Skemp v. Olansky

• Citation: 85 N.W.2d 580,249 Iowa 1
• Decision Date: 15 October 1957
• Docket Number: No. 49244,49244
• Parties: Charles R. SKEMP, d/b/a F. G. Skemp & Son Contractors, Plaintiff-Appellee, v. Matthew B. OLANSKY, d/b/a Olansky Construction Company of Dubuque, Iowa, Defendant-Appellee, Arthur Trausch and Peter J. Seippel Lumber Company, an Iowa corporation of Dubuque, Iowa, and William S. Sheppley and Geneva K. Sheppley of Cook County, Illinois, Defendants-Appellants.
• Court: United States State Supreme Court of Iowa

Page 580

85 N.W.2d 580

249 Iowa 1

Charles R. SKEMP, d/b/a F. G. Skemp & Son Contractors, Plaintiff-Appellee, v. Matthew B. OLANSKY, d/b/a Olansky Construction Company of Dubuque, Iowa, Defendant-Appellee Arthur Trausch and Peter J. Seippel Lumber Company, an Iowa corporation of Dubuque, Iowa, and William S. Sheppley and Geneva K. Sheppley of Cook County, Illinois, Defendants-Appellants.

No. 49244.

Supreme Court of Iowa.

Oct. 15, 1957.

Gilloon, Nelson & Gilloon, Dubuque, for appellant Trausch.

Kenline, Roedell, Hoffman & Reynolds, Dubuque, for appellants Peter J. Seippel Lumber Co. and William S. Sheppley and Geneva Sheppley.

Kintzinger & Kintzinger, Dubuque, for plaintiff-appellee.

Matthew B. Olansky, pro se, Dubuque, for defendant-appellee.

THOMPSON, Justice.

During the year 1954 the defendant Arthur Trausch was the owner and holder of record title to real estate described as Lot 1 of 13 and Lot 2 of 14 in Mississippi Heights Subdivision No. 2 in the City of Dubuque, Iowa. In April of that year the defendant Olansky was engaged in building a dwelling house upon these lots. He engaged the plaintiff to do certain masonry and brick work. A large part of this work was done, beginning on May 13 and ending on July 29th of 1954. The reasonable value of the work done by plaintiff was not in dispute.

During the year 1954 Olansky became financially involved and in the latter part of the year all work on the house was stopped. The defendant Peter J. Seippel Lumber Company, a corporation (hereafter referred to as the Company), furnished a considerable quantity of building material for the house, of the value of $5,129.40. In November, 1954, the Company filed a mechanic's lien against the property for that amount. A lien was also filed by Curtis-Straub Company in the sum of $604.68. No other liens were filed, except for that of the plaintiff, which was filed on June 13, 1955. In the meantime, on May 8, 1955, Trausch deeded the property to the Company, the consideration being satisfaction of its mechanic's lien, payment of the then existing Curtis-Straub lien, satisfaction of an account in the amount of $3,032.12 owing to the Company by Trausch and Olansky growing out of a partnership venture in which they had engaged in building certain apartment houses, and a cash payment by the Company to Trausch of $900. The total consideration was thus $9,666.20. At the time the house was partly completed, and work had been stopped for several months.

The deed from Trausch to the Company was recorded on May 19, 1955. On June 21, 1955, the Company sold and conveyed the property to the defendants Sheppley, who completed the house and so far as the record shows still hold legal title.

On June 7, 1955, the plaintiff went to the house and with a helper did one hour's work. He then, on June 13th, filed his claim for a sub-contractor's lien in the sum of $1,366.53, and on the same date gave the statutory notice of filing to Olansky, Trausch, and the Company.

I. It is the primary claim of the plaintiff and of Olansky that Olansky, Trausch, and the Company were engaged in a joint venture in building the house. The district court, after a full trial of the issues, found there was no joint venture, and that plaintiff was not entitled to foreclose his mechanic's lien. But it confounded an already somewhat confused situation by finding that the value of the house and lot, apparently after the house was completed, was $22,500; that from this there should be deducted the amount of the Company's lien in the sum of $5,129.40 and the value of the lots, owned by Trausch, which it fixed at $3,500; and the balance, or $13,870.60, was adjudged to be a constructive trust, to be held by Trausch, his wife, Lillian Trausch (who was at no time a party to the suit), and the Company, as trustees. The beneficiaries of the trust were listed as the plaintiff in the amount of his claim, $1,366.53; the defendant Olansky, who had in his cross-petition claimed $1,125 for anticipated profit from the sale of the home, but which the court said was for 'services on said home' as a general contractor; and some thirteen other supposed suppliers of material and labor, 'as listed in Exhibit 'A' attached to the (Olansky's) cross-petition.' The trustees so created, Arthur and Lillian Trausch and the Company, were ordered and directed to pay from the trust fund the claims of the thirteen parties whose names were included in Exhibit A, 'upon being satisfied that the claimants furnished the services and materials claimed upon and that they thus have an interest in the trust,' in addition of course to paying the sums awarded to the plaintiff and Olansky.

It seems to have been the thought of the court that in some manner Trausch and the Company had unjustly enriched themselves at the expense of those named as the beneficiaries of the trust. It is true Olansky testified these persons and firms had not been paid. None of them had filed claims for liens, or asserted their claims, in any way. The only supplier other than the plaintiff and the Company who had filed a claim for a lien, the Curtis-Straub Company, was paid, as noted above. The others slept on their rights; so far as the record shows, they had abandoned any claims. The order of the trial court was for them a 'windfall', something bestowed upon them by a bountiful Providence without request or even knowledge on their part. Somewhat less agreeable, however, must be the position of Lillian Trausch, who, although not named as a party by any of the pleadings in the case, who was served with no notice of the proceedings or of any claims against her, finds herself a trustee of a constructive trust and liable, with Arthur Trausch and the Company, to pay over to the plaintiff, the defendant Olansky, and some thirteen other potential claimants the sum of $13,870.60. We fear the court, in its zeal to administer what appeared to it to be equity, overlooked some fundamental principles of law and procedure.

II. The finding of a constructive trust was not in response to any issue raised by the pleadings or suggested in the trial of the case. We are satisfied from the record that it burst upon the litigants as a judicial bomb unheralded and unexpected.

It is the contention of the plaintiff that the prayer for general equity contained in his foreclosure petition and in the cross-petition of Olansky were sufficient to support a finding of constructive trust. It is true that even though the special relief prayed for in an action in equity is not supported by the evidence, a request for general equitable relief may often justify the court in awarding other relief, and that such a request is generally to be granted liberally. But the rule is not without limitations. 19 Am.Jur., Equity, Sec. 227, pp. 181, 182; 30 C.J.S. Equity, § 607, pp. 1003, 1004; Paintin v. Paintin, 241 Iowa 411, 413, 414, 415, 41 N.W.2d 27, 16 A.L.R.2d 659, and cases cited. The relief granted under the general prayer must be consistent with the case made by the pleadings and must be such as will not surprise the defendant. He must have an opportunity to defend against whatever relief may be granted against him; it will not be granted if there is nothing in the prayer of the bill or in the facts asserted in the pleadings which fairly apprizes him that such relief is asked or may be granted against him. Fairness in the trial of the case demands that much.

In the instant case there was nothing in the plaintiff's petition or the cross-petition of Olansky which in any way advised either Trausch or the Company that reliance was had upon the theory of a constructive trust. Both parties, in asking relief against these defendants, planted themselves upon the claim of a joint venture; with the additional claim of the plaintiff that he was entitled to a foreclosure of his mechanic's lien. In fact, it is fair to say that the record discloses no point at which any party, either by pleading or by evidence or argument in the trial, made any claim that a constructive trust was shown or that relief should be awarded upon that theory. The trial court, in basing its order upon that ground, was far outside anything permitted either by the special prayers or the prayer for general equitable relief. The order amounted to a judicial ambush of the defendants, and cannot be upheld.

In fact, there is no basis for the finding in the evidence, even if the pleadings had made it available. The most that...