Morgan v. Hodge

• Decision Date: 21 February 1911
• Citation: 129 N.W. 1083,145 Wis. 143
• Parties: MORGAN v. HODGE ET AL.
• Court: Wisconsin Supreme Court

145 Wis. 143

129 N.W. 1083

MORGAN

v.HODGE ET AL.

Supreme Court of Wisconsin.

Feb. 21, 1911.

Appeal from Circuit Court, La Crosse County; James O'Neill, Judge.

Action by J. C. F. Morgan against George Hodge and others. Judgment for defendants, and plaintiff appeals. Reversed and remanded for new trial.

Action to recover damages resulting from a fraudulent conspiracy. A nonsuit was granted at the close of plaintiff's testimony, and the plaintiff appeals.

The following facts appeared on the trial: For some time prior to May 1, 1909, the defendants operated a large livery stable upon rented real estate at La Crosse. One Isaac Hollenbeck, Jr., had some negotiations with them looking towards a purchase of the business by trading a farm therefor in the spring of 1908, but no agreement had been reached. About April 18, 1908, Hollenbeck came to New Lisbon, where plaintiff lived, bringing with him one Bovee, a real estate man, who was employed by the defendants to make the sale, and interested the plaintiff in the project, proposing a partnership in the business. As a result all of the parties, plaintiff, Bovee, and Hollenbeck, went to La Crosse by train on the same day, and on the following day plaintiff examined the stock of carriages, horses, and other personal property, and also the books showing the business done. On the following day Hodge, Hollenbeck, and plaintiff went to Alma Center, where Hollenbeck lived, and looked over the farm which Hollenbeck proposed to trade; but no terms could be agreed on and that idea was abandoned. The parties returned to La Crosse and began to talk about a cash trade. Plaintiff had $3,000 in cash. Hollenbeck had a house and lot at Alma Center, which defendants were willing to receive at $2,500. Hollenbeck proposed to give his note for $500, so that his individual contribution should also be $3,000. The plaintiff claims that the defendants and Hollenbeck conspired to defraud the plaintiff and induce him to make the purchase, and that the fraud consisted (1) of false representations as to the value of the property, in that they represented it to be worth $16,800, when as matter of fact it was not worth to exceed $11,000; and (2) of inducing the plaintiff to believe that Hollenbeck and he were each paying one-half of $16,800 as the purchase price, when as matter of fact Hollenbeck was paying only half of $15,300 for his half interest. The deal was finally concluded by written agreement April 22d. By this agreement the livery stock and business was contracted to be sold and possession given to Hollenbeck and Morgan May 1st following, in consideration of the sum of $16,800 to be paid as follows: $800 by assuming a debt of $800 owing by defendants; $100 cash down; $2,900 on May 1st by the plaintiff Morgan; a house and lot at $2,500 and a note of $500 by Hollenbeck; $1,500 in cash by Hollenbeck; and the remainder of the purchase price, viz., $8,500, in monthly payments evidenced by notes and secured by chattel mortgage on the stock. This arrangement was apparently carried out on May 1st following, when the parties met and the bill of sale was made out and passed. At this time plaintiff paid over the $2,900. Hollenbeck delivered the deed of the house and lot and his note of $500. Hollenbeck and plaintiff signed notes aggregating $8,500, payable in monthly installments, and secured by a chattel mortgage as provided by the contract, and Hollenbeck drew and delivered to the defendants a check for $1,500 which plaintiff supposed was a bona fide payment of cash. In order to make the amounts contributed by the partners even, plaintiff executed and delivered to Hollenbeck his note for $750, which at Hollenbeck's request was made payable to one Wheaton and delivered by Hollenbeck to Wheaton as collateral security to indemnify Wheaton as indorser on a note he had signed at the bank as surety for Hollenbeck. The $1,500 check was a mere dummy check and was returned to Hollenbeck shortly afterwards and destroyed. The evidence tends to show that the apparent purchase price of $16,800 was arranged between Hollenbeck and the defendants shortly before the contract was signed, and that it was understood between them that Morgan should be led to believe that it was the real price and should pay for his half on that basis, while Hollenbeck was to pay only half of $15,300, and that the dummy check was to be given to carry out the deception. It is undisputed that Morgan supposed that Hollenbeck was paying the same for his half as he (Morgan) was paying. The new firm conducted the business for a number of months and paid some of the chattel mortgage notes; but the business did not prove as prosperous as expected, and plaintiff soon became convinced that the firm could not pay for it, and, further, that the price paid was too great. He began to make efforts to sell without success, and in February, 1909, he was informed by Bradbury of the fact that the check for $1,500 was a dummy check and never in fact paid. Thereupon, and on February 20, 1909, the plaintiff served written notice on Hodge, Bradbury, and Hollenbeck rescinding the purchase, demanding back the money he had paid and the surrender of his notes and offering to return the property. This demand not being acceded to, he immediately commenced an action against the three last-named parties, the nature of which does not clearly appear in the evidence; but it is referred to in the briefs as an action for rescission on the ground of fraud. In this action it was stipulated that the property be placed in the hands of one Atkinson, and thereafter the defendants took possession of the property under the chattel mortgage and advertised it for sale. Before sale plaintiff received an offer from Hollenbeck for the purchase of his half interest in the property, and he thereupon notified the defendants of the offer and its terms and gave them an opportunity again to rescind. Nothing resulting from this, he closed with Hollenbeck's offer and received from him $1,425 and a contract releasing him from liability on the $750 note (which had been lost). In order to make this settlement, he was obliged to release Hollenbeck from all liability for the alleged fraud; but the release expressly reserved all rights of action against Hodge and Bradbury. Upon this showing the circuit...