Todd v. State Bank of Edgewood
| Citation | 182 Iowa 276,165 N.W. 593 |
| Decision Date | 20 December 1917 |
| Docket Number | No. 30471.,30471. |
| Parties | TODD v. STATE BANK OF EDGEWOOD. |
| Court | United States State Supreme Court of Iowa |
OPINION TEXT STARTS HERE
Appeal from District Court, Delaware County; C. W. Mullan, Judge.
Action to enforce an agreement whereby it is claimed defendant received a sum of money originally deposited with the Delaware County State Bank and afterwards taken over by defendant upon an agreement to return the same to plaintiff on demand if plaintiff did not receive title to certain land in the state of Texas which plaintiff had purchased from the American & Canadian Land Company. It is alleged that this money was deposited in the banks as a tender of the amount due on certain notes given for the Texas land, with a demand for the fulfillment of the contract, which was never done; and the suit was primarily to recover the amount of the tender and deposit from the bank. Defendant bank admitted the tender and deposit, said it was made to stop interest on the notes, and also pleaded a counterclaim upon the notes. It also alleged that plaintiff was a nonresident, and it sued out a writ of attachment which was levied upon the fund. To this plaintiff replied by alleging that the consideration for the notes had failed, and that defendant was not a bona fide holder thereof, but had notice when it purchased that the notes were given for the purchase price of lands, title to which thereafter entirely failed. Defendant averred that it was a bona fide holder without notice of any infirmities, and also pleaded an estoppel on plaintiff to deny the validity of the notes. Other issues were tendered which will be noticed in the body of the opinion. The case was tried as in equity, resulting in a decree dismissing plaintiff's petition, finding for the defendant on its counterclaim, and sustaining the attachment. Plaintiff appeals. Reversed.
Salinger, J., dissenting.Yoran & Yoran, of Manchester, and J. W. Arbuckle, of Waterloo, for appellant.
W. H. Norris, of Manchester, and Grimm & Trewin, of Cedar Rapids, for appellee.
In March of the year 1909 plaintiff and one F. B. Peet separately entered into written contracts with the American & Canadian Land Company of Tipton, Iowa, for the purchase of certain Texas lands. Plaintiff, Todd, agreed to pay $3,600 for his tract, $800 of which he paid in cash, and the balance of $2,800 was represented by two negotiable promissory notes in the sum of $1,400 each maturing March 18, 1912. Peet agreed to pay $7,200 for his land, $3,200 of which was paid by a transfer of land to the company, and the remainder was represented by negotiable notes in the sum of $1,000 due March 18, 1912, $1,000 due March 18, 1913, $1,000 due March 18, 1914, and a note for the same amount due March 11, 1911, was paid by Peet. The five notes above described are made the subject of counterclaim against the plaintiff, he having taken over the Peet contract and assumed and agreed to pay the notes. The American & Canadian Land Company executed contracts with the purchaser of the land wherein it was agreed, among other things:
“In consideration of the payments above mentioned the vendor agrees to convey to purchaser in fee simple, free and clear of all incumbrances, the following described real estate, to wit: Southeast quarter of section No. 5 in block 6, Randall county, state of Texas, U. S. A.
It is further agreed that on the date of the last payment mentioned herein, in case same shall have been fully paid, purchaser shall have a warranty deed to the above-described property, together with an abstract of title showing title free and clear from all incumbrances in vendor; said abstract to be approved by Gustavus, Bowman & Jackson, of Amarillo, Tex., and when so approved to be final and conclusive upon the purchaser, and his money should be due and payable; all money paid under this contract to be returned if warranty deed and abstract are not furnished as herein provided.”
Some time in April, 1909, one W. R. Jameson, acting as agent for the land company, entered into negotiations with the defendant bank to sell it the Todd and Peet notes, and not later than April 19, 1909, defendant purchased all these notes which were duly indorsed to it by the original payee. It paid cash for the notes, and took assignments of the land contracts for security. There is some dispute in the record as to the exact date when the bank took over the contracts, but, notwithstanding the claim of some of the bank officers that the contracts were not received until after the purchase of the notes, the record as a whole shows beyond reasonable doubt that they are mistaken in this respect, and that the contracts were in fact assigned and delivered to the bank together with the notes. March 18, 1912, plaintiff made a tender of the full amount called for in his notes, and also the ones executed by Peet, and demanded a deed to the land covered by the contracts. This demand was made of the appellee bank, but it could not make the title, and the money so tendered was deposited in the Delaware State Bank, and afterwards by written agreement transferred to the appellee bank. The tender covered the amount due and to become due on the notes at the time it was made. It is stipulated in the agreement under which the tender and deposit were made as follows:
“Both the State Bank of Edgewood and Levi M. Todd are desirous of avoiding any loss to any one of the interest on the amount still remaining unpaid on said notes and contracts, and it is therefore agreed between the said State Bank of Edgewood and the said Levi M. Todd that the amount above stated offered to be paid by the said Levi M. Todd and by him tendered, which is now on deposit, as above stated, with the Delaware County State Bank, shall be deposited by him with the State Bank of Edgewood under the following agreement and understanding, that is to say:
That so long as the same is left by the said Levi M. Todd with said bank the said deposit shall have the same force and effect with relation to the tender and offer of payment above made as though the same had remained on deposit in the Delaware County State Bank, and the said State Bank of Edgewood agreed to thus accept the same as a deposit by the said Levi M. Todd for the purpose stated, and agrees that, so long as the same is left on deposit with said bank, there shall be no interest due or to be collected on the said notes of F. B. Peet and Levi M. Todd now held by said bank, and to pay which the said amount was offered in payment and so tendered, and each party further agrees that the making of this agreement to deposit said money with the State Bank of Edgewood, the depositing of the same, and none of the negotiations with reference to this agreement or deposit shall be considered or held to in any way influence or change the rights or interests of either party in the ultimate determination of any question to be determined with reference to the obligations of said Levi M. Todd on said notes, or his rights under said contracts, or his right to demand and receive deed with perfect title to the property purchased under said contract before the delivery and payment of the amount to be paid as evidenced by said notes.
It is understood that in the final settlement with the American & Canadian Land Company said company will pay all interest from the time of tender, and it is agreed that such interest when paid shall be for the time the deposit is kept in the State Bank of Edgewood, to be by it paid to Levi M. Todd.
And it is further specifically agreed that the said Levi M. Todd shall have the right to withdraw said deposit at any time that he sees fit to do so, and the said State Bank of Edgewood agrees to pay the same to him on demand at the Delaware County State Bank in Manchester, Iowa.”
This action is bottomed primarily on the last paragraph of this stipulation. The agreement was entered into September 23, 1912, and on September 13, 1913, plaintiff demanded the return of his money, which was refused. It appears that the land company had title to the Texas land it had agreed to convey to plaintiff and Peet at the time they negotiated for the same, but was incumbered by vendor's liens. Todd, however, took up the vendor's liens so far as they affected the land purchased by him. There is evidence that the land company which issued these contracts and sold these notes was solvent and doing business until February, 1912, but we think it clear that long before these notes became due, if not indeed at the time they were negotiated, the concern was in financial straits, and that, if it remained for some time a so-called “going concern,” it was due to the law of nature which keeps a paper balloon afloat until some puncture allows the hot air to escape. When the notes became due March 18, 1912, and the company was called upon to perform its contracts, it confessed its inability to do so or to convey the lands free from incumbrance, and whatever title it had to the property had since been lost by foreclosure of prior liens. Before buying the notes one of the bank officers met the plaintiff and asked him whether he had any objections to their making the purchase, and he replied it would be satisfactory to him. Later, on one or two occasions, one of the men representing the bank testifies he spoke to plaintiff of the advisability of obtaining a conveyance of the land, and says he told him if he would make his own notes for the amount direct to the bank it would turn over to him the notes he had given for the land, and thereby enable him to fix the matters up with the company, but the witness further says that the plaintiff seemed satisfied with the situation as it was, and did not accept the offer made him. As it does not appear that the notes were then due or that the land company was then under any present obligation to make the conveyance, it is somewhat uncertain what the plaintiff could have done in the matter, and as he could not substitute new...
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