People's Trust & Sav. Bank v. Wassersteen

• Decision Date: 07 December 1937
• Court: Wisconsin Supreme Court
• Parties: PEOPLE'S TRUST & SAVINGS BANK v. WASSERSTEEN.

226 Wis. 249

276 N.W. 330

PEOPLE'S TRUST & SAVINGS BANK

v.WASSERSTEEN.

Supreme Court of Wisconsin.

Dec. 7, 1937.

Appeal from a judgment and order of the Circuit Court for Brown County; Henry Graass, Judge.

Affirmed.

This action was commenced on February 9, 1934, by the People's Trust & Savings Bank, plaintiff, against Marion Wassersteen, defendant, to recover the sum of $8,300, with interest, alleged to be due on a contract of guaranty executed by the defendant. The defendant answered, made certain admissions and denials, asked for reformation of the instrument sued upon, and alleged that the failure of the Brown County State Bank to comply with its part of the agreement rendered it void. Judgment was entered on May 25, 1937, in favor of the defendant and against the plaintiff, from which the plaintiff appeals.

The facts briefly stated are as follows: The Brown County State Bank, hereafterreferred to as the bank, was liquidated and the plaintiff became the owner of the cause of action sued upon. Prior to March 21, 1931, Al. Wassersteen, husband of the defendant, owned and operated a ladies' ready to wear business in Green Bay. Wassersteen was being pressed by his creditors, among whom was the bank to which he owed $8,300 on a note long overdue. The bank made strenuous efforts to realize upon this note. The trial court found that Wassersteen was induced by the bank to make a common-law assignment, executed on March 9, 1931; that it was agreed between the defendant and the bank (a) that the bank would endeavor to acquire the assets of the business of Al. Wassersteen and if able to acquire it would turn it over to the defendant at cost; (b) that the bank would then finance the defendant in the conduct of the business by the advance of moneys to her up to $15,000, inclusive of the $8,300 then owed by Al. Wassersteen; (c) that the bank would then incorporate the business under the name of Wassersteen, Inc., with a capitalization of $10,000, issue 75 shares of stock, two of which shares so issued were to be held by persons other than the defendant for incorporation purposes; (d) that of the 75 shares so issued, 73 shares were to be deposited with the bank as collateral security for the amount the defendant was to become obligated under this agreement; that the bank caused incorporation to be made; all the papers, the stock book, and seal relating thereto remained in the custody of the bank, and no stock was ever issued. The bank thereafter on March 21, 1934, acquired the assets of Al. Wassersteen business for the sum of $2,000; that thereupon the bank caused said assets to be transferred to the defendant for $2,200, and on that day the bank through its president drew, and the defendant signed, the instrument sued upon. This instrument was in the form of a guaranty, which provided, among other things:

“Said bank has taken and may hereafter take by way of discount or otherwise, from time to time, for Marion Wassersteen (defendant), such amounts as said bank may see fit, not exceeding in the aggregate the sum of $15,000 at any one time, and has now taken for the benefit of Albert Wassersteen notes to the extent of $8300.00 and may take notes and paper for Wassersteen's, Inc.”

The condition was that the defendant would “save the said bank harmless from and against any damages, loss, cost or expense, growing out of default of payment by said Marion Wassersteen to said bank, its successors or assigns, such notes or evidences of indebtedness of the said Marion Wassersteen, Wassersteen's, Inc., or Albert Wassersteen, who formerly did business under the trade name of the United Cloak Shop, from and against all charges, costs, expenses, suits and actions, by reason of taking of said notes or evidences of indebtedness, either by way of checks, notes, endorsements or otherwise, or any of them, then this obligation to be void, otherwise to remain in full force.”

The defendant went into possession of the assets of the Al. Wassersteen business turned over to her by the bank. She requested loans to be made to her in accordance with the terms of the agreement. The bank refused to loan to the defendant and as a result she was deprived of the spring and summer business of 1934, and was otherwise unable to finance her business or secure the necessary stock of merchandise. When the bank refused to loan in accordance with the agreement, the defendant shortly before Easter, 1934, disaffirmed the guaranty and notified the bank that she would not be liable thereunder. The court found that the guaranty did not represent the agreement as made between the bank and the defendant, in that it did not contain full representations to the end that she was to secure loans in the sum of $15,000, inclusive of the $8,300 obligation of Al. Wassersteen. The court found further that failure of the instrument to express the full agreement was a fraud perpetrated on the defendant by the bank, the bank occupying...