Parol evidence is not admissible to show that the grantee in a deed took title only as agent or trustee for another, in the absence of any showing on the face of the instrument, indicating a representative capacity.

Bryan v. Brazil, 52 Iowa, 350, 3 N. W. 117; Beeson v. Green, supra; 22 C. J. § 1654; Babbett v. Young, 51 N. Y. 238; Heffron v. Pollard, 73 Tex. 96, 15 Am. St. Rep. 764, 11 S. W. 165; Clark v. Talbott, 72 W. Va. 46, 44 L.R.A. (N.S.) 731, 77 S. E. 523; Hypes v. Griffin, 89 Ill. 134, 31 Am. Rep. 71; Sparks v. Dispatch Transfer Co. 104 Mo. 531, 12 L.R.A. 714, 24 Am. St. Rep. 351, 15 S. W. 417.

When defendant relies upon want of consideration as a defense to a written instrument, he must plead and prove failure of consideration.

Gould v. Gunn, 161 Iowa, 155, 140 N. W. 380; Mosnat v. Uchytil, 129 Iowa, 274, 105 N. W. 519; University of Des Moines v. Livingston, 57 Iowa, 307, 42 Am. Rep. 42, 10 N. W. 738; State v. Wright, 37 Iowa, 522; Smith v. Frantz, 59 Ind. App. 260, 109 N. E. 407; Nixon v. Beard, 111 Ind. 137, 12

N. E. 131.

- Messrs. Johnson, Donnelly & Lynch, for appellee:

The rule that oral evidence is not allowable to work a change or variance in the terms, conditions, etc., as fairly expressed by the writing, is enforced only where a controversy arises between the parties to the contract or their privies. As against a stranger to the contract, a party thereto may assert that the agreement was other than, or different in any respect and to any extent from that which the writing imports.

Peters v. Goodrich, 192 Iowa, 790, 185 N. W. 903; Livingston v. Stevens, 12? Iowa, 62, 94 N. E. 925; Clark v. Shannon & M. Co. 117 Iowa, 645, 91 N. W. 923; Re Shields Bros. 134 Iowa, 559, 10 L.R.A. (N.S.) 1061, 111 N. W. 963; Aultman Engine & Thresher Co. v. Greenlee, 134 Iowa, 368, 111 N. W. 1007; Logan v. Miller, 106 Iowa, 511, 76 N. W. 1005; De Goey v. Van Wyk, 97 Iowa, 491, 66 N. W. 787; Fuller v. Lamar, 53 Iowa, 477, 5 N. W. 606.

Where a grantee receives title solely in a trustee capacity, and without any beneficial interest in the realty, and merely as a holder for the benefit of the real purchaser, such grantee is 50 A.L.R.-77.

not liable on a clause assuming payment of the mortgage on the land.

27 Cyc. 1353; 19 R. C. L. 379; Klapworth v. Dressler, 78 Am. Dec. 88, note; Deyermand v. Chamberlin, 22 Hun, 110.

Appellee was entitled to show his true relation to the transaction, and that he was a mere trustee, without beneficial rights, and that the corporation was the beneficial owner and the real purchaser, without reforming the deed.

Shult v. Doyle, 200 Iowa, 1, 201 N. W. 787; Peters v. Goodrich, 192 Iowa, 790, 185 N. W. 903.

Where the suit is based upon a contract not signed by the party to be charged, an essential element of plaintiff's case is the pleading and proving of a consideration.

Snyder v. Sargeant, 197 Iowa, 475, 196 N. W. 22.

Vermilion, J., delivered the opinion of the court:

The defendants E. M. and Jennie E. Sabin executed the mortgage in question to the appellant to secure their notes in the sum of $13,000. Thereafter E. M. Sabin entered into a written contract with E. W. Dennstedt for the sale of the mortgaged premises to the latter, who in the contract assumed payment of the mortgage. The conveyance of the land in pursuance of this contract was made by the Sabins to the appellee A. L. Dennstedt by warranty deed, in which the grantee assumed and agreed to pay the mortgage. The appellee subsequently conveyed the land to the defendant Curley by a deed in which the grantee also assumed payment of the mortgage. Judgment for the amount due under the mortgage was asked against the mortgagors and against the appellee and Curley on the assumption clauses in the respective conveyances to them. The relief prayed was denied as against the appellee, and it is from this judgment the plaintiff appeals.

The appellee claimed, and, subject to objection, introduced parol evidence to show, that the Dennstedt Land Company, a corporation, was

the real purchaser of the land from Sabin; that the contract therefor was made in the name of E. W. Dennstedt and the deed taken in the name of appellee as a mere matter of convenience; that the latter had no interest in the land and received no consideration for the agreement in the deed to assume and pay the mortgage; that the corporation contracted to sell the land to Curley, and he executed a conveyance thereof in pursuance of such contract; and that he received no part of the consideration therefor. There is no contradiction of this testimony. The only question upon which the testimony is in conflict is as to whether Sabin had knowledge that the corporation was the real purchaser of the land. The controversy is over the competency of the evidence and its sufficiency to relieve appellee from liability on the assumption clause in the deed to him. It should be observed that the Sabins, the grantors in the conveyance to appellee, make no claim under the assumption clause therein. The only party seeking to enforce any liability as against the appellee is the mortgagee, who was not a party to the agreement.

Evidence-parol to contradict writing-rights of stranger.

It is a well-settled doctrine, frequently applied to such contracts as the one in question, that the rule that the terms of a written contract cannot be altered or contradicted by parol evidence cannot be invoked either by or against a stranger to the contract; that it has "no application in controversies between a party to the instrument on the one hand and a stranger to it on the other, for the stranger, not having assented to the contract, is not bound by it and is therefore at liberty, when his rights are concerned, to show that the written instrument does not express the full or true character of the transaction. And where the stranger to the instrument is thus free to vary or contradict it by parol evidence, his adversary, although a party to

it, must be equally free to do so." Aultman Engine & Thresher Co. v. Greenlee, 134 Iowa, 368, 111 N. W. 1007.

See also De Goey v. Van Wyk, 97 Iowa, 491, 66 N. W. 787; Logan v. Miller, 106 Iowa, 511, 76 N. W. 1005; Clark v. Shannon & M. Co. 117 Iowa, 645, 91 N. W. 923; Livingston v. Stevens, 122 Iowa, 62, 94 N. W. 925; Peters v. Goodrich, 192 Iowa, 790, 185 N. W. 903; Shult v. Doyle, 200 Iowa, 1, 201 N. W. 787. In Re Shields Bros. 134 Iowa, 559, 10 L.R.A. (N.S.) 1061, 111 N. W. 963, we said: "As against a stranger to the contract, a party thereto may assert that the agreement was other or different-in any respect and to any extent-than that which the writing imports."

In Shult v. Doyle, 200 Iowa, 8, 201 N. W. 787, we said, speaking of the relation of the mortgagee to a contract whereby the purchaser of the land from the mortgagor assumed and agreed to pay the mortgage: "As to the plaintiff herein, his rights are subordinate to the real agreement entered into, as between the defendants. His rights are purely legal. They do not arise out of any equity. They spring alone from the express agreement of the parties, made in his behalf as a third person. Peters v. Goodrich, 192 Iowa, 790, 185 N. W. 903. The cause of action thus created in his favor is a bit of legal grace; it cost him nothing; it simply fell upon him, without effort or knowledge on his part. He is entitled to it, such as it is. He has no ground of appeal to equity, either to expand it or to prevent its shrinkage.'

Appellant relies upon Beeson v. Green, 103 Iowa, 406, 72 N. W. 555. Language is to be found in that case that seems to support appellant's contention that, in such a situation, the rule excluding parol evidence to vary or contradict a written contract is applicable. No consideration appears to have been given in that case to the fact that the question arose between the assignee of

the mortgagee, a stranger to the contract evidenced by the assumption clause, and the mortgagor's grantee, a party to the contract. In so far as it applies the rule affecting parties to the contract in favor of a stranger thereto, it is clearly out of harmony with our many subsequent holdings on the question, cited above, and must be considered as, in effect, if not in terms, overruled by them. See particularly Peters v. Goodrich, supra.

Appellant also relies upon the doctrine that one who contracts for an undisclosed principal binds himself. The difficulty with the application of this doctrine to the facts in hand is that the one invoking it is a stranger to the contract. Whatever might be said of the appropriate application of this rule at the instance. of the grantors in the deed, in case

Principal and agent-undis

closed principal

-who entitied to benefit of rule.

the real purchaser was not disclosed, it cannot aid one who was not a party to the contract. In this view, it becomes unnecessary to determine whether the Sabins were advised that the Dennstedt Land Company was the real purchaser, the only disputed question of fact in the case.

In argument, counsel discuss the question of consideration for the assumption clause in the deed, and whether it was incumbent on the appellant to plead and prove a consideration therefor. In the view we take of the case, it is unnecessary that we consider these questions. The evidence on behalf of the appellee established without contradiction that he was not the purchaser of the land; that by the purchase he acquired no interest in it; that there was in fact no agreement that he should assume and pay the mortgage. As against the appellant, it was not necessary Reformation of that there be a refwhen not neces- ormation of deed in order to relieve the appellee from liability

instruments

sary.

the

under the agreement appearing in the deed, for, as we Evidencehave seen, he had a showing facts right, as against mortgagee.

as against

the mortgagee, notwithstanding the writing, to show the facts.

In Shult v. Doyle, supra, the land was sold on contract to one who by the contract agreed to assume and pay the mortgage. This purchaser sold the land on contract to parties who therein agreed to take it subject to the mortgage. Both transactions were consummated by conveying the land "across" from the first vendor to the last vendee by a deed in which the grantees assumed and agreed to pay the mortgage. The grantees asked a reformation of the deed. We said: "So far as the plaintiff [the mortgagee] was concerned, they [the grantees] had no need of equitable relief. As against him, they had a right to introduce parol evidence, to vary and contradict the writing upon which he predicated his case."

When it is determined, either as a result of the reformation of the writing, or on competent evidence, where reformation is not necessary, that there was no agreement on the part of the appellee to assume and pay the mortgage, it is the end of the controversy. As bearing on the question, see also Rogers v. Castle, 51 Minn. 428, 53 N. W. 651; Gold v. Ogden, 61 Minn. 88, 63 N. W. 266; Kelly v. Geer, 101 N. Y. 664, 5 N. E. 332; Deyermand v. Chamberlin, 22 Hun, 110; Painter v. Kennedy, 89 Wash. 275, 154 Pac. 161; Llewellyn v. Butler, 186 Mo. App. 525, 172 S. W. 413; Boyd v. Winte, 65 Okla. 141, 164 Pac. 781; 41 C. J. 744.

We do not have before us, and express no opinion upon, the question of the right of the grantor in such a situation to recover, in a proper case.

We reach the conclusion that the judgment below was right, and it is affirmed.

Evans, Ch. J., and Stevens and Faville, JJ., concur.

encumbrances, and recited that the property was granted subject to the mortgage, and the parol evidence, therefore, did not contradict the terms of the conveyance. The court said: "The theory on which such evidence is permitted, notwithstanding the contents of the deed, is that the purpose of such evidence is to show the consideration for the transfer, and that this may be done by parol evidence."

And in J. H. Magill Lumber Co. v. Lane-White Lumber Co. (Ark.) supra, in which a sawmill outfit, including machinery and buildings on leased lands, etc., was sold under a written bill of sale, it was held, in a contest between the seller and the purchaser, that parol evidence was admissible to show that part of the consideration for the sale was the assumption of a mortgage debt, notwithstanding that the bill of sale did not recite the assumption of the mortgage debt as part of the consideration for the sale, where the deed recited that it was subject to the mortgage, the court saying: "It has been decided by this court in numerous cases that, though the recitals as to consideration in a deed cannot be contradicted by parol evidence for the purpose of defeating the conveyance, it is competent to prove by such evidence that consideration has not been paid as recited, or to establish the fact that other considerations not recited in the deed were agreed to be paid, when it does not contradict the terms of the writing." See also Felker v. Rice (Ark.)

supra.

So, in an action by the grantor against the grantee to enforce a deficiency judgment after the sale of the property, parol evidence that the grantee assumed to pay a mortgage upon the property as part of the consideration, where there was no agreement whatever made in the deed, express or implied, respecting the mortgage or the mortgage debt, is admissible to prove such assumption, in which case parol evidence does not vary or contradict the deed of conveyStrohauer v. Voltz (Mich.) In this case the conveyance

ance.

supra.

recited that it was made subject to the mortgage.

And a further example of the application of the principle that parol evidence is admissible to show the consideration of a deed is seen in Bolles v. Beach (N. J.) supra, in which the mortgagor sued his grantee to recover the amount of the mortgage, which he was forced to pay, where it was held that a verbal promise of the grantee to pay the mortgage debt could be shown, notwithstanding the deed contained full covenants, including those against encumbrances, and the conveyance was not made subject to the mortgage, the court saying: "The evidence as to the agreement to pay off the mortgage did not go to affect the operation of the deed, but simply to show the character and extent of the payment of the consideration; and the same reasons which persuade to the free admission of extrinsic inquiry in the one case equally apply to the other."

And under the principle that parol evidence is admissible to explain the consideration in a deed, it was held in Johnson v. Elmen (Tex.) supra, in an action by the grantor to recover certain real estate and cancel a deed executed to the grantee, on the ground that the consideration had failed, that the grantee may show by parol evidence that, as part of the consideration for the deed to the land, he had assumed a vendor's lien, and, therefore, the consideration had not failed, even though such evidence would contradict the covenant of general warranty in the conveyance.

And where the owner of an undivided interest in property subject to a mortgage conveys his interest in the property to another party owning an undivided interest in the same property subject to the same mortgage, and subsequently the grantor is forced to pay a deficiency judgment, it is proper, in an action against his grantee to recover the amount of the deficiency judgment, to show by parol evidence that the grantee agreed to assume the mortgage debt, since the contract to assume and pay a mortgage is wholly independent of the con