196 Iowa 1092 | Iowa | 1923
This is an action upon a negotiable promissory note for $10,000, which was executed April 20, 1920, contemporaneously with a written contract or proposal for the purchase of 80 acres of land near Garden City, in Scott County, Kansas. The note is made payable to the makers, and, when offered in evidence, bore the following indorsement on the back: “Gordon B. Martin, Anna M. Martin. Apr. 28-1920. Paid on this note $50.00.”
Appellant alleged in its petition, and claims, that it purchased the note of the State Bank of Kansas City, before ma
“I, the undersigned, hereafter styled ‘the purchaser,’ of the town of Peterson, county of Clay, state of Iowa, hereby propose to Francis C. McCarty, as Francis C. McCarty Land Company, of Chicago, Illinois, hereafter styled ‘the company,’ to purchase the following described real estate, to wit: * '* * This proposal if accepted shall become a part of the contract evidenced by the notes and shall be considered as incorporated in and made a part of the notes, and -upon default in the payment of any of such notes, or any part thereof, or interest thereon, when the same becomes due and payable, then the entire series of notes given herewith, with interest thereon, shall forthwith become due and payable. The said cash and notes being-tendered and received hereunder as earnest money and earnest money notes, given to evidence a portion of the purchase price of the above described property. ‘The purchaser’ shall not be entitled to the possession of said lands, without written consent, until he has received deed thereto, ‘the company.’ agreeing when one half of the fixed purchase price with interest, has been fully paid by ‘the purchaser’ to deliver deed to said lands, as hereinafter provided. * * * This agreement is made subject to the approval of the owner of said land, and in the event of the disapproval hereof on the part of the owner, or in case ‘the company ’ is unable for any reason, to deliver deed to said land, then and in that event, ‘the company’ shall have the right to cancel this contract upon returning to such purchaser, the amount of*1094 money so paid hereunder by him, together with all notes executed by ‘ the purchaser, ’ and thereupon ‘ the company ’ and the owner shall be released and discharged from all liability and responsibility hereunder. * * * For the balance of said purchase price, namely $12,000, ‘the purchaser’ agreed to execute and deliver upon demand ‘the company’s’ regular form of mortgage and purchase-money notes, said notes being payable in five annual installments thereafter of approximately even amounts with interest at 6 per cent per annum payable semiannually. ‘The company’ will thereupon convey or cause.to be conveyed to ‘the purchaser’ the said lands above described, by deed of general warranty excepting as to any taxes or assessments of whatsoever kind or nature hereafter becoming due, and subject to existing leases, if any, and to any and all water or easement rights appurtenant to said lands. ‘The company’ further agrees to furnish ‘the purchaser’ a certified abstract of title to the said lands, which abstract will show a merchantable title in the grantor in the deed conveying title thereto. ‘The purchaser’ agrees to receive and within ten days from the receipt of such abstract, to examine the title to said land as shown by such abstract, and -return the same to ‘the company’ together with whatever objections, if any ‘the purchaser’ may have to such title, and a reasonable time shall thereafter be allowed to remedy and. remove such defects or objections; further agreeing that all objections to said title shall be considered as waived, unless made within such time. * * *”
It will be observed at once that the contract is materially different in its terms and provisions from the usual and ordinary contract for a deed, entered into by an owner with a purchaser of real property. Appellant is a banking corporation, located at Royal, in Clay County, this state. Appellees, who are husband and wife, reside on an 80-acre farm in the vicinity of Royal. In July, 1920, they, in company with a friend and his wife, at the'request of an agent of the McCarty Land Company, went to Garden City, to look at some land which the company claimed to have for "sale near that place. When they reached Kansas City, they "joined an excursion, party of about 300, all bound for the same destination: Upon arrival, they were treated for two days to automobile trips and lectures upon the country to
No abstract of title was ever furnished appellees; but, in further exemplification of the McCarty Land Company’s capacity to identify and deal with victims, its representative made a visit to the home of appellees, a few days after they returned from Kansas, and sought to obtain payment of the $10,000 note, representing that this money was necessary, in order to improve the land by irrigation.
At the conclusion of all the testimony, the court directed the jury to return a verdict in favor of the defendants. The questions presented for decision all go to the correctness of this-ruling. , Appellee Gordon B. Martin testified that, immediately after he returned from Kansas, he took the contract to the appellant bank, and submitted it to E. C. Nelson, cashier, for examination, and to obtain his advice as to the matter. Appellee was a small stockholder in the bank. He testified that Nelson took
The delivery of the note was conditional upon the acceptance of the contract by the owner of the land. Until it was accepted, the contract was, in form and in the intention and contemplation of the parties, a mere offer or proposal to buy the land at the price and upon the terms specified. Any transfer of
Appellant relies for reversal upon the testimony of the officers of the bank, which, it is argued, was sufficient to carry to the jury the question of notice.
To constitute notice, it is necessary that the transferee of a note executed in pursuance to an unperformed executory contract for the conveyance of land must have notice of the breach of the contract or of the inability of the vendor to perform its terms, at the time of the transfer. Grinnell Sav. Bank v. Gordon, arid other eases cited supra.
The doctrine of the above cases is not inconsistent with our holding in Todd v. State Bank of Edgewood, supra. In that case, the bank not only purchased the note which was given as part consideration for an unperformed executory agreement to convey land, but also took an assignment of the contract. We held that the bank was conclusively charged with notice of the terms of the contract, and that, by becoming an assignee thereof, it stood in the same relation to the purchaser as the bank’s assignor. The holding of the court is not, however, based alone upon the ownership of the contract by the bank. This fact is given emphasis for another reason: that is, that it conclusively charged the bank with notice of the terms of the contract. We further held that the contract and note, when construed together, involved mutual and dependent obligations. Payment
It is suggested by counsel for appellant in argument that the only distinction to be made between the Todd case and the case before us is that, in the Todd case, the bank was- the assignee of the contract, and not only conclusively charged with notice, but also obligated to perform the terms of one of the parties thereto. Our attention is also called to the reference in the opinion of the court in Wegener v. Emmetsburg Nat. Bank, supra, to the Todd case, and to the emphasis there given to the fact that the bank was the assignee of the contract. The distinction pointed out in the Wegener case was sufficient for the purpose of the court in deciding the issues then pending. The holding goes no further than that. Notice to Nelson of the terms of the contract in question would be as conclusive upon the bank as would the further fact that the transfer of the note was accompanied by the assignment of the contract. The difference is one of fact, and mot of principle.
Much that is said above is in response to the contentions of counsel. The defect in the title to the note in question does not arise out of the breach of an executory contract, — the contract never went into effect. The note was delivered by appellees and held by the land company'conditionally only, and subject to the final acceptance and approval of the contract by the owner of the land. The transfer was in-breach of faith, and a