of the sum remaining due upon said worthless notes. To this petition the defendants demurred upon grounds which may be abbreviated as follows: (1) The alleged written contract is too vague, uncertain, and indefinite to be capable of legal enforcement. (2) There is a defect of parties, in that H. N. Linebarger, who is named in the contract, is made neither plaintiff nor defendant in this proceeding. (3) The contract is to pay losses incurred by the “second parties” named in the writing, and no loss to them is alleged. (4) No consideration is shown for the agreement. The writing shows affirmatively that there was no consideration. (5) There is shown no privity between the parties of the second part and the purchasers of the stock. The demurrer being sustained, the plaintiff elected to stand on his pleading, and, judgment being entered against him for costs, he appeals.

1. While none of the grounds of demurrer is abandoned on appeal, chief attention is given by counsel to the proposition that the contract in suit is void for uncertainty. It is not to be denied that the instrument is inartistically prepared and very obscurely worded, but, when read in the light of the facts and circumstances attending its execution alleged in the petition and admitted by the demurrer, we incline to the view that its purpose and legal effect may be ascertained. The mere fact that the language of a contract, unaided by extrinsic evidence of any kind, is too uncertain for satisfactory interpretation, does not necessarily dispose of the question of its enforceable quality. The general doctrine in this respect has been stated as follows: “The parties to a contract choose words to express their intention in view of all the surrounding circumstances. It is practically impossible to state these facts in the contract, and it is rarely if ever attempted. The court which construes the contract must therefore either disregard all the material facts which led the parties to express their intention as they did, or else admit extrinsic evidence of the surrounding facts and circumstances. In this dilemma the courts have chosen the latter alternative. It is a recognized rule of construction that the court will place itself in the position of the parties who made the contract as nearly as can be done by admitting evidence of surrounding facts and circumstances, the nature of the subject-matter, the relation of the parties to the contract, and the objects sought to be accomplished by the contract.” 2 Page on Contracts, § 1123. This court has frequently recognized the soundness of the rule as here stated. Thus it has been said: “The intention of the parties may be ascertained by evidence of extrinsic circumstances which surround the transaction; the court thereby placing itself in the situation of the contracting par...