Cannon Falls Holding Co. v. Peterson
| Decision Date | 16 October 1931 |
| Docket Number | 28,606 |
| Citation | 238 N.W. 487,184 Minn. 294 |
| Parties | CANNON FALLS HOLDING COMPANY v. HILMA C. PETERSON AND ANOTHER |
| Court | Minnesota Supreme Court |
Action in the district court for Goodhue county by the assignee of two promissory notes against the makers thereof. There was a verdict for defendants, and plaintiff appealed from an order Charles P. Hall, J. denying its alternative motion for judgment or a new trial. Reversed.
Contract -- unfulfilled promises of future action -- fraud.
1. Unfulfilled promises of future action will not constitute fraud unless, when the promises were made, the promisor did not intend to perform. It was error not to instruct accordingly.
Trial -- charge -- erroneous submission of issues.
2. It is error to submit a case to a jury upon a point as to which there is no evidence or when the evidence will admit of but one reasonable inference.
Bentley & Christianson, for appellant.
T R. Johnson and Albert Johnson, for respondents.
In this action by a holder for value but not in due course against the makers of two promissory notes, the verdict was for defendants. Plaintiff appeals from an order denying its motion for judgment notwithstanding the verdict or a new trial.
The facts are simple and for the most part not in serious controversy. Defendants are respectively the widow and a son of Mr. P. A. Peterson, late a resident of Cannon Falls, who departed this life August 20, 1924. For some years he had been president of the Peoples State Bank of Cannon Falls and treasurer of the Scandinavian Benevolent Society. After his death it was discovered that in the latter capacity he was $3,850 short in his accounts. It may be assumed that the loss was attributable to unwise and unauthorized investment of the trust funds rather than to wilful misuse of them. Mr. A. J. Lee, then acting cashier of the Peoples State Bank, brought the matter to the attention of the family of the deceased. These defendants, together with a daughter of the deceased, thereupon agreed to give the bank their note for the amount if it would at once make good the liability.
That agreement was consummated December 1, 1924, by the execution to the bank of a note for $3,850, signed by these defendants and the daughter, and by the bank's payment to the benevolent society of $3,850 in cash to make good the shortage and thereby prevent what it was so highly desirable to all concerned to prevent -- any reflection upon the good name of the Peterson family and any impairment of the standing of the bank itself in the community.
When the original note matured, December 1, 1925, two were taken in renewal, one for $3,850, covering the principal, and another for $290, representing accrued interest. These notes were signed only by the present defendants.
Thereafter the Peoples State Bank of Cannon Falls was reorganized and became the Security State Bank of that city, and the latter succeeded by indorsement and delivery to the ownership of the notes. Certain of the assets of the old bank had been guaranteed by nine of its stockholders. In making good that guaranty they finally had to take over the notes in suit, the transfer being evidenced by indorsed assignment. The present plaintiff is a corporation, organized, it is said, as a holding company to take over and liquidate some of the slow or frozen assets of the Peoples State Bank. Anyway, it has become, by indorsement and delivery, the owner of the notes. The facts as thus far stated are not in controversy.
1. There was an attempted defense on the ground of alleged fraud perpetrated by Mr. Lee, then acting cashier of the Peoples State Bank, inducing the execution of the original note. He was apparently a long-time and trusted friend of the Peterson family and was chosen to be administrator of the estate. We assume for present purposes that the evidence sufficiently discloses a confidential relation existing between him and the makers of the first note. One and a principal fraudulent misrepresentation charged to him by defendants is a statement that he as administrator of the estate would pay the notes. That could have been taken to mean, not that he assumed any personal liability, but only that he would pay out of the assets of the estate. The jury was not instructed that this representation, being strictly promissory in nature, would not constitute fraud unless the evidence justified the conclusion that at the time it was made there was no intention on the part of the promisor to perform and so the promise was intentionally deceitful. It was prejudicial error not to so instruct, for in such cases a broken promise alone does not prove fraud.
"It must be made affirmatively to appear that the promisor had no intention to perform at the time the promise was made." Maguire v. Maguire, 171 Minn. 492, 496, 214 N.W. 666, 668, 215 N.W. 522, and cases cited.
The error just dealt with was assigned as such both on the motion for a new trial and on this appeal. It is no answer to say that the alleged representation by Lee that as administrator he would pay the notes was not submitted to the jury. The claim of fraud, as made for defendants, was submitted as a whole. All the statements charged against Mr. Lee were included. The jury would not have concluded otherwise.
2. There went to the jury an issue as to whether the notes in suit were based upon a valuable consideration, or rather whether the...
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