Thompson's Estate v. O'Tool, 53660

• Decision Date: 10 March 1970
• Docket Number: No. 53660,53660
• Citation: 175 N.W.2d 598
• Parties: ESTATE of William H. THOMPSON, Deceased, Mary Lou Barnett, Ruby Nunn, Robert Baldwin, Appellants, v. James O'TOOL and Juletta O'Tool, Husband and Wife, Appellees.
• Court: Iowa Supreme Court

Page 598

175 N.W.2d 598

ESTATE of William H. THOMPSON, Deceased, Mary Lou Barnett, Ruby Nunn, Robert Baldwin, Appellants, v. James O'TOOL and Juletta O'Tool, Husband and Wife, Appellees.

No. 53660.

Supreme Court of Iowa.

March 10, 1970.

Crary, Huff & Yates, Sioux City, for appellants.

Thomas L. McCullough, Sac City, for appellees.

LeGRAND, Justice.

This is an action for rent under a farm lease. The defendants claim an offset, asserting they performed certain work and made certain improvements under an oral agreement with their landlord for which they are entitled to compensation. The trial court found that defendants owed $16,000.00 in rent, allowed them an offset of $13,662.50 for repairs and improvements, and entered judgment for plaintiffs in the amount of $2367.50. Plaintiffs appeal.

We agree as to the amount of rent due but find defendants are not entitled to credit for any repairs or improvements allegedly made by them. Consequently we modify that portion of the decree and enter judgment in favor of plaintiffs for $16,000.00, the full amount of the rent due.

Since most of the testimony concerns W. H. Thompson, now deceased, and James O'Tool, we refer to them as though they were the sole parties. However, what we say applies equally to all plaintiffs and to both defendants.

The record shows some uncertainty as to the nature of this action, but it was agreed the matter was triable in equity. Under our rules we therefore consider this as an equity case triable de novo. McCullough Investment Company v. Spencer, 246 Iowa 433, 436, 67 N.W.2d 924, 925, and citations; Mahon v. Mahon, 257 Iowa 563, 568, 133 N.W.2d 697, 700. It follows that the trial court's findings are not binding upon us, although we give them consideration in reaching our own conclusion. Rule 344(f)(7). Rules of Civil Procedure; Connell v. Hays, 255 Iowa 261, 268, 122 N.W.2d 341, 345.

Defendant had been a tenant on the 400-acre farm in question since 1942. On October 17, 1955, a written lease was entered into for a one year period beginning March 1, 1956, at a cash rental of $7000.00. No notice of termination was given over the ensuing years by either party, and the lease stood renewed from year to year thereafter until 1967 under the terms of sections 562.6 and 562.7, Code of Iowa.

W. H. Thompson owned an interest in the farm and also acted as agent for the other owners. He was the only person with whom defendant had any negotiations or conducted any business over the period of the lease.

Mr. Thompson died in December of 1966. Shortly after his death his executor discovered from the farm records that defendant was delinquent in rent payments. On behalf of the W. H. Thompson estate, the executor, joined by the other owners of the farm, brought this action to recover the unpaid rent. In his answer defendant claimed credit in an amount equal to the unpaid rent for work done and improvements made under an oral contract entered into with W. H. Thompson. He denied any rent was due or owing. Plaintiff asserts the trial court erred in allowing defendant any offset and relies on the following propositions for reversal:

(1) There is no competent evidence of the alleged oral agreement permitting defendant credit credit for repairs and improvements made;

(2) The testimony concerning said alleged oral agreement is so vague, indefinite and uncertain that it could not in any event establish the alleged oral agreement;

(3) All of defendant's evidence was in violation of the parol evidence rule;

(4) The testimony offered by defendant to prove the alleged oral agreement was inadmissible under the dead man statute, section 622.4, Code of Iowa; (5) The defendant did not sustain the burden of proving the making of said repairs and improvements and the reasonable cost thereof; and

(6) The judgment of the court allowing $13,662.50 was excessive.

In view of our conclusion that defendant has failed to establish the oral lease upon which he relies, we need consider only the first of these propositions.

The written lease of October 17, 1955, heretofore referred to, contained the following provision:

'. . . The said James O'Tool, Jr. and Juletta O'Tool, parties of the second part, do hereby waive and release any claim they or either of them have for any improvements they or either of them may have placed upon the leased premises and for any money, materials, labor or other expenses incurred, paid or furnished by them or either of them for said real estate and improvements. This waiver and release applies to all past expenditures as well as such future expenditures by them made during the term of this lease.' (Emphasis added.)

Despite this specific provision, which strongly suggests the parties were attempting in advance to avoid the very type of controversy which has now arisen, defendant contends that within a month or two thereafter this provision was virtually scrapped and plaintiff orally gave him unlimited authority to make repairs and improvements and agreed to credit his rent for the work done.

Plaintiff resisted all effort to establish an oral agreement modifying the written lease of October 17, 1955. He claimed all such evidence was inadmissible because it attempted to vary the terms of a written contract in violation of parol evidence rule. We must disagree. The purpose of the testimony was to show a new agreement made subsequent to the date of the lease. While it is quite true, such an agreement may have modified, or even cancelled, the written agreement, it would have done so by separate contract, not by changing the terms of the old one.

Parties to a contract, in the absence of some legal impediment, may change their agreement by making a new one which meets the requirements of contractual relationship. 17A C.J.S. Contracts section 377(c), page 437; 17 Am.Jur.2d, Contracts, sections 465--467, pages 934--939; Baie v. Nordstrom, 238 Iowa 866, 869, 29 N.W.2d 211, 213; Gard v. Razanskas, 248 Iowa 1333, 1340, 85 N.W.2d 612, 616, 65 A.L.R.2d 982. See also Davenport Osteopathic Hospital Association of Davenport, Iowa v. Hospital Service, Inc., Iowa, 154 N.W.2d 153, 157.

We hold it was proper to show an oral agreement subsequent to the written lease by which defendant would be compensated for work done and improvements made. The troublesome question is not whether he Could prove such a modification, but whether he Did.

To succeed here defendant must establish that oral contract. He is at once confronted with the serious obstacle that any conversations he or his wife may have had with W. H. Thompson concerning this matter are rendered incompetent by virtue of section 622.4, Code of Iowa, the dead man statute. The trial court, correctly we believe, excluded all such evidence in reaching its decision. We do likewise, but we reach different conclusions than those of the trial court based upon the competent evidence in the record.

Before reviewing this evidence, we point out defendant has the burden in this equitable action of proving his oral agreement by clear and satisfactory evidence. Davis v. Davis, Iowa, 156 N.W.2d 870, 874. We refer briefly to a few of our pronouncements concerning the type of evidence which defendant must unfortunately rely upon here.

In Williams v. Harrison, 228 Iowa 715, 722, 293 N.W. 41, 44, we said, 'It has always been the holding of this court, and of the courts generally, that claims of this kind (based on oral contracts for services rendered to a decedent) should be scrutinized with the greatest care, and established only upon the most satisfactory evidence.' We there mentioned some of our previous holdings to the same effect in which we uniformly held a high degree of proof necessary to establish a claim based upon an oral agreement with a party since deceased.

In Byers v. Byers, 242 Iowa 391, 404, 405, 46 N.W.2d 800, 807, 808, we put it this way:

'* * * There can be no testimonial contradiction or denial of the testimony of these five witnesses because the lips of Nathan N. Byers, with whom they talked, are sealed in death. Such testimony has been presented to this court many, many times since the court was organized, in various kinds of cases in law, equity, probate, and criminal prosecution, and just as often the court has announced that such testimony is heard with doubt and skepticism, examined with the closest scrutiny, subjected to the most severe tests which tend to weaken its credibility, and carefully, jealousy and cautiously weighed and considered. Some of the reasons why such testimony is uniformly regarded as so dangerous and unsatisfactory are: because of the ease of its fabrication, the impossibility of its controversion, the grievous consequences which may result from the fallability of human memory, understanding or judgment, and the absence of worldly sanction, since from the nature of such evidence, no witness so testifying could ever be convicted of perjury. Such testimony is not accepted as conclusive simply because it cannot be directly denied. It must, nevertheless, pass the test of credibility in the light of surrounding circumstances and its inherent probability or improbability, as judged by common experience and the ordinary rules of human conduct in like situations.'

In Bell v. Pierschbacher, 245 Iowa 436, 444, 62 N.W.2d 784, 789, we said, 'We have repeatedly pointed out that evidence of claimed oral statements of a decedent should be closely scrutinized and cautiously received because it is not susceptible of denial and the witness may not have been capable or desirous of...