Reeder v. Lund, 40582.

• Decision Date: 10 April 1931
• Docket Number: No. 40582.,40582.
• Citation: 236 N.W. 40,213 Iowa 300
• Parties: REEDER ET AL. v. LUND ET AL.
• Court: Iowa Supreme Court

213 Iowa 300

236 N.W. 40

REEDER ET AL.

v.LUND ET AL.

No. 40582.

Supreme Court of Iowa.

April 10, 1931.

Appeal from District Court, Cedar County; F. O. Ellison, Judge.

Suit by guardians of the property of John W. Reeder against Arthur Lund, individually and as trustee, to cancel promissory notes, mortgage, and deeds to Lund and trust agreement signed by plaintiff's ward and for accounting. Beneficiaries under the trust deed are joined as defendants but raise no issue. The issues between the plaintiffs and the defendant Lund were determined in favor of the plaintiff except as to three promissory notes, one for $600, one for $50, and one for $1,179.62, upon which the court rendered judgment in favor of the defendant for $2,000.70. Plaintiffs and defendant Lund appeal.

Affirmed on defendant's appeal. Reversed on plaintiffs' appeal.C. O. Boling and J. C. France, both of Tipton, and E. A. Johnson, of Cedar Rapids, for appellant.

Hamiel & Mather and Henry L. Huber, all of Tipton, and C. J. Lynch, of Cedar Rapids, for appellees.

MORLING, J.

Defendant Arthur Lund is an attorney at law and during the times in controversy was acting as attorney and advisor of plaintiff's ward, John W. Reeder. Reeder was at the time of the trial, June or July, 1929, about 93 years of age. Plaintiffs base their suit upon allegations of mental incompetency and of express and implied fraud.

Lund since October, 1926, had had a power of attorney signed by Reeder, the provisions of which are not in evidence.

At various dates in 1927 and 1928 Reeder signed numerous promissory notes payable to Lund for various sums ranging from a few dollars up to $4,200, among them three notes dated October 23, 1928, one for $1,179.62, one for $3,000, one for $2,500, a total of $6,679.62, secured by real estate mortgage to Lund of the same date signed by Reeder and purporting to “be security for other indebtedness and also for future indebtedness to Arthur Lund.” Under date of January 26, 1929, February 5, 1929, March 27, 1929, John W. Reeder signed three warranty deeds describing various tracts of farm and town property, each stated to be for $1, and other valuable considerations. The deeds named as grantee Arthur Lund “as trustee with sole and absolute power and exclusive authority to convey an absolute title in fee simple to premises herein described without any restrictions or reservations whatsoever.” Under date of March 27, 1929, Reeder and Lund signed and acknowledged a trust agreement, which recited that Reeder was the owner of real property requiring considerable time and attention for its proper management; that he desired to make provision for the disposition of his estate; that he had deeded to Lund real estate known as the Reeder Block, Reeder farms, and the Reeder residence; that such real estate should be in trust for the persons and purposes therein enumerated. The trust agreement is very elaborate, conferring on Lund power to manage, collect income, apply net income on principals of mortgages, including any that Arthur Lund might find it necessary to place as provided; “that the notes and other accounts and moneys due Arthur Lund personally or otherwise shall be paid by the use of the income of the premises herein described and that if the said Arthur Lund desires said moneys out of said notes or accounts or other matters that he shall have the right to mortgage real estate to borrow money to pay the same, and said mortgage or mortgages so executed shall be considered and construed the same as if executed by me personally and shall be paid from the income referred to herein the same as other mortgages. The said Arthur Lund, as trustee, * * * shall not execute any bond for the performance of his duties hereunder so long as he holds notes or other indebtedness against the said J. W. Reeder or mortgages on real estate in or about the aggregate amount of four thousand dollars, but should said indebtedness to him be reduced below that amount said Arthur Lund shall execute a surety bond in the sum of five thousand dollars, for the use and benefit of the said J. W. Reeder. * * *” It was further stipulated that the title to the premises described in the deeds therein referred to should be absolute in the trustee Arthur Lund without any reservation or restriction. The trust agreement revoked the power of attorney. The petition is to cancel the mortgage and these deeds and agreement and for accounting. Lund answered, in substance, by general denial and afterwards amended setting up loans of various sums to Reeder on notes then held by Lund, namely, note dated September 7, 1928, for $4,200, interest 5 per cent.; note dated August 18, 1928, for $1,000, 5 per cent.; note dated April 7, 1928, for $600, 6 1/2 per cent.; two notes for $500 each dated September 3, 1927, 5 per cent.; note of $50 dated August 18, 1928, 6 per cent.; note for $75 dated February 28, 1929, signed by John W. Reeder and Arthur C. Reeder, 7 per cent. Also three notes secured by mortgage, all dated October 23, 1928, to wit, one note for $3,000 on which there is a credit of $2,000 under date of December 20, 1928, leaving a balance due thereon of $1,000 and interest; one note for $2,500 upon which there is a credit under date of December 20, 1928, of $1,837, leaving a balance due of $663; one note for $1,179.62. The defendant alleged that there was unpaid on the mortgage notes $2,842.62, with interest, and on the unsecured notes $6,925, with interest, and that he was not indebted to Reeder in any sum. The answer also alleged that at the time the mortgage was given John W. Reeder requested defendant to take the note of Arthur C. Reeder for $850 and if collected from Arthur the amount paid was to be credited on the mortgage. By amendment to petition plaintiff asked cancellation of all notes.

The printed abstract and amendment contain more than 800 pages, a lengthy statement of which will not be attempted.

There was the usual conflict of opinion between witnesses, expert and lay, concerning the mental competency of the ward. There had been for a period of two years and more prior to the signing of the trust agreement discussions between Reeder and Lund concerning the disposition of Reeder's estate, in which references to possibility of future guardianship had been made. It is not disputed, in fact Lund asserts that repeated explanations to Reeder of various matters under discussion had been made. We shall not undertake to determine whether or not at the particular times in controversy the ward had sufficient mental capacity to contract. We have two first-hand pictures of his mental condition, one furnished by a letter written by him March 12, 1929, to a son, and the other his testimony given on the witness stand in this case in June, 1929. The ward had attended the presidential inauguration on March 4, 1929, and had had the honor of holding the President's hat while on the platform. The letter reads: “Art says it was Grant (the ward's son) that was with me at the Vice Presidents while they were elected and went with me to the President's platform and saw me go to him and shake his hand and bid him good by & Mrs. Rosevelt or Mrs. Hoove--also--Now when I arrived at the platform and during the Address I was at the opposite end of the Platform from Hoover as directed by the Platform Chairman and at once told to go forward & meet the President--at once I did as ordered & met the President & shook his hand & bid him good by &c at once met Mrs. Hoover as I retired from the platform as the people around surrounded. Dr. Grant (the ward's son) did you see it all--or was Dr. Wm. (another son) behind me, I do not know exactly but people called me at once Mr. J. W. Reeder & shook my my hand very kindly. I do not know but Art (a son) said you had followed me from the Vice Presidents office. I was helped Stand on a barrell quite a while in the Vice Presid Presidents room during the election and at once proceeded when they were done to the Presidents platform * * *” J. W. Reeder was a witness on the trial of this case. He denied remembering any promissory notes or bonds given to Lund, denied ever signing any notes to Lund. Testified that he had loaned Lund money at different times.

“Q. Do you remember anything about any trust deed? A. Never heard of such a thing, and when that word came to my mind from Mr. Hoover when I came from the south a few days afterward, he says, ‘J. W., they have got you on for a talk,’ he says, ‘we are going to make a president of you’ and I says, ‘I guess it will,’ and I just met Mr. Hoover and he says, ‘they have enough presidents.’

Q. Now, there appears to be filed of record a deed to Arthur Lund as trustee, marked Exhibit 8, it consists of five typewritten pages and purports to bear your signature and that of Mr. Lund, and purports to be acknowledged by you and Mr. Lund before Hollyce Roberts, notary public? A. I never saw this one, I had never signed this one before I--I said and after the regular statements had been made, now I could not say this was done by an artist, and I could not say but what she printed that correctly after me, but it is not quite correct, the president did not sit at my right hand when it was done or he would have had it done better, now as to the line below, I said, if there is anything on your mind, President, that would seem necessary to change, it will be necessary to change, it will be all right with me, but he did not change it and then he gave me his name to sign, also president occupying the chair at that time, both presidents signed it, but I did not sign it just at that moment. I had signed it though, but that I never signed, that never passed through my hands.

Q. When you were talking about having signed something, what was it you thought you signed? A. I signed something in regard to my occupying a position on the board and being present and my two sons with me, and he gave that promise and he fulfilled it, and I...