Conan v. A. C. Allyn & CO.
| Decision Date | 20 June 1932 |
| Citation | 209 Wis. 35,243 N.W. 400 |
| Court | Wisconsin Supreme Court |
| Parties | CONAN v. A. C. ALLYN & CO. CHARNEY v. A. C. ALLYN & CO. |
OPINION TEXT STARTS HERE
Appeal from Judgments of the Circuit Court for Milwaukee County; Otto H. Breidenbach, Circuit Judge.
Actions by Hattie L. Conan and by Rachel W. Charney against A. C. Allyn & Co. Judgment for plaintiffs in civil court, and defendants appealed to the circuit court. From adverse judgment, plaintiffs appeal.--[By Editorial Staff.]
Judgments of the circuit court reversed, and those of civil court affirmed.
These actions were separately commenced in the civil court of Milwaukee county to recover the considerations paid by the two plaintiffs for bonds purchased from the defendant. The actions were tried together. The facts relied on in both cases are substantially the same. The civil court (Carl Runge, civil judge) found for the plaintiffs, and rendered separate judgments in their favor. The defendant appealed from both judgments to the circuit court where the actions were heard on the record. Both judgments of the civil court were reversed by judgments of the circuit court entered on the 19th day of December, 1931. From such judgments, the plaintiffs separately appealed.Sydney C. Charney, of Milwaukee (W. C. Zabel, of Milwaukee, of counsel), for appellants.
Fawsett & Shea, of Milwaukee (C. F. Mikkelson, of Milwaukee, of counsel), for respondent.
In the first action, hereinafter called the Conan case, the plaintiff sued to recover the sum of $2,000 paid for two bonds issued by Great Lakes Terminal Warehouse Company of Toledo, on the ground that she was induced to purchase them by misrepresentations and fraud, which purchase she had duly rescinded prior to the bringing of the action.
In the second action, hereinafter called the Charney case, the plaintiff sued to recover the sum of $100, the consideration paid by her for one Great Lakes Terminal Warehouse Company bond, on the ground of false representations.
The defendant is a corporation engaged in the sale of stocks, bonds, and other investment securities. At all the times herein mentioned, Mae Nee was employed by the defendant as one of its authorized representatives and agents.
Hattie L. Conan, at the time of the transaction of which she complained, was a widow of the age of sixty-four years, and was dependent for her support upon the interest income from her investments and the rent from a duplex house. Prior to the 21st day of November, 1927, she had purchased securities from the defendant through Miss Nee, as its agent. She was inexperienced in business matters, and necessarily relied upon statements made by agents of investment companies who sold securities to her. On the date mentioned, Mrs. Conan was the owner of two Webster Building Corporation bonds of the par value of $2,000, which she had theretofore purchased from the defendant, and which, at the time mentioned, had been called at 103 and one-half. On or about the date mentioned Miss Nee called on the plaintiff, and, after a rather extended interview, induced her to exchange her two Webster bonds for the two Great Lakes bonds and $70 in cash. The Great Lakes bonds sold to Mrs. Conan were in fact “general mortgage bonds,” were part of an issue of $850,000, but were in fact second and subsequent to an issue of $2,250,000 secured by a first mortgage. The plaintiff claimed, and the trial court found, that Miss Nee, in order to induce the plaintiff to purchase the two Great Lakes bonds, represented that said bonds were first mortgage bonds; that the business was a going business, and was earning more than enough to met its interest requirements; that the bonds were better than the Webster bonds, which were then being called; that they were adequate security for the $2,000 invested by the plaintiff; and that they were a first class investment for a person of plaintiff's financial status. The court further found that the said representations were false, in that said bonds were secured by a second mortgage which was subject to a first mortgage; that they were not as good as the Webster Corporation bonds, in that they were secured by a second mortgage; that they were not adequate security for the $2,000 invested by the plaintiff by reason of the large first mortgage and because the warehouse was uncompleted and not a going concern; that they were not a first class investment by reason of the fact that they were subject to the first mortgage; that they were not first class bonds and were not a safe investment because of the entire lack of earnings at the time the bonds were sold. The court further found that, prior to the commencement of the action, and upon discovering the fraud, plaintiff duly tendered the two Great Lakes bonds to the defendant, and demanded the return of the consideration paid, which demand was refused by the defendant. Judgment was entered in favor of the plaintiff for the sum of $2,000 and costs.
The issues in the Charney case were substantially the same as in the Conan case. Rachel W. Charney is a daughter of Mrs. Conan, and in November, 1927, was living with her mother. At that time she was the owner of a $100 Livingston Baking Company bond quoted at $104. This bond was exchanged for a Great Lakes bond of like denomination and $4 in cash.
On appeal to the circuit court, both actions were reviewed on the records. In the Conan case the circuit court held that the proof was insufficient to measure up to the proof required in fraud cases; that is to say, fraud was not shown by clear and satisfactory evidence. In the Charney case the circuit court did not pass upon the sufficiency of proof, but reversed the judgment of the civil court on the ground that plaintiff's proof failed to show that the value of the bond purchased by her was less at the time of the sale than the amount actually paid; the court held that, because her action was one for damages rather than one for the return of the consideration paid, she could not recover.
[1] It is well established that on an appeal from the civil court of Milwaukee county to the circuit court, where the trial had been had before the court without a jury, the findings of the trial court should not be set aside, unless such findings are against the clear preponderance of the evidence. Pabst...
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