Shult v. Doyle
| Citation | 201 N.W. 787,200 Iowa 1 |
| Decision Date | 20 January 1925 |
| Docket Number | 36290 |
| Parties | FRED SHULT, Appellee, v. JOHN DOYLE et al., Appellants |
| Court | Iowa Supreme Court |
REHEARING DENIED MAY 15, 1925.
Appeal from Buena Vista District Court.--N. J. LEE, Judge.
ACTION at law by a mortgagee, to recover the amount of the debt secured by the mortgage, from remote vendees of the land under an assumption clause in their respective deeds. Judgment was entered against the last vendee, and denied as to a prior vendee. The prior vendee was Dealy, and the last vendees were Hawkins et al. The defendants Hawkins et al have appealed from the judgment against them, and the plaintiff has appealed from the order of refusal of judgment against the defendant Dealy.--Reversed on both appeals.
Reversed on appeal of Hawkins defendants; reversed on appeal of plaintiff.
Nelson Miller and Ladd & Ladd, for W. G. Hawkins, R. A. Hawkins, M. J. Lancaster, Art Detloff, Henry Detloff, and Ed Buss.
C. E. Pendleton and Bailie & Edson, for Fred Shult.
Guy Mack, for John Doyle and Lillie Doyle.
Fred H. Free and Whitney & Whitney, for Ed. L. Dealy.
We have before us a very complicated record, in a case the facts of which are simple enough. The pleadings in the court below occupy 66 pages of the abstract. In response to the petition, 5 demurrers, several motions, 4 answers, 3 cross-petitions, and as many replies, are set forth. Each answer contains 4 or 5 counts, and each count as many paragraphs. Our initial problem, therefore, is to reduce the issues to their lowest terms. The plaintiff sued upon a note for $ 9,600, and claimed recovery from all of the defendants. The note was secured by a third mortgage on a half-section farm. The defendants Doyle were the mortgagors and makers of the note; the defendant Dealy was a purchaser of the land from Doyle; the other defendants, 6 in number, were joint purchasers of the same land from Dealy. These latter named defendants are referred to in the record as the Hawkins group, and will be so referred to here, without the repetition of their many names. After Dealy had sold the farm to the Hawkins group by written contract, he procured a deed from Doyle, wherein the Hawkins group were named as the grantees. To use the language of the witness, Doyle "deeded across" to the Hawkins group. The farm so conveyed was incumbered by three mortgages: for $ 36,000, $ 12,000, and $ 9,600, respectively. By the terms of the deed executed by Doyle, the grantees assumed payment of such mortgages. Dealy does not appear in the record chain of title. His purchase of the farm from Doyle was evidenced by a written contract. It was pursuant to such contract that Doyle executed the deed. By the terms of such written contract, Dealy also assumed to pay the mortgages in question. The plaintiff's action, therefore, is predicated against Doyle upon the note and mortgage; against Dealy, upon his written contract; against the Hawkins group, upon the deed wherein they appear as grantees. Prior to the execution of Doyle's deed, the Hawkins group had purchased the farm from Dealy by a written contract. By the terms of this contract, they agreed to take the farm "subject" to the mortgages in question. They did not assume or promise therein to pay the mortgages. They had no negotiations of any kind with Doyle. Doyle executed his deed wholly pursuant to negotiations with Dealy. He delivered his deed to Dealy. Dealy filed it for record, and mailed it, sometime later, to the other defendants. These defendants had consented to Dealy orally that the title might be conveyed to them "across" by Doyle, expecting that the deed would be drawn pursuant to and consistent with their written contract. They failed to discover its departure therefrom until this suit was brought against them. These are the fundamental facts upon which their defense is predicated. They deny that they ever consented to assume the mortgages, and assert that the insertion of such a clause in their deed was a fraud upon them, and was in violation of their actual contract, and was without consideration. They pray the reformation of their deed, to conform with their contract. They filed cross-petitions against Dealy and against Doyle, respectively, asking the same relief. The foregoing is the substance of the controlling facts on this branch of the case. There is another branch or feature of the case which will be considered in a separate division hereof, wherein some further facts will be noted.
Before proceeding to a consideration of the respective defenses of Dealy and the Hawkins group, we are confronted with a confusion of practice and procedure. Attack was made by several demurrers upon the pleadings of the Hawkins group. These demurrers were, in several instances, sustained. Later, the demurring parties pleaded to the answer and cross-petition thus attacked by demurrer, and joined issue thereon. We shall, therefore, confine our attention to the issues as finally joined. The Hawkins group filed a motion to transfer to the equity side of the court, on the ground that they had presented an equitable issue in defense. This motion was overruled. It was later renewed, and overruled again. The case was, therefore, tried on the law side, without a jury. Upon the taking of evidence, the court on its own motion received all evidence offered, and reserved ruling on objections thereto, and in practical effect tried the case by the equitable method. The case, being submitted, was decided on its merits, without any ruling upon objections to evidence, and without any finding of facts other than such as inhere in the judgment entry.
The Hawkins defendants pleaded an equitable defense, as they had a right to do, under the statute. This did not entitle them to a transfer of the case to the equity side of the docket. It did entitle them to a trial of the equitable issues which were essential to them in their defense to the law action. So far as the plaintiff was concerned, they had no need of equitable relief. As against him, they had a right to introduce parol evidence, to vary and contradict the writing upon which he predicated his case. This is so because he was not a party to the writing. In other words, as against him they were entitled to show their actual undertaking, whether it accorded with the writing or not. Peters v. Goodrich, 192 Iowa 790, 185 N.W. 903.
But the cross-petition of these defendants against their codefendants presented a different situation. The plaintiff was proceeding against all of them. As among themselves, the question of primary and secondary liability was important. On the face of the deed, unreformed, the Hawkins group were primarily liable. If their contentions were sustained, they would not be liable at all. Their escape from liability would operate adversely to the interest both of Dealy and of Doyle. As against these, reformation of the deed was essential, in order to make the defense of the Hawkins defendants available at all. The reformation prayed for presented an equitable issue. It could be had only through the exercise of equity jurisdiction. It is clear, therefore, that these defendants were entitled to such trial, as of an equitable issue. The relation of this issue to the merits of the case as a whole was virtually controlling. Upon the facts so far stated, we deem it clear, therefore, that the trial court should have tried this issue in equity, and that the issue as tendered by the plaintiff in his law action should await the trial of the equitable issue, and should be subordinate thereto.
In view of the facts presented herein, which are shown to be exactly what they would have been if the case had been professedly tried in equity in the lower court, we deem it the best solution of the situation that we treat the issue as pending here in equity, and that we deal with it as such, de novo. This will better serve the interests of all the litigants than it would to remand the case for a retrial on the equitable issue.
I. We proceed to inquire whether the Hawkins defendants are entitled to equitable relief against that proviso in the deed whereby they purported to assume the mortgages. There can be no fair question, upon this record, but that the real undertaking of these defendants was that which was expressed in the written contract. Under this contract, they purchased "subject" to the mortgages. This was entered into on March 17, 1920, with Dealy as vendor. It was on the day following that Dealy entered into his contract of purchase with Doyle. By this contract, the vendee expressly "assumed" the payment of the mortgages. Dealy requested Doyle to name the Hawkins group as grantees in the deed, and it was so done. Dealy prepared the deed, and Doyle signed the same on the same day. It was then sent to Missouri, to be signed by Mrs. Doyle, and was returned by her to her husband. He delivered the same to Dealy. None of the Hawkins group had anything to do with this transaction. This method of conveyance was adopted by Dealy confessedly for the purpose of eliminating his name from the chain of title, and of avoiding the obligations which might otherwise ensue. The terms of the deed were a clear departure from the terms of the contract signed by the Hawkins group. It was accomplished without their knowledge, and without their discovery until the beginning of this suit. The terms of the deed, however, were in accord with the terms of Dealy's contract with Doyle. If Dealy brought about this change intentionally, it was a fraud upon these defendants. If he did it inadvertently, his insistence upon the fruits of it is no less a fraud. In either event, as against Dealy, such defe...
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