Danielson v. Bank of Scandinavia

• Decision Date: 01 April 1930
• Citation: 201 Wis. 392,230 N.W. 83
• Parties: DANIELSON v. BANK OF SCANDINAVIA.
• Court: Wisconsin Supreme Court

201 Wis. 392

230 N.W. 83

DANIELSON

v.BANK OF SCANDINAVIA.

Supreme Court of Wisconsin.

April 1, 1930.

Appeal from a Judgment of the Circuit Court for Waupaca County; Byron B. Park, Judge.

Affirmed.

Action begun February 14, 1929; judgment dated August 5, 1929. Action to recover amount paid by plaintiff to the defendant for mortgage on Minnesota farm. The plaintiff is an elderly woman whose husband had died leaving her with a farm. She sold this farm, which was near Scandinavia, and moved to town, where she has since lived. For many years she and her husband had transacted their banking business with the defendant, and were well acquainted with its cashier, R. J. Bestul. The bank had in its files certain mortgages on Minnesota property which it was desirous of disposing of, and on August 11, 1922, or shortly prior thereto, they commenced negotiations with the plaintiff, as a result of which plaintiff paid $2,000 for the mortgage in question. It is the contention of the plaintiff that the defendant opened the negotiations and falsely represented that the note was well secured by the mortgage upon the farm in question. The defendant denies that it made any false statements or any agreement to refund the money.

The case was tried and the jury returned a special verdict by which it found: (1) That the defendant represented to the plaintiff at the time the mortgage was purchased that it was an absolutely safe investment; (2) that such representation was false and untrue; (3) that the plaintiff did not have the right to rely upon said representation; (5) that “at the time of the purchase of said note and mortgage the defendant bank by R. J. Bestul, its cashier, did promise and agree with the plaintiff that if she became dissatisfied with her purchase it, the bank, would take back the note and mortgage and return the consideration she paid therefor”; (6) that the plaintiff in the summer of 1927 made demand upon the bank that it should take back the note and mortgage and pay her the sum invested therein; (7) that the plaintiff refrained from pressing her demand that the bank take back the note and mortgage, and repay her the sum she had invested therein because of representations then made to her by the said cashier of the bank that the mortgage would be paid; that the bank examiner had ruled that the bank could not purchase any more mortgages.

There were the usual motions after verdict. The court filed a written opinion and directed judgment for the plaintiff upon the verdict, from which judgment the defendant appeals.Lloyd D. Smith, of Waupaca, for appellant.

Goggins, Brazeau & Graves, of Wisconsin Rapids, for respondent.

ROSENBERRY, C. J.

It should be said on behalf of the bank and its officers that they were themselves misled with regard to the value of the property covered by the mortgage, and that, while the representations made by them were false and untrue, the defendant and its officers were in 1922 not aware of the true state of affairs.

[1] The theory upon which plaintiff seeks recovery is that under the arrangement as claimed by her and found by the jury she had a right at any time before the right became barred by the statute of limitations to make a demand upon the defendant to return her money, and that upon the making of such demand it was the duty of the defendant to repay her the consideration for the mortgage; that, having made this demand and being entitled to receive back the money from the defendant bank, she was induced to forego her right upon new false and fraudulent representations upon which she relied, and by reason of which she did not begin an action to recover the money until after the expiration of six years from the date of the original promise. She now seeks recovery for damages for the false and fraudulent misrepresentations made in 1927 by which she was induced to forego a valid claim against the defendant upon the original promise. The case is in this respect ruled by Seideman v. Sheboygan Loan & Trust Co., 198 Wis. 97, 223 N. W. 430.

The trial court correctly disposed of all questions raised upon the motion for a new trial. One question is raised here upon proper exception which was not treated by the trial court in its opinion disposing of the case. It should be said that the trial court in its opinion indicated that it would if at all material change the answer to question No. 3, for the reason that it was clear that the plaintiff did have a right to rely upon representations made to her. As set out in the statement of facts, plaintiff was at the time of the trial fifty-eight years of age; her husband died in 1916. Shortly before the occurrence of the transaction in question she sold the farm upon which she had lived and removed to Scandinavia. She had never had experience in investing in mortgages. She and her husband had transacted their banking business with the defendant, and she was well acquainted with R. J. Bestul, the cashier. He was familiar with her financial situation, knew that she had only about $2,500 or $2,600, and he approached the matter by asking her if she would not like to procure an investment which would pay her a larger return than a deposit in the bank; that at that time the money had been in the bank but a short time. Plaintiff's version of the transaction in her own language is as follows:

“I said, ‘What would that be then’ and he said, ‘I have some good farm mortgages.’ I said, ‘Around here,’ and he said, ‘No, but I have some Minnesota mortgages.’ I said, ‘They are good then,’ and he said, ‘Why, yes, I have just sold three of them to men that I knew real well and men that were in the habit of loaning money.’ I thought they knew what they were doing and if it is good for them it is good enough for me. He said prior to that time, ‘that if for any reason you want your money back the Bank would be glad to refund it.’ ”

At the same time the defendant gave plaintiff a receipt as follows:

“Bank of Scandinavia

Incorporated as State Bank Sept. 1, 1903

Capital and Surplus $30,000.00

Scandinavia, Wis. August 11, 1922

Received from Mrs. Josephine Danielson the sum of $2000.00 for which we have sold her mortgage signed by Oliver Erion and wife, dated March 13th, 1920, due March 13th, 1925.

Mrs. Danielson is to have 6% interest on this mortgage from August 11th, 1922.

We agree to keep this mortgage in our vault for safe keeping, to collect the interest without cost to Mrs. Danielson, and to look after it as though it belonged to this bank.

Bank of Scandinavia

R. J. Bestul, By Cashier

Plffs Ex A

C. L. O.

The Modern-Up-To-Date Bank of Service”

The defendant objected to any oral testimony by the plaintiff respecting an agreement made at the time of the transaction to repay the money by the defendant on the ground that it could not be received to vary the terms of a written contract. If the position of the defendant upon this question is sound, the plaintiff cannot recover. There is no other proof of the agreement to repurchase in the case except the oral testimony of the plaintiff. If the bank was under no obligation in 1927 to comply with the plaintiff's demand that it return her her money, then any false statement made by the bank to her could create no liability, for the reason that she sustained no damage on account of any reliance she may have placed upon such false representations.

It appears that the papers were at all times in the possession of the defendant. The plaintiff testifies that she never had the note and mortgage in hand. The note and mortgage in question bore interest at the rate of 7 per cent. per annum. The first part of the document dated August 11, 1922, is clearly a receipt. It does not purport to state the terms or conditions of the sale of the mortgage by the defendant to the plaintiff. The remainder relates to the custody of the note and mortgage. The defendant agrees to keep the mortgage in its vault, collect the interest, and look after the security, for which it would retain the differencebetween the 6 per cent. to be paid the plaintiff and the 7 per cent. which the note and mortgage bore. The claim of the defendant is that this is a contract, and that, while it is in form a receipt, it includes all the elements of a contract, and, like any other contract, cannot be varied, expanded, or contradicted by parol testimony, citing Conant v. Estate of Kimball, 95 Wis. 550, 70 N. W. 74;Twohy...