Opinion ID: 2011697
Heading Depth: 1
Heading Rank: 1

Heading: Before entertaining defendant's contentions we first consider our scope of review.

Text: Generally, an action on contract is treated as one at law. See Brammer v. Allied Mutual Insurance Company, 182 N.W.2d 169, 172 (Iowa 1970). Conversely, accounting issues are usually deemed to stand in equity. See Engel v. Vernon, 215 N.W.2d 506, 512 (Iowa 1974); 1 Am.Jur.2d, Accounts and Accounting, § 44; 1 C.J.S. Accounting § 14. As above stated, plaintiff commenced an action at law for recovery on the November 1970 note. By counterclaim, however, defendant sought an accounting. Apparently trial court proceeded on the premise this issue was determinable in equity, albeit validity of the contract must be resolved at law. See generally 27 Iowa L.Rev. 451 (1942). All issues, legal and equitable, were tried to the court. Further in this regard, we have repeatedly held a cause is reviewed as tried below. See In re Estate of Dallman, 228 N.W.2d 187, 189 (Iowa 1975); Davis v. Hansen, 224 N.W.2d 4, 5 (Iowa 1974). Therefore, our review on the question as to validity of the contract is governed by this well established rule in the case of In re Estate of Dallman, supra : `[F]indings of fact by the trial court have the effect of a special verdict and are equivalent to a jury verdict. If supported by substantial evidence and justified as a matter of law, the judgment will not be disturbed on appeal.    It follows, the rule does not preclude inquiry into the question whether, conceding the truth of a finding of fact, the trial court applied erroneous rules of law which materially affect the decision.' On the other hand, as to trial court's disposition of the accounting issue, our review is de novo. See Engel v. Vernon , cited above. And as this court said in Ontjes v. McNider, 224 Iowa 115, 120, 275 N.W. 328, 331 (1937): [W]e see no insuperable difficulty in reviewing the equitable issues by trial de novo, while considering the alleged errors asked to be corrected in the law action, in an appeal from the final judgment on the merits. II. As heretofore noted, it is initially contended trial court erroneously found defendant was not fraudulently induced to execute the above mentioned note. This claim is apparently premised upon certain entries in plaintiff corporation's books. Defendant's Exhibit A is a copy of a ledger account maintained by plaintiff. Debit and credit entries therein reflect transactions between the parties commencing January 31, 1965. As of June 30, 1969, defendant owed plaintiff a balance of $52,311.21. A subsequent entry, again dated June 30, 1969, discloses defendant's account was credited by a $26,111.21 write-off. This facially reduced to $26,200 defendant's stated balance. Further additions and subtractions by way of debit and credit entries to defendant's June 30, 1969 account of $26,200 resulted in a balance of $31,187.85. Plaintiff later redebited defendant's account in the amount of the previous June 30, 1969, $26,111.21 write-off. This redebit, when added to defendant's previously noted balance of $31,187.85, made a total of $57,299.06 owing to plaintiff. As stated, defendant executed a note payable to plaintiff for such sum, being the balance then shown on plaintiff's ledger. In an attempt to defeat recovery thereon, defendant contends plaintiff was obligated to inform him of the June 30, 1969 write-off before he signed the November note and failure to do so resulted in fraudulently inducing him to execute the instrument for a greater sum than was owing. The essential elements of fraud are set forth in Phoenix v. Stevens, 256 Iowa 432, 436, 127 N.W.2d 640 (1964), and need not be here repeated. Moreover, the burden was upon defendant to establish every element of such defense asserted by him. See Phoenix v. Stevens, supra ; Lamasters v. Springer, 251 Iowa 69, 73, 99 N.W.2d 300 (1959). There is no need to dwell at length on defendant's instant assignment. Our examination of the record fails to disclose defendant was in any manner deceived or injured by the aforesaid write-off and redebit. In fact, this book transaction was merely an intercorporate entry effected entirely for tax purposes. Illustratively, trial court stated: This [June 30 write-off] was entirely an internal matter of the company. Their outstanding advance account with Mr. Sears was not being reduced. Their certified public accountants advised them through a correcting entry to transfer that amount [$26,111.21] from Mr. Sears' account, crediting him and debiting the log purchase account which would have the effect of showing an increased cost of logs purchased. This is logical. In brief, trial court correctly found defendant had failed to carry his burden of proof on the asserted defense of fraud in connection with the giving of said November 1970 note. Defendant's first contention in support of a reversal is devoid of substance. III. We next entertain defendant's claim to the effect trial court abused its discretion in allowing the in-course-of-trial amendment of plaintiff's answer to defendant's counterclaim. Leave to file same was granted over defense counsel's objection during examination of defendant's first witness. Relevant here is Iowa R.Civ.P. 88 which provides: Any pleading may be amended before a pleading has been filed responding to it. The court, in furtherance of justice, may allow later amendments,    which do not substantially change the    defense. Allowance of an amendment to a pleading is the rule and denial the exception, although an amendment is not permissible which will substantially change the issue. Additionally, a trial court has considerable discretion as to whether an appropriate request for leave to amend should be granted or denied and we will reverse only where a clear abuse of discretion is shown. See Mora v. Savereid, 222 N.W.2d 417, 422 (Iowa 1974); Galbraith v. George, 217 N.W.2d 598, 601 (Iowa 1974); Madison Silos, Div. of Martin Marietta Corp. v. Wassom, 215 N.W.2d 494, 497 (Iowa 1974). Looking now to the pleadings, paragraph 2, count III of plaintiff's original answer to defendant's counterclaim contains this relevant allegation: [A]nd [plaintiff] admits that true accountings were made from time to time, and furnished by Plaintiff to Defendant, including a full and complete accounting on or about September 30, 1970, which culminated in the approval thereof and the execution of the [November 3, 1970] note   . Plaintiff's subsequent amendment stated, in part: That the said [November 3, 1970] note was offered by the Defendant    and Plaintiff accepted the same as full and complete settlement    of its claim    and that the Defendant is now estopped from proceeding with    his demand for an accounting. At the outset it is apparent this amendment neither asserted a new defense to defendant's counterclaim for accounting nor materially changed plaintiff's original defense. It further appears, despite the fact that plaintiff did not specifically use the word estopped or estoppel in its original responsive pleading, such was, in essence, pled by facts giving rise thereto. See Janssen v. North Iowa Conf. Pen., Inc. of Meth. Ch., 166 N.W.2d 901, 907 (Iowa 1969). Furthermore, settlement and estoppel constitute an appropriate defense to an action for accounting. See 1 Am.Jur.2d, Accounts and Accounting, § 61; 1 C.J.S. Accounting § 29. We find no abuse of discretion by trial court in permitting the controverted amendment. Defendant's second assigned error is without merit.