Swartz v. Bly
| Decision Date | 09 February 1971 |
| Docket Number | No. 53978,53978 |
| Parties | Andrew P. SWARTZ and Betty Jane Swartz, Appellants, v. Ella F. BLY, Executor of the Estate of Leo F. Bly, Deceased, Appellee. |
| Court | Iowa Supreme Court |
Klauer, Stapleton, Ernst, Sprengelmeyer & Schrup, Dubuque, for appellants.
Gary K. Norby and O'Connor, Thomas, Wright, Hammer & Bertsch, Dubuque, for appellee.
Plaintiffs appeal from the trial court's judgment dismissing their action after hearing on the merits.
Events leading to the commencement of this action began in April 1957 when Andrew P. Swartz and his wife Betty Jane purchased an unimproved lot in Dubuque county for a homesite and immediately started construction. After their funds were exhausted by payment of costs of preliminary improvements and they were unable to obtain conventional financing to complete their home, plaintiffs entered into an oral agreement with Leo F. Bly to finance some of the remaining costs of construction. As we understand, Bly was to furnish materials and pay part of the costs of labor. Swartz was to do the inside finishing work and complete the structure. September 11, 1957 Swartz and his wife deeded the property to Bly, doing business as Leo F. Bly Co., as security for the advancements to be made. Plaintiffs orally agreed to repay these amounts at the rate of $100 a month. It was understood between the plaintiffs and Bly that upon repayment the property would be reconveyed to plaintiffs. No money was paid by Bly at the time of conveyance.
Pursuant to their oral agreement plaintiffs paid Bly $100 per month until Mr. Swartz became unemployed. It was then agreed Bly would accept weekly payments of $20 during 1960. Plaintiffs made no payments after June 1961.
September 28, 1962 Bly served a three-day notice to quit on plaintiffs for failure to make agreed payments. He then instituted a forcible entry and detainer action in justice court. At the hearing, the justice of the peace determined a title question was involved and certified the matter to the Dubuque district court. February 6, 1963 the district court entered a decree approved by plaintiffs' counsel removing them from possession of the real estate and putting Bly in possession. It was apparently agreed execution would be deferred until April 1, 1963.
At the present trial it was stipulated that as of April 1, after allowance of payments made by plaintiffs plus credits for materials returned, they were indebted to Bly in the sum of $8923.12.
August 5, 1963 Bly and his wife conveyed the property to Paul and Mary Ann Stanley for $12,900 which the parties stipulate is the fair market value of the premises.
September 19, 1963 plaintiff commenced an action on open account against Leo F. Bly for labor performed and material furnished at his specific instance and request. As indicated by the bill of particulars attached, plaintiffs seek to recover the original cost of the unimproved lot, the amounts expended for preliminary improvements before the deed to Bly, costs of material and labor necessary for furnishing the dwelling after the deed as well as the fair and reasonable value of labor performed by Mr. Swartz. These items totaled $5475.33. The following October defendant's motion for more specific statement was sustained and on August 18, 1965 plaintiffs complied with the ruling.
In the meantime, Mr. Bly died April 15, 1965 and an executor was appointed for his estate May 21 and notice of her appointment was published May 27 and June 3. The period of limitations for filing claims would normally expire December 3, 1965.
During 1965 and 1966 there were changes of attorneys representing the parties to the original action.
August 22, 1966 defendant in answer generally denied the allegations of the petition and affirmatively alleged no notice of substitution as required by section 633.415 Iowa Code, 1966, had been served on the executor and time for filing claims under section 633.410 had expired thus plaintiffs' claim, if any, was barred by the statute of limitations.
Section 633.410 provides:
Section 633.415 provides in part:
* * *.'
Defendant moved for separate adjudication of law points. Rule 105, Rules of Civil Procedure. Following the court's ruling that the action was barred under sections 633.410 and 633.415 but reserving right to apply for equitable relief by plaintiffs, they filed a motion for relief from application of section 633.410 and for authority to file their claim in the Bly estate. The motion was granted and notice of substitution was served on the executor January 7, 1967. The executor answered denying the claim and gave notice of disallowance.
April 11, 1969 plaintiffs with leave of court filed an amended and substituted petition in three divisions against the Bly estate. Two divisions are based on plaintiffs' claim for the labor and materials specified in the bill of particulars filed in the September 1963 action. In division 1 they rely on an express contract and in division 2, on an implied contract. In division 3 plaintiffs allege the warranty deed given Bly was intended as a mortgage and plaintiffs were entitled to the difference between their debt to Bly and the amount realized from a sale of the property under the theory of equitable mortgage.
The trial court concluded plaintiffs had failed to establish a right to recover under either division 1 or 2 of their petition.
The court further determined the forcible entry and detainer action brought by Bly was conclusive as to the right to possession of the property involved; that the equitable mortgage action instituted April 11, 1969 was barred by the statute of limitations and plaintiffs' right to recover thereunder was waived.
Plaintiffs assert the trial court erred (1) in denying recovery under the theory of equitable mortgage as pleaded in division 3 of the amended and substituted petition and (2) in denying recovery on the basis of an implied contract alleged in division 2. No appeal is taken from the court's dismissal of division 1.
I. Plaintiffs contend in support of the first proposition the deed given by them to defendant's decedent was to be security for materials and labor to be furnished by Bly for completion of their home with the understanding that the premises were to be reconveyed when the indebtedness was paid in full.
They argue that the decree in the forcible entry and detainer action merely gave Bly possession of the property, did not perfect title in him and plaintiffs' interest was not expunged or the mortgagor-mortgagee relationship destroyed.
Plaintiffs insist that since their action asserted in division 3 was instituted within the 10-year period provided by Code, section 614.1(6), for recovery of an interest in real estate, they should have been granted recovery. They concede that the property having been sold to Stanley, a good faith purchaser, they could not actually redeem the real estate but had to content themselves with recovery of the difference between the sale price and the indebtedness owed Bly.
Defendant on the other hand maintains in support of the trial court's ruling plaintiffs' cause of action pleaded in division 3 of their amended and substituted petition is barred by the statute of limitations for two separate and distinct reasons. First, the action is barred by reason of the statute of limitations for filing claims in the Leo F. Bly estate under section 633.410 set out, supra. Secondly, at the time of the filing of plaintiffs' amended and substituted petition on April 11, 1969, Bly's cause of action against them for materials furnished on open account was barred by the statute of limitations, hence any remedy which plaintiffs may have had against Bly for an accounting or for redemption was also barred.
We thus inquire when plaintiffs' equitable mortgage cause of action was commenced for purposes of the statute of limitations for filing claims in probate.
Our decisions permitting amendment after the statute of limitations has run have been to permit insertion of allegations inadvertently omitted, of a claim for additional damages arising from the tort relied on in the original pleading and those which otherwise amplify and are germane to the grounds previously stated. Cornick v. Weir, 212 Iowa 715, 721, 237 N.W. 245, 247; Page v. Koss Construction Co., 219 Iowa 1017, 1023, 257 N.W. 426, 429; McCornack v. Pickrell, 229 Iowa 457, 461, 294 N.W. 746, 748; Rosin v. Northwestern...
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