Title: Shold v. Goro
Citation: 449 N.W.2d 372
Docket Number: 88-1804
State: Iowa
Issuer: Iowa Supreme Court
Date: December 20, 1989

449 N.W.2d 372 (1989) Jerri SHOLD, Appellant, v. Terry GORO, Appellee. No. 88-1804. Supreme Court of Iowa. December 20, 1989. Leslie Knock of Mershon, Snow &amp; Knock, Cedar Falls, for appellant. Samuel T. Beatty of Mosier, Thomas, Beatty, Dutton, Braun &amp; Staack, Waterloo, for appellee. Considered by McGIVERIN, C.J., and HARRIS, LARSON, SCHULTZ, and ANDREASEN, JJ. LARSON, Justice. Jerri Shold and Terry Goro were lovers for several years and, for a while, lived together. Throughout the period of their relationship, Jerri advanced money to Terry for various purposes which, she claimed, were intended to be loans. After the relationship ended, Jerri sued to recover these advances. The district court denied relief, and Jerri appealed. We reverse and remand. Although unjust enrichment is generally an equitable matter, Regal Ins. Co. v. Summit Guar. Corp., 324 N.W.2d 697, 704 (Iowa 1982), this case was tried as a law action, and we will consider it as such on appeal. See Beckman v. Carson, 372 N.W.2d 203, 206 (Iowa 1985). Jerri and Terry met in 1977 when Jerri was a student at the University of Northern Iowa. Terry was one of her instructors. In April of 1978, they began to have an affair. Both were married at the time, although Jerri was separated from her husband and was soon divorced. In 1980, Terry took a job in Minneapolis, Minnesota, and moved there with his family. Shortly thereafter, Jerri obtained a job with the same company and moved to Minneapolis. Although Terry expressed a desire to leave his wife, he said he could not afford to do so. Jerri agreed to help. Each month Terry would let Jerri know the amount of his financial needs, and she would give him a check for that amount. In 1982, Terry was transferred to Davenport, Iowa, and Jerri followed later the same year. In 1982, Jerri and Terry decided to go to California to look for jobs and ultimately moved there for a period of time. Terry's son, Todd, accompanied them. On their arrival in California, several bank accounts were established out of which Jerri paid the monthly expenses of the parties and drew checks payable to Terry as his needs arose. She testified that the separate accounts were used in order to keep track of her expenses. Terry, who was apparently a devoted record keeper, kept detailed accounts of all amounts received from Jerri during the period of their relationship. Ultimately, the parties returned to Iowa where Terry again became employed with the university. The parties continued to see each other for approximately two years, until Jerri was transferred to the Detroit, Michigan, area. *373 Jerri acknowledges that there was no specific agreement as to when the money would be repaid, because they did not know how long Terry would need the money. Most of the checks payable to Terry were marked "loan" or "LN," and Terry does not deny that they were initially intended to be loans. He does claim, however, that at least some of the loans had been forgiven. The trial court, in denying recovery, relied primarily on our case of Slocum v. Hammond, 346 N.W.2d 485 (Iowa 1984). In Slocum, the plaintiff sought recovery under a theory of unjust enrichment, asking for an equitable division of assets acquired during the period of the parties' cohabitation. In denying recovery we said that Id. at 491-92. In the present case, the facts are quite different. Jerri's claim does not arise out of the relationship of the parties, but from loans made to Terry. Although the loans were intended to foster their relationship and, perhaps, to eventually encourage a more permanent arrangement, they retained their character as loans. They were clearly not accumulated property of cohabiting parties such as we found in Slocum. The practical effect of denying recovery under the facts of this case would be to permit a person to escape payment of a debt by simply entering into a romantic relationship with the creditor. A similar case was presented in Watts v. Watts, 137 Wis.2d 506, 405 N.W.2d 303 (1987), in which the court stated: Id. at 511-12, 405 N.W.2d at 305-06. Another Wisconsin case, Lawlis v. Thompson, 137 Wis.2d 490, 405 N.W.2d 317 (1987), is also on point. The parties had cohabited; the woman had assisted the man financially; and there was no express agreement for repayment. The court in Lawlis held that the plaintiff could sue for unjust enrichment despite the cohabitation, so long as the claim existed independently of the cohabitation and was supported by separate consideration. Id. at 502, 405 N.W.2d at 321. Other jurisdictions have held that, where the benefit received was not based on the parties' relationship, it does not violate public policy to grant relief against a party unjustly enriched. See Mason v. Rostad, 476 A.2d 662 (D.C.1984); Spafford v. Coats, 118 Ill.App.3d 566, 74 Ill.Dec. 211, 455 N.E.2d 241 (1983); Collins v. Davis, 68 N.C.App. 588, 315 S.E.2d 759, aff'd, 312 N.C. 324, 321 S.E.2d 892 (1984). In Gard v. Razanskas, 248 Iowa 1333, 1336, 85 N.W.2d 612, 614 (1957), we quoted with approval this language from the Restatement of Restitution: A person who has been unjustly enriched at the expense of another is required to make restitution to the other.... A person is unjustly enriched if the retention of the benefit would be unjust. A person obtains restitution *374 when he is restored to the position he formerly occupied either by the return of something which he formerly had or by the receipt of its equivalent in money. Accord Shadle v. Borrusch, 255 Iowa 1122, 1126-27, 125 N.W.2d 507, 510 (1963). In Shadle, we also stated: Id. at 1127, 125 N.W.2d at 510. We believe that Terry's retention of the loan proceeds without repayment would be unjust, and the district court, in denying relief, applied an erroneous interpretation of Slocum. We therefore reverse. Jerri is entitled to a judgment against Terry for all of the amounts advanced by her as loans, subject to any credits by reason of any forgiveness of indebtedness by Jerri or payments by Terry. Under the present record, we are unable to determine the exact amount to which Jerri is entitled and therefore remand to the district court for that purpose. REVERSED AND REMANDED.