Palmer v. Hawes

• Decision Date: 04 December 1888
• Citation: 73 Wis. 46,40 N.W. 676
• Parties: PALMER v. HAWES.
• Court: Wisconsin Supreme Court

73 Wis. 46

40 N.W. 676

PALMER

v.HAWES.

Supreme Court of Wisconsin.

December 4, 1888.

Appeal from circuit court, Rock county; JOHN R. BENNETT, Judge.

The complaint is, in effect, upon a promissory note bearing date January 20, 1886, made by the defendant, L. N. Williamson, and indorsed at the same time by the appellant, Cornelia J Hawes, for $7,000, due one year after date, with interest at 8 per cent., and which note was duly presented for payment at the maturity thereof, but the same was not paid, and was thereupon protested for non-payment, and the appellant duly notified thereof; that the plaintiff, Henry Palmer, is the lawful owner and holder thereof, and has been ever since January 20, 1886; and that no part thereof has been paid, etc. The appellant separately answered, and for a defense relies wholly upon that portion of the answer of which the following is the substance: That the note was given by Williamson in payment for capital stock in the Wisconsin Shoe Company, a corporation organized under the laws of this state, doing business in Janesville; that, at the time of such giving and indorsing the note, Williamson delivered to the plaintiff 100 shares of such stock, of the par value of $100 each, as collateral security to the said note; that, at the time of such indorsement, the appellant owned, in her own right, 180 shares of such stock, and has ever since; that the plaintiff holds 30 shares thereof as collateral security to said note; that said company was January 20, 1886, and for a long time prior thereto had been, engaged in the manufacture and sale of boots, shoes, etc., in Janesville; that the capital stock of said company was $80,000; that the plaintiff was a stockholder, director, and vice-president of said corporation, January 20, 1886, and for a long time prior thereto and since; that it was the duty of the plaintiff, as such director and officer, to superintend and supervise and manage the affairs of said company, and to protect the interests of all the stockholders therein; that the appellant, in indorsing said note, relied upon said collateral security so furnished by Williamson to pay said note, and upon the plaintiff, as such director and officer, to see that said stock was maintained at a par value, so as to be ample security,--all of which was well known to the plaintiff; that the plaintiff, together with the other officers and directors of the company, so carelessly, negligently, and wrongfully managed, controlled, and supervised the affairs of the company that the stock was thereby depreciated in value until it is almost, if not entirely, worthless, and has no market value whatever; that the stock and such security have thus become worthless, and of no value, through the negligence and carelessness of the plaintiff; that the plaintiff failed and wholly neglected to perform his duty, as an officer of the company, to the great damage of the appellant, and to the entire loss of the 100 shares of stock so held by him as collateral; that in July, 1886, the plaintiff falsely represented to the appellant that the company was doing a good business, and its affairs were in a good condition; that at the same time such affairs were being managed in a careless, negligent, and wasteful manner by the plaintiff and the other officers thereof, and the stock was then being rapidly depreciated in value through such careless and negligent management; that the appellant relied upon such representations, and was thereby lulled into inactivity and rest concerning any liability on said note; that the appellant would have been able and would have secured herself against loss by reason of such indorsement, but for such false representations so made by the plaintiff; that from that time on the company continued to lose money, and the assets of said company continued to be lost through the carelessness and negligence of the plaintiff, until said stock became almost, if not entirely, worthless; that, if the plaintiff had managed the affairs of the company in a careful and prudent manner, the 100 shares so held by him from Williamson would more than have paid said note, and there would have been no necessity to resort to the 30 shares from the appellant; but, as it is, she has lost said 30 shares. To such defense the plaintiff demurred, on the ground that the facts stated were insufficient to constitute a defense. There were other grounds of demurrer, and to other portions of the answer, but none of them were relied upon on this appeal. The court sustained the demurrer, with leave to the appellant to amend her answer within 20 days, on payment of $10 costs. From that order Mrs. Hawes brings this appeal.Fethers, Jeffris & Fifield, for appellant.

George Southerland, ( Winans & Hyzer, of counsel,) for respondent.

CASSODAY, J., ( after stating the facts as above.)

It is alleged in the answer that the note was given to the plaintiff in payment for capital stock of the company, which was of par value at the...