Schulte v. Mauer

• Decision Date: 26 June 1974
• Docket Number: No. 56523,56523
• Citation: 219 N.W.2d 496
• Parties: John A. SCHULTE and Jonco, Inc., Appellees, v. Martin MAUER et al., Appellants.
• Court: Iowa Supreme Court

Page 496

219 N.W.2d 496

John A. SCHULTE and Jonco, Inc., Appellees, v. Martin MAUER et al., Appellants.

No. 56523.

Supreme Court of Iowa.

June 26, 1974.

Forker & Mahr, Sioux City, for appellants.

Thomas L. McCullough, Sac City, for appellees.

Heard before MOORE, C.J., and RAWLINGS, LeGRAND, UHLENHOPP and HARRIS, JJ.

RAWLINGS, Justice.

Defendants Martin Mauer, Mauer Construction Co., Inc. and Carl M. Mauer Construction, Inc. appeal from summary judgment for plaintiffs John A. Schulte and Jonco, Inc. We affirm.

Because of the issues here involved a relatively extensive analysis of the complex record presented, and occasional subsequent reference thereto, is unavoidable.

By law action commenced September 6, 1972, against defendants above named, plaintiffs seek recovery on multiple promissory notes with foreclosure of attendant liens and security interests. Attached to plaintiffs' petition, as exhibits, are the signed instruments relied upon for relief sought.

Defendants' answer, as amended, at least inferentially admits execution of the notes and other documents as alleged by plaintiffs. It is also generally asserted (1) all debts owing have been satisfied; (2) the instruments sued upon were given to or secured by Schulte while he was attorney and bookkeeper for defendants; (3) the transactions involved were in the nature of partnership enterprises or joint ventures; (4) in some instances defendants' moneys were wrongfully used by Schulte to the advantage of himself or corporations controlled by him; (5) an audit will reveal defendants are not indebted to plaintiffs; and (6) Schulte breached his duties and obligations as attorney for defendants.

By reply plaintiffs denied the above allegations.

October 2, 1972, plaintiffs moved for summary judgment. It is thereby alleged, in substance, to Schulte's personal knowledge the facts set forth in the petition are true and plaintiffs believe there is no defense to the instant action. By a verified affidavit Schulte affirms all statements contained in the summary judgment motion.

October 26, 1972, defendants filed resistance to the aforesaid motion. Assertions made are essentially repetitive of those contained in the answer summarized above. Attached to the resistance is Martin Mauer's affidavit by which he verifies all allegations set forth in answer to plaintiffs' petition; asserts Carl M. Mauer Construction, Inc. gave a $50,000 promissory note to Sac City Pavers, Inc. on which payments have been made in excess of the amount owing; and alleges Schulte, as a Sac City Pavers' officer, was responsible for application of all related funds.

By an October 30, 1972, amendment to the above noted resistance defendants, in essence, further allege (1) the burden is upon Schulte to show all involved transactions were not to his advantage; (2) by obtaining the notes sued upon Schulte merely transferred funds to his fiduciary account, thus placing on him the duty to account for all receipts, expenditures, and his actions in related matters; and (3) a meritorious defense exists in that Schulte has misapplied defendants' moneys. Martin Mauer's attached affidavit reasserts the allegations contained in the aforesaid answer. He additionally states, in course of the transactions all checks were endorsed and left with Schulte; defendants are entitled to an accounting as prayed; and an audit will disclose defendants are not indebted to plaintiffs.

October 30, 1972, hearing was had on the summary judgment motion and resistances thereto.

November 3, 1972, trial court inceptionally ruled upon the summary judgment motion. It was then found, in substance, most if not all material allegations made by defendants are mere opinions and conclusions unsupported by ultimate statements of fact and the court could rule, as a matter of law, no defense exists. But since defendants sought to further support their defense to the summary judgment motion by discovery, they were allowed 30 days to pursue that course and accordingly present factual evidence in support of their claim to the effect all debts owing to plaintiffs had been paid. Right was also accorded plaintiffs, upon expiration of the 30 day period, to renew their summary judgment motion.

The record fails to reveal defendants, in any manner or means, ever attempted to initiate discovery proceedings within the allotted 30 days, or then sought an extension of time for the given purpose.

December 4, 1972, plaintiffs resultantly filed what is denominated a 'Second Motion for Summary Judgment'. Final judgment was thereupon entered, adverse to defendants, from which this appeal is taken.

In support of a reversal defendants contend trial court erred (1) in sustaining plaintiffs' summary judgment motion when there existed a genuine issue as to material facts, and (2) in sustaining plaintiffs' second motion for summary judgment absent a hearing thereon.

I. The first issue to be considered is whether the pleadings, motions, affidavits, and testimony, i.e., the entire record, discloses a genuine issue as to any material fact. Inceptionally called into play is Iowa R.Civ. P. 237, which provides, in relevant part:

'Summary Judgment may be had under the following conditions and circumstances:

'(a) For claimant. A party seeking to recover upon a claim * * * may, at any time after the appearance day or after the filing of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in his favor upon all or any part thereof.

'* * *

'(e) Form of affidavits--Further testimony--Defense required. Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. * * * When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

'(f) When affidavits are unavailable. Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery be had or may make such other order as is just.'

We dealt with the foregoing rule in Davis v. Comito, 204 N.W.2d 607, 608 (Iowa 1973) and there stated:

'The purpose of the summary judgment is to enable a party to obtain judgment promptly and without expensive trial where there is no fact issue to try. Jensen v. Voshell, 193 N.W.2d 86, 88 (Iowa 1971). See also Gruener v. City of Cedar Falls, 189 N.W.2d 577, 580 (Iowa 1971). However, where a fact issue is generated by the pleadings, depositions, affidavits or other instruments before the court a motion for summary judgment should not be sustained. Sherwood v. Nissen, 179 N.W.2d 336, 339 (Iowa 1970) and Northwestern Nat. Bank of Sioux City v. Steinbeck, 179 N.W.2d 471, 475 (Iowa 1970).

And in the same case we said, 204 N.W.2d at 611--612:

'When a trial court is confronted with such motion under rule 237, R.C.P., it is required to examine the entire record before it, including the pleadings, admissions, depositions, answers to interrogatories, and affidavits, if any, to determine for itself whether evidentiary facts are presented which, if decided in favor of the defendant, would amount to a good defense to the action. Continental Ill. Nat. B. & T. Co. v. Security State Bank, 182 N.W.2d 116, 118 (Iowa 1970), citing authorities.

'Bauer v. Stern Finance Company, 169 N.W.2d 850, 853 (Iowa 1969), has this statement:

"The rule provides that a party may not 'rest upon the mere allegations or denials of his pleading.' He must set forth specific facts showing there is a genuine issue. He cannot merely say there is one; but it must appear 'by affidavits or otherwise' that this is the case."

It is also well-settled, since adoption of Iowa R.Civ. P. 237 and 238, a party must plead ultimate facts and cannot rely upon conclusions by themselves. Furthermore, courts are required to apply that rule to all pleadings, admissions, depositions, answers to interrogatories and affidavits presented in resolving a summary judgment motion. See Northwestern Nat. Bank of Sioux City v. Steinbeck, 179 N.W.2d 471, 477 (Iowa 1970); cf. Bailey v. Iowa Beef Processors, Inc., 213 N.W.2d 642, 647--648 (Iowa 1973).

But the burden of showing absence of any genuine issue of material fact is upon the summary judgment movant. See Davis v. Comito, 204 N.W.2d at 612.

Additionally, all matters properly before the court are viewed in a light most favorable to the opposing party. See Davis v. Comito, Supra.

If, under those principles, an examination of the record discloses any allegations of ultimate fact which if found true would constitute a good defense to the action, a summary judgment motion must be overruled. See Davis v. Comito, Supra.

Viewed in the light most favorable to defendants these are the material facts disclosed by the entire record.

Schulte served as attorney, financial advisor and bookkeeper for defendants from 1964--1970. During that time he was called upon to assist defendants in obtaining bonds essential to submission of construction project bids. In order to finance projects undertaken by defendants they were required to constantly borrow money from various banks and financial institutions, mainly because of lending limits. As a condition to use of State Surety Company as the project bonding institution for defendants, Surety required joint control of money in all related...