Schnuettgen v. Mathewson
| Decision Date | 08 January 1929 |
| Docket Number | 39276 |
| Citation | 222 N.W. 893,207 Iowa 294 |
| Parties | LOUISE SCHNUETTGEN, Appellee, v. R. H. MATHEWSON, Appellant |
| Court | Iowa Supreme Court |
Appeal from Woodbury District Court.--ROBERT H. MUNGER, Judge.
Suit in equity, to enforce a written contract and to recover thereon as upon a promise to pay. The defendant admitted the execution of the instrument, but denied that it represented the whole or true agreement between the parties. Various affirmative defenses were pleaded. There was a decree for the plaintiff for the full amount of her claim, and the defendant has appealed.
Reversed.
J. A Berry and Stason & Knoepfler, for appellant.
Bennett Cullison and Jepson, Struble, Anderson & Sifford, for appellee.
The contract sued on is a rather unique one, and one which presents difficulties of interpretation and of classification. It is as follows:
The petition set forth this contract, and alleged that the defendant had failed and refused to pay the taxes, and failed and refused to pay the interest on the first mortgage, and had failed and refused to pay the interest on the second mortgage, to the total amount of (as amended) about $ 8,000. A perusal of the contract and of the allegations of the petition concerning the same conveys no intelligence to the reader as to what rights have accrued thereunder to the plaintiff, or as to what issues are tendered in her pleading. The contract becomes intelligible only as it has been supplemented by oral evidence and by certain other writings. In that respect, the contract between the parties may fairly be deemed to be partly in writing and partly oral. The land described in the contract was a half-section farm, first owned and mortgaged by one Grover. He had executed a first mortgage for $ 28,000 to the Peters Trust Company, and a second mortgage for $ 36,000 to the plaintiff. One Kellogg, a relative of Grover's, had some interest in the ownership, not of record, and he was active in bringing about the negotiations which resulted in the contract. The plaintiff is an elderly lady, living at Earling, and did not personally carry on the negotiations. She was represented in these by Kohles, a son-in-law. The defendant is a banker at Wakefield, Nebraska. He appears to have been an unsecured creditor either of Kellogg's or Grover's, or both. Kellogg proposed to secure him by conveying the title to him as security, thereby making him a junior incumbrancer of the land. As between Kellogg and the defendant, the purpose appears to have been to obtain for the mortgagor sufficient additional credit to pay the accruing interest on the two mortgages and to pay the taxes, in order to avoid foreclosure of the mortgages. The taxes for one year were already past due, and perhaps one semiannual installment of interest on each mortgage. It was pursuant to this plan that the contract sued on was executed. The defendant entered into possession of the land, after receiving the deed, and farmed it for the year 1925. He applied all the proceeds of the farm operations to the payment of the obligations referred to in the contract. These proceeds, however, were insufficient to meet the call of the contract.
There is some dispute between the parties--not a very material one--as to the date upon which the contract was signed. It purports to have been signed on October 1st, and the contention for the plaintiff is that it was executed on that day or the day following; whereas it is the contention of the defendant that it was signed by him on the last day of November or the first day of December. The contract was drawn at Earling, and was signed there on the first day of October by the plaintiff. It was taken by her son-in-law, Kohles, to Wakefield, and presented to the defendant on the following day. Kohles testified that it was immediately signed by the defendant, and the whole transaction closed. It is the contention of the defendant, as witness, that it was not signed on that day, although it was discussed, and that the transaction was left open, to await the conveyance to the defendant. It is undisputed that Kohles returned about the last day of November, and that further negotiations were resumed, and that an additional paper was signed on that day, which will be referred to later. That was the day upon which the defendant received conveyance of the title. A careful reading of the evidence satisfies us that the transaction was not deemed closed between the parties until the last day of November or the first day of December. The language of the contract shows that it was predicated upon the assumption that the defendant was to receive title to the land. It was as such owner, and not otherwise, that the defendant purported to enter into the undertaking. This conclusion is fortified by the fact that, on the first day of December, Kohles entered into an undertaking which operated materially as representation and inducement to the signing of the contract by the defendant, as will hereinafter appear.
On October 20, 1925, the plaintiff began foreclosure suit of her mortgage by personal service of notice on that date, both upon Grover and wife and upon this defendant, Mathewson. Her petition was filed on October 23, 1925. In her petition she prayed for judgment for the principal only, in the sum of $ 36,000. She prayed no recovery for interest against either defendant. Decree was entered for her as prayed, on January 5, 1926, for $ 36,000, and no more.
On October 20, 1925, she likewise began the instant action against the defendant alone, predicating the same upon the written contract above set forth. Both actions were brought in Woodbury County district court, and both were pending therein up to the time of decree in the first action. Pursuant to her foreclosure decree, the plaintiff sold the mortgaged land under special execution on March 5, 1926, and became the execution purchaser at a bid of $ 30,000, leaving a deficiency judgment of $ 6,000 against Grover. After execution sale in the foreclosure case, the defendant filed his answer in the case at bar, wherein, among other defenses, he pleaded the bar of the foreclosure decree as a prior adjudication. He also predicated defense upon the provisions of Section 12375, Code of 1924, which provides as follows:
I. We proceed first to consider the question whether the foreclosure decree operated as a bar to the present action on the theory that it was a prior adjudication, and that the maintenance of two actions was a mere attempt to split one cause of action. The determination of this question depends upon the nature and the interpretation of the writing which is set up as a cause of action herein. The plaintiff sues upon the writing as upon a promise to pay. It is conceivable that the writing might be construed as a mere covenant, for the breach of which an action for damages would lie. But inasmuch as the plaintiff has sued and recovered upon it as an absolute promise to pay, we shall confine our discussion to such interpretation thereof. The interpretation of plaintiff is that the writing constitutes a distinct and independent cause of action, and that it stands upon its own base, as an absolute promise to pay. As already indicated, the contract itself is quite incomplete in its terms, and requires the aid of extrinsic evidence for the disclosure of its scope and purpose. It must be interpreted, therefore, in the light of the circumstances surrounding its execution. Was it independent, as a new or additional cause of action? Or was it a security for a cause of action already existing? If the plaintiff's existing mortgage and the note which it secured, and this contract, constituted but one debt, then, under the authorities, a decree of foreclosure of the mortgage operated as a full remedy, and operated to bar another action to recover for any part of the same debt. And this is so...
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