Bair v. Spokane Sav. Bank, 25966.

• Decision Date: 15 June 1936
• Docket Number: 25966.
• Citation: 186 Wash. 472,58 P.2d 819
• Parties: BAIR et ux. v. SPOKANE SAV. BANK et al.
• Court: Washington Supreme Court

58 P.2d 819

186 Wash. 472

BAIR et ux. v. SPOKANE SAV. BANK et al.

No. 25966.

Supreme Court of Washington

June 15, 1936

Department 2.

Appeal from Superior Court, Yakima County; Dolph Barnett, Judge.

Action by A. H. Bair and wife against the Spokane Savings Bank Howard H. Hansen, as Supervisor of Banking of the State of Washington, George H. Jackson, as Special Deputy Supervisor of Banking of the State of Washington, and others, wherein the named defendants filed cross-complaint. From an adverse judgment, the named defendants appeal.

Reversed with instructions.

Robertson & Smith, Dillard & Powell, and Hart Snyder, all of Spokane for appellants.

D. V. Morthland, Harry L. Olson, and Lane Morthland, all of Yakima, for respondents.

BEALS Justice.

For some time prior to June, 1928, one W. J. Burianek had been representing Spokane Savings & Loan Society as its agent in Yakima. J. L. Cooper and Boyd C. Walker were president and secretary, respectively, of the society. Burianek was the son-in-law of A. H. and Allie B. Bair, the plaintiffs in this action. June 8, 1928, Messrs. Cooper and Walker and a third man, representing the company which had bonded Burianek as the society's agent, called at Burianek's office, and, after examining his accounts, taxed him with a shortage of something over $9,700. The agent of the bonding company stated that if they were called upon to make good any shortage, the matter would be placed Before the prosecuting attorney. It is not denied that Burianek was in fact short in his accounts, and that he had embezzled funds belonging to the society in the amount claimed.

At this time, Mrs. Burianek, plaintiffs' daughter, was expecting the birth of her first child, and was under a doctor's care; she experiencing some annoyance from pains in her back. On the evening of June 8th, plaintiffs were informed of the shortage by Burianek and his wife, and were told that unless the matter was adjusted Burianek would probably be arrested. At this time Mrs. Burianek was naturally greatly excited, and the possible effect upon her of her husband's arrest was naturally the cause of alarm to plaintiffs. Burianek suggested that plaintiffs execute with him a promissory note in favor of the society for the amount of the shortage, which plaintiffs, that evening, stated that they would do. On the afternoon of Saturday, June 9th, Mr. Cooper and Burianek called on plaintiffs at their home. The testimony is in some conflict as to just what happened on that occasion. Defendants contend that the evidence shows beyond question that a note and mortgage were submitted to plaintiffs, who signed both instruments, together with a receipt. Plaintiffs strenuously deny that they signed any document save the mortgage. On the trial, Mr. Bair testified positively that he did not sign the paper referred to as a 'receipt,' which authorized the bank to pay the proceeds of the loan to Burianek. It is difficult to understand how plaintiffs can seriously contend that they did not sign all three documents. The instruments are all in the record, handwriting experts testified on behalf of defendants, and it cannot be doubted that plaintiffs did sign the note, mortgage and receipt. Plaintiffs' testimony in connection with these matters demonstrates that, at the time of the trial, their recollection of what was said and done was extremely unreliable.

It clearly appears that plaintiffs expected to sign a note, and that when the note and mortgage were submitted to them on Saturday afternoon, they objected only to signing the latter instrument, saying that they understood that they were to sign a note. Plaintiffs, however, finally did sign the note, payable three years from date, and the mortgage securing the same. Semiannual payments of interest were made during the term of the mortgage, the payment for December, 1930, having been accompanied by a letter from Mr. Bair, calling attention to the fact that the loan would fall due in six months, and asking whether or not the same could be renewed. During the month of June, 1931, the loan was extended; plaintiffs executing an extension agreement specifically referring to the note and mortgage, and agreeing to pay the same, together with interest, on or Before June 9, 1934.

The period within which Burianek could be prosecuted for his embezzlements expired prior to January 1, 1931. Plaintiffs continued to pay the semiannual interest up to and including December 7, 1932, but in the spring of 1933 consulted an attorney, requesting his advice as to whether or not they were liable upon the note and mortgage.

During the month of January, 1934, plaintiffs instituted this action, praying that the note and mortgage be canceled, and asking that they be granted judgment for the amount of interest which they had paid, claiming that the note and mortgage had been signed under duress and that they should be judicially relieved from liability thereon. Meanwhile, the Spokane Savings & Loan Society had become the Spokane Savings Bank, which institution had been taken over by the state supervisor of banking. No claim demanding the return of the interest which they had paid had been filed by plaintiffs within the statutory period for the filing of claims against the insolvent bank.

Trial to the court resulted in a decree in plaintiffs' favor canceling the note and mortgage and granting judgment against the bank for the amount of the interest payments, together with 6 per cent. interest thereon from the respective dates interest was paid. The bank's cross-complaint asking for judgment on the note and foreclosure of the mortgage was dismissed. From this decree, Spokane Savings Bank and the supervisor of banking, together with his deputy, have appealed.

Appellants assign error upon the ruling of the trial court canceling the note and the mortgage securing the same; upon the rendition of judgment against the bank for the amount of interest paid by respondents; and upon the dismissal of the cross-complaint asking for judgment on the note and foreclosure of the mortgage.

The evidence is voluminous and authorities are copiously cited. A detailed discussion of all phases of the case would extend this opinion to an unreasonable length.

It is easy to understand that respondents desired to protect their daughter, whose physical condition naturally excited their sympathy and afforded ground for the thought that any considerable shock might result in unfortunate and possibly serious consequences. It is admitted by all the witnesses that when the parties were together on Saturday afternoon, Burianek, who was naturally nervous and disturbed, turned to Mr. Cooper and inquired, 'If this is not signed I will be sent to jail?' or words to that effect. Respondents' witnesses testified that Mr. Cooper replied in the affirmative. Mr. Cooper testified that he made no answer to the question. Burianek then remarked, 'I want that understood.'

Respondents base their case upon the following propositions: (1) That the mortgage was executed by them under duress, and is for that reason null and void, or at least voidable, and that the same was never ratified; (2) that the duress continued for five years, or thereabouts, and until Mr. Bair consulted counsel; (3) that respondents had the right to and did rescind the mortgage and the note and recover back the interest payments which they had made thereon; (4) in the alternative, that if it should be determined that the mortgage was not void, or that the same has been ratified, it should be held that the consideration for the same was illegal and that the mortgage is void; (5) that the mortgage was entirely without consideration, and is for that reason void.

The trial court did not pass upon the question of the illegality of the contract between the parties as possibly based upon an agreement, express or implied, to suppress the prosecution of Burianek.

Respondents admit that they first learned that Burianek was in difficulties from him and their daughter, and that Before they had any consultation with any one representing the bank, they had decided that they would sign with Burianek a note in the bank's favor. If respondents decided that in order to assist their daughter they would underwrite their son-in-law's indebtedness to the bank, they simply determined a matter of policy which was for them to decide, after consideration of all the circumstances, with which they were, of course, familiar.

Respondents are not ignorant and unsophisticated, but are people of education and experience. They themselves stood in no danger. It is not contended that they knew of, or profited to the least degree by, their son-in-law's peculations. Neither did their daughter stand in personal jeopardy. The only element which respondents argue constituted duress was the fact that their daughter was in delicate health, and that the arrest of her husband and her consequent worry and sorrow might have serious consequences. The basic fact that her husband was an embezzler was already known by the wife. As the result of the Friday evening's conversation between respondents and their daughter and her husband, respondents, Before they had met any agent of the bank, stated that they would sign a note with Burianek. Certainly the bank applied no duress to bring about that understanding.

At the Saturday afternoon meeting, it is evident that Mr. Cooper impliedly at least, indicated that Burianek would be arrested unless the bank was, in some manner, protected against loss. It does not appear, however, that he asked respondents to execute the documents, or that he engaged in any argument with respondents, or urged any course of conduct upon them. It is not contended that the sum agreed to be paid was any...