Richardson v. Short

• Decision Date: 17 March 1925
• Docket Number: No. 35973.,35973.
• Citation: 202 N.W. 836
• Parties: RICHARDSON v. SHORT ET AL.
• Court: Iowa Supreme Court

202 N.W. 836

RICHARDSON

v.SHORT ET AL.

No. 35973.

Supreme Court of Iowa.

March 17, 1925.

Appeal from District Court, Clarke County; Homer A. Fuller, Judge.

Action in equity to foreclose a real estate mortgage on certain lands in Clarke County, Iowa. From a judgment in favor of the plaintiff, defendants appeal. Affirmed.Crist & Dyer, of Osceola, and Campbell & Campbell, of Newton, for appellants.

Lloyd Thurston and O. M. Slaymaker, both of Osceola, for appellees.

ALBERT, J.

On the 1st of March, 1920, the defendants Ira and Erma Short executed and delivered to the plaintiff their promissory note and mortgage for $5,500 to mature March 1, 1922. The mortgage securing the note was on a 145-acre tract of land. Subsequent to that date Short and his wife entered into a written contract with the defendant Joe Horn, by which Short sold to Horn the 145-acre tract in controversy herein, together with another 157-acre tract of land situated in Clarke county, and took as part payment therefor a tract of land in Canada then owned by the defendant Horn, and as a part of said contract Joe Horn assumed and agreed to pay the aforesaid $5,500 mortgage.

It appears from the evidence that when Short made the deed to Horn, Horn had his name erased from the deed as grantee, and inserted the name of Margaret A. Horn, his wife, codefendant herein. This deed also contained a clause that the grantee assumed and agreed to pay the aforesaid $5,500 mortgage. The plaintiff seeks in this foreclosure to hold both Joe and Margaret Horn defendants on the assumption of this mortgage.

Joe Horn and wife filed a joint answer to plaintiff's petition, and also a cross-petition against Ira Short in which they allege that under their contract with Short it was agreed and understood that the $5,500 mortgage, herein referred to, was to be due on the 1st of March, 1926, and through inadvertence, oversight, and mistake, the date was omitted from the written contract, and they ask that the same be reformed accordingly, and say that Ira Short falsely represented to them that this mortgage was due on the 1st of March, 1926; that Joe Horn was merely acting as agent for Margaret A. Horn, and that they relied on these representations and by reason thereof entered into the contract. They deny that they ever assumed and agreed to pay the mortgage of $5,500 due March 1, 1922, and pleaded novation by substitution of Margaret A. Horn as grantee. They allege that Ira Short failed to furnish these defendants an abstract of title showing merchantable title, and in their cross-petition against Ira Short they ask to have the contract reformed making the due date of the mortgage March 1, 1926, and ask judgment against Ira Short for $2,500 damages, and that the contract be adjudged rescinded and canceled and for other equitable relief.

The court entered a decree against Horn and wife and Short and wife for the amount due, fixing their liability holding Horn and wife primarily liable and Short and wife secondarily liable, and it is from this judgment that Horn and wife appeal.

[1] The defendants Horn, in their cross-petition against Short, seek to reform the contract to make the due date of the mortgage, assumed by them, March 1, 1925. The burden of proof was on them to establish their contention under this cross-petition by a preponderance of evidence. A careful review of the evidence shows that they did not sustain this burden, and therefore the ruling of the district court in refusing the relief prayed must be, and is found to be, correct.

[2] II. It is admitted, or the evidence substantially and satisfactorily shows, in addition to the facts hereinbefore set out, that Short did not furnish to Horn the abstract of title provided for under his contract; but the evidence does show that in pursuance of the terms of the contract Horn took possession of the land and rented it and collected the rents therefrom after the date of the performance of the contract. It also shows that a deed was made by Short to Horn and delivered to Horn about the time provided for in said contract. The deed appears to have been originally a deed made by Short and wife to one Lewis, but the deal between Short and Lewis never had been completed, and the deed was never delivered to Lewis, and consequently the name “Lewis” was stricken from the deed as grantee, and Joe Horn requested that the name of his wife, Margaret A. Horn, be inserted in place of his name, which was done. Apparently through oversight, in one place in the deed the name “Lewis” was not stricken out; but however this may be, the deed was delivered to Horn and accepted by him, and no complaint was made about the correctness or sufficiency of the same until this trouble arose. Horn says that he never accepted the deed, but, under the evidence, we find against him on this proposition.

Horn seeks to escape on the theory that he has tendered a return of the deed, and that he assigns the lease on the property to one A. F. Wade for the benefit of all parties.

In view of what we shall hereafter say as to the question of rescission, turning this deed into court and assigning the lease will not avail the defendants herein.

The Horns admit that the plaintiff Richardson is entitled to the foreclosure of this mortgage, but insist that no judgment should be entered against Joe Horn because by novation his wife, Margaret A. Horn, was substituted under the contract and the deed made to her, thereby releasing him from liability. They insist that Margaret A. Horn is not subject to judgment for the reason that no judgment is prayed for against her in the plaintiff's petition. Such further facts as may be necessary will be stated as the opinion proceeds. Some preliminary questionsof law may be stated governing this matter.

In Shult v. Doyle, 201 N. W. 787, 790, with reference to the right of a mortgagee to foreclose under circumstances similar to this case, we said:

“As to the plaintiff herein, his rights are subordinate to the real agreement entered into as between the defendants. His rights are purely legal. They do not arise out of any equity. They spring alone from the express agreement of the parties, made in his behalf as a third person. Peters v. Goodrich, 192 Iowa, 790, 185 N. W. 903. The cause of action thus created in his favor is a bit of legal grace; it cost him nothing; it simply fell upon him, without effort or knowledge on his part. He is entitled to it, such as it is. He has no ground of appeal to equity either to expand it or to prevent its shrinkage.”

In Gilbert v. Sanderson, 56 Iowa, 349, 9 N. W. 293, 41 Am. Rep. 103, we held, in substance, that the original parties to a contract for the benefit of a third person may change, vary, or abrogate such contract as they may see fit at any time before it is accepted or acted upon by the third person for whose benefit it was made. This doctrine finds support in International Trust Co. v. Keefe Mfg. Co., 40 Colo. 440, 91 P. 915;Blake v. Atlantic Nat. Bank, 33 R. I. 464, 82 A. 225, 39 L. R. A. (N. S.) 874;Jones v. Higgins, 80 Ky. 409;Romaine v. Judson, 128 Ind. 403, 26 N. E. 563, 28 N. E. 75.

[3] After a contract for the benefit of a third person has been accepted or acted on by him, it cannot be rescinded by the parties without his assent. 13 C. J. 602.

[4] Where one, for a consideration, agrees to assume and pay the debt of another, the creditor is impliedly included within the privity of the promise, and he may single out and sue the promisor therefor, subject, however, to all equities arising out of the contract affecting the principal parties. Malanaphy v. Mfg. Co., 125 Iowa, 719, 101 N. W. 640, 106 Am. St. Rep. 332;Benedict v. Hunt, 32 Iowa, 27;Shult v. Doyle (Iowa) 201 N. W. 787.

[5] To a suit by a third person on a contract made for his benefit, a failure of consideration or a rescission of the contract by the parties thereto, before the acceptance by plaintiff of the stipulation in his favor, is a defense. Keller v. Ashford, 133 U....