Luetzke v. Roberts

• Citation: 130 Wis. 97,109 N.W. 949
• Parties: LUETZKE ET AL. v. ROBERTS ET AL.
• Decision Date: 04 December 1906
• Court: United States State Supreme Court of Wisconsin

130 Wis. 97

109 N.W. 949

LUETZKE ET AL.

v.ROBERTS ET AL.

Supreme Court of Wisconsin.

Dec. 4, 1906.

Appeal from Circuit Court, Manitowoc County; Michael Kirwan, Judge.

Action by Charles Luetzke and others against Austin Roberts and others. From a decree in favor of plaintiffs, defendant Roberts and certain other defendants appeal. Affirmed.

An action to cancel and annul three promissory notes, executed by the plaintiffs to the defendants, Roberts, Legget and Hanen, who were copartners, doing business under the name of “Westfield Importing Company” of Westfield, Ind. The defendant John Gutman signed the notes. Upon his refusal to join as plaintiff in the action he was made a defendant. The defendants Schmitz, Burke, and Craite were attorneys for Roberts, Legget, and Hanen and were joined as parties in the action upon the ground that plaintiffs believed the notes in question were in their possession as such attorneys. They with their principals were temporarily restrained from transferring or parting with the possession of the notes. The defendants Alton P. Nave and the “Citizens' National Bank,” a foreign corporation, after the action had been begun, petitioned, as bona fide owners of the notes, to be made parties defendant, and by order of the court they were allowed to intervene, and were made parties defendant, whereupon they appeared generally in the action and served their answers. Before trial, the complaint and answers were severally amended at different times. These need not be particularly recited. After trial, upon notice, the complaint was further amended to conform to proof received without objection, to the effect that the principal defendants had secured the subscriptions of plaintiffs and others for shares in the proposed company upon the representation, promise, and agreement with them; that they would expressly warrant the horse to be sound and free from disease. The court's findings cover the facts of the case sufficiently to present the questions upon which error is assigned upon this appeal. The material facts found by the court are as follows: In January, 1903, the defendants Roberts, Legget, and Hanen were copartners and continued so until after this action was commenced. They were engaged, under their firm name, in the buying and selling of horses, their principal place of business being Westfield, Ind. E. M. O'Connell was their agent, and as such agent exhibited their horse, named “Fusil,” to the plaintiffs and others at the villages of Valders and St. Nazianz in Manitowoc county, for the purpose of making a sale. To make a sale of the horse, O'Connell presented to plaintiffs and others a subscription agreement of the tenor following: “We, the undersigned subscribers, realizing the necessity of improving our stock, do hereby agree to pay the Westfield Importing Company $100 for each share in the Percheron Horse Company now being formed at Valders, Wis., to buy one Percheron stallion of the Westfield Importing Co., of Westfield, Ind. Capital stock, $3,000. Name of horse, Fusil. No. 31,679 (48,957). Payments to be made, one–third in one year, one–third in two years, one–third in three years, security by joint notes with inetrest or by cash.” He solicited subscriptions to the undertaking, and secured plaintiffs' assent and subscriptions “upon an understanding and agreement between each of them respectively, and the Westfield Importing Company that no signature to said contract would be binding until bona fide subscribers thereto for 30 shares had been obtained by said Westfield Importing Company.” Prior to February 28, 1903, plaintiffs were informed by O'Connell that he had secured bona fide subscriptions to the written contract for the 30 shares. Relying upon such representation as true and correct, plaintiffs signed and executed three promissory notes, each for $1,000, in form, to wit: “$1,000.00. February 28th, 1903. Sixteen months after date, for value received, we or either of us, promise to pay the Westfield Importing Co., or order, $1,000.00 at the Manitowoc Savings Bank, with interest at 6% per annum, interest payable annually.” The two other notes were payable, respectively, in two and three years and four months after date. Eleven of the persons, who were represented to plaintiffs as subscribers to the subscription contract for shares in the horse, refused to sign these notes after plaintiff had signed them, and the importing company has never collected or enforced payment from them upon their alleged subscriptions. An action was instituted against one of such subscribers, Knut Berg, by the company to recover $100, the amount of one share in the Percheron Horse Company, which action terminated by entry of judgment dismissing the complaint on June 22, 1903, the date the instant action was begun. Two of the alleged subscribers to shares in the Percheron Horse Company, named Alfson and Nelson, were not in fact bona fide subscribers, though their names were on the subscription contract. They had signed and made their subscriptions upon the express oral understanding and agreement between them and O'Connell, as agent of the importing company, that such subscriptions were not to hold them to liability on the contract. It was further represented by the agent O'Connell to these plaintiffs that no signature to these notes would be binding until every subscriber to the shares in the Percheron Horse Company had signed them, or, in lieu of signing these notes, had paid their shares in cash. To the other plaintiffs in this action, it was represented that all the other subscribers would sign these notes or pay their subscriptions in cash, and that such payments, to apply on the purchase price, would, in case of default, be enforced against them severally. Plaintiffs relied on this, but none of these conditions have been performed, nor has the importing company enforced such payments. The court also found that the representation by O'Connell, to the effect that he had obtained subscriptions for 30 shares of $100 each in the proposed Percheron Horse Company, was in fact untrue, that he knew it to be false, and that plaintiffs believed it to be true, relied on it, and were thereby induced to execute the notes. It was also found that plaintiffs had good reason to believe and did believe that the defendants––copartners in the importing company at the time this action was commenced––had these notes, and had not sold, pledged, or hypothecated them or any of them; that plaintiffs before action offered the horse in question to these defendants and demanded the return of the notes; and that defendants refused to receive him and have so refused to receive him ever since, and have not returned the notes to plaintiffs. Plaintiffs, therefore, have been compelled to keep, feed, and care for the horse ever since, and such feed and care is found to be worth $12 per month. The court found upon the issues that the defendants Nave and the Citizens' National Bank became the holders and owners of these notes, in good faith, before maturity, and without notice or knowledge of any infirmity as to their validity, and that plaintiffs were liable thereon to such defendants, but that, as between plaintiffs and the defendants Roberts, Legget, and Hanen, the notes were...