Swift v. White

• Decision Date: 16 July 1964
• Docket Number: No. 51342,51342
• Citation: 256 Iowa 1013,129 N.W.2d 748
• Parties: Joseph L. SWIFT and Judith C. Swift, Appellants, v. Donald E. WHITE, Appellee.
• Court: Iowa Supreme Court

Page 748

129 N.W.2d 748

256 Iowa 1013

Joseph L. SWIFT and Judith C. Swift, Appellants, v. Donald E. WHITE, Appellee.

No. 51342.

Supreme Court of Iowa.

July 16, 1964.

Joseph B. Joyce, of Stewart, Miller, Wimer, Brennan & Joyce, Des Moines, for appellants.

Robert R. Rydell, of Tesdell & Miller, Des Moines, for appellee.

THORNTON, Justice.

Plaintiffs are husband and wife. The husband handled the transaction giving rise to this lawsuit and will be referred to as sole plaintiff. Plaintiff purchased a home in Des Moines from Mr. and Mrs. Graziano. Defendant was the real estate broker with whom the Grazianos listed the property. In preparing an offer to buy for plaintiffs' signatures defendant filled in paragraph one to read, '1. All regular taxes on the property due and payable in 1961 are to be paid by Seller.'

The transaction started in the latter part of September, was apparently concluded in time for plaintiffs to take possession on October 1, 1961. The result of paragraph one above, as filled in, and paragraphs two and three immediately following in the offer was that the real estate taxes for the year 1961 payable in 1962 became the obligation of plaintiffs.

Plaintiffs' action is to recover from defendant three-fourths of the 1961 taxes payable in 1962. The trial court directed a verdict for defendant at the close of plaintiffs' testimony and plaintiffs appeal.

In their petition plaintiffs allege defendant acted as their agent as well as agent for the sellers in drawing the offer to buy, contrary to their express intent he filled in paragraph one as above stated, defendant exceeded his authority in so filling in paragraph one without their knowledge or consent and contrary to their express wishes and intent that the 1961 real estate taxes, as is the usual custom, would be apportioned between seller and buyer according to the portion of the year the property was owned by each, their damages, and they had no knowledge of defendant's trick and deceit until February of 1962. A copy of the offer was attached.

Plaintiff does not cite an authority directing our attention to the elements necessary for him to recover. If we assume defendant was plaintiff's agent, his duty as a real estate broker can be no more than a full, fair and prompt disclosure of all facts within his knowledge which are or may be material. Generally a fiduciary relationship exists between principal and agent within the scope of the agency. Fowler v. Berry Seed Company, 248 Iowa 1158, 84 N.W.2d 412. However, with this assumption and the stated duty we must determine what would constitute a breach of the duty under the pleadings and facts before us. It comes down to this, was it defendant's duty to explain to plaintiff that the 1961 taxes due in 1962 were plaintiff's obligation, how the same would be treated for federal income tax purposes, and that it was the custom to apportion the same as of the date of possession? And, assuming this is true, would it not be necessary for plaintiff to first prove such was the custom in the locality? The answer, of course, is yes.

Because plaintiff was the only witness and his testimony is brief we set it out with minor deletions as it appears in the record.

'I am 29 years old. I live at 3203 S.E. 3rd Street, Des Moines, Iowa. I and my wife are plaintiffs. * * * I am vice-president of Joe A. Swift Company, Inc., a construction company. I have been with the company twelve (12) years. * * *

'* * * Defendant was the real estate broker for the property at 3203 S.E. 3 rd for the sellers, Mr. and Mrs. Louis J. Graziano.

'I negotiated with Mr. White, the defendant for the purchase of the property at 3203 S.E. 3rd. I offered to pay $21,000.00 for the real estate if the sellers removed two dead trees on the property, filled in the holes and sodded an area.

'Mr. White then prepared an Offer to Buy for me to sign. I noticed the purchase price stated of $21,000.00, the trees, holes and sod provisions and signed the Offer to Buy prepared by the defendant.

'The sellers signed and accepted the Offer to Buy, Exhibit A in this case. We learned early in 1962, * * *, that we were liable for all the 1961 real estate taxes due in 1962 on the property.

'The blanks in 1, in the Offer to Buy now showing 61 and Seller were filled in by Mr. White. I do not know whether or not those blanks were filled in when I signed the Offer to Buy. The real estate taxes were never mentioned or discussed.

'MR. JOYCE: Are you acquainted with any custom in regard to taxes on real estate transactions between Buyer and Seller in this area? MR. SWIFT: Yes.

'MR. JOYCE: What is that custom?

'MR. RYDELL: I object on the grounds that no foundation has been laid, and that the witness is not qualified, and has not been shown to be an expert, or to be familiar with any custom between Buyers and Sellers of real estate.

'THE COURT: If the witness has any knowledge, he can tell what.

'MR. SWIFT: It is my understanding the usual custom is to apportion the real estate taxes between Seller and Buyer according to the date of sale or possession.

'The entire real estate taxes for 1962 were $538.80. I paid the entire $538.80.

'Mr. White did not leave me a copy of the Offer to Buy after I signed it.

'CROSS-EXAMINATION: My brother, Joe A. Swift, looked at the Offer to Buy before I signed it. Joe A. Swift, Mr. White and I were in my brother's office at the time of the signing. I read the Offer, but I don't remember if the blanks in Paragraph 1, in regard to the taxes were filled in or not at that time.'

Plaintiff then asked the court to take judicial notice of U.S.Code, Title 26, Sec. 164(d)(1) and rested. On defendant's motion the court then directed the verdict for defendant.

Defendant's admission of paragraph three of plaintiff's petition was sufficient to allow the admission of the offer to buy though the record does not indicate it was offered in evidence.

We think the proof offered as to the custom in regard to real estate taxes between buyers and sellers in the area was insufficient to make a case. A witness to a custom must first show that he knows what the custom is and when required by objection, as here, his previous experience and means of knowledge. Gibson v. Shelby County Fair Association, 246 Iowa 147, 153, 65 N.W.2d 433, 437. A proper objection was made in this case, '* * * has not been shown * * * to be familiar with any custom between Buyers and Sellers of real estate.'

The only means of knowledge shown by plaintiff was his age, 29 years, he was presently a vice-president of a construction company and that he was employed by the company for 12 years. He did not show he occupied a position to know the custom, or that he had in any other manner acquired any knowledge of the custom. All that is necessary is that he should have occupied such a position as to know of the existence of the custom as a fact. A comparison of the testimony in this case and in McCrady v. Sino, 254 Iowa 856, 860, 861, 118 N.W.2d 592, 594, and in Gibson v. Shelby County Fair Association, 246 Iowa 147, 150-155, 65 N.W.2d 433, 435-438, demonstrates the insufficiency of the evidence here to make a case for the jury on the existence of the claimed custom. See also 32 C.J.S. Evidence § 483, pp. 139, 140, 141; and 55 Am.Jur., Usages and Customs, § 56, pp. 316-317.

Because of the nature of this case it was not error to allow the witness to answer. Plaintiff had pleaded the defendant acted contrary...