186 Iowa 151 | Iowa | 1919
The second count of the petition sought to recover because of a promise by defendant, subsequent to his discharge in bankruptcy. It is conceded by both sides that this appeal does not involve any matter in regard to the second count, because, the jury having disagreed, that count is left for retrial.
Going now to the first count: The note in suit is for |2,500, executed November 27, 1907, and signed by defendant, Harry F. Pierce, and by William Barker. In consideration of said note, plaintiff conveyed to Barker 80 acres of land, then owned by plaintiff. By the first count of the petition, plaintiff claims, substantially, that, at the time of such conveyance, defendant, Pierce, represented to plaintiff that he, defendant, was the owner of a one-half interest in the retáil shoe business carried on in the city of Council Bluffs under the Ann name of W. A. Pierce; that plaintiff, relying upon said statements, conveyed the land and accepted a note; that defendant was not the owner of a one-half interest in said business; that, after the execution of
By amendment, plaintiff says that the defendant made the statement to induce plaintiff to accept the note; that the plaintiff relied upon such statement until after the delivery of the deed; that said representations were false and not true, at the time plaintiff parted with his land by the delivery of the deed to Barker, and at the time plaintiff received the note; that he was not advised by Pierce that the latter had disposed of his interest in the shoe store.
The answer denies all allegations not admitted. Defendant admits the execution of the note, and his discharge, in bankruptcy, and says, further, that he filed his petition in bankruptcy on November 11, 1908, and on that date was adjudged a bankrupt; that he turned over to the trustee in bankruptcy all his property, for the benefit of his creditors, and that, on April 2, 1909, he was duly discharged as a bankrupt, and that thereby he was discharged from all his provable debts, including the claim of this plaintiff, and that he was thereby released and discharged from all liability to plaintiff on the claim sued on.
The defendant, Pierce, was called as a witness for plaintiff, and testified that, in 1907, he was paralyzed, and not doing any business; that the store of Pierce & Company carried a stock of from $50,000 to $100,000; that this had been true in previous years, and he supposed it was true in 1907, though he had been out of the store and not doing business in 1907; that the business was a partnership; that he sold his half interest in the store about Christmas, after the signing of the note; that it was right in there about that time.
Plaintiff as a witness testified:
“I reside in Council Bluffs, and have for 46 years; have known defendant' and Barker 20 years. I conveyed the land in November, 1907. Barker first spoke to me about buying the land; Barker and Pierce came to me together, about buying the land, in November, 1907. Pierce came into my shop with Barker, and said: ‘Gregory, I can’t handle this land to very good advantage with a mortgage on it. I own a half interest in the store, and Barker and I ought to be good.’ After he said that, I said, ‘It’s all right, and we will take the note.’ I had been in the store, and knew there was a large stock. I relied on what Pierce told me, and would not have accepted the note if he had not said he owned a half interest of that store. I accepted
A son of plaintiff’s says he remembers a little about the conversation; that Pierce- said he owned a half interest in the store, describing it, and that he and Barker ought to be good for it, without a mortgage. Locke says that, after defendant told plaintiff he owned a half interest in the shoe business, plaintiff said, “Well, you ought to be good for it, I believe I’ll let you have it.” Defendant testified for himself, and denied the conversation in plaintiff’s shop, related by plaintiff and his son and Locke, and says he had no interest whatever in the 80 acres of land for which the
The record is somewhat mixed, and there is some uncertainty as to just what counsel upon either side, and the trial court, had in mind. Appellee suggests for the first time that no verdict was, in fact, rendered by the jury as to Count 1. It may be that it would have been better practice to have done so, and avoided confusion; but in the district court, they, as well as counsel for defendant, seem to have treated the ruling as final, as to Count 1, by plaintiff’s filing a motion for a new trial, and by the defendant’s asking the court to rule on plaintiff’s motion for new trial. Appellee argues the rule as to the discretion of the trial court in granting new trials, and urges that the court did not violate the same in setting aside its order directing a verdict for the defendant. Had there been a verdict by the jury either way, there would have been, by the proceedings had, an adjudication as to Count 1. The trial court seems to have proceeded upon the theory that, because there was a mistrial as to the second count, he would grant a new trial as to the first, and allow the whole ease to stand for retrial; and the plaintiff, in his motion for new trial, suggests the same thought. Whether this is a ground for new trial, we need not determine. The plaintiff’s motion for new trial does, however, raise the question as to whether plaintiff was entitled to go to the jury at all, on the first count, and whether the court erred in taking
The facts in thaf case are quite different from the instant case. It appears that, in the Brown case, notes were discounted at different times, and the holding was that it. was not necessary that the misrepresentation should have been repeated every time a note was discounted. In the instant case, there was but one transaction, which was closed when the note was executed and the conveyance made, and the representation is not shown to have been false at that time. Counsel quote from the insurance case, supra, that:
“When the representation of good health and the certificate of the surgeon have been made, and the contract is not immediately closed, but negotiations for it continue, and proposals and counter proposals are made, but for some time none are accepted, the representation and certificate continue, and condition all the proposals and the ultimate contract when it is closed. They are'all made in reliance upon the continued truth of the representation and certificate, and in the belief that there has been no material change in the health or the probability of the continued life of the subject. The nature of this contract * * * imposes upon him the duty of disclosing to the company every
The distinction between that case and this is apparent.
2. Appellant quotes the language of the Bankruptcy Act a little differently than appellee, but the substance is about the same, so that we shall not take the space to quote it. Appellant cites Louisville & Nashville R. Co. v. Bryant, 149 Ky. 359 (28 Am. Bank. Rep. 867), where the court used this language:
“Fraud is generally divided into two classes, known as actual or positive fraud, and legal or constructive fraud. 20 Cyc., page 8; 14 Am. & Eng. Encyc. of Law, page 19; Bouvier’s Law Diet., title Fraud. But the character of fraud necessary to save a demand or judgment from the operation of the Bankruptcy Act is positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, as does embezzlement; and not implied fraud, or fraud in law, which may exist without imputation of bad faith or immorality. Neal v. Scruggs, 95 U. S. 704 (24 L. Ed. 586); Strang v. Bradner, 114 U. S. 555 (5 Sup. Ct. 1038, 29 L. Ed. 248). Forsyth v. Vehmeyer, 177 U. S. 177 (3 Am. B. R. 807, 20 Sup. Ct. 623, 44 L. Ed. 723); Bullis v. O’Beirne, 195 U. S. 606 (13 Am. B. R. 108, 25 Sup. Ct. 118, 49 L. Ed. 340).”
See, also, Cooper Grocery Co. v. Gaddy, 27 Am. Bank. Rep. 422.
Appellee cites no cases to the contraxy, other than those already referred to. Under this record, no false representation is shown to have existed, at the time of the transaction in question. If thei’e was any fx’aud at all, it is because of defendant’s selling his intei’est in the store after the 'transaction in question was closed; and it is'not
This being so, the cause is reversed and remanded, with directions to overrule the plaintiff’s motion to set aside the order directing a verdict for defendant, and to overrule plaintiff’s motion for new trial. — Reversed.