Beers v. Atlas Assur. Co.

• Citation: 253 N.W. 584,215 Wis. 165
• Parties: BEERS v. ATLAS ASSUR. CO., LIMITED, ET AL.
• Decision Date: 06 March 1934
• Court: United States State Supreme Court of Wisconsin

215 Wis. 165

253 N.W. 584

BEERS

v.ATLAS ASSUR. CO., LIMITED, ET AL.^a1

Supreme Court of Wisconsin.

March 6, 1934.

Appeal from an order of the Circuit Court for Rock County; George Grimm, Circuit Judge.

Action by Clarence P. Beers against the Atlas Assurance Company, Limited, and others. From an order sustaining a demurrer, plaintiff appeals.--[By Editorial Staff.]

Reversed and remanded.

This is an action in deceit begun on the 20th day of February, 1933, to recover damages on account of an alleged fraud upon the plaintiff by virtue of which he entered into a contract of sale for his insurance business, good will, and equipment in connection therewith. There was a demurrer to the complaint upon the ground that it did not state facts sufficient to state a cause of action and upon the further ground that there was a defect of parties plaintiff. From the order sustaining the demurrer, entered on July 15, 1933, the plaintiff appeals.

The facts will be stated in the opinion.

William G. Wheeler, of Janesville, for appellant.

Wolfe & Hart and Bender, Trump, McIntyre & Freeman, all of Milwaukee, for respondents.

ROSENBERRY, Chief Justice.

From the amended complaint it appears that the plaintiff, one Cora G. Beers and the Rock County Insurance Agency, had since October, 1918, conducted a general insurance business. In view of the fact that we do not reach the second ground of the demurrer which involves the validity of an assignment to the plaintiff of any cause of action which Cora G. Beers and the Rock County Insurance Agency might have, we shall in referring to the contract refer to the parties of the first part as plaintiff although there were in fact three parties to the contract. This is merely a matter of convenience. The defendant insurance companies were represented by George G. Wright, Byron K. Olinger, Robert K. Meeker, and Cecil L. Davis, who will be referred to as trustee defendants. The insurance companies will be referred to as insurance company defendants. The complaint is long and contains much evidentiary matter. After setting out the corporate character of the insurance company defendants, there is alleged in the complaint in considerable detail the nature of the business carried on by the plaintiff, assignment of the cause of action by Cora G. Beers and the Rock County Insurance Agency; that the year 1932 was one of great financial distress; that the plaintiff had been unable to make collections, the nature of the agency, relations existing between the plaintiff and the insurance company defendants.

The complaint alleges that the defendants falsely and fraudulently represented to the plaintiff that they knew he was having a hard time collecting premiums; that they wished to put the business under a trust arrangement; that the trustees would open a separate bank account and that no action was desired to be taken that would in any way interfere with plaintiff's control over his property or business; that during the time of the trusteeship plaintiff was to receive a salary of $150 per month; that plaintiff should continue in possession of the business and property until the accounts owing to the insurance company defendants should be paid.

That on October 12, 1932, the defendants, with intent to deceive and defraud the plaintiff and his assignors, stated that they had prepared a trust agreement in accordance with their previous negotiations which was presented to plaintiff; that the defendants “falsely and fraudulently represented to plaintiff and his said associates, that the defendants had no desire or intention of interfering with plaintiff and his associates,” and repeated all of the false and fraudulent representations made on October 4th, and “in addition they falsely and fraudulently stated that they wished the agreement signed in order that they might open a trustee account at a local bank in order that the plaintiff, in conducting the business of the agency, might deposit to the account of the trustees any amounts collected by him.”

Further, “that while the agreement contained a power of sale, that power would never be exercised as long as plaintiff was faithful in his care of and attention to said business, nor would defendants in any way attempt to oust plaintiff and his associates from the possession, control and management of said business, or interfere therewith except as to disposition of the income thereof.”

It was further alleged that the plaintiff wished to consult his banker, but that defendants persuaded him not to, representing that it would block everything, which representations were false and fraudulent.

It is then alleged that plaintiff in reliance upon the false and fraudulent representations made by defendants signed the contract known and described in the case as Exhibit A; that the plaintiff was induced to rely upon the representations made because of his long association in business with the defendants. It is then alleged that “all of said representations were false and fraudulent in that the defendants had no intention of allowing plaintiff, said Cora G. Beers or the Rock County Insurance Agency, to continue said business, or to be connected with it in any manner; or of permitting them to redeem said property from the indebtedness therein mentioned, and for which such agreement purported to be security; but were made for the fraudulent purpose of acquiring possession of said property and business, in order that they might convert the same to their own use and defraud plaintiff, said Cora G. Beers and said Rock County Insurance Agency of the same.”

That the defendants had no intention of carrying out said contract or any part thereof except to gain possession of said property and defraud the owners; “that the so-called trust agreement was not intended by the defendants as a contract, but was merely an instrument whereby the unlawful and fraudulent scheme of defendants might be accomplished, the possession of said property obtained, and plaintiff, Cora G. Beers, and Rock County Insurance Agency defrauded thereof, and that that was the only purpose of defendants in securing it.

“There was no element of good faith in the negotiation of said agreement, but that the same was intended to deceive and defraud plaintiff, Cora G. Beers, and said agency.”

That after the signing of the agreement, the defendants by artifice obtained possession of the key to the office, and, immediately after obtaining the key to the office and the combination to the safe, the defendants informed the plaintiff that they did not want him in the office, that his authority as an agent was at an end; that he was not to touch anything in the office; that he was to collect no bills; and that he was to have nothing to do with the policies. The defendants then ordered the plaintiff to leave the office and compelled him to do so and placed a watchman on guard and took exclusive possession thereof; that on October 26, 1932, the property and business described in the contract was sold without any opportunity on the part of the plaintiff to redeem; that the defendants have not accounted to the plaintiff for the proceeds of said sale, and have filed no account thereof as required by section 241.15, Wis. Stats.

Plaintiff further alleges that no actual consideration for the contract passed between the parties thereto.

Plaintiff demands judgment against the defendants in the sum of $150,000 together with his costs and disbursements.

The contract referred to as Exhibit A, after the names of the parties, recites that the parties of the first part “have now defaulted and have not paid and remitted to said Insurance Companies the premiums collected for business written more than sixty days prior to the execution of this agreement; and are further indebted for business written during the months of August and September, 1932, and are unable to pay and discharge the liabilities now due and owing to said hereinbefore mentioned Insurance Companies.”

The contract then provides that in consideration of $1 and other good and valuable considerations, the first parties have set over unto the trustee defendants all of the business, equipment, etc., including the good will and right to solicit at expiration “with the absolute right and privilege given to the parties of the second part, at any time in their discretion, to sell, transfer, convey or make other disposition to whomsoever they may desire of the assets hereby conveyed to them.”

It is next agreed that if the parties of the first part shall pay the amount due and owing to the defendant insurance companies, that “if the parties of the second part at such time shall not have made a sale, conveyance, or disposition of the assets or business of the said C. P. Beers or Rock County Insurance Agency, being the insurance business of the parties of the first part, that the parties of the second part will then reconvey, surrender and deliver the said business and the title to the physical and other assets thereof to the said parties of the first part; but that at any time until such back balances and indebtednesses shall have been paid by the parties of the first part, and the current balances placed on a sixty-day basis, that this sale shall be considered as absolute, and the parties of the second part shall have the unqualified right to sell the business and property herein conveyed to them at either public or private sale, whichever may, in their opinion, be advantageous, and the title conveyed to the purchaser thereof by them shall be absolute, and the parties of the first part shall have no further right or interest therein or thereto.”

The proceeds of the sale were to be applied upon the indebtedness of the parties of the first part. The contract then provides for the employment of C. P. Beers at a salary of $150 a month, “which arrangement shall continue until such a time as the parties of the second part may determine, and which, at their discretion, may be...