Koontz v. Iowa City State Bank

183 Iowa 1353 | Iowa | 1918

Salinger, J.

1. Pleading : general limited by specific. I. Assume intervenor originally declared lie was entitled to a return of his deposit because tbe contract bad been breached by tbe district. If such claim be not thereafter narrowed, be may recover it any breach be proved. But as intervenor could refrain from suing, or dismiss after suing, and so waive all breaches, he could, upon the trial, forego some of the breaches by selecting from all, those which he desired to declare upon. He did narrow his suit. In response to a motion that he be required *‘to specifically state wherein and in what particular the bonds referred to were found to be illegal by the intervener’s attorney * * ® and wherein the proceedings had by * * * the district did not evidence the legality of the issue of said bonds to the satisfaction of said intervenor’s attorney,” the intervenor selected two “particulars.” We think that, so, the intervenor narrowed his suit to a claim that his deposit should be returned on account of one or both of the two points selected by him.

2' scisSon an'a áeposit.y oi II. Had there been no contract, the intervenor could recover his deposit only by showing that the bonds he had undertaken to buy were in fact illegal because of one or both the matters which he asserted against their validity. If the good-faith opinion of his attorney, and not the fact of illegality,— and that is the theory of this suit, — is to control, the contract must create this exceptional method of determining whether a party to a contract is justified in rescinding. The contract provides that intervenor shall be furnished a complete certified transcript “of all proceedings leading up to the issue, evidencing the legality of the same to the satisfaction of our attorney;” and that the district “will take sucli steps as may be necessary to make the bonds legal in every respect;” and that, “if the bonds are found to be illegal,” then the deposit made shall be returned to intervenor.

The specific controls the general language. Qualifications must be read, into what is qualified. Upon the apjAication of these elementary rules of construction, it must be found that no failure to make proof of legality to the satisfaction of the attorney is material, except as to steps “leading up to the issue.” The attorney — a Mr. Hill, and not the attorney who represents the appellee herein — was dissatisfied on two things. Whether the failure to satisfy him on these is controlling, and the judgment below, therefore, right, depends, then, upon whether the unfavorable opinion of the attorney deals with some step leading up to the issue of the bonds. One breach asserted by the intervenor is, in one place, stated to be that there was a failure to show “that any proper resolution was adopted, making provision for the payment of the annual interest for the bonds at maturity * * * that said board refused to pass a resolution providing for the levying of an annual tax in sufficient amount to pay the interest year by year, or in any way to pledge itself to provide for the payment of the bonds at maturity and make said pledge irrepealable.” Another statement is that the board declined to adopt a resolution “that there shall be levied annually, beginning with the year 1913, on all the taxable property in said Independent School District, a special direct annual tax of sufficient rate and amount with which to pay the interest on said bonds as it becomes due and to constitute a sinking fund for the payment of the principal thereof at maturity, which said tax levy and this resolution ordering the same shall be and remain irrepealable so long as any of said bonds or interest coupons shall remain outstanding and unpaid.”

We are of opinion that, no matter how desirable it may be that the bond, when issued, shall contain such provisions tor its payment, a failure to insert such a provision is not a failure as to any step “leading up to the issue.” We shall have occasion later to deal with what is such a step. What we now decide is the following: The claim of the intervenor is that he may rescind because it was the opinion of his attorney that failure to make such provision did affect the validity of the issue. We hold that the contract gave the attorney no power to determine whether failure to make such provision for payment affected legality; and we put this much of our decision upon the sole ground that the contract gives the attorney no such power, because provisions in the completed bond fixing method and means of payment are not steps leading up to the issue. Hence, it was no breach of the'contract that the attorney was not satisfied that a bond which had no such provision is valid.

We doubt whether the failure to make this sinking fund arrangement would be available to the intervenor if the contract included this subject in what is to be 1 controlled by the opinion of intervenor’s attorney. The parties made their contract with reference to the law of the state. The district lacked power to make some, if, indeed, not all, the provisions demanded. Its powers were liriiited to certifying to the board of supervisors the basis lor making a levy, year by year. We should be loath to hold that an opinion which declared a bond issue to be illegal because the issuer would not do a thing which the law did not authorize it to do, was binding on anyone. Such an opinion as that would be quite strong evidence that it was not rendered in good faith.

a. bonds : con-Son8® estoppel", III. The second attack is that the district “failed to show proper evidence of the election notice having been given by the publication of the notice of the election as required by law.” This does involve a step leading up to the issue, and failure to sat-the attorney that lawful notice was given would sustain the recovery of the deposit, unless there be some avoidance. The attorneys for the respective parties engaged in much correspondence, in which the one for intervenor claimed the publication was not sufficient, and the other, that it was. Finally, the attorney for the intervenor, Mr. Hill, receded, and wrote a letter which refers to the opinion of the attorney for the district, and states that, “from a further examination of the various laws and amendments pertaining to the issuance of bonds by school districts of Iowa, I am willing to accede to the position which he outlines as to the authority for the present issue.” The writer of this opinion believes that, as to any matter which is a step leading up to the issue, the opinion of the attorney for the bond buyer is, in the absence of bad faith, binding upon both buyer and seller. Indeed, appellee, in effect, concedes this. He plants himself on the proposition that the district can have no benefit from the opinion of the attorney of the intervenor, because the district contends it is not bound by any opinion of his when adverse to it; that the opinion is binding on neithei*, if not binding on both; that it does not lie in the mouth of one who denies the power to bind by such opinion to claim any advantage from such opinion. The vice is in the premise. The district does not say that the opinion of the intervenor’s attorney is not binding at all, but that it is binding only as to steps that lead up to the issue of the bonds. Notices of election ai*e steps leading up to the issue of the bonds. So, the district concedes that, upon this point, the opinion of intervenor’s attorney is binding; wherefore, it may avail itself of the opinion of said attorney on that point. It may be that, if it were necessary to decide the question, we might not be agreed; but it is not necessary. Whether or not the contract made the opinion of intervenor’s attorney on the legality of the publication of notice binding upon the parties to the contract, the fact remains that this attorney was the agent of the buyer in conducting so much of the negotiations as were to settle legality. When he advised the other party to the contract that the objection to the notice would not be insisted on, the sellers were justified in doing nothing more upon that point. It would violate every principle of natui*al equity and orderly procedure in litigation to permit the party who had made this declaration to thereafter recede from his recession. It is plain we are not concerned with whether the publication of notice was the one required by.law, and we express no opinion upon the point. We ground our decision at this point upon the fact that the intervenor is in no position to urge that the notice was not such as the law requires.

4- mistake”35 There is some argument that the attorney for intervenor was mistaken in making said concession. This is a claim related to the one that the opinion is not as conclusive on the buyer as on the seller. We have disposed of that claim. We may well add that no such issue is tendered in the pleadings, and that in no view may intervenor be relieved for such- mistake, if mistake there was, without appropriate plea, prayer, and proof.

We hold that there must be a reversal- because the failure to put methods of payments into the bond was not, as' the trial court of necessity held, a matter upon which the opinion of intervenor’s attorney is material; and because appellee is estopped to urge that lawful notice of election was not given.' — Reversed and remanded.

Preston, O. ,1., Lad», Evans, Gaynor, and Stevens, JJ., concur.