Hawkins Realty Co. v. Hawkins State Bank
| Citation | 236 N.W. 657,205 Wis. 406 |
| Parties | HAWKINS REALTY CO. v. HAWKINS STATE BANK. |
| Decision Date | 12 May 1931 |
| Court | United States State Supreme Court of Wisconsin |
OPINION TEXT STARTS HERE
Appeal from a judgment of the Circuit Court for Rusk County; Emery W. Crosby, Circuit Judge.
Action by the Hawkins Realty Company against the Hawkins State Bank. From a judgment for plaintiff, defendant appeals.--[By Editorial Staff.]
Reversed with directions.
This action was commenced on the 17th day of August, 1928, to recover damages claimed to have been sustained by the plaintiff because of the failure and refusal of the defendant to repurchase certain mortgages pursuant to the terms of an agreement entered into by and between C. K. Ellingson and G. O. Vig, while president and cashier, respectively, of defendant bank. From a judgment in favor of the plaintiff and against the defendant, in the sum of $11,270.92 and costs, entered on the 6th day of June, 1930, the defendant appealed.
The facts of the case are substantially undisputed. The plaintiff is a Wisconsin corporation organized by the heirs of C. K. Ellingson, deceased, for the purpose of expediting the handling of certain properties belonging to the estate of Ellingson, who died on the 24th day of May, 1921. For a number of years prior to his death Ellingson was the president of the defendant bank and received a salary of $500 a year. During the year 1920 G. O. Vig was the cashier of the bank. On or before the 11th day of September, 1920, Ellingson held certificates of deposit issued by the defendant bank in the amount of $30,000. Shortly before September 11, 1920, Ellingson either handed to Vig or mailed to the bank the following letter:
“State Bank of Hawkins.
Gentlemen:
I hold your CD #1280-81-82-83 & 84. Allso 1286 & 1288, total 31000 & the interest--
All being past due & duplicated I desire to clean these up & place them at better interests if you care to use this money your CD-3-6-M- in 1000 each with interest at 7% is acceptable--otherwise I deem it my duty to myself & mine to place this elsewhere at a better rate of interest.
Yours truly
C. K. Ellingson
If accepted date CD Sep 8th 1920. Further it is to be your privilege, to redeem these when you desire.”
Ellingson's proposal was not looked upon favorably by Vig for the reason that he believed it would be contrary to banking rules, since the bank was paying only 4 per cent. on time certificates. Thereupon Ellingson asked Vig for a list of the farm mortgages belonging to the bank and Vig furnished him with such list. Ellingson thereafter picked out of the list what he considered to be good mortgages, the best the bank had. Ellingson then said that he would take the mortgages selected by him in lieu of his certificates of deposit. Ellingson and Vig then entered into an agreement which Ellingson drew up or dictated and which Vig typewrote in duplicate. The agreement is as follows:
Ladysmith, Wis.
Dear Mr. Ellingson:
Relative to your $30,000.00 Certificate of Deposit on our bank now past due will say that we herewith hand you this list of Real Estate Mortgages which we offer to let you have in lieu of the certificates with the understanding that we will repurchase same from you as fast as we are able to, at face plus interest accrued while you held same. We will take this up as per the following list:
Trusting this will be entirely satisfactory to you as this would make it much easier for us to take care of in this way.
When this agreement was executed in duplicate, Ellingson took one copy and Vig retained the other. All of the mortgages enumerated in the contract, with the exception of two, which, in the meantime, had been paid and the proceeds of which were turned over to Ellingson, were assigned to Ellingson, and the notes, mortgages, and assignments delivered to him on or about the 6th day of October following. The copy of the contract retained by Vig was put in a folder of the letter file which contained other correspondence between Ellingson and the bank. Upon the delivery to Ellingson of the mortgages and the proceeds of the two mortgages that had been paid, the certificates of deposit in the sum of $30,000, plus accrued interest, were surrendered and canceled. No record of this contract was made on any of the books of the bank, and the only way in which it could have been discovered by the directors or other officers of the bank was by going through the letter file. None of the other directors had any knowledge of the existence of the contract until years afterwards when the copy of the contract retained by Ellingson came to light in the fall of 1928. Although a meeting of the directors was held on the 7th day of October, 1920, no mention was made of the contract entered into, nor was the contract mentioned at any subsequent meeting of the board or to any of the directors individually. In the fall of 1928 one of the Ellingson heirs found the Ellingson copy of the contract in a “strong box” in which Ellingson, in his lifetime, had kept his mortgages. After the discovery of the contract some of the Ellingson heirs demanded that the bank repurchase four certain mortgages which at the time remained unpaid. Oral demand to repurchase was made in the fall of 1928, followed by a written demand made on April 11, 1929. On April 18, 1929, the bank denied any liability under the contract. At that time all of the mortgages with the exception of the F. Juengenberg mortgage in the principal sum of $3,000, the Henry Toy mortgage in the principal sum of $2,000, the Hans Martinson mortgage in the principal sum of $600, and the Andrew Enger mortgage in the principal sum of $1,000, had been fully paid by the respective mortgagors. Several of the mortgagors had paid their mortgages direct to the Ellingsons; but most of them had paid them by delivering moneys to the bank with instructions to obtain satisfactions from the assignees of the mortgages, and such moneys so paid were turned over to the respective assignees or credited to their accounts in the bank. Up to the time that demand to repurchase the four unpaid mortgages was made upon the bank, it...
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