182 Iowa 816 | Iowa | 1918
I. In 1912, Bricker negotiated an exchange of a tract of land in Holt County, Nebraska, for a lot, with building, occupied by what was known at the Electron Sanitarium, in Omaha, Nebraska, subject to an incumbrance of $1,800, receiving a conveyance thereof in January, 1913. Negotiations by Huber, conducted at about the same time, resulted in the exchange of a tract of land in Meade County, South .Dakota, to one Loomis, for the NW% NEyj, and Wy2 SWy4 NE%, and the W% NWy* SE%, and the W% of Lot 7, all in the E% Section 34, in Township 78 North, Range 45 West of the 5th P. M., in Harrison County, Iowa, containing 99.8 acres, according to the government survey. The agreed difference was $2,500, and Huber and wife gave Loomis their note for this amount, and secured its payment by mortgage back on the land. Loomis had a deed from one Wood, with place for grantee’s name blank, and Huber’s name was inserted therein, and the deed handed to him. The note was endorsed without recourse to E. M. Unger, who paid value therefor without notice of any infirmities therein. This note and mortgage were assigned by Unger to the plaintiff for collection. Subsequently, Bricker traded his lot and the Electron Sanitarium in Omaha to Huber for his land in Harrison County, and with his wife, executed a note to Huber for the agreed difference of $1,250, and a mortgage on said land to secure its payment. Huber transferred these to plaintiff, as collateral security for a loan of $1,000. The evidence indicated that plaintiff acquired the note and mortgage without notice of any infirmities therein. The deed from Huber to Bricker recited that the latter assumed the payment of the $2,500 incumbrance. Suit to foreclose these mortgages and for judgment on these notes was begun February 10, 1915, and, on March 12th follow
Bricker denied this, in saying that he did not understand that the attorney was undertaking to collect a judgment, but supposed he wanted payment on the notes; and testified- that he first knew that a judgment had been entered May 7th following, and that the attorney, if he found the land satisfactory and that the deed would satisfy the mortgages, was to use it, — otherwise, not to do so.
Rhode, father-in-law of Bricker, denied ever having advised Bricker as the attorney swore Bricker had informed him, and stated that he first learned that suit was brought, or decree entered, after the general execution was levied. On this showing, the motion to set aside the default and decree and hear the cause on the merits was sustained. That the showing was sufficient as to Mrs. Bricker cannot be questioned; and the circumstances recited were well calculated to distract the attention of Bricker, and prevent him from leaving Earlham to attend court, or even to consult and employ counsel. Though not strong, the showing was not void of merit.
Courts favor hearings on the merits, and only on- a clear showing of abuse of the large discretion with which a trial court is clothed will its order in setting aside default and allowing a hearing on the merits be interfered with on appeal. Mally v. Roberts, 167 Iowa 523. We are not inclined to interfere in this case.
But this obligation arises from the contract implied from the acceptance of the deed, and not owing to the terms of the promissory note; and, though such contract may ¿ffect the security of the note, it has no bearing on its negotiability. It amounts to no more than a contract with one person to pay the debt of another to a third person; and, under the law of this state, the latter may recover thereon. Beeson v. Green, 103 Iowa 406.
But such a contract is not impressed with the law of negotiability, even though the indebtedness undertaken to be paid be that evidenced by a promissory note, and is subject to defenses such as may be interposed to the enforcement of other contracts.
Wayne, an engineer, upon examining the land, estimated that not to exceed 25 acres of the description were out of the river; while Stern thought there were not more than 10 or 12 acres; and Smith, who was with Stern when they looked, fixed the limit at 15 acres. This evidence was without conflict. Huber represented to Bricker that the river there flowed to the east and had cut off half an acre from
“Representations which are untrue, and which materially affect the value of the property which forms the subject o'i the contract, will furnish grounds for a rescission, even though they may not have been made with a fraudulent intent. Indeed, the intent of the person making a misrepresentation for the purpose of inducing a purchase of property, is wholly immaterial. A party selling land or other property must be presumed to know whether the representations made by him are true or false; if he does know them to be false, he is guilty of positive fraud; but if he does not knoAV, it must be from gross negligence, and false representations which are material, made under such circumstances, although founded on mistake, in contemplation of a court of equity constitute fraud, and will justify the rescinding of the contract.”
Even though Huber believed that what he was saying was true, and Bricker relied thereon, then their deal was based on a mutual mistake, and Bricker had the same right to rescind as though Huber did not believe his representations true, or knew they were false. The answer and cross-petition were broad enough to include these different phases, and Bricker and his Avife were required to prove no more than was essential to the-relief prayed.
V. Something is said in the brief with reference to the duty of the person to ascertain the condition of property for which he is negotiating for himself. Huber was aware that Bricker was exchanging without examining the land, and doing so in reliance on his representations; and he is not in a situation to complain because Bricker believed what he said, instead of suspecting his veracity and ascertaining for himself that his statements were untrue. Holmes v. Rivers, 145 Iowa 702.