Shimp Bros. v. Place
| Decision Date | 27 September 1938 |
| Docket Number | 44143. |
| Citation | 281 N.W. 471,225 Iowa 1098 |
| Parties | SHIMP BROS. v. PLACE et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Black Hawk County; George W. Wood Judge.
This action was originally at law, but was transferred to and tried in equity. The petition contains three counts. Two of these counts asked damages at law, and the other seeks to establish and enforce a trust. The opinion states the facts. The trial court found for the defendants, dismissed the petition, and entered judgment for costs against the plaintiff, and the plaintiff appeals.
Affirmed.
Kepford and Kepford, of Waterloo, for appellant.
W. L Beecher, of Waterloo, for appellees A. M. Place, receiver of First Nat. Bank, Dunkerton, Iowa, and Farmers & Merchants Sav. Bank, Dunkerton, Iowa.
Ray R. Reed, of Waterloo, for appellee George S. Mornin, receiver of First Nat. Bank, Waterloo, Iowa.
E. H. McCoy, of Waterloo, for appellees Floyd P. Davis and United States Fidelity & Guaranty Co.
The record in this case is somewhat complicated and we deem it advisable to set out the principal facts involved as nearly as possible in chronological order.
George McNellis was the owner of two farms in Black Hawk County. One of these farms was encumbered by a mortgage held by the Connecticut General Life Insurance Company. McNellis was also indebted to First National Bank of Dunkerton and First National Bank of Waterloo in considerable amounts, evidenced by unsecured promissory notes. Shimp Bros., a co-partnership, of Dunkerton, Iowa, performed labor and furnished material for the improvement of the farm on which the mortgage was held by Connecticut General Life Insurance Company, and, some time prior to April 1, 1928, filed a mechanic's lien for $565 against the land upon which the improvements had been made. Some time after the filing of this mechanic's lien McNellis endeavored to renew the mortgage against this farm, but the insurance company was unwilling to renew such mortgage unless the mechanic's lien was released. McNellis talked to W. R. Jameson, a representative of the insurance company, and Jameson and McNellis talked to Floyd P. Davis, who was vice-president of the First National Bank of Dunkerton, in regard to obtaining a release of this mechanic's lien. Thereafter McNellis and Davis had a talk with Harvey Shimp, one of the co-partners, and were told that Shimp Bros. would have to have something that was just as good as the mechanic's lien before they would release it. No agreement was reached at that time, but, on the following day, either George McNellis or Davis saw Harvey Shimp and told him to go to the bank. Shimp went to the bank where a note for $565, and a chattel mortgage securing same, had been executed by Vern McNellis, a son of George McNellis. This chattel mortgage covered four horses and a corn sheller. Both the note and the mortgage were made payable to the First National Bank of Dunkerton, were left in the possession of the bank, and the chattel mortgage was duly filed in the office of the recorder of Black Hawk County, Iowa, on April 3, 1928. At the time the note and chattel mortgage were given to the bank, Davis prepared the following memorandum, which was given to Shimp Bros.:
Following this transaction Shimp Bros. released their mechanic's lien.
Some time after the execution of the note, chattel mortgage and memorandum, George McNellis and Mae McNellis, his wife, and Vern McNellis, his son, executed a chattel mortgage to the First National Bank of Waterloo, and also a chattel mortgage to Davis and W. A. Lane, as trustees for the First National Bank of Dunkerton, covering personal property owned by the mortgagors. These chattel mortgages were given to secure indebtedness owed by the McNellises to the First National Bank of Waterloo and to the First National Bank of Dunkerton. The indebtedness secured by these two chattel mortgages was not paid, foreclosure proceedings were instituted, decrees of foreclosure entered, and F. P. Davis was appointed receiver to take possession of, handle and sell all the property covered by both mortgages, and distribute the proceeds under order of court. As such receiver, Davis inventoried, took charge of, appraised, made application for authority to sell, sold the personal property at public sale, made report of his doings, distributed the proceeds of the sale, and made final report and was discharged. The property described in the two chattel mortgages above referred to was sold by Davis, as receiver, at public sale held on the McNellis farm on January 10, 1931, and it is claimed by Shimp Bros. that, at this public sale, Davis also sold the horses described in the chattel mortgage executed by Vern McNellis to the First National Bank of Dunkerton in April, 1928, in connection with the release of Shimp Bros.' mechanic's lien on the McNellis farm. It is also claimed by Shimp Bros. that the corn sheller described in this chattel mortgage executed by Vern McNellis to the bank was purchased by George McNellis, prior to the public sale and that he paid the purchase price of $80 to Davis at the bank. Neither the $80, which George McNellis is claimed to have paid for the corn sheller, nor the sums which Shimp Bros. claim were received by Davis for the horses covered by the Vern McNellis chattel mortgage and sold at the public sale on January 10, 1931, nor any part thereof, was ever credited on the note secured by such chattel mortgage or placed to the credit of Shimp Bros. pursuant to the memorandum given to them by the bank. In addition to Davis, for whose alleged wrongful acts Shimp Bros. seek damages, claim is made against United States Fidelity & Guaranty Company, surety on Davis' bond as receiver, and against the other defendants, because they are alleged to have received funds distributed by Davis, as receiver, which were the proceeds of the sale of the horses described in the Vern McNellis chattel mortgage to the bank.
Originally the plaintiff filed a petition at law in three counts. Later, the entire proceedings were transferred to equity and the plaintiff filed an amended and substituted petition in equity, in three counts: A count at law for damages, a count at law for conversion, and a count in equity to establish and enforce a trust. Upon the trial of the case the district court found for the defendants, dismissed the plaintiff's petition, and entered judgment against the plaintiff for costs. From the judgment and adverse rulings of the trial court, the plaintiff appealed.
Plaintiff's brief and argument contains three divisions, each division corresponding to a count of the petition. The first division is devoted to the proposition that the court erred in failing to find for the plaintiff on the count of the petition which claimed damages at law for wrongful and fraudulent representations of the defendants. The wrongful and fraudulent representations, for which damages are claimed, are alleged to have been made by F. P. Davis. As stated in the brief and argument, appellant's contention is:
" That F. P. Davis personally, and as an officer of the defendant, First National Bank of Dunkerton, made false representations to the plaintiffs, these being that he represented to them that the chattel mortgage which he had secured for their benefit would fully protect them, when in fact, as his future conduct clearly confirmed, he intended that they have no protection at all, but falsely and fraudulently induced them to release their lien in order that he and his bank might gain a distinct advantage thereby."
Appellant's theory seems to be that, at the time the note and mortgage were executed by Vern McNellis, they were made to the First National Bank of Dunkerton instead of to Shimp Bros., because F. P. Davis secretly intended thus to secure the bank for some of the money then owed to it by George McNellis. The mere suspicion or possibility of such an intention, however, is not sufficient to entitle the plaintiff to damages, and, before plaintiff could recover on this count of the petition, the burden was upon it to establish by a...
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