Ida County Savings Bank v. Johnson

Evans, J. i. Real proptup? qmetms evidence. The plaintiff is a savings bank located in Ida Grove, Iowa. The alleged oral purchase of the land by defendant occurred in 1901. The plaintiff had recently acquired the land by foreclosure of a mortgage thereon. Prior to June 4, 1901, Hadlock was president and Dessel was vice president of the barde. On the date named, Dessel became president and Hadlock retired and soon thereafter removed from the state. The land was acquired by the bank in 1900. At about the same time, a contract of sale thereof was made to one Buss. By reason of some objection to the title, such sale was not consummated, and Buss became a renter of the property from the plaintiff for the year beginning March 1, 1901. The defendant was a practicing attorney, and was attorney for the bank in various suits pending at and before such time. He was also a stock [237] holder. It is the claim of the defendant that, shortly after the failure of the Buss contract, the managing officer or officers of the bank solicited him to purchase the same, and that he agreed with them upon a price, and that he took possession in pursuance thereof by renting the land to Buss in his own name for the ensuing year beginning March 1, 1902, and that he has continued in such possession ever since, with the knowledge and acquiescence of the bank officers. On the other hand, the appellant contends that there never was a completed agreement between the appellant’s officers and the defendant, and that in any event such officers of appellant were without authority to make the alleged agreement. We have therefore first to dispose of a question of fact relating to the alleged negotiations of 1901. The defendant in his behalf called as a witness H. A. Dessel, the president of the plaintiff bank, and personally examined him as follows: Q. Tip to the time you left the bank you had made no efforts to rent this land for the year 1902 ? A. Not that I remember of. Q. Why? A. At that time, if I remember right, you had some talk with Mr. Hadlock relative to this piece of land. Q. Was it your understanding that I bought the land ? A. My understanding was that you had concluded or agreed upon a price. Q. What was the price ? A. To the best of my recollection was $1,300 or $1,350. Q. And you knew, or at least you understood; that I had some talk with Mr. Hadlock and had agreed on a price with the savings bank for this land? A. Certainly. Q. And you knew, after you talked with Mr. Hadlock or myself, or whoever it might have been, that the bank had lost title to that land, at least- to such an extent that you did not think it was necessary, as the active manager in charge of the bank’s interest, to give it any further thought, care, or attention, and you made no attempt to lease it for the year 1902 ? A. As I told you before that I understood,' as near as I remember it,- that Mr. Hadlock told me he had some kind of a deal with you, and as I told you, to the best of my [238] recollection, it was $1,300 or $1,350, or in that neighborhood anyway, and I spoke to you,, wanted to get it fixed up. You said you had a claim against the Ida County Savings Bank. They were owing you. Q. In all the talks, the talk was not that I did not own the land, was it? A. The talk was, I talked from the standpoint of what' Mr. lladlock had told me, and you claimed that you had a bill against the bank. Q. In all the talks we might have had you never claimed that I didn’t own this land? A. You certainly didn’t own it because you didn’t pay for it. Q. I had bought it, bargained for it? A. I say all I knew about it was that Mr. lladlock told me that you had made a bargain for it. Q. There never was any dispute between you and I, at any time, was there, that I didn’t own the land? A. I don’t think we ever argued that question. Q. The whole talk was how it was to be paid for, that was the question, wasn’t it? A. The question was to make a settlement of some kind. Q. A settlement of what? A settlement of what I paid for the land, wasn’t it? A. The dispute was just the same as the one that was brought up in the minutes of the board of directors to get a settlement — to get it out of the world. That was the dispute. Q. Mr. lladlock told you that I had bargained for the land ? A. As far as I can remember it; yes. Q. lladlock told you that I had bargained for that land, and the price that I was to pay for it. Is that right? A. My recollection is that he had a deal with you and bargained for the piece of land that was unsettled, but the price was made. The land that I talked with Mr. lladlock about was the land in controversy. The defendant himself testified as follows: Some time in the year 1901, and before September 13, 1901, that date I wrote to Mr. Buss regarding the renting of the land. At that time I owned the land because I was negotiating with Mr. Buss to rent it. The bank had the land and it was bringing but little- rent. Mr. Dessel suggested to me that if I would buy it myself they would make a discount on what they offered it to Buss for. Then I went up there, I had talks with Mr. Dessel and Mr. lladlock as to which one the deal was closed with, whether one or both. I can’t remem [239] bear positively, but the upshot of it was that they discounted the price to me $100, as I understand it. I was to take the land for $1,200. It was incumbered by judgments complicated that particular time I think by a suit, Chase v. Conry. That at the time I purchased this land from the bank they turned over tó me the abstract of title together with the opinion of the loan company. I leased the land in the fall or early fall of 1901 to Mr. Buss. Mr. Buss went into possession under my lease in the spring of 1902, and he has continued under my lease under his tenancy with me from the spring of 1902 to the present time, paying me the rent. - The foregoing is the only testimony in the record relating to the negotiations. It is not very definite in its details. The details of the negotiations, however, are not of themselves of controlling importance if it is otherwise made to appear that an agreement for the purchase at a fixed price was in fact reached and that the defendant went into possession thereunder. No deed or writing of any kind was ever executed. The circumstance which bears most strongly against the defendant is that he has never paid for the land. Neither has he ever tendered payment in any formal way. It also appears that, at the time of such negotiations and afterwards, something was due the defendant from the plaintiff for attorney’s' fees in impending suits.. On July 24, 1902, the plaintiff paid to the defendant a bill of $521.65 for services to date in the district court in the “Knepper case.” At a later time the plaintiff paid him $1,000 in the “Sidensticlcer case.” In the collection of these amounts by defendant from the plaintiff bank, no account was taken of the $1,200, alleged purchase price of the land. As against this, however, it is claimed by the defendant that the plaintiff bank was owing him at the same time about $525 for services rendered in other eases, principally the “Willett and Heinrich cases.” He also claims that he was then expecting to perform other services, and especially in the Knepper case which had [240] been appealed to the Supreme Court, and he contends in his evidence that such services rendered, and thereafter rendered, were more than sufficient in amount to pay the full purchase price of the land. Upon the whole record we think it must be said that the president of the bank and the defendant did agree upon a price for the land, and that possession was taken in anticipation of mutual performance of such agreement. The testimony of Mr. Dessel, president of the bank, will permit of no other conclusion at this point. It is earnestly argued by counsel for appellant that Mr. Dessel was mistaken in his testimony. Ilis candor as a witness is conceded. The fact remains that for many years he has acquiesced in the possession of the land by the defendant upon the theory that he was to have a conveyance thereof upon payment of an agre'ed price. The defendant has collected all rent and paid all taxes without protest, until the bringing of this suit; the rent, however, being greater for each year than the tax. This long acquiescence oh the part of the managing officers, with knowledge of the claim of defendant, is in itself in the nature of an admission by the corporation of the existence of such agreement. The weight of such acquiescence as an admission may be greater or less according to the circumstances. 2. Same: con-chaise:° par?r" performance, Up to this point we are assuming, authority in the president to make the agreement contended for. It is strongly urged by appellant that there was no such authority in the president. We will give that question further consideration later. The agreement, as it was, was 'executory and was wholly unperformed on defendant’s part. The agreement manifestly contemplated simultaneous performance by both parties. The defendant bargained for no credit nor for deferred time of payment. It was no part of the agreement that defendant’s attorney’s fees should apply upon the purchase price. This would not prevent the defendant [241] from offsetting any claim in his favor against the purchase price in a proper way. But the mere existence of such a claim, if any, did not operate as a part performance of the contract on defendant’s part. 3 same-equitable' rehef‘ Were it not for the state of the pleadings, the equities of the case appear to us simple enough. Having found the existence of the agreement and possession thereunder, elementary equity would seem to require that the title should be awarded to the defendant on condition that he perform on his own part and pay the purchase price, with interest thereon from the date of the defendant’s talcing possession of the land. Equity would also require that the defendant be permitted to offset against the purchase price any valid claim held by him against the bank at the time of the commencement of this suit in 1908. But the plaintiff’s petition asked only for possession of the land and for rents and profits and to quiet its title. It ignored the alleged agreement and asked no alternative relief in relation thereto. The defendant filed a cross-bill with his answer. He did not plead the terms of the agreement. He only pleaded as a conclusion that he had “bought” the land from the plaintiff and had taken possession under his purchase. There was nothing in his cross-bill to indicate whether the contract of purchase was executed or executory, nor whether it was performed in whole or in part by himself. The real nature of the controversy between the parties was disclosed only by the evidence. The defendant as a witness conceded that he had paid no part of the purchase price. He claimed a performance, however, in the sense that he had an account for attorney’s fees against the bank to the full amount of such purchase price. He offered no evidence, however, to prove up such account for the purpose of having it offset against the purchase price. Neither did his cross-bill contain any reference to such account. [242] 4‘ stated^ evidence. [241] It should be stated here that on August 2, 1902, the [242] defendant prepared a statement of account against the plaintiff and receipted the same as follows: “Ida Grove, Ia., Aug. 2, 1902. Ida County Savings Bank, Dr. to Will E. Johnston. To services in case Heinrich v. Ida Co. Sav. Bk., $150.00. To services in case Willits v. Bank, Supreme Court, etc., $300. To services pertaining to liquidation of Ida Co. Sav. Bk. preparing contracts, deeds, advice, etc., $25.00. To services preparing and filing answer, and trial of case of Engle v. Sav. Bk. J. T. Hallam et al., $50.00. Total $525.00. Deceived payment of the above and foregoing in full this 2d day of August, 1902. (Signed) Will E. Johnston.” It is the recollection of the defendant, and he so testified, that he delivered this receipted account to some of the officers of the bank to be applied as a payment upon the purchase price. Of course if this were done and it was assented to by the bank officers, it would amount to an account stated, and no further proof of the items of such account would be necessary. But the evidence is seriously in dispute at this point. The defendant testified concerning the same as follows: Q. Who did you give the bill to ? A. I don’t know, Mr. Easton or Mr. Dessel,- undoubtedly. It bad to be to Mr. Easton or Mr. Dessel; I can not be mistaken. I prepared a bill and a deed which was delivered to the one or the other of those two' men or left with the bank for them. On the other hand, Easton and Dessel both testified positively that they never saw the statement prior to the trial. The defendant and the two opposing witnesses testified on the subject with manifest candor. The defendant candidly disclosed that the details of that particular transaction were not clear in his recollection. We would not be justified therefore, in finding this fact established over the positive denial of the other two witnesses concerned. It was therefore incumbent upon the defendant to make legal [243] proof of his account for attorney’s fees in order to render the Same available to him as an offset against the purchase price or as the equivalent of performance of the contract on his. part. 5‘ erty ;P contract of purchase; pleadings: evidence. It is perhaps true that the failure of the plaintiff to ask for alternative relief in the way of a recovery of the purchase price, excused the defendant from setting up a counterclaim for attorney’s fees. On the other hand, the legal title being in the plaintiff, the defendant was bound to justify his possession. This required a pleading of the contract and a pleading of performance or tender of performance on his part. And this was especially so when he asked for affirmative equitable relief .by his cross-bill. Under the evidence, the plaintiff was not entitled to the relief prayed for in its petition while the defendant stood ready to perform the agreement on his part. On the other hand, the defendant was not entitled to the relief prayed in his cross-bill except on proof or tender of full performance on his part. By ignoring the contract the plaintiff pleaded no breach or rescission thereof. On the other hand, defendant pleaded no performance or tender of performance on his part. The decree of the trial court granted the defendant full relief on his cross-bill and quieted, his title to the land. The result of such decree was to specifically enforce against the plaintiff the executory agreement of sale. -The fact that no performance was shown on defendant’s part was wholly ignored in such degree. If such decree is permitted to stand, it will deprive plaintiff, not only of the land, but of the purchase price as well, because an independent action for the purchase price is apparently barred by the statute of limitations. On the other hand, if such decree should be reversed or modified to the extent of requiring the defendant to pay the agreed purchase price as a condition to the decree in his favor, then he would be- deprived [244] of the right to offset against the purchase price his present claim for attorney’s fees, an independent action for which is also apparently barred by the statute of limitations. We are confronted, therefore, with an unusual dilemna, for which the parties to the case must divide the responsibility, and we.-pass it for the moment. 6. Banks and banking: power of officers. II. It is strongly urged by appellant that the president of the bank had no authority to enter into the agreement contended for by appellee. 'Reliance is based upon article 6 of the articles of incorporation as follows: “Art. 6. The affairs of the said corporation shall be managed by a board of five directors, and those who shall manage its affairs for the first year are: J. T. Hallam, Thomas P. Hollander, F. L. Hadlock, A. T. Blackman and Julius Sauer.” It is also urged that the authority of President Hadlock especially was abridged to some extent on February 5, 1901, by the adoption of the following resolution of the board of directors: “Be it resolved by the board of directors of the Ida County Savings Bank that H. A. Dessel, vice president of said bank employ his entire time in the supervision and conduct of the business of said bank under the direction of the board of directors, as president of the bank at a salary for such services as shall be agreed upon hereafter by the said board of directors and H. A. Dessel.” In pursuance of this resolution, Dessel actually became president on June 4, 1901. The defendant testified that Dessel himself first suggested the purchase of the land by him. He also testified that his negotiations were had both with Dessel and with Hadlock. Dessel only denies that the agreement was made with him. He fairly concedes that he understood the agreement to be made, but contends that it was so made with Hadlock. It must have been made after February 5, 1901, because Dessel himself leased the land on March 1, 1901. Inasmuch as Dessel knew of the negotiations [245] with Iladloek and Hadlock’s agreement upon the subject and assented thereto by his acquiescence, the legal effect was the same as though both Dessel and Iladloek had participated personally in the agreement. In the light of the resolution of February 5, 1901, it seems clear to us that the negotiations for the sale were fairly within the presumptive authority of the president of the bank. The plaintiff Bad become an involuntary purchaser of the land. As a matter of law, it was forbidden to purchase such land as an original investment. Code, section 1851. It was permitted to acquire the same only by way of security for its previous loan. By the same statute it was required to dispose of the same within ten years. In the meantime it was carried on the books as an equivalent to the former loan. There is nothing in article 6 which provides the method by which the affairs of the bank should be managed by the directors. The method adopted by the board of directors was to appoint a president who should have “the supervision of the conduct and business of said bank under the direction of the board of directors.” If in the making of this agreement the president violated or ignored the direction of the board of directors, such facts was within the-special knowledge of the bank officers. 7 Same-“"¿^burden of proof. The burden was upon the plaintiff to show that the contract was not authorized or ratified by the directors. White v. Creamery Co., 108 Iowa, 526; Patterson v. Robinson, 116 N. Y. 193 (22 N. E. 372); Bank v. Bank, 141 Ind. 352 (40 N. E. 799, 50 Am. St. Rep. 330); Smith v. Manufacturing Co., 148 Ind. 333 (46 N. E. 1000). The question is one of fact rather than of law. The question is not Whether the articles of incorporation conferred power upon the president to make the agreement. It is whether it was within the fair scope of the direction imposed by the board of directors upon the president. In view of the ordinary character of the transaction, and in. [246] view of the long-continued and open possession of the defendant and the failure of any officer of the bank to challenge the same for at least a period of five years or more, it leaves little merit to this particular contention. 8. same: evidence. It was shown that there was no record on the books of the bank showing an authorization by the. board of directors. But the . controlling question is, Was there authority or ratification in fact? It was not legally necessary that such authority and ratification appear of record. Stetson v. Northern Inv. Co., 104 Iowa, 393; Bank v. Bank, 107 Mo. 133 (17 S. W. 644, 28 Am. St. Rep. 405); Parsons Mfg. Co. v. Hamilton Ice Co., 78 N. J. Law, 309 (73 Atl. 254). 9. Real property: contract price: evidence. III. In view of our conclusion as to the existence of an agreement, it becomes important to determine what was the purchase price agreed upon. Only two witnesses testified upon, this question — Dessel and Johnston. The recollection of neither was very definite. Dessél fixed it at $1,300 or $1,350; Johnston fixed it at $1,200. Turning aside from the testimony of these two witnesses for a moment, it is undisputed that the land was first bargained to Buss for $1,200. This bargain failed because of the character of the title which was not acceptable to Buss. It is undisputed also that the land was charged on the books of the bank to their real estate account at $1,186. These circumstances so strongly corroborate the defendant in this respect that we think the purchase price should be found at $1,200. io Same- appealofls-mTsf1011 remand. IV. Having settled the foregoing finding of facts, we return to our dilemma. In view of the unusual state of the record, we deem it unavoidable to depart some-from the usual practice in equity cases. It is our conclusion that there should be a decree for the defendant for the enforcement of the contract and quieting his title, and that he should be held to pay therefor the full purchase price, with legal [247] interest as of March, 1902, subject, however, to the further proviso that he be permitted to offset against such purchase price in whole or in part any valid account held by him against the plaintiff at the time of the institution of this suit. To this extent the decree of the trial court will be modified, and the case will be remanded to the district court in pursuance of such modification. The district court will give to the defendant an opportunity to plead and' prove any valid offset, if any, to the purchase price. Leave will be given to both parties to amend their pleadings to this end, and final decree will be entered in the district court. — Modified and Remanded.