Finnerty v. Shade

I dissent from Division III of the majority opinion on the theory that Finnerty sought to recover on, and proved, an express contract, under which Harrison, and not Shade, was to pay the $3,000 in controversy. It seems to me that the majority entirely disregard the distinction between express and implied contracts. They also ignore the underlying principles of procedure which distinguish between a declaration upon an implied contract and one upon an express agreement.

Every day in the business world, oral contracts are made. These undertakings are just as sacred as written compacts. While, in making interpretations of conversations involved in oral contracts, it may be permissible for the courts to proceed upon the theory that men do not always remember, and therefore the one contender, rather than the other, is to be believed, yet that principle will not permit us to go so far as to say that we may disregard an express agreement, even though verbally made, and permit a litigant to recover upon something entirely different, which was not testified to by any witness. An oral contract, as well as one in writing, may be express. This doctrine is recognized by courts, textbooks, and encyclopedias. For illustration, it is said in 6 Ruling Case Law 587, Section 6:

"But, as ordinarily understood, the only difference between an express contract and a contract implied in fact is that in the former the parties arrive at their agreement by words, eitheroral [italics are ours] or written, * * * while in the latter, their agreement is arrived at by a consideration of their acts and conduct."

Likewise, a similar expression is made in 13 Corpus Juris 240, Section 6, where this language is used:

"An express contract is one where the intention of the parties and the terms of the agreement are declared or expressed by the parties, in writing or orally [the italics are ours], at the time it is entered into."

Those fundamental rules of law should be recognized and applied. To disregard them is to cause confusion and uncertainty, which, in time, must necessarily interfere with business transactions everywhere. On the theory of those well established principles, a review of the case at bar will now be made.

Contained in the appellee Finnerty's petition is the allegation "that the said Charles Shade [appellant]" or Harrison, aforesaid, agreed to pay appellee's intestate $3,000 deferred payment. Everything else, it is parenthetically noted, had already been paid by the appellant, Shade. Thus, according to the allegation aforesaid, the statement is in the alternative. (Whether such pleading is sufficient is a subject not before the court.)

Consistent with the allegation contained in the petition, the district court presented to the jury the duty of determining whether, under the evidence as alleged by appellee, Finnerty, "said Charles Shade [appellant] or Harrison, aforesaid, agreed to pay appellee's intestate the $3,000 deferred payment." Support for the alternative issue, so far as it relates to the appellant Shade's agreement, must be found, if at all, in the testimony of Ed Finnerty. An analysis thereof reveals the following statements concerning the alleged oral contract:

"I owed the bank [First National Bank of Rock Rapids] $7,000. My notes [the two before mentioned, making up the $7,000,] were at the banks at Larchwood and Inwood. The notes came due about April, 1923. I could not pay the notes. When the notes for $7,000 came due, I told Shade [appellant] I could not pay them, and that I would sell that mortgage [the $19,000 McLaughlin mortgage] at a big discount. He [appellant] wanted to know how much, and I told him I did not want all the money right away. He said: ``I will take it. I will give you $3,000,' and Harrison was to give me $3,000, and he [appellant] was to cancel. my notes for $7,000. Q. Just what arrangement did you have then? A. He [appellant] said that he would pay me $3,000 right away, and Harrison, he knew, was hard up, and didn't have the money, and I would have to wait on him [Harrison] awhile. Q. For the $3,000? A. Yes, for the balance, of $3,000. * * * Q. What was said about how much he [appellant] and Harrison would pay you? A. They were to pay me $3,000 apiece."

Such was the material part of the witness's testimony on direct examination. Then he continued, upon cross-examination, in this way:

"Q. And he [appellant] said he was to pay you $3,000 and Harrison was to pay you $3,000? A. Yes. The deposit I got was what Shade paid me. * * * Q. Had you seen Shade between the time you assigned the mortgage and the time you talked to him in Sioux Falls? A. Oh, yes, many times. Q. Nothing had ever been said about the $3,000 that you say was owing you during that two years? A. Well, no, only what he [appellant] told me at the time of the transaction. He [appellant] said not to worry. He said Harrison was hard up. That's what he [appellant] told me there in Sioux Falls [about two years after the original contract was made], and when the deal was made in Rock Rapids [approximately two years before the conversation at Sioux Falls]. I did not askShade for the three thousand. I knew Mr. Harrison. [The italics are ours.] Q. The only time you ever requested payment of the $3,000 that you say Shade [appellant] said Harrison was to pay, was there in Sioux Falls * * * about two years ago, and to Mr. Harrison last year? A. Yes."

Manifestly, when the record is construed most favorably for appellee, there is not a word in that testimony that can fairly and conscientiously be said to support any agreement whereby appellant undertook the payment of the remaining $3,000. Harrison, if anyone, was to discharge that obligation. Not only once, but repeatedly, appellee's intestate affirms and reaffirms that Harrison, and not appellant, was to pay the money in suit. Parenthetically, it is here noted that this is not an action to recover from appellant because: First, of fraud in misrepresenting his right to represent Harrison; second, because the right to represent Harrison did not exist; third, of quasi contract, based upon unjust enrichment; or fourth, of any other theory except an ordinary suit on an express oral contract.

It is fundamental that a contract is based upon an offer and an acceptance. There must be a meeting of minds. Otherwise there is no agreement. Applying that well-known principle to the evidence in this record, it is very plain that appellant never agreed to pay appellee's intestate the $3,000 now claimed. Whatever undertaking existed in that respect was imposed upon Harrison, so far as regards appellant's consent. Also, appellee's intestate intended, according to the evidence, not that appellant would discharge this obligation, but that Harrison would do so. Where, then, did the minds meet? Certainly not upon a contract wherein appellant was to assume the burden of this debt. Neither appellant nor appellee's intestate intended that. Each mind met upon the proposition that Harrison would assume the liability for the $3,000. Clearly, then, that must have been the contract, if any at all existed in this respect. There was nothing upon which the jury could base any other finding. The whole theory of the trial was upon that idea. Fraud, misrepresentation, false warranty, quasi contract, or any other doctrine, was not pleaded, proved, or relied upon. If one contract is relied upon, another cannot be proven. Hence, in the case at bar, there was nothing in the record for submission to the jury concerning appellant's liability for the $3,000 which, under the alleged agreement, Harrison was to pay, because, construing the evidence in that regard in its most favorable light for appellee, it is plain and uncontradicted that the latter's intestate described a contract wherein Harrison, and not appellant, Shade, was to be obligated for the deferred payment. Resultantly there was nothing for the jury's consideration; for, having thus proven that Harrison, if anyone, is liable, appellee cannot recover against appellant, Shade, under the contract which was pleaded and submitted to the jury.

When reaching the above and foregoing conclusion, full consideration has been given to the testimony of the appellant, Shade, and especially that part thereof wherein he replies to the proposition of sale made by the said Ed Finnerty. After the sale was proposed, Shade is alleged by Finnerty to have said: "I will take it." Take what? Manifestly, the proposition outlined by Finnerty, which was that Shade, after satisfying the $7,000 indebtedness, would pay Finnerty $3,000, and Harrison would pay the other $3,000. It must be remembered that Finnerty was there himself, stating the conversation. Shade does not claim that was the conversation. The latter contends that he agreed to pay $10,000 for the note, and no more. Finnerty urges that he was to receive another $3,000, but in the testimony he emphatically declares that Harrison was to pay it. Under the evidence, the jury could find nothing more than Finnerty's version of the conversation, because Shade disputes Finnerty in reference to the $3,000 in controversy. Shade says that he never agreed to pay said $3,000, and Finnerty himself stated that Harrison was to pay it. Then it is clear that there was nothing upon which a jury could say that Shade ever agreed to pay it, for neither Shade nor Finnerty claimed that Shade was to pay this sum. Finnerty says Harrison was to pay it, and Shade declares no one was to assume the obligation. So, appellee proved that Harrison, and not Shade, was to pay the $3,000. The contract was express. Forsooth, appellant was absolved from responsibility.

Under those circumstances, well established rules of law and procedure bar appellee's recovery. Analogous authorities are:Petersen v. Ochs, 40 Iowa 530; York v. Wallace, 48 Iowa 305;Proctor v. Reif, 52 Iowa 592; Duncan v. Gray, 108 Iowa 599;Shambaugh v. Current Sanderson, 111 Iowa 121; Roundy McMurrayCo. v. Nicholson Prod. Co., 166 Iowa 39; Bierkamp v. Beuthien,173 Iowa, 436; Hankins v. Young, 174 Iowa 383; Roche v. Star LandCo., 176 Iowa 34; Quillen v. Minneapolis St. L.R. Co., 181 Iowa 536; Globe Indemnity Co. v. Anderson-Deering Co., 200 Iowa 1035;Bremhorst v. Phillips Coal Co., 202 Iowa 1251; Olson v. Shuler,203 Iowa 518.

Appellee, if he relies upon some other theory, must plead and prove it. Adjudicated cases, stretching over the years, and requirement of orderly procedure in courts of law, make this absolutely necessary. Some support is found by the majority to sustain the contract pleaded, through a conversation alleged to have been had at Sioux Falls, South Dakota, between appellant and appellee's intestate, about two years after the McLaughlin mortgage had been sold, under the transaction aforesaid, — that is to say, two years after the alleged contract was entered into. Preliminary to a discussion of this fact, it will elucidate to note that no one claims a novation, modification, or an additional agreement. Of course, whatever the contract may have been, it was fully completed and final in April, 1923. Later conversations might confirm that agreement or prove its existence, but could not, under the circumstances, enlarge or change it. The Sioux Falls conversation, as shown by the record, was:

"Q. The only time you ever requested payment of the $3,000 [from appellant] that you say Shade [appellant] said Harrison was to pay, was here in Sioux Falls, about two years ago, and to Mr. Harrison last year? A. Yes. Q. You didn't take any evidence from either Mr. Shade or Mr. Harrison to pay the $3,000 that was due? A. No, I did not. Q. And no time was fixed when it would be paid? A. No. Only just as quick as times got better, they would pay it."

Obviously, the inference contained in the last answer cannot change or amend the original contract. Two years, it must be remembered, had transpired. Following that testimony, however, appellee's intestate explained his evidence, so as to exclude any idea that appellant, Shade, had originally undertaken or later assumed the obligation of Harrison. Reference is made to the following record on redirect examination:

"He [Harrison] said that Shade [appellant]never told him anything about it [the transaction here involved], and that he [Harrison] didn't feel like paying $3,000 until he knew what became of the mortgage. That's all he [Harrison] said about it."

Continuing, then, on re-cross-examination, appellee's intestate reaffirmed his original testimony in this way:

"Q. When you first had the transaction and assigned the mortgage, what he [appellant] said about paying what was coming to you was that he would pay $3,000 and Harrison would pay $3,000? A. Yes. Q. Then Shade [appellant] didn't agree to pay but $3,000? Is that right? A. That was right at that —, yes. Q. But he didn't say he [appellant] would pay it ever? A. Well, no, he [Shade] never * * * told me he would pay it. He [Shade, appellant] said Harrison would pay it, but Harrison was hard up at the time."

To begin with, this Sioux Falls conversation, as before related, took place two years after the alleged contract was consummated. Therefore, under no stretch of the imagination could this belated conversation have become a part of the original contract, under the facts here presented. Even appellee concedes that, whatever the agreement was, the same was completed at the original conversation, which occurred two years before the Sioux Falls transaction. Modification of the original contract is not alleged or proven. Consideration for a new contract in no event appears, and, as just stated, contention that there was novation or modification is not made. Furthermore, the Sioux Falls conversation, when considered as a whole, in the light of Finnerty's entire testimony, including his cross-examination, supports and confirms, rather than minimizes, appellant Shade's theory of the contract; because both conversations, as related by Finnerty, indicate that Harrison, and not Shade, was to pay the $3,000. There is no place here for an implied agreement, for such implication has no place either in the pleadings or the proof.

Because the appellee did not prove the contract pleaded, I would reverse the judgment of the district court.

De GRAFF, WAGNER, and GRIMM, JJ., join in the dissent.