Patterson v. Wuestenberg

• Decision Date: 04 May 1948
• Docket Number: 47189.
• Citation: 32 N.W.2d 209,239 Iowa 658
• Parties: PATTERSON et al. v. WUESTENBERG et al.
• Court: Iowa Supreme Court

32 N.W.2d 209

239 Iowa 658

PATTERSON et al. v. WUESTENBERG et al.

No. 47189.

Supreme Court of Iowa

May 4, 1948

H. W. Hanson, of Des Moines, for appellants.

Herrick Sloan & Langdon, of Des Moines, and M. C. Herrick, of Indianola, for Ray Wuestenberg, appellee.

Hansen & Wheatcraft, of Des Moines, for J. L. Diss appellee.

E C. Newell, of Des Moines, for E. A. Browne, appellee.

SMITH Justice.

Neither their pleadings nor their evidence makes entirely clear upon what theory plaintiffs originally sought recovery. Both contract and fraud are indicated but apparently fraud alone is finally urged on appeal. The case involves the affairs of the Policyholders Mutual Casualty Company of which defendants were officers and plaintiff Hugh Patterson an employee. Plaintiffs are husband and wife.

The events date back to September, 1941, when plaintiff Hugh Patterson was employed as field superintendent by defendant Browne, the company's secretary and general manager. Browne and defendant Mapes, assistant secretary (named as party defendant but not served (herein), were in charge of the company's office in Des Moines. Its home office in West Liberty, Iowa, was in charge of defendants, Wuestenberg, as president, and Diss, as vice-president and treasurer, and one Heath, assistant treasurer.

Construing plaintiffs' claim as best we may in the light of their pleadings and evidence, we conclude count one is based upon an alleged oral contract (in the early part of 1942) with defendant Browne and perhaps defendant Mapes whereby plaintiff agreed to and did make certain contributions to the surplus of the Casualty Company with the understanding that if the items were not approved by the state insurance commissioner they would be returned to plaintiffs.

These contributions consisted of the following items: (1) Plaintiffs' $1,000 note and mortgage on certain small acreage property owned by them at Carlisle, Iowa; (2) two small mortgages (which they had acquired by placing a second mortgage on their home in Knoxville, Iowa) known as the Coulter mortgage, $200, and the Richardson mortgage, $400, respectively; and (3) a back salary check of $400.

It is further claimed defendants Wuestenberg and Diss, at West Liberty, while not original parties to the alleged contract, knew of it and by participating in its subsequent breach ratified it and are liable therefor.

Plaintiffs also allege that in the negotiations leading up to the making of the contract it was represented to them by Browne that the Casualty Company 'had plenty of money but that they needed securities in order to temporarily build up the surplus to a point where they could take over Midland Mutual Insurance Association of Waterloo, Iowa.'

Plaintiff Hugh Patterson testifies that in December, 1941, Browne gave him a slip of paper which he (Patterson) copied into a notebook which is lost: 'I do remember what he said approximately with reference to surplus, and he said it was between 17 and 18,000 and they would increase to 25 to take over the business.' He further testifies he showed Diss and Wuestenberg the figures out of his notebook 'and they said that was approximately it. It might be a little bit different then, but it was approximately the statement of the last statement of the company.'

In a second count plaintiffs allege that 'the promises and representations * * * with respect to the matters and things hereinbefore set forth were false,' that defendants knew of their falsity and made them with intent to deceive, and that plaintiffs 'believed in and relied on' them.

Proof was offered that the surplus of the Casualty Company was in fact $7665.99 instead of $17,000 or $18,000 on December 31, 1941. Objection to it on behalf of defendants Wuestenberg and Diss was sustained and no error is assigned on the ruling.

The $1,000 note and mortgage, having been rejected by the Insurance Commissioner, were not returned to plaintiffs but were assigned by the Casualty Company to one Noland and by him foreclosed. Apparently the Company retained the proceeds of the sale to Noland. The other items of property were presumably also retained. No surplus or contribution certificate was issued to plaintiffs. The prayer is for judgment for $1789.33.

All three answering defendants, at the close of plaintiff's evidence, moved for directed verdict and the motions were sustained. The motions of defendants Wuestenberg and Diss were sustained 'on the theory that any promises or any agreement or any representations made prior to the transaction were those made by Mr. Browne'; that their (Wuestenberg's and Diss') acts, as officers of the corporation, in assigning the $1000 note and mortgage, were official and not individual; and that there was no evidence 'they ever agreed that this would be put up to increase this surplus or made any representations about it.'

As to defendant Browne, the trial court found the alleged agreement to return the $1,000 mortgage was one on behalf of the corporation and that Browne was not individually liable on it; that there was no evidence as to what was done with the $400 and $200 mortgages; and that as to the allegations of false representation there was no showing that plaintiffs would not have turned over their property even if the size of the surplus had been correctly stated--in other words, the claimed misrepresentation as to size of the surplus was not the inducement to the transaction.

On appeal plaintiffs argue only the claimed fraud, except as to some pleaded affirmative defenses which did not enter into the decision complained of and need not be discussed here. There is no appearance in this court or argument on behalf of defendants Diss and Browne.

I. The issue here is therefore limited to...