152 Iowa 649 | Iowa | 1911
Plaintiffs are residents of Jasper'county, Iowa, and defendant is a resident of the same county, and in the year 1907 was engaged in the real estate business at the town of Colfax. One L. E. Zachary, at that time a resident of Colorado, living at the city of Pueblo, owned three • hundred and twenty acres of land in Jasper county, Iowa, which plaintiffs were desirious of purchasing, and they employed defendant to purchase the same for them from Zachary. Defendant was in partnership with one Stouffer, and it seems that on the 21st day of September, 1907, this partnership, in the name of Hahn & Stouffer, entered into a written contract with Zachary and wife for the purchase of the three hundred and twenty acres of land at the agreed price of $21,000. This contract was entered into pursuant to correspondence had between Zachary and defendant during the latter part of August and the 1st of September of the year 1907. At the time of the pur
I said to him (Mr. Hahn), ‘You go and buy that land as cheap as you can, and make as good terms as you can/ but that we would pay $80 an acre, but that ho should buy it as cheap as he could, and make the terms as good as he could make them; and he said, ‘All right, I will do it; I will go out and see Mr. Zachary; I will make the terms as good for you boys as I can.’ lie said, ‘I want to get away today; this is Friday, and I want to get back Sunday.’ He said, ‘You get your draft for a thousand dollars at once.’ There was nothing said about a contract up to that.time. After I got the $1,000 draft, it was along late in the evening, along about 6 o’clock, and after he had receipted for the $1,000 he said, ‘Boys, I ought to have a contract for this farm.’ I said, ‘All right.’' Then we made the contract. After the contract was made, he said, ‘Boys, if X do not buy this for $80 an acre, you will not hold me to the contract?’ I said, ‘Certainly not/ and replied, ‘If you can buy it for less, you will buy it for less?’ He said, ‘Certainly.’ That statement was made after the written contract was made. Exhibit B, Robinson, is the contract that was executed at
Another witness by the name of Cross testified as follows:
I was with Horace Lavalleur at the office of J. H. Hahn, in Colfax, on the 19th day of September, 1907, and heard some of the conversation between Lavalleur and Hahn at that time, with reference to the land in controversy. . . . Mr. Hahn said that he would go out and buy the land as cheap as he could. He said he would go out that evening, and wanted a thousand dollars to take with him to make the purchase. He said, ‘I will go o.ut and work in your interest ' (Horace 'and L. L. Lavalleur’s), and I will buy the land as cheap as I can, and make as good terms as I can.’ He said, ‘Of course, I will buy it in Mr. Stouffer’s. and my name, so Mr. Zhchary "won’t know I am getting the land for you, as he might not allow the $1,000 for giving possession.’ Exhibit B, Robinson, was signed by the parties at that time. When that was signed, Mr. Hahn said, ‘Now, if I do not buy the land for you boys, you will- not hold me to this contract? and they said, ‘Certainly not;’ that they would not do that. Nothing that I remember was said by Mr. Hahn that he would not hold Lavalleur to the contract in case he could buy the land for less than $80 an acre. This took place after the contract was signed. The statement
The other plaintiff testified:
I was present in his office in Colfax, Iowa, on the 19th day of September, 1907, and took part in the conversation. . . . Mr. Hahn said, ‘I will go out and try to buy this land for you boys as cheap as I can. If- I can not buy the farm for less than $80 an acre, then you will give $80 ?’ We said that was all right, and we went over to the bank to get a draft for $1,000. He said, ‘Boys, I will go out and work in your interests, and buy the land for you as cheap ias I can; if I can buy the land for less than $80, I will do it; but if I can not, I will give $80.’ We said that was all right, and for him to ■ buy it as cheap as he could, and he said he would do it. This conversation was after the signing of the contract (Exhibit B, Bobinson). Of course, - it had been talked before the contract was signed, and afterwards, too. Hahn said, ‘Boys, I will go out and work in your interests; if I can not get the land for $80 an acre, you will not hold me to this ?’ and we told him, ‘No.’ Mr. Hahn said that he was going to see L. E. Zachary in Colorado about the purchase of the land. I saw Mr. Hahn after he returned from Colorado, at my residence in Ira, Iowa. Horace Lavalleur was with him. They drove into my place. I was out in the field somewhere, and they called me, and I went where they were. Hahn said, ‘Well, I got the farm.’ I said, ‘Did you?’ and he said, ‘I got it all right, but I háve got to have a little more money.’ I asked him how much, and he said he would have to have another $1,000. We talked awhile, and he read over another contract. I supposed it would be all right, and we went to Ira and got a thousand dollars at the 'bank, and my brother and I signed the other contract, and they went home. He said that he had to pay $80 an acre for the land; that he worked there until 2 o’clock at night with Zachary and his wife, before he could get them to sign a contract. He said that he had worked and done everything he could, but he could not get them to sign a contract for less than
In addition to the testimony first quoted, Horace Lavalleur testified as follows:
The defendant,' J. II. Hahn, received $170 as compensation for acting as our agent in the purchase of the Zachary land. He figured it out. Do not know that I can explain how he figured it out, but he set down the figures, showing how it was done. We were to get $300 off if we made it a cash payment, and $170 of that was not allowed. He said he was out there and made those trips, and -that he was entitled to $170. He said he had to pay his fare both ways and his expenses. He said he was keeping out the $170 to pay his bills. Mr. Stouffer was not present when this talk was had in regard to this matter between Mr. Hahn and myself. I had a talk with Mr. Stouffer about buying the farm. Mr. Stouffer was out there at the time. He was not present when the contracts were made. Mr. Stouffer is the first man I spoke to about the sale of the land. The settlement I finally made was not made until after Mr. Hahn" returned from Pueblo. I think he went out there (Pueblo) on the 21st day of
So far as material, the first contract referred to by these witnesses, of date September 19, 1907, reads as follows :
This agreement made and entered into this 19th day of September, A. D. 1907, by and between J. H. Hahn, party of the first part, and Horace and L. L. Lavalleur, parties of the second part, witnesseth: That the party of the first jiart has this day bargained and sold to the party of the second part the three hundred and twenty acres of land known as the L. E. Zachary farm, being now occupied by Horace Lavalleur and E. A. Cross 'and described more particularly as follows: (Here follows description of land), for the consideration of twenty-five thousand six hundred and 00-100 dollars ($25,600.00) upon the following terms and conditions: Ten hundred and 00-100 dollars ($1,000.00) cash, the receipt of which is hereby acknowledged. Ten hundred and 00-100 dollars ($1,000.00) October 1, 1907. Eighty hundred and 00-100 dollars ($8,000.00) on or before March 10, 1908. Ten hundred and 00-100 dollars, being the amount expended for improvements and surrender .of possession of said place on March 1, 1908, and which amount is to be credited as part of the purchase price of said land. The said improvements to remain upon the said place, and the parties of the second part agree to pay the two notes of $1,440.00 each, making $2,880.00, which are due January 1, 1909, and January 1, 1910, being the rent notes of the said place for the seasons of 1908 and 1909 and which are now sold to the Valley National Bank of Des Moines, Iowa, the same to be credited as part of the above purchase price of said place. The parties of the second part further agree to pay the- mortgages of $2,500.00 and $500.00 now upon the said place, the same to be deducted from the
The material parts of the second or substituted contract referred to read:
This agreement made in duplicate this 23d day of September, A. D. 1907, by and between J. H. Hahn, party of the first part, and Horace and L. L. Lavalleur, parties of the second part, witnesseth: That the party of the first part has this day bargained and sold to the parties of the second part the 320 acres of land known as the L, E. Zachary farm, being now occupied by E. A. Cross and Horace Lavalleur, and more particularly described as follows: (Here follows description), for the consideration of twenty-five thousand six hundred and 00-100 dollars ($25,600.00) upon the following terms and conditions: Twenty hundred and 00-100 dollars ($2,000.00), the receipt of which is hereby acknowledged. Ninety hundred and 00-100 dollars ($9,000.00) on or before March 5, 1908. Ten hundred
Cash ...................:................ $2,000.00
Possession ................................ 1,000.00
Pent Notes................................ 2,880.00
Security Mortgage........ 2,732.64
Meredith .......................!......... 530.00
Taxes .............. 105.86
$25,600.00
9,248.50
$16,351.50
13,000.00
$ 3,351.50
$9,248.50
With commission of $130.00 to come out of $13,000.00 loan.
(1) It may always be shown that the document in question never had any legal existence. On this ground rests the very important exception that duress or fraud in the inception of the contract may be proved, although accompanied by the most solemn formalities. Such proof does not recognize the contract as ever existing as a valid agreement, and is received, from the necessity of the case, to show that that which appears to be a contract is not and never was a contract. . . . Eor the purpose of proving the fraud, verbal statements which are material and fraudulent, although made before or at the same time with the written agreement, may be proved. In such case the rule that prior negotiations are merged in the written agreement does not apply. No rule is better settled than this: AVhere fraud is alleged, a very broad range is given to the testimony. ... In such cases any secret agreement or trust may be shown 'by them, although directly contradicting the face of the conveyances. The consideration may be inquired into, the purpose and object of mortgages or assignments may be shown, and generally the entire transaction may be investigated. Again, in actions upon a written contract, brought by one of the contracting parties against the other, the rule under discussion is constantly invoked; and parties are allowed to prove fraudulent representations or conduct which formed an inducement to the contract. Jones on Evidence (Pocket Ed.), section 435.
(2) “It is a principle, to which we shall frequently
(3) “Parol evidence is competent- to show that a writing, in form a complete contract, and delivered, was not to become binding until the performance of some condition resting in parol.” Browne on Parol Evidence, section 32. This exception is very similar to the second one just quoted, and the manner of its application is shown 'in the eases cited by Mr. Browne under the section quoted.
(4) “It has long been the settled rule that in courts exercising equitable jurisdiction it is admissible to prove by parol that instruments in writing, apparently transferring the absolute title, are in fact only given as security.” Jones on Evidence (Pocket Ed.), section 446. “Although evidence to show that an instrument, absolute in form, is not such in fact, is most frequently used to show that an apparent deed is a mortgage, it is not limited to this class of cases. The rule that deeds and other instruments, absolute in terms, can be thus transformed into instruments for the security of money is purely an equitable doctrine; and it has sometimes been held that in actions at law evidence for this purpose is not admissible. But in some states such evidence has been held proper in legal actions, as well as in those of an equitable nature; and, as the differences
The exceptions are well sustained ‘by authority, and we have heretofore recognized them in many cases. See Hinsdale v. McCune, 135 Iowa, 683; Sutton v. Griebel, 118 Iowa, 78; McCaskey v. Hall, 140 Iowa, 87; Gavanagh v. Beer Co., 136 Iowa, 236; McNight v. Parsons, 136 Iowa, 390; Oakland Cem. v. Lakins, 126 Iowa, 121; Bonewell v. Jacobson, 130 Iowa, 170; Morrison v. Bryson, 129 Iowa, 645; Providence Co. v. Fessler & Sons, 145 Iowa, 74; Rohrabacher v. Ware, 37 Iowa, 85; Walker v. Camp, 63 Iowa, 627; Button v. Weber, 127 Iowa, 361; Fisher v. Lee, 94 Iowa, 611.
The exception which permits the introduction of parol evidence where fraud is alleged has been thus formulated: “It has been held that where the execution -of the written instrument has been induced by an oral stipulation or agreement made at the time, on the faith of which the party executed the writing, and without which he would not have executed it, but where such agreement or stipulation is omitted from the writing, even if its omission is not due to fraud or mistake, evidence of the oral stipulation or' agreement may be given, even though it may have the effect of varying the contract or obligation evidenced by the writing, where there has been an attempt to make a fraudulent use of the instrument in violation of such promise or agreement, or where the circumstances would make the use of the writing for any purpose inconsistent with such agreement dishonest or fraudulent. ■ The rule is put upon the ground that the attempt of one party afterward to take advantage of the omission of such terms from the contract is a fraud on the other party, who was induced to execute it upon the faith of such promise; and hence he will be
Now, if to tbe parol evidence rule there be an exception in tbe case of fraud, then clearly it was competent for tbe plaintiffs to show that, instead of purchasing tbe land from tbe defendant, Hahn, as tbe written contracts show be (Ilabn) was acting as their agent for tbe purchase of tbe lands, and that tbe contracts were never intended to be binding, or tbe complete evidence of tbe transaction, but were being used fraudulently by the defendant to escape a duty owing by him under tbe law. Where fraud is charged, tbe court looks behind all forms and at tbe substance of tbe transaction, and in such cases no one can shield himself under tbe parol evidence rule. We think tbe testimony was admissible under at least two exceptions to tbe parol evidence rule. Tbe conclusion finds abundant support in Bonewell v. Jacobson, supra; Rorebeck v. Van Eaton, supra;
In Humbert v. Larson, 99 Iowa, 275, we said: “Appellant further argues that the court erred in allowing certain evidence, over his objections, tending to contradict the written bill of sale. The record shows that the court below did admit evidence to prove the representations and statements made by plaintiff as an inducement to the sale. Under the issues in the case, this evidence was properly received. The defendants did not rely upon their hill of sale. Their defense was independent of it, and was based upon fraud. It is elementary that the rule excluding evidence contradictory of a written instrument does not apply when fraud is the gravamen of the action or gist of the defense. It is clear that there was no error here.”
In Stanhope v. Swafford, 80 Iowa, 45, the court said: “It will he observed that the action is to recover for false representations inducing plaintiff to make the trade. Now, if it be assumed that all the terms of the v contract are embodied in the writing, and the false representations are not expressed therein, plaintiff may recover thereon, for the reason that the action is not upon the contract, but for false representations — a cause of action other and independent of the contract. If one should be inveigled or induced by false representations to enter into contract of a sale of property, he could maintain his action on the false representations, and would not be required to sue on the contract of sale, in order to recover his damage therefor.” See, also, Nixon v. Carson, 38 Iowa, 338; Mann v. Taylor, 78 Iowa, 355; Rohrabacher v. Ware, 37 Iowa, 85.
None of the cases cited or relied upon by appellee seem to be in point. Counsel for appellee throughout the discussion seem to overlook the fact that fraud is the gravaman of plaintiffs’ action, and that in such cases the parol evidence rule does not obtain.