Green v. Bruck

• Decision Date: 02 December 1937
• Docket Number: 6493
• Citation: 74 P.2d 85,58 Idaho 401
• Parties: KATHRYN GREEN and JAMES H. GREEN, Respondents, v. EDWARD BRUCK and BERTHA F. BRUCK, Husband and Wife, Appellants
• Court: Idaho Supreme Court

74 P.2d 85

58 Idaho 401

KATHRYN GREEN and JAMES H. GREEN, Respondents, v. EDWARD BRUCK and BERTHA F. BRUCK, Husband and Wife, Appellants

No. 6493

Supreme Court of Idaho

December 2, 1937

MORTGAGES-FRAUD-EVIDENCE SUFFICIENCY OF.

1. Evidence that mortgagor received and had in his possession shares of oil stock for which note and mortgage were given and that, with his consent, the shares were delivered to one not shown to be connected with the oil company, for delivery to its office for reissuance pursuant to reorganization plan present whereabouts of such shares not being shown, is insufficient to establish fraud so as to defeat the mortgage.

2. In a case of this kind fraud is never presumed, but must be proved by clear and satisfactory evidence by the party asserting it and, if the facts from which the alleged fraud is supposed to arise are consistent with honest intentions, it will not be imputed.

APPEAL from the District Court of the Eighth Judicial District, for Kootenai County. Hon. Bert A. Reed, Judge.

Suit to foreclose real estate mortgage. Defense of fraud and failure of consideration. Decree for plaintiffs. Affirmed.

Affirmed. Costs awarded to respondents.

J. Ward Arney, for Appellants.

Material false representations are not mere promises, but support defenses of lack of consideration and fraud. (Intermountain Assn., etc., v. Pierce, 43 Idaho 279, 251 P. 615.)

When a note maker establishes procurement of the instrument by fraud, the burden shifts to the holder to prove acquisition in due course; including the burden of proving that when negotiated to the holder, the latter had no notice of the infirmity. (Wright v. Spencer, 39 Idaho 60, 226 P. 173; Utah State, etc., v. Stringer, 44 Idaho 599, 258 P. 522, 524.)

Notes given for stock in Jagcure Corporation, procured by fraud, are not collectible. (New Mexico Ensor Remedy Co. v. Hobson, 4 Idaho 689, 43 P. 573.)

Whitla & Knudson, for Respondents.

There is no proof of fraud in this case. This court in keeping with all courts has held that fraud is never presumed but must be proven by clear and satisfactory evidence. The only attempt in this case to show any failure on the part of either Melson, Stimmel or anyone else is the claim that some stock delivered to the plaintiff might not have been indorsed. We have heretofore commented on the facts of this and call the court's attention to the evidence where the defendant himself, when pressed, admitted that he did not know whether the stock was indorsed in blank or not. He also admitted that he did not know how it was made out on the face and finally said that he was not familiar with stock transactions and knew little about the same. Certainly they cannot prove any fraud or wrong in such a manner. When a man comes into court and tries to prove fraud he must do it by clear and satisfactory evidence. He certainly cannot prove fraud by saying he does not know or cannot remember, and that is what the party in this case is trying to do. (Smith v. Thomas, 42 Idaho 375, 245 P. 399; Nelson v. Hudgel, 23 Idaho 327, on page 335, 130 P. 85; Smith v. Johnson, 47 Idaho 468, 276 P. 320.)

MORGAN, C. J. Holden, Ailshie, Budge and Givens, JJ., concur.

OPINION

MORGAN, C. J.

This is an appeal from a decree foreclosing a mortgage on land in Kootenai county. The mortgage was given by appellants, July 22, 1932, to secure payment of a promissory note of even date therewith to C. H. Melson, three years after date. December 6, 1935, when the debt was past due, Melson sold and assigned the note and mortgage, for a valuable consideration, to respondent Kathryn Green. The note and mortgage were given to Melson by appellants to evidence their indebtedness and secure payment to him by them of $ 3,000 for 110,000 shares of stock in Crow's Nest Oil Company. In their answer appellants alleged failure of consideration for the note and mortgage and fraud practiced upon them by Melson and others in procuring its execution and delivery. The trial resulted in a decree foreclosing the mortgage.

Respondents introduced the note, mortgage and assignment in evidence proved nonpayment of the debt, stipulated with appellants with respect to the attorney fee, and rested. Appellant, Edward Bruck, in support of the defense of fraud and failure of consideration, testified to the circumstances leading up to the execution and delivery of the mortgage. From his testimony it appears that since 1915 he had been a stockholder in Crow's Nest Oil Company; that Melson knew he was a stockholder; that in June, 1932, a man named Kendall called him on the telephone and told him he was from Crow's Nest Oil Company and was sent by its president to urge the stockholders to buy as much stock as possible, and wanted to meet him at Mr. Gibbs' office; that the next morning he met Kendall at Gibbs' office; that Kendall, Gibbs and Bruck were present and the latter stated he had no money with which to buy stock; that Gibbs was dealing in Crow's Nest Oil Company stock and stated Bruck had property and could try to raise money that way with which to buy; that during the conversation Kendall called Ben Stimmel on the telephone and "He asked Mr. Stimmel if he go in on 100,000 shares of Crow's Nest with me." Bruck further testified: "I tried to raise money but couldn't, so then it was the week in July--on Friday same week, the 22nd, so Mr. Kendall and Mr. Melson came to my house and Mr. Melson offered me to sell 100,000 shares if I agree to mortgage my property for $ 3,000"; also that negotiations resulted in an agreement that he should purchase from Melson 110,000 shares of the stock for which he was to pay, and he paid, $ 25 in cash, and was to give, and he gave, a mortgage on his property for $ 3,000; that it was agreed the stock should be kept by Ben Stimmel in escrow for six months; that this was requested because to put so much stock on the market would bring the price down. He further testified: "I had signed a contract that Mr. Stimmel was to keep...