Beers v. Atlas Assur. Co.

• Decision Date: 09 May 1939
• Citation: 231 Wis. 361,285 N.W. 794
• Parties: BEERS v. ATLAS ASSUR. CO., Limited, et al.
• Court: Wisconsin Supreme Court

231 Wis. 361

285 N.W. 794

BEERS

v.ATLAS ASSUR. CO., Limited, et al.

Supreme Court of Wisconsin.

May 9, 1939.

Appeal from an order of the Circuit Court for Walworth County; E. B. Belden, Judge.

Affirmed.

The action was commenced on February 20, 1933, by the plaintiff, Clarence P. Beers, against the defendants, Atlas Assurance Company, Ltd., fifteen other insurance companies and George G. Wright, Byron K. Olinger, Robert K. Meeker, and Cecil L. Davis, to recover damages for fraud and deceit. Shortly after the action was commenced, an amended complaint was served. The defendants demurred to that complaint on the grounds: (1) That it did not state a cause of action and (2) that there was a defect of parties plaintiff. The demurrer was sustained by the trial court. Upon appeal to this court, it was held that the complaint did not state a cause of action for fraud and deceit, but did state a cause of action for breach of contract. The order was reversed and cause remanded for further proceedings according to law. Beers v. Atlas Assurance Co., 215 Wis. 165, 253 N.W. 584. Upon the remittitur of the record, the plaintiff elected to serve a second amended complaint in which he again attempted to state a cause of action for fraud and deceit. The defendant demurred to that complaint. The trial court overruled the demurrer and the defendants appealed. Upon that appeal this court was of the view that the amended complaint was in all material and essential respects identical with that of the first amended complaint except that the allegations asserting conspiracy and fraud were amplified. Upon that appeal, this court adhered to its prior decision, supra. Beers v. Atlas Assurance Co., 219 Wis. 472, 263 N.W. 81. Upon the remittitur of that record, the defendants moved the trial court to strike from the second amended complaint all allegations of promissory representations asserted to have been made prior to the integration and execution of the contract and further demurred to that complaint on the grounds that it appeared upon the face thereof that there was a defect of parties defendant. Thereafter, on November 20, 1936, the trial court disposed of the demurrer by ordering that North River Insurance Company and the United States Fire Insurance Company be made parties defendant, and on March 24, 1936, granted defendants' motion to strike all of the allegations relating to statements or representations asserted to have been made prior to or contemporaneous with the execution of the contract. Thereafter, on April 1, 1936, the plaintiff served a third amended complaint. From that complaint all allegations as to prior or contemporaneous statements or representations were eliminated, leaving the complaint one for breach of contract. The defendants answered denying the material allegations of the complaint and all of the defendants, except the North River Insurance Company and the United States Fire Insurance Company, counterclaimed for premiums collected by the plaintiff as their agent which he had failed to remit to them. No reply to that counterclaim was made. This fact is not considered important since the plaintiff's attorney, William G. Wheeler, died in July, 1936. Thereafter, the plaintiff's present attorneys were retained. In 1937, the plaintiff caused to be drawn a fourth amended complaint and offered it to defendants' attorneys for admission of service. The defendants' attorneys refused to admit service thereof. Thereupon the plaintiff applied to the court for an order, which was issued and which required the defendants to show cause why the plaintiff should not be granted leave to serve and file his fourth amended complaint. The defendants opposed the granting of such leave. The trial court, however, granted leave to serve and file such complaint. That complaint contains all of the allegations found in the first and second amended complaints relating to the prior and contemporaneous statements and representations and in addition several new allegations not found in the prior complaints. Judgment in substance was demanded in the alternative (1) for a rescission of the contract and for damages; and in the alternative (2) for an accounting by the defendants to the plaintiff for their management and disposition of the property conveyed to them by the plaintiff under the contract, including the moneys received by them upon a sale thereof and the moneys paid out by them, and (3) for judgment as and for a breach of contract.

The defendants moved to strike the allegations relating to the statements and representations asserted to have been made prior to or contemporaneously with the execution of the contract. The trial court denied that motion because in its view, the action had become an action for rescission. It said:

“This is an action for disaffirmance and rescission of the contract in question and for an accounting. The parol evidence rule invoked by counsel for defendants does not, in my opinion, apply to the instant action. It is elementary that in actions of this sort, in equity, wide latitude is permitted in the reception of evidence. The character and extent of relief to be granted the plaintiff, if he prevails, will not be determined or indicated until the trial has been concluded. Then the Court will grant such relief as is ‘consistent with the case made by the complaint and embraced within the issues.’ If the contract is rescinded an accounting will be ordered of course.

“The portions of the complaint which defendants seek to have stricken are considered pertinent to the cause of action now pleaded.”

The defendants then demurred to the complaint upon the grounds that upon its face it does not state a cause of action (1) in equity for a rescission of the contract, (2) in law for damages for fraud and deceit or (3) in law for damages for breach of contract. The trial court overruled the demurrer. From the order overruling the demurrer, entered December 1, 1938, the defendants appealed.

Wolfe & Hart, of Milwaukee, and Arnold, Caskey & Robson, of Beloit, for appellants.

Bagley, Spohn, Ross & Stevens, of Madison, for respondent.

NELSON, Justice.

The trial court, after due hearing had, held that the fourth amended complaint stated a cause of action in equity for rescission of the contract based on fraud and for an accounting if rescission be decreed. It seems clear that the plaintiff attempted either to state a cause of action grounded upon his having theretofore rescinded the contract because of the asserted fraud of the defendants or to state a cause of action for equitable rescission because of the asserted fraud of the defendants. That conclusion is amply fortified by statements repeatedly made by the plaintiff in his brief, such as: “The present action is one grounded upon disaffirmance of the contract;” “disaffirmance of the contract is the gist of the plaintiff's complaint;” “the court is here dealing with an entirely new complaint, proceeding upon an entirely different theory and that however the court may conclude with reference to the application of the parol evidence rule to bar promissory misrepresentations in an action grounded upon the affirmance of the contract, the court will and ought to permit proof of such promissory misrepresentations in an action grounded upon the disaffirmance of the contract;” the reasons for permitting the parol-evidence rule to operate to bar proof of promises and representations contained in a contemporaneous and oral agreement “do not apply to an action in equity for rescission of the contract based upon its disaffirmance;” “where the relief prayed for by the plaintiff is the rescission of the contract, where disaffirmance of the contract is asserted and the action is one in equity, fraud of the character here asserted may be shown.” Other similar expressions may be found in the plaintiff's brief.

The plaintiff undoubtedly thought that the rules laid down by this court in its other opinions, which considered the first and second amended complaints, might be obviated or circumvented by amending his complaint and alleging that he had “at all times since the 12th day of October, A. D., 1932, disaffirmed the existence of the alleged contract between the parties and said trust agreement and has never at any time since said date, by word, act or deed affirmed the existence thereof. That the plaintiff herein and the said Cora G. Beers and the said Rock County Insurance Agency have at all times since the execution of said contract disavowed the same and asserted their right, title and claim in and to the properties and the business forming the subject matter of the said contract.” There is language in the opinion of the court in Beers v. Atlas Assurance Company, 215 Wis. 165, 253 N.W. 584, which doubtless encouraged the plaintiff to hope, that if he amended his complaint so as to allege a disaffirmance of the contract-a rescinding thereof-or a cause of action for equitable rescission, he might surmount the barriers of the parol-evidence rule. Mr. Chief Justice Rosenberry, speaking for the court, said (215 Wis. pages...