Iowa Cnty. Bank v. Graber

• Decision Date: 12 January 1926
• Citation: 206 N.W. 835,189 Wis. 277
• Parties: IOWA COUNTY BANK v. GRABER.
• Court: Wisconsin Supreme Court

189 Wis. 277

206 N.W. 835

IOWA COUNTY BANK

v.GRABER.

Supreme Court of Wisconsin.

Jan. 12, 1926.

Appeal from Circuit Court, Iowa County; S. E. Smalley, Judge.

Action by the Iowa County Bank against Louis Graber. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

The action was brought to recover on two promissory notes. For many years prior to 1923, one A. T. Graber was engaged as a cattle dealer in Iowa county. In the conduct of his business he would purchase a large number of cattle in the spring of the year, pasture them until the following winter, and would then sell them in the market. Having insufficient financial means with which to pay for the cattle when they were bought, he pursued the practice, together with other cattle dealers in said county, of applying to a bank for a loan covering the period of time intervening between the purchase and the sale. It appears that the financial operations of A. T. Graber prior to 1923 had been rather unsatisfactory, and that his obligations to the plaintiff bank, evidenced by his promissory notes, had to be renewed from time to time.

The defendant, Louis Graber, the father of A. T. Graber, appears to be one of the substantial citizens of Iowa county, being the owner of about 1,300 acres of valuable pasture lands in said county, and he also having been, for a period of upwards of 20 years prior to 1923, one of the directors of the plaintiff bank. As the obligations of A. T. Graber from time to time became due and were renewed, they were discussed at directors' meetings, in the presence of the defendant, and the latter was repeatedly urged to guarantee their payment. This he consistently at all times refused to do, expressing, however, orally, his willingness to stand back of his son's obligations.

In the spring of 1923, at the usual time when cattle men made applications for loans to the plaintiff bank, A. T. Graber also applied for a loan of $25,000, to enable him to carry on his operations for the coming season, and this application was presented to the board of directors of the bank, at which meeting the defendant was present, and discussed. At this time A. T. Graber was indebted to the bank on two notes, one for the sum of $4,800, dated March 21, 1921, and the other for $5,178.95, dated February 1, 1923. Owing to the failure of A. T. Graber to meet his prior obligations, and the repeated renewals of prior notes, and the failure of the defendant to comply with his former oral promises to legally guarantee his son's indebtedness, a decided opposition sprang up at the directors' meeting, to the granting of the application of A. T. Graber; and in this behalf the cashier of the bank, one Bishop, who was also a director, testified as follows:

“I reported to the board that Mr. A. T. Graber had asked for a loan of $25,000 for cattle for that year, and one of our board of directors spoke up, and said that he should not have any more money; that there were two notes in the bank that his father had promised to guarantee and had not done it when so requested. That was talked over pro and con, and Mr. Louis Graber (the defendant) got up and said that they needed money to make money with; that they had a lot of pasture, and they had to have money to get cattle to put on these pastures; and he said to the board, ‘If you will loan us $15,000, I will assume the payment of Bert's other two notes, and you will never lose a dollar.’ He also asked me at his request not to put in the minutes what he said about assuming the payment of Bert's other two notes. He made the statement that, if he did not pay these notes while he was alive, he had his will fixed so that the notes would be good if he died before he had paid them. He told the board that these cattle were going on his pasture and that they would be his cattle. The board then voted to him and Bert $15,000 on the condition I have stated.”

Other directors of the bank, who were present at the meeting, corroborated the testimony of the cashier. The directors thereupon voted favorably on the loan for $15,000, and to evidence the same a note for this amount was duly executed by both the defendant and A. T. Graber, and the amount of the loan was placed to the credit of A. T. Graber in his open checking account with the bank, and withdrawn from time to time by A. T. Graber, and used in the payment of cattle purchased by him. The minutes of the directors' meeting, in accordance with the alleged request of the defendant, omitted all statements of the defendant's alleged assumed obligation of the prior notes as testified to by the cashier.

The defendant denied the testimony of the directors above referred to, with respect to the alleged assumption of the obligation concerning the prior notes of A. T. Graber. He also denied that he was in any manner interested in A. T. Graber's business; that he had any interest in the cattle; that he received any of the profits from the sale of the cattle purchased out of the proceeds of the $15,000 loan; and he further testified that the cattle were pastured upon lands either belonging to A. T. Graber or held by him under lease, or lands which had been assigned to him for pasturage purposes. A. T. Graber substantially corroborated the testimony of the defendant.

The case was tried with a jury, and in the special verdict the jury found: (1) That at the meeting of the board of directors of the plaintiff bank, held on the 4th day of April, 1923, the defendant, Louis Graber, as a consideration for the loan of $15,000 to be made by the bank to his son, A. T. Graber, and himself, agreed that he would assume the notes of $4,800 and $5,178.95 then owing to the plaintiff bank by his said son, A. T. Graber; (2) that the plaintiff relied on said agreement when it made said loan of $15,000; (3) that when the said $15,000 was arranged for on April 4, 1923, the said Louis Graber represented to the officers of the bank that it was to be used by him and his said son in a joint enterprise, whereby cattle were to be purchased and pastured on the lands of Louis Graber; (4) that the bank relied on said representations when it made said loan of $15,000; (5) that the defendant, Louis Graber, requested the plaintiff bank not to say anything to A. T. Graber about the assumption of the payment of said notes by him, and to continue to treat them as the notes of A. T. Graber until such time as the bank felt it must have the money.

After the usual motions made after verdict, the court ordered judgment in favor of the plaintiff and against the defendant,...