Farmers' Sav. Bank of Morrison v. Jameson

• Citation: 175 Iowa 676,157 N.W. 460
• Decision Date: 10 April 1916
• Docket Number: No. 29825.,29825.
• Parties: FARMERS' SAVINGS BANK OF MORRISON v. JAMESON.
• Court: Iowa Supreme Court

175 Iowa 676

157 N.W. 460

FARMERS' SAVINGS BANK OF MORRISON

v.JAMESON.

No. 29825.

Supreme Court of Iowa.

April 10, 1916.

Appeal from District Court, Blackhawk County; Chas. W. Mullan, Judge.

Action at law to recover damages for fraud and deceit accomplished by means of a letter written by defendant to plaintiff which is alleged to have induced plaintiff to loan a large sum of money to the Central Iowa Granite Company. Verdict and judgment for plaintiff in the sum of $40,000. Defendant appeals. Reversed.Edwards, Longley, Ransier & Smith and J. W. Arbuckle, all of Waterloo, for appellant.

Williamson & Willoughby, of Grudy Center, and Mears & Lovejoy, of Waterloo, for appellee.

SALINGER, J.

I. Defendant wrote plaintiff a letter, in effect, that its bearer was a desirable bank customer, would probably need to use considerable money, was thoroughly reliable, and was “good for any arrangement” it might make with plaintiff. Plaintiff was a bank which was forbidden by section 1870 of the Code of 1897 to loan more than $2,000 to any one borrower, but from time to time after receiving this letter it loaned the party so presented more than $60,000, and the borrower is wholly unable to pay. The bank contends it would not have loaned at all had it not been for said letter, and was induced thereby to loan said large sum. It had a verdict against defendant for its said loss. The trial judge charged that the statement as to being good, etc., is “the material part of this letter,” and, if the damage suffered by plaintiff by said loaning was “the immediate consequence” of relying thereon, defendant will not be relieved from liability, though the loan “was in violation of law and in sums beyond the authority of the bank to make.” Appellant urges this charge is erroneous in that it permits a recovery for the total of the loans, because in no view was defendant liable for more than the $2,000 which might lawfully have been loaned; that any loan above $2,000 could not be any “consequence” of the letter, and therefore, no “immediate consequence” of the same. This attack presents whether the law has put any limitations on what should be understood from the phrase “good for any arrangement” a proposing borrower might make.

[1] If, for illustration, said letter is to be treated as a general guaranty, unlimited both as to time and amount, then, though its maker undertook “to become responsible for any amount of credit you may give him,” he would still not be bound for “an unreasonable amount of credit.” Lehigh v. Scallen, 61 Minn. 63, 63 N. W. 245. If we may treat this letter as being no more than such guaranty, we would readily hold that the loaning of more than $60,000 to a stranger, a country dealer in gravestones, made by a bank having a capital of $10,000, and limited by statute to $2,000 per borrower, was so unreasonable a credit as that the guarantor could not be charged with it, because he neither intended nor anticipated it. It is manifest, then, that if we may not thus hold, it is because the finding of the jury settles that the letter was a fraudulent false pretense, and that therefore the writing of it was not a guaranty, but a tort.

[2] One difference between a letter of guaranty and a letter which is a tort is that one who so commits a tort may not defend that his writing had unexpected consequences. Doyle v. Railway, 77 Iowa, 610, 42 N. W. 555, 4 L. R. A. 420;Railway v. Carlin, 111 Fed. 777, 49 C. C. A. 605, 60 L. R. A. 462;Fottler v. Moseley, 185 Mass. 563, 70 N. E. 1040;Hill v. Winsor, 118 Mass. 251; Jones v. Royce, 1 Stark, 402. And the essence of appellee's theory is that because of this rule of damages in tort defendant may not urge he could not anticipate $60,000 would be loaned on the strength of the fraudulent pretense with which he is charged.

[3] It is perfectly true that he may not do this if the pretense was broad enough. But does the fact that it will not avail one who does make a false pretense to say that he could not reasonably anticipate the consequences that did follow make him liable for a pretense which he did not make? That one who utters a false pretense may not escape the consequences of it, no matter what they are, certainly has no bearing on the question of what his false pretense was, nor bar the defense that the loss sustained is not a consequence of his writing at all. The existence of said rule of damages merely enlarges what may be recovered for a wrong which has been committed. The least reflection should demonstrate the rule does no more than settle that in cases where a charged representation is established the defense that its consequences were unforeseen, or could not have been foreseen, is eliminated. But surely such rule does not interfere with showing that no false pretense was made, or that what was suffered by complainant was not caused by such false pretense as was made. That a stated act being done precludes inquiry into whether its consequences could be anticipated neither proves that such act was committed, that it had any consequences, nor what were its consequences. Once show this defendant did fraudulently write a falsehood which may in reason have been understood to represent that the granite company was financially responsible for any amount whatsoever, and he may not say he should not have been believed, nor that he could not foresee that so large a loan as was would be made. But, if he made a representation which could not thus be understood, then, no matter how fraudulent was his letter, its representations would still be no more than they were. A fraudulent representation that one is good for $2,000 would not make him liable for all loaned if $60,000 be loaned. While the representor may not say that, though he falsely represented a borrower was good for $2,000, he did not anticipate that such sum would be loaned, he may defend against being held liable for a $60,000 loan, not because the larger loan could not have been anticipated, but because he never represented the borrower to be good for the larger loan. The falsity of the pretense that the borrower is good for the smaller sum, coupled with the fact that the larger sum was loaned, cannot enlarge the pretense that was, in fact, made. The excess of the loan above $2,000 is not an unexpected consequence of the pretense which was made, but it is not its consequence at all. If we must hold that the representation made was limited to a loan of $2,000, then as to the loan in excess thereof there is no question of fact as to whether the larger loan was proximately due to such representation. Our question is not whether defendant made a false representation not limited to a loan of $2,000, and whether he may evade it by claiming that he could not foresee $60,000 would be loaned. It is whether a loss suffered by plaintiff was caused by justified reliance upon the representation which was made. No matter how vicious the fraud perpetrated, plaintiff may not recover more than such fraud induced him to lose; and instruction 12 so rules.

[4] It follows the vital inquiry is: What is the representation that was made--more concretely, how should plaintiff have, as a matter of law, understood what was written to him? However the damages permissible may differ in tort and on guaranty, the meaningof language used is settled by the same rules in either case. While one may not commit a tort by writing and have read into it a limitation as to what damages resulting he is to be responsible for, he may insist that what he has written is not the tort which plaintiff claims it to be. There is no rule of construction peculiar to determining the meaning of written words which constitute a tort. The same words are dealt with in the same way, whether found in a statute, an alleged libel, or a contract. We have applied the ordinary rules of construction in tort, or, rather, in determining how a statute forbidding a tort should be construed. State v. Gardner, 156 N. W. 747, involves how the words “any person” should be construed when found in a statute which makes it a felony to resort to a house of ill fame for stated purposes. It goes without saying that the felony of so resorting to such house is as much a tort as the writing of a fraudulent false pretense. We held in Gardner's Case that the phrase “any person,” found in such statutes, though broad enough to include all human beings, is limited by the rule of reason, and that in determining how the use of the words was understood there should be taken into consideration what was the general understanding of the law as it existed before such statute was made, in order to arrive at what meaning such words in such statute would convey, and that it should not be held the Legislature contemplated absurd literal interpretation of said general words. If the approved usage of the language, or the meaning in law of technical phrase, or pre-existing law, may be read into a statute which creates a felony, and if the words therein found may be interpreted and limited by considering these, it must follow that, whenever it becomes a question whether a written false pretense induced a loss, the rule of damages in tort affords no reason for blocking an inquiry on what the words used in the pretense mean in law. Dealing with “any person” when defining to whom a criminal statute applies, and “any arrangement” used in a false pretense, calls not for different rules of construction. Though the consequence of what was written must be met, whether anticipated or not, no rule of law prevents reading into a written false pretense either the approved usage of the language, the meaning in law that a technical phrase may have attained, or the law of the land.

The point, then, narrows to how, applying the ordinary rules of construction, plaintiff must have understood defendant's letter.

[5] 2. If to the statement that the proposed customer “was good for any arrangement he might make” there had been...