Shepard v. Pabst

• Decision Date: 12 March 1912
• Citation: 149 Wis. 35,135 N.W. 158
• Parties: SHEPARD ET AL. v. PABST.
• Court: Wisconsin Supreme Court

149 Wis. 35

135 N.W. 158

SHEPARD ET AL.

v.PABST.

Supreme Court of Wisconsin.

March 12, 1912.

Appeal from Circuit Court, Waukesha County; Martin L. Lueck, Judge.

Action by Sidney E. Shepard and another against Fred Pabst. From an order denying a motion to vacate a temporary injunction, defendant appeals. Reversed and remanded.Lines, Spooner, Ellis & Quarles, for appellant.

T. M. Priestley and Fiedler & Fiedler, for respondent.

TIMLIN, J.

Upon a verified complaint having the contracts in question annexed thereunto as exhibits and an affidavit by two of the plaintiffs, a restraining order was issued enjoining the defendant from selling, assigning, or transferring any and all unpaid notes theretofore executed by the plaintiffs and delivered to the defendant, and from selling, assigning, or transferring a certain written contract, and from commencing or prosecuting any action at law or suit in equity against the plaintiffs, or either of them, upon the said unpaid notes or contract until the further order of the court. The defendant moved before the circuit court to vacate this restraining order, or, in the alternative, to modify it so as to permit the defendant to commence suit on the notes. This motion was supported by several affidavits and a proposed answer and counterclaim or cross-complaint, and, after hearing, the circuit court ruled that the complaint was sufficient to state a cause of action against the defendant; also, that the contract between the defendant and the Western Land Securities Company constituted the latter the agent of the defendant, and that the plaintiffs were not by reason of anything in the contract between them and the defendant estopped to allege and prove fraud, and further modified the injunction by permitting the defendant to interpose in this action a counterclaim upon any and all notes held by him against the plaintiffs. From this order the defendant appeals. He contends that the following issues are involved on the appeal: (1) A construction of the contracts between appellant and the Securities Company as to whether they are contracts of purchase or option to purchase, or whether they are contracts of agency. (2) Whether this action can be maintained by respondents in view of their stipulation relating to their examination of the land and nonreliance on any representations made to them. (3) Whether respondents are guilty of negligence in failing to ascertain the alleged fraud within a reasonable time. (4) Whether it is a proper case for an injunction.

[1] It is conceded that the motion to vacate the injunction challenges the sufficiency of plaintiff's complaint, and presents all questions to this court which would be presented by a general demurrer within the rule of Harley v. Lindemann, 129 Wis. 514, 109 N. W. 570, 8 L. R. A. (N. S.) 124;Sage v. Fifield, 68 Wis. 546, 32 N. W. 629;Judd v. Fox Lake, 28 Wis. 583. There is thus attempted to be presented in limine that very perplexing question discussed in 1 Mechem on Sales, §§ 43-50, inclusive. That learned author writing in A. D. 1901 says: “The cases involving this question have now become so numerous and the varieties of forms of contracts so great that it would be impractical to attempt a full exposition of them in the text.” Section 47. This practical consideration joined with well-known common-law rules forbids any such attempt within the narrower limits of a judicial decision.

Confining ourselves as closely as possible to the case presented:

The defendant, who resided in Waukesha county, Wis., was the owner of about 64,000 acres of land in North Dakota. The Western Land Securities Company was a Minnesota corporation, with its principal office and place of business in the city of St. Paul, and engaged, among other things, in marketing, selling, and disposing of lands as agent for compensation. On December 1, 1907, these two persons entered into an agreement in writing to be hereinafter noticed, and upon the construction of this agreement the case mainly turns. The Securities Company about June, 1908, undertook to sell to the plaintiffs 4,241.76 acres of this land, and, as is averred, falsely and fraudulently pointed out to the plaintiffs as the lands in question other and different lands far superior in quality and value to the lands of defendant, representing such lands so pointed out as the lands which they were selling, and plaintiffs, relying on such representations, paid the money, entered into the contract with defendant, and gave the notes hereinafter mentioned. It does not appear by the complaint exactly when the plaintiffs discovered the alleged fraud. It does appear that they made payments as late as June 29, 1910, and that since the discovery of the fraud they have executed and tendered to the defendant a conveyance or release and relinquishment of all their right, title, and interest whatsoever in the lands included in their contracts with the defendant, and offered to deliver the same to the defendant, and they make the offer to reconvey in their pleading, and it also appears by averment that all the sums paid by the plaintiffs upon the purchase price were paid without knowledge on their part of the fraud committed upon them and before the discovery of said fraud. There is an inference, then, that the fraud was discovered after June 29, 1910, and the action was begun in January, 1911.

The contract between the defendant and the Securities Company recites that the defendant is the owner of the lands in question and certain personal property used or intended to be used in connection therewith, and desires to sell and dispose of the lands and personal property, except the horses, cattle, hay, etc. This paragraph follows: “Whereas said party of the second part (Securities Company) is engaged in the purchase and sale of such lands and the marketing the same, in parcels, among settlers and other purchasers, and is desirous to acquire title to said personal property, and the right up to June 1, 1910, to so market, sell and dispose of the lands aforesaid, and the right to said date to acquire title to such of said lands as shall not be so sold or disposed of: Now, therefore, in consideration of the premises and the sum of $32,000 in hand paid by said party of the second part to said party of the first part, the receipt whereof is hereby acknowledged, and in consideration of the agreements hereinafter contained,” etc. Then follows a recital of the purchase price, a provision that this shall bear interest from December 1, 1907, payable annually, special provisions relating to small tracts to which the title might fail, and then: “That said party of the second part at its own cost and expense shall forthwith and at all times hereafter, during the life of this agreement, use its best endeavors to find purchasers for all of said lands in parcels, either for cash or upon land contracts to be made with said party of the first part upon terms of not less than one-third cash and the balance in not to exceed eight equal annual payments evidenced by the promissory notes of the purchaser thereof payable to the order of the said party of the first part, with interest thereon at the rate of five per cent. per annum, payable annually or semiannually, which land contracts shall be in the form hereto annexed and marked Exhibit ‘D,’ and made a part hereof, and shall be executed in duplicate.” The fourth paragraph fixes the minimum price at which the Securities Company may sell the land, and, if it goes below that price, it must make up the deficiency in cash. Upon each sale the consideration must be promptly paid or turned over to the defendant with the said land contract properly executed, and thereupon the defendant either in person or by his duly authorized agent shall execute a land contract in duplicate, retain one, and deliver the other to the Securities Company for such purchaser, and credit the amount thereof upon the purchase price subject to conditions. It was also agreed that the Securities Company might at its election purchase from the defendant any of the said lands and pay him for such lands according to the provisions and terms therein for sales to other purchasers. In the sixth paragraph it was stipulated that at any time during the life of the agreement, if the Securities Company should not be in default, the defendant would, upon demand, convey to the Securities Company any parcel or parcels of said lands not theretofore conveyed by him under the contract or agreed to be conveyed by land contract to others upon payment to the defendant for said parcels in cash at a fixed rate per acre. By the seventh subdivision it was provided that at any time during the existence of the agreement, the Securities Company not being in default and the lands sold amounting to a stated price per acre, the defendant would on demand execute and deliver to the Securities Company his warranty deed of the balance of said land not theretofore conveyed or agreed to be conveyed to others by land contract under the agreement. By the eighth paragraph the Securities Company was given the right to the possession of all the land with an item excepted, but, in case it failed to perform its agreements, it was required to surrender up possession to the defendant. The Securities Company was required to pay all taxes and assessments during the life of the agreement, except such as might be payable by purchasers under said land contracts, and to furnish duplicate receipts to the defendant. It was provided that the covenants of this instrument should extend to the heirs, legal representatives, and assigns of defendant, and to the successors and assigns of the Securities Company.

In a modification of this contract made February 22, 1908, not otherwise relevant here, some prior contract was described as “a preliminary agreement for the sale or purchase or option to purchase certain lands,” and the aforesaid contract as “a permanent...