Winburn v. Fidelity Loan & Building Ass'n

110 Iowa 374 | Iowa | 1900

Lead Opinion

Deemer, J.

1 2 Addie Blackburn, O. B. Johnson, and a Mr. Calkins owned real estate in the city of Des Moines, on which they contemplated making improvements. In order to do this, they wore compelled to borrow money of the defendant. Drafts payable to the borrowers were sent to one J. O. Macv. that- were indorsed by the borrowers, and redelivered to Macy, in order that he might protect the mortgages given on the property to secure the loans from mechanics’ liens. One Winburn, plaintiff herein, did some work on the improvements made by one of the borrowers, under Bowman, who was the principal contractor. He also' did some work for Coon Bros., who were principal contractors for other improvements. Bowman and Coon Bros., who, as we have seen, were principal contractors, issued the orders in suit. They are in the usual form of such instruments, and were drawn on J. O. Macy. Macy did not accept the orders in writing, but it is claimed that, he accepted them in parol for and on behalf of the defendant. Such an acceptance is not good unless it also be shown that the drawer has funds in tlie hands of the drawee or acceptor at the time-the acceptance is made. Unless he have snch' funds, his verbal promise to pay the debt of another is within tliestatute of frauds, and therefore invalid. Walton v. Mandeville, 56 Iowa, 597. The first inquiry, then, is, did Bowman- and Coon Bros, have funds in the hands of Alacy, as. agent of the defendant, at the time it is claimed the acceptance is made? We have seem that the funds were- deposited with him by the borrowers. None of these persons gave evidence at the trial. ' Winburn testified that Alacy said to him that there-were several hundred dollars back on the loans at the time-lie claims Alacy accepted the- .orders. One of the Coon Brothers testified to- a conversation with an agent of the association in which that agent said, in effect, that the money would he sent as the buildings progressed, and that defendant usually made payments as the building progressed, -and', that the money would he sent to Alacy. He further testified that he gave orders on Alaev and that Alacy said, before- the-orders were drawn, that he would honor them. He also- testified that he had no contract with the defendant to- build the-house, that his contracts were with the owners of the property, and that he understood the association was loaning the lot owners a certain amount of money, and that this was tlie money Macy was to- pay out. Another of,the Coon Brothers testified that the contract of their firm was with the-' owners; that they (the owners) obtained the money to build the houses by loans from the defendant. Bowman testified to-a conversation with Macy in which Alacy said that, if he (Bowman) wo-uld give orders, lie (Alacy) would pay them. This is all the evidence material to bur inquiry, and it is-well to ask when the money was ever transferred by the borrowers to the contractors. When and how did they acquire any legal right thereto ? It- seems to us-that neither defendant nor Macy was. indebted to Bowman, or Coon Bros, at tlie time the orders were drawn, and it is. clear that neither had any money in'his hands belonging to-the drawers of the orders. The original borrowers never-parted with their titlei to the money, and they cannot be. deprived of their right thereto by orders drawn against the-same by men with whom they had contracted to erect their-buildings.

3 Again, as the orders were drawn on Macy, and not on-the defendant, and as there- was no written acceptance by any one, plaintiff is not entitled to- recover on the original petition, which alleges that the orders were drawn on the defendant, accepted by it, and partly paid. Thurston v. Mauro, 1 G. Greene, 231; Daniel Negotiable Instrument (4th ed.), section 303, and cases cited p Randolph Commercial Paper (1st ed.), section 131, and cases cited. In a proper action, and under proper pleadings,,, the plaintiff might recover on proof that Macy acted as agent for the defendant in accepting the orders- in parol, to the-same extent as if they had been so accepted by the defendant. No sncli pleading was filed until after the motion for new-trial was overruled, and judgment had been entered for plaintiff. That was too late.

4 It may he that the contractors had equitable liens on the fund in Macy’s hands, but thatwould not enable them to. make valid orders against the .same, which might he-accepted in parol. If they have equitable claims thereto, it will be time enough to enforce them when they ask that such relief be granted. As Macy could not pay out the money, except on orders of the borrowers, his verbal promise to accept orders drawn on him by the contractors, or his verbal acceptance of orders already drawn by them, is of no validity. Surely such acceptance would not be binding on either the original borrowers or the lender. To- render; ■judgment against the defendant on such a promise would' be to subject it to double liability, or to impose on it the-burden of setting up an equitable defense, as against the borrowers, should they attempt to enforce their legal rights. The contractors never had any legal right to the money placed by the original borrowers in the hands of Macy, and, as Macy, had noi money belonging to> them at the time it is claimed he niade verbal acceptances of the orders issued by them, such acceptances, even if established, will not be enforced in an action on such orders.

The court erred in rendering judgment against the defendant for the amount of the balance due on the orders.— Reversed.

Granger, O. J., not'sitting.

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Dissenting Opinion

Given, T.

(dissenting). — As I view this record, it shows that T. O. Macy was agent of the defendant; that the money loaned was placed in his hands, to be applied in payment for the improvements, in pursuance of an understanding between the defendant, the borrower, contractors, and subcontractors; that in pursuance of this understanding the plaintiff performed the labor and received the orders; and that Macy, with the money in his hands, accepted the orders, made partial payments thereof,, and promised to pay the balance. I do not question the.law as stated in the opinion, but deny its application to the facts. The law never works injustice. It is the misapplication of it that leads to wrong results. So far as appears, Mr. Macy has, of this borowed money, sufficient in his hands to nay the balance of these orders, as it was agreed should be done; yet the opinion says to the plaintiff : “Though you performed the labor, and, because of the arrangement for your compensation, abandoned your right to take a lien when you might, still, because your orders were ón J. O. Macy, and not on the defendant, and were not accepted in writing, you cannot be paid out of this money, though set apart for that purpose.” I do not believe that the law, properly applied, leads to such a result.