Opinion ID: 1626883
Heading Depth: 1
Heading Rank: 8

Heading: acceptance of agency responsibility

Text: The undersigned, Walter H. Noack, hereby accepts the above responsibility to act as agent with respect to this agreement and with respect to the transfers of title. Walter H. Noack The agent was duly acknowledged by all parties. A warranty deed was prepared by Allan Nash and executed by Tracy North. The deed was taken to Tracy North's residence at Vail, Iowa, where his wife's signature was obtained and notarized. As shown the agreement provides that Tracy would on that date (September 10, 1967) deed three farms to Walter Noack as agent and with authority for Noack to sell them. The contract provided for distribution of the proceeds. At the close of this meeting Leonard Baker and his wife executed a deed (Leonard drove him to get his wife's signature) releasing their interest in the farm sold to the Collisons, (title problem referred to supra), and at the meeting Leonard also executed two $15,000 notes to the two banks which were holding the kite checks. Apparently it was necessary that the kite checks be taken care of immediately, and that is the reason that the two notes were executed by Leonard at this Sunday meeting. The shortage under the check floating scheme at that time was estimated to be about $30,000. It was later determined to be $26,700. The evidence also indicates that Baker had given some checks to help out but was not actively involved in the check floating scheme. On October 19, 1967 the farms were sold privately at Allan Nash's office. The farms were not advertised because it was thought that the available market might be depressed if word leaked out concerning the troubles and activities of Allen and his father. Sale contracts were executed but need not be discussed herein. Incident to the September 10th meeting it was admitted by plaintiff that at least twice Allan Nash told plaintiff that he should have independent counsel. There was some evidence that this admonition was given three times. Plaintiff refused to call legal counsel. He said a neighbor had advised against calling a lawyer. There was no evidence that plaintiff was surprised at anything disclosed or discussed at the meeting. Although plaintiff later testified he understood the farms would not be sold without his consent the record discloses no evidence of any fraud, misrepresentation or concealment. There was no evidence that the deed was to be treated as a mortgage. There was a strong family relationship and there was evidence that plaintiff said he did not want anyone to get hurt. Plaintiff was experienced in business and financial affairs. He operated on a large scale, borrowed large sums of money and knew the results of signing written obligations. He had just lost one farm because of his warehouse bond obligation. Except that he made a costly agreement there was nothing to indicate mental incapacity. The brief and prayer of plaintiff's petition in substance is as follows: He asks that the titles to the three farms be quieted in him; that it be decreed that Noack holds title to the three farms as security for the payment of the $26,700 check float and this indebtedness only; alternatively, plaintiff in his prayer asks judgment against the defendants for $120,000 together with costs. Plaintiff also claims that his signature to the contract and deed was obtained by fraud and duress. By previous order the issues as to the contract purchasers were separated for later hearing if such hearing was necessary. I. The first legal issue in the case to be determined is whether the warranty deed to the three farms executed by Tracy North and his wife on September 10, 1967 was an absolute conveyance or merely given for security purposes only. It is so well settled as to need no extensive discussion that a transfer of title absolute on its face if intended as security only will be construed as a mortgage. Intent may be shown by parol. In order that a deed be held a mortgage the evidence must be clear, satisfactory and convincing. Collins v. Isaacson, Iowa, 158 N.W.2d 14, 18, Koch v. Wasson, Iowa, 161 N.W.2d 173. There is no claim that the deed to Walter H. Noack was a conveyance to him to hold for his own benefit except as he was one of the creditors. The written agreement leading to the deed clearly refutes the claim that the deed was merely security for the payment of Tracy North's debts at some future date. Pursuant to the agreement the deed was for the purpose of expediting the sale of the farms and the liquidation of existing debts and expenses to the extent possible. The balance of proceeds [if any] to be paid in full to Tracy North   . It should be noted that the agreement specifically authorized the sale by Mr. Noack. We know of no law holding that in the absence of fraud or misrepresentation such an agreement should be construed other than according to its terms. II. We quote, except for minor changes, from the trial court's conclusions: The plaintiff contends that a confidential relationship existed between attorney Nash, the two bankers and Tracy North at the time of the transaction and therefore the burden of proof shifted to them to show that the transaction was free from duress and fraud and that Tracy North acted with full knowledge of the facts and without any impairment of his will.    [Sours v. Colvin, 244 Iowa 40, 55 N.W.2d 462, Thorne v. Reiser, 245 Iowa 123, 60 N.W.2d 784]. The court is of the opinion that even if a fidiciary relationship was established (a finding I do not make) the evidence clearly and satisfactorily discloses that Tracy North and his wife were fully advised as to the nature and purpose of the contract and deed. The testimony of attorney Nash, an attorney for many years, is particularly persuasive in establishing that no fraud or duress had been perpetrated. He met with the parties for about five hours. During the meeting    he took great pains to insure that Tracy understood his acts. On at least two and perhaps three occasions he advised Tracy to seek independent advice. Mr. Nash has specialized in probate and real estate law for a number of years. He is regarded as a person of impeccable integrity as well as diligent in the performance of his duties as an attorney. This court is convinced beyond a shadow of a doubt that Allan Nash carefully explained to the plaintiff the nature of the papers he had prepared at the request of the parties   . The check float, the bonding [company] judgment and the Baker sheep note were fully discussed. The court concludes that the evidence clearly and satisfactorily establishes that it was the uninfluenced wish and desire of the plaintiff and his wife to convey the three farms absolutely to Noack and from the proceeds therefrom to pay off the liens thereon, the expenses of the sale, including attorney fees and commissions and the balance was to be applied on the indebtedness caused by the check float; next to the bonding [company] judgment in the hands of Walter Noack, and lastly to the balance due on the Baker sheep note. The events that followed the September 10, 1967 meeting fully support the conclusions reached. Tracy and members of his family attended the farm sales at Nash's office in Denison, Iowa. There is testimony that attorney O'Connor was present and that he was acting either as attorney or as a friend of Tracy's and his family. Tracy bid on all three of the farms. One farm was sold to him on condition that he raise a down payment within seven days, and this Tracy was unable to do. Both Tracy and Leonard Baker testified that the farms brought a fair price. In November, 1967 Tracy and Leonard examined the preliminary accounting made by Noack as to the allocation of the proceeds from the earnest money payments and no objections were raised by either of them. Our court in Mohler v. Andrew, 206 Iowa 297, 300, 218 N.W. 71, said: `Mere advice, argument, importunity, suggestion, or demand is not sufficient to constitute such duress as to vitiate an instrument duly executed by competent persons who are fully advised regarding the transaction in which they are engaged.   ' Estoppel as pleaded by the defendants is also present in the case. The law estops Tracy from complaining about the transaction (at least in the absence of fraud or duress) when he permitted the property to be sold and pass to the hands of innocent purchasers. 59 C.J.S. MortgagesEstoppel or Waiver § 147, pages 196 and 197. III. Sale of the farms was held on October 19, 1967, 29 days after the date of the agreement. Real estate agents and prospective buyers had been contacted and were present. There was testimony that many phone calls had been made. There was no secrecy and bidding was open. There was no objection as to procedure, manner, form or conduct of the sale. Plaintiff was present and participated. He bid on all three farms. He was the highest bidder on one. He was unable to make the down payment. During the bidding and while plaintiff was bidding the bids had gone to $77,000. Plaintiff's final bid was $78,000. When plaintiff was unable to make a down payment as required Mr. Noack sold the farm to the original bidder for $74,000, the amount of his original bid. He made a down payment of $25,000. This was 7 or 8 days later. There is nothing in the record to suggest that at that time the buyer was willing to pay more. Neither the record nor transcript discloses any bad faith. The transaction ended up with $3,000 less money than would have been available if plaintiff had let the next to last bid at the sale prevail. Plaintiff's overbidding when he was without funds available for a down payment caused the loss. Plaintiff may not legally complain. IV. Appellant argues that there was error in finding that the agreement was supported by consideration. Section 537.2, Code of 1966, provides: Consideration implied. All contracts in writing, signed by the party to be bound or by his authorized agent or attorney, shall import a consideration. Section 537.3 provides: Failure of consideration. The want or failure, in whole or in part, of the consideration of a written contract may be shown as a defense, total or partial, except as provided in the Uniform Commercial Code, chapter 554. The burden was on plaintiff to establish lack of consideration. DePenning v. Bedell, 242 Iowa 102, 106, 44 N.W.2d 385, Sisson v. Janssen, 244 Iowa 123, 130, 56 N.W.2d 30. These statutes have no application where the consideration is set forth in the written instrument. Dullard v. Schafer, 251 Iowa 274, 284, 100 N.W.2d 422. The agreement involved here made no mention of consideration. The evidence does not sustain plaintiff's burden of showing lack of consideration. There was a long record of close family and business relationships. Plaintiff, his son and stepson had on previous occasions signed substantial obligations for each other. They had helped each other without accounting as to pay. Plaintiff needed and received deeds including a deed from Baker and his wife to complete a sale and pay the bonding company judgment. They all had checks involved in the float or kite. During August 1967 plaintiff wrote checks on Westside State Savings Bank to Westside Elevator totaling over $51,000. At no time during this period did he have a bank account balance of more than $900. He knew he had insufficient funds. In the past plaintiff had frequently written checks that overdrew his account and had made them good when called, but there was no evidence that he had previously engaged in an active check kiting scheme. Plaintiff agreed, in fact he volunteered, to deed three farms to be sold as a rescue operation. If he did what he wanted to do he may not now complain about lack of consideration. There was no misunderstanding by plaintiff as to what he had done. About a month later he made application for a farm loan on other land. He stated that he owned 1243 acres of land in Crawford County and had recently sold three farms to pay the bonding company over $110,000 on grain loss of his son. V. Plaintiff complains about the disbursement of funds. No final accounting appears. Whether there will be an excess or insufficiency does not appear. Mr. Noack disbursed the first $40,000 received. As noted in the quotation from the trial court (Division II, supra), plaintiff and Leonard Baker drove to Westside and visited Mr. Noack. Mr. Noack showed them the statement of the account and explained it to them. Neither then nor afterward for some time did plaintiff make any objections. Plaintiff now complains about the payment of real estate commissions and attorney fees. He does not question the reasonableness of the charges but says they should not be charged to him. The charges were proper under the agreement. Paragraph 3 of the agreement authorizes sale of the farms, delivery of the proceeds and payment of expenses incurred in connection with this agreement. From the $40,000 down payment Mr. Noack paid to Noack and Johnson real estate commissions in the sum of $1,130 for sale of the McCullough farm and $830 for sale of the Yankey farm. There was testimony that the payments represented the regular and going commissions in the county. Plaintiff was aware of this as he had paid them a commission on a previous sale. The payees were licensed agents and produced the buyers. The commissions were part of the expense incident to the sales. Attorney fees in the sum of $1,000 were paid to Nash and Hall, but $567.54 of the amount paid was for services and expenses incident to the Ethel North (plaintiff's deceased first wife) estate and clearing the title to the farm sold to pay the bonding company judgment against plaintiff. Mr. Noack was billed for this account but the services were for the benefit of plaintiff. They were a part of the necessary expense incident to the satisfaction of the judgment against plaintiff. The remainder of the $1,000 was for services incident to the agreement, sale, and matters incident thereto. The charges were clearly expenses incurred in connection with the agreement. The charges were reasonable. Appellant's complaint is without merit. The right of attorneys to make charges for services that are not chargeable to plaintiff is not involved herein. VI. The trial court concluded his careful analysis of the facts and law with these words: In conclusion the court would like to state that he has a certain amount of sympathy for Tracy and his other children. It is another tale of woe that we see not too infrequently. Here an elderly father has sacrificed a fortune to bail out an erring and bungling son. Tracy North must now pick up the pieces because that is what he agreed to do. We agree. The court adjudged and decreed as follows: 1. The warranty deed executed by Tracy North and his wife on September 10th, 1967 to the three farms is valid and absolute. 2. From the proceeds of the farm sales there must be paid the expenses incurred including the liens thereon, if any, the attorney fees and real estate commission. 3. The balance shall be applied insofar as funds permit as follows: a. Check float (if not already paid in full;) b. The judgment including accrued interest and costs due Walter Noack; c. The sheep note of Leonard Baker's which had a balance on September 10th, 1967, of $58,615.21 together with accrued interest; d. The balance, if any, to Tracy North. The case is Affirmed.