American National Bank of Lake Crystal v. Helling

• Decision Date: 30 January 1925
• Docket Number: 24,164
• Citation: 202 N.W. 20,161 Minn. 504
• Parties: AMERICAN NATIONAL BANK OF LAKE CRYSTAL v. J. S. HELLING AND OTHERS
• Court: Minnesota Supreme Court

202 N.W. 20

161 Minn. 504

AMERICAN NATIONAL BANK OF LAKE CRYSTAL v. J. S. HELLING AND OTHERS

No. 24,164

Supreme Court of Minnesota

January 30, 1925

Action in the district court for Blue Earth county to recover $1,994. The case was tried before Olsen, J., and a jury which returned a verdict in favor of defendants J. S. Helling and Elvin G. Helling for $10,970.63. From an order denying its motion for judgment notwithstanding the verdict or for a new trial, plaintiff appealed. Reversed and judgment directed for plaintiff.

SYLLABUS

Contract to protect guilty person from prosecution void.

1. A contract to make restitution of property stolen or embezzled made under an agreement to protect the guilty person from prosecution, is void and the courts will give no aid to either party, unless it was executed under duress.

Who may assert duress.

2. It is the general rule that only the person threatened with prosecution can assert such threats as constituting duress and then only where he was not guilty of the offense charged. But a person from whom payments or securities have been extorted by threats to prosecute a near relative may assert duress, and may do so whether such relative was guilty or innocent.

Definition of duress.

3. Duress consists in subjecting a person to a pressure which overcomes his will and coerces him to comply with demands to which he would not have yielded if he had been acting as a free agent.

Who may not assert duress.

4. Ordinarily a person who enters into a contract with knowledge of all the facts, and after advising with his friends and his attorney, and after ample time for reflection, cannot sustain a claim of duress.

Finding not sustained by evidence.

5. The finding that the contract in controversy was executed under duress is not justified by the evidence.

C. J. Laurisch and Alfred W. Mueller, for appellant.

Einar Hoidale and John Lind, for respondents.

OPINION

TAYLOR, C.

Plaintiff brought this action to recover $1,994 as the value of certain bonds which defendants had agreed to transfer to plaintiff by a contract executed November 12, 1921. Clifford Helling, although named as a defendant, was not served and did not appear in the action. J. S. Helling and Elvin G. Helling, who will be designated as defendants hereafter, asserted that the contract had been executed by them under duress, and interposed a counterclaim to recover back the payments previously made under the contract. At the opening of the trial they admitted that plaintiff was entitled to recover the amount claimed unless they established their charge of duress and their right to recover on their counterclaim. The amount of the counterclaim was also admitted. The court instructed the jury to return a verdict of $2,234.60 for plaintiff, unless they found that the contract had been obtained by duress, and if they so found to return a verdict of $10,970.63 for defendants. The jury found for defendants in the amount stated. Plaintiff appealed from an order denying its alternative motion for judgment or a new trial.

Clifford Helling resided at Lake Crystal and was the cashier of plaintiff bank to which he had given a surety bond in the sum of $10,000 for the faithful performance of his duties as such cashier. His parents resided in the village of Hanska and owned a farm of 379 acres a few miles from the village. His older brother, the defendant S. L. Helling, called Sidney in the record, resided upon and operated the farm. His other brother, the defendant Elvin G. Helling, was manager of the Farmers Elevator at Hanska.

Clifford had embezzled over $45,000 of the bank's funds. The contract in question was executed by Clifford as party of the first part, by defendants as party of the second part, and by the bank as party of the third part. By its terms Clifford and defendants agreed to transfer and convey to the bank certain properties therein specified, and in consideration thereof the bank satisfied and discharged all its claims against Clifford and agreed to make no claim against the surety on his bond. The contract was carried out in all respects, except that defendants failed to turn over the bonds for which plaintiff seeks to recover in this action.

Defendants received their first information that Clifford was in trouble from their mother on October 16, 1921. The next day Sidney went to Clifford's home and found his parents there. Clifford was then negotiating with one L. P. Jones for a loan, and told Sidney and his father that he would turn over everything to raise $18,000 in money. They supposed this was the amount of his shortage. On October 19, 1921, his parents executed a mortgage to Jones on the farm for $18,000 and Sidney executed a chattel mortgage to Jones as further security. As a part of this transaction Clifford transferred all his property to Sidney as security for the liability assumed by his father and Sidney. Although the mortgages were delivered to Jones, he failed to furnish the money and they never went into effect.

On October 28, 1921, Sidney, Elvin and Emil G. Hage, a banker of many years experience and a life-long friend of the family, met at the elevator in Hanska, apparently by previous arrangement. Later Clifford and George W. Champlin, an attorney of Lake Crystal, arrived. Champlin had the Jones mortgage but had drawn a new mortgage for $18,000 running to the bank, and, according to Sidney, stated that, if it was not executed, Clifford would be reported to the bonding company, and they knew what would follow. Sidney asked for the old mortgages, but Champlin refused to give them up until the new one was executed. The five went from the elevator to the home of the parents and the parents signed the new mortgage. It was not acknowledged, however, and was retained by Sidney and in fact was never delivered and never went into effect. While at the house it was arranged that Sidney should go to Lake Crystal the next day. At the instance of Hage, who acted as one of the advisers of defendants throughout the remainder of the negotiations, Henry Somsen of New Ulm was employed as attorney for defendants and their parents. On Saturday, October 29, 1921, Sidney, Somsen and Hage met Champlin and three of the directors of the bank, Lamoreaux, James and Upson, at the office of Lamoreaux & Champlin in Lake Crystal. Sidney and Hage testified that at this conference Upson stated that a telegram was ready which would be sent to the bonding company unless a settlement was made, and that Somsen replied that they would have to send it, if they wished, as he did not represent Clifford but only the defendants and their parents. Defendants refused to deliver the new mortgage and Somsen demanded the return of the Jones mortgage which Upson then had. Upson refused to return it. No settlement was made or agreement reached at this conference. An examination of the bank had been begun by the national bank examiners but the amount of the shortage was not then known. After the meeting on the twenty-ninth, Mr. Somsen, Mr. Hage and Sidney saw Mr. Wilson, the attorney for the bank, at his office in Mankato, and through him arranged for Mr. Hage to go into the bank and make an examination on their behalf to ascertain the amount of the shortage. On Monday, October 31, Mr. Hage began his examination and completed it November 8, 1921. He found that Clifford's shortage amounted to the sum of $45,619. The bank examiner made it somewhat larger.

The parents of the defendants were in poor health. On October 31, their father became seriously ill and died November 2, 1921. Following the funeral their mother also became ill. They claim, and doubtless truly, that fear of the effect which the arrest of Clifford would have upon their mother impelled them to make the settlement in controversy.

Mr Hage, having completed his examination of the books, arranged for a meeting with the bank officials on November 9, 1921, at the office of Mr. Wilson in Mankato. At this meeting defendants were accompanied by Mr. Somsen, their attorney, by Mr. Hage, by Mr. Schlaben, an uncle by marriage, and by Mr Anderson, a cousin who was cashier of the bank at Hanska. Late in the afternoon Mr. Somsen and Mr. Hage had an interview with Mr. Wilson, attorney for the bank, in which the terms of settlement were discussed and "a tentative agreement arrived at." In the evening they all went to Mr. Wilson's office, and met the president of the bank and several of the directors. Mr. Somsen enumerated the properties which they were willing to turn over. The principal item was a half interest in a mortgage of $21,000. The directors were not satisfied with the amount offered. Mr. Somsen reminded them that his clients owed the bank nothing and were offering $8,000 more than the amount of Clifford's bond. He wanted it understood that the bond would be released and canceled if the settlement was made, and was assured that it would be. He also wanted an understanding or assurance that no criminal proceedings would be instituted. The bank officials assert that they emphatically refused to give any such assurance. When it appeared that the total amount to be turned over, including Clifford's property, aggregated only $18,000, Mr. Upson, one of the directors, was unwilling to consider the proposition further. But they finally separated with the understanding that the directors would satisfy themselves as to the value of the mortgage the next morning, and that they would meet again at Lake Crystal the next afternoon. The next morning, November 10, 1921, Hage was told by the national bank examiner that Clifford would be arrested, and he told Clifford, Sidney and Elvin what the examiner had said. In the afternoon of the tenth, Sidney, Elvin, Hage and Schlaben met with...