Wright v. Thompson

• Decision Date: 16 October 1962
• Docket Number: No. 50529,50529
• Parties: Wilbur E. WRIGHT, Appellant, v. Malcolm M. THOMPSON, Appellee.
• Court: Iowa Supreme Court

Page 520

117 N.W.2d 520

254 Iowa 342

Wilbur E. WRIGHT, Appellant, v. Malcolm M. THOMPSON, Appellee.

No. 50529.

Supreme Court of Iowa.

Oct. 16, 1962.

J. C. Beckley, Margaret L. Beckley, and L. M. Hullinger, Sr., Cedar Rapids, for appellant.

Elliott, Shuttleworth & Ingersoll, Cedar Rapids, for appellee.

GARFIELD, Chief Justice.

Plaintiff Wright filed his petition against defendant Thompson for declaratory judgment under rules 261-269, Rules of Civil Procedure, 58 I.C.A. The trial court sustained defendant's motions to dismiss the petition and to strike the amended and substituted petition filed pursuant to permission from the court. From judgment accordingly plaintiff has appealed.

No question is raised as to finality of the judgment for purposes of appeal under rule 331, R.C.P. Nor does defendant question plaintiff's right, under 331(b), to a review upon this appeal of the ruling dismissing the original petition. However, we accept defendant's argument it is unnecessary to consider the sufficiency of the original petition as against his motion to dismiss it and that the appeal presents the question of the sufficiency of the amended (and substituted) petition as against such motion.

The amended petition alleges: On August 18, 1956, plaintiff owned a written option to purchase certain realty in Cedar Rapids; defendant desired and requested to become a partner with plaintiff in the joint adventure stated in the petition; on said date defendant entered into an oral agreement with plaintiff whereby the latter would furnish $1000 for the down payment required by the option agreement, defendant would furnish all the money required to buy the property, would cause to be exercised the option under its terms, would thereupon own a half interest in the property, after it was procured the property was to be sold, the amounts required for its purchase were to be deducted and the balance of the sale price was to be equally divided between plaintiff and defendant; at defendant's request the option was extended by written agreement; it was then orally agreed the parties would continue to have joint ownership in the realty purchased under the modified option agreement and when it was sold the parties would divide equally the profits therefrom pursuant to their original oral agreement.

The amended petition further states defendant failed and refused to exercise the extended option and pay the required amounts when they fell due and refused to carry out his oral agreements notwithstanding various demands by plaintiff who performed his part of the agreements except as prevented by defendant; if defendant had not refused to carry out his agreements plaintiff could have sold the property for $125,000, and can now, at a profit of $55,000 above the option price; the fair and reasonable market value of the realty when defendant refused to carry out his contract and now is $125,000; defendant orally notified plaintiff he would not honor or carry out his oral agreements and stated they were not valid or binding upon him.

The pleading further alleges the validity of the aforesaid oral agreements as modified and the amount due plaintiff thereunder should be determined by the court; there is a real and substantial controversy involved, it is justiciable in character and should be determined. The prayer is for a declaratory judgment determining the rights of the parties in and to the oral contract as modified, that it is valid and binding, determining the amount justly due plaintiff from defendant, and rendering judgent therefor and for such other relief as may be equitable and proper.

Defendant's motion to dismiss alleges six grounds. The first three are included in the fourth and, as defendant asserts, the fifth ground is broad enough to include the first four. The fourth ground is that plaintiff has failed to state any enforceable and valid contract or one imposing any duty or obligation upon defendant which he has breached or failed to perform. Fifth ground of defendant's motion is that the petition fails to state a cause of action against him. Sixth ground is it affirmatively appears from the petition plaintiff is not entitled to declaratory relief or any relief.

The trial court sustained grounds one to five and overruled ground six. Grounds of the motion to strike the amended petition are that it contains no allegations not pleaded or implicit in the original petition and none which would not be subject to the motion to dismiss as sustained. As stated, this motion to strike was sustained.

Defendant relies upon and argues three propositions for affirmance. 1) It is within the sound discretion of the trial court whether jurisdiction to enter a declaratory judgment will be exercised in a particular case. 2) Plaintiff has failed to allege any enforceable and valid contract imposing any duty or obligation upon defendant. 3) No recovery may be had for loss of profits from failure of a partner or joint venturer to furnish capital as agreed.

Under (2) it is argued it appears from the amended petition the alleged oral agreement lacks consideration and mutuality of obligation and hence is of no legal efficacy. Also that the defenses of lack of consideration and mutuality of obligation may be properly raised by motion to dismiss under rule 104(b), R. C.P., which provides: 'Failure to state a claim on which any relief can be granted, may be raised by motion to dismiss such claim.'

I. Of course defendant's motion to dismiss admits all well-pleaded facts in the amended petition for the purpose of testing their legal sufficiency. This has been the holding in declaratory judgment actions as well as others. Hartford Accident & Indemnity Co. v. O'Connor-Regenwether Post No. 3633, Veterans of Foreign Wars, 247 Iowa 168, 173, 73 N.W.2d 12, 14, and citations; Herbst v. Treinen, 249 Iowa 695, 699, 88 N.W.2d 820, 823, and citations; 26 C.J.S. Declaratory Judgments § 142b, pages 341-342; 16 Am.Jur., Declaratory Judgments, section 67.

Further, as defendant apparently concedes, the facts well pleaded in the petition and all reasonable inferences which may be drawn therefrom must be construed in the light most favorable to plaintiff. 26 C.J.S. Declaratory Judgments § 142a, page 339, supra.

Hartford Accident & Indemnity Co. v. O'Connor-Regenwether Post No. 3633, Veterans of Foreign Wars, supra, applies the rule that a motion to dismiss admits well pleaded facts in the petition to the allegation therein that '* * * there is a present dispute between the parties as to their rights and duties under the aforementioned insurance contract * * *.' This allegation does not differ greatly from what is alleged here.

II. It seems desirable to quote the Rules of Civil Procedure applicable to declaratory judgments, so far as pertinent here.

'261. Declaratory Judgments Permitted. Courts of record * * * shall declare rights, * * * whether or not further relief is or could be claimed. It shall be no objection that a declaratory judgment or decree is prayed for. The declaration * * * shall have the force and effect of a final decree. The existence of another remedy does not preclude a judgment for declaratory relief in cases where it is appropriate. The enumeration in the next three rules does not limit or restrict the exercise of the general power herein referred to.

'262. Construing Contracts, Etc. Any person interested in a contract, oral or written, * * * or whose rights, * * * are affected by a * * * contract * * * may have determined any question of the construction or validity thereof or arising thereunder, and obtain a declaration of rights, * * * thereunder.

'263. Before Or After Breach. A contract may be construed either before or after there has been a breach thereof. * * *

'265. Discretionary. The court may refuse to render a declaratory judgment or decree where it would not, if rendered, terminate the uncertainty or controversy giving rise to the proceeding.

'266. Supplemental Relief. Supplemental relief based on a declaratory judgment may be granted wherever necessary or proper. The application therefor shall be by petition in the original case. If the court deems the petition sufficient, it shall, on such reasonable notice as it prescribes, require any adverse party whose rights have been adjudicated to show cause why such relief should not be granted forthwith.

'267. Review. All orders, judgments or decrees under rules 261-266 inclusive may be reviewed as other judgments, orders or decrees.

'268. Jury Trial. The right of trial by jury shall not be abridged or extended by rules 261-267.'

Nearly all our decisions involving these rules point out they are remedial and should be given a reasonably liberal construction. In re Estate of Turner, 250 Iowa 795, 798-799, 96 N.W.2d 481, 483, and citations; Center Township School Dist. v. Oakland Independent School Dist., 251 Iowa 1113, 1117, 104 N.W.2d 454, 456. See also 26 C.J.S. Declaratory Judgments § 9, and Iowa cases cited note 90, page 65. 'Declaratory judgment acts are progressively receiving liberal interpretations * * * (citations).' Rich Mfg. Co. v. Petty, 241 Iowa 840, 848, 42 N.W.2d 80, 85; Katz Investment Co. v. Lynch, 242 Iowa 640, 647, 47 N.W.2d 800, 805.

We have so often held our rules have the force and effect of statute that precedents thferefor need not be cited.

III. Oour rules applicable to declaratory judgments are based on the Uniform Declaratory Judgment Act with modifications where it appeared desirable to broaden its scope or clarify provisions thereof which had been the subject of question or litigation. Article by Mr. T. M. Ingersoll, 29 Iowa Law Review, [254 Iowa 349] pages 62, et seq. We have cited this article with the apparent approval it deserves. Katz Investment Co. v. Lynch, supra, 242 Iowa 640, 646, 47 N.W.2d 800, 804; Crews v. Collins, 252 Iowa 863, 867, 109 N.W.2d 235, 237.

We quote from the article (page 64): 'Rule 261 * * * (is) similar to ...