Antigo Superior Nursing Home, Inc. v. First Fed. S & L Ass'n

• Decision Date: 04 May 1971
• Docket Number: No. 256,256
• Citation: 51 Wis.2d 196,186 N.W.2d 265
• Parties: ANTIGO SUPERIOR NURSING HOME, INC., et al., Respondents, v. FIRST FED. S. & L ASSN., Defendant, Supreior Nursing Home of Antigo, Inc., etal., Appellants.
• Court: Wisconsin Supreme Court

Page 265

186 N.W.2d 265

51 Wis.2d 196

ANTIGO SUPERIOR NURSING HOME, INC., et al., Respondents, v. FIRST FED. S. & L ASSN., Defendant, Supreior Nursing Home of Antigo, Inc., etal., Appellants.

No. 256.

Supreme Court of Wisconsin.

May 4, 1971.

This is an action for breach of contract, fraud and accounting. Plaintiffs-respondents are the Antigo Superior Nursing Home, Inc., Superior Nursing Home, Inc., and Donald H. McMurtrie, president of respondent corporations. On May 5, 1970, respondents served an amended complaint. Demurrer was made to such amended complaint by defendants-appellants National Health Enterprises, Inc., Superior Nursing Home of Antigo, Inc., a subsidiary of Nationa, and Al Zocher, an employee of National. Defendant, First Federal Savings and Loan Association, did not join in the demurrer. From orders overruling the demurrers, this appeal is taken.

Levin, Blumenthal, Herz & Levin, Thomas E. Weil, Milwaukee, for appellants.

Kelley, Weber & Bolte, Wausau, for respondents.

ROBERT W. HANSEN, Justice.

Four issues are raised on this appeal seeking reversal of the trial court order overruling the demurrer to the amended complaint.

(1) As to cause of action for breach of contract. The amended complaint alleges breach of a purchase and sale agreement, entered into on November 18, 1968, calling for sale of two nursing home facilities by respondents to National Health Enterprises, Inc., or to its assignee. As alleged in the complaint, respondents further agreed to construct and complete, without additional cost to the purchaser, an addition to the nursing home for the housing of twenty-two persons. It is alleged that subsequently it was agreed that certain construction equipment, a 'bobcat' and truck, be transferred by respondents to National Health. At the time of closing, National Health chose to receive the property in the name of its nominee and subsidiary, Superior Nursing Home of Antigo, Inc.

Appellants contend that, as to alleged requested changes in construction and transfer of construction equipment, the complaint fails to allege that the requests were acknowledged so as to give rise to an obligation of payment. A complaint attacked upon demurrer is to be liberally construed and sustained if by reasonable interpretation it states a cause of action. ¹ Facts alleged are assumed to be true. ² The question is: Does the complaint state facts which give rise to a duty owing to plaintiff by defendants as a matter of law? ³

The complaint on this aspect of the case meets the test. Paragraph 14 alleges that the respondents complied with the collateral agreement and that the appellants have failed to release the bargained-for consideration. Requested construction changes are a part of the agreement. The allegation that respondents did fully and completely comply with that agreement sufficiently states a cause of action for the money promised. Whether in fact there was such compliance is for the trial to determine. That issue is not raised by demurrer. Paragraph 13(c) alleges the transfer of assets outside the sales agreement, alleging such transfer to be contrary to the agreement (paragraph 12). It sufficiently states a cause of action against the appellants.

As to cause of action for fraud. The amended complaint alleges that, at the closing of the purchase and sale agreement, on January 28, 1969, the defendants, individually and collectively, wrongfully and fraudulently and with intent to deceive the plaintiffs, did provide and use an inflated figure as to the mortgages involved to the prejudice of the plaintiffs. The complaint further alleges that, at the time of closing and pursuant to the agreement to transfer certain assets not covered by the purchase and sale agreement, defendant, Al Zocher, then an employee of National Health, with access to the books and records of the plaintiffs, did wilfully and wrongfully satisfy certain indebtedness on such assets to the benefit of defendant, National Health, in the sum of $7,200.37.

Appellants claim that a cause of action for fraud is not sufficiently alleged. Once again, it is to be remembered that a complaint, attacked by demurrer, is to be liberally construed and '* * * sustained if it expressly, or by reasonable inference, states any cause of action. * * *' ⁴ Facts alleged are assumed to be true. ⁵ The fact that the plaintiffs may have difficulty in proving facts alleged cannot be considered. ⁶ Paragraph 13 of the complaint alleges that defendants did wrongfully and fraudulently, and with intent to deceive the plaintiffs, provide an incorrect figure for certain mortgages, and incorrectly charged certain closing costs against plaintiffs, and transferred assets contrary to an alleged previous agreement. Such allegation is sufficient to state the cause of action, alleging, as it does, fraud as to a material fact, acts done with intent to deceive and relied upon by plaintiffs.

As to cause of action for accounting. The amended complaint alleges that, at the time of closing, respondents and appellants entered into a collateral agreement with the defendant, First Federal Savings and Loan Association, as escrow agent. The savings account of Superior Nursing Home of Antigo, Inc. was deposited with First Federal in the amount of $150,000 and, by such collateral agreement, pledged to insure completion of the twenty-two bed addition to the nursing home as provided for in the purchase and sale agreement. First Federal, as escrow agent, was to have sole discretion in determining compliance with the construction agreement. Upon such determination, First Federal was to pay over to the seller the money held in escrow, together with all interest earned or accrued thereon, less any expenses, charges or expenditures properly offset against said account. It is alleged that the plaintiffs did fully comply with such collateral agreement, but that First Federal and appellants have wrongfully failed to release to plaintiffs certain funds which should be released upon completion of the agreement. It is further alleged that National Health has received an unknown amount of funds belonging to plaintiffs as accounts receivable accrued prior to date of transfer, and plaintiffs demand an accounting as to such funds.

Appellants argue that a cause of action for accounting has not been pleaded because no reason is given why the remedy at law is inadequate, and, therefore, no ground for equity jurisdiction has been established. Paragraph 15 of the complaint alleges that National Health has received an unknown amount of funds belonging to the plaintiffs. Only an accounting can determine the proper or exact amount due and owing the respondents, if the facts are as alleged. The need for discovery as to amounts due under all the agreements and liabilities deriving therefrom creates the reason and ground for seeking and being entitled to equity jurisdiction. ⁷ At the demurrer stage, the complaint adequately sets forth a cause of action for accounting, and, as the trial court found, establishes a basis for equity jurisdiction.

As to the joinder of causes of action. The basic rule in this state for allowing joinder of causes of action in a single complaint is clear enough. The joining of causes of action in the same complaint is permitted when: (1) The causes affect all parties to the action; (2) the causes do not require different places of trial; and (3) are separately stated. ⁸ The application of the rule, however, can be and often is a 'most perplexing question.' ⁹ Identification of the exact status of the parties to this lawsuit, as well as the primary nature of the action, are required to answer whether the causes of action can be properly united...