Stanek v. Libera
| Decision Date | 01 July 1898 |
| Docket Number | 11,105 - (173) |
| Citation | 75 N.W. 1124,73 Minn. 171 |
| Parties | LENA STANEK v. ALBERT LIBERA and Another; KATHERINE SNEDA v. Same |
| Court | Minnesota Supreme Court |
Plaintiffs Lena Stanek, as administratrix of the estate of Thomas Stanek, and Katherine Sneda, as administratrix of the estate of Joseph Sneda, severally recovered judgments in the district court for Winona county against defendants Albert Libera and John Mlnazek for the deaths of their respective intestates, who were killed while in the employment of defendants. Thereafter garnishee summons was issued in these actions against the Standard Life & Accident Company of Detroit, Michigan, which had insured defendants against liability for accidents to employees. The garnishee appeared and denied indebtedness. Under order of the court, plaintiffs thereupon served supplemental complaints upon which issues were made up. At the trial the court submitted special questions to the jury for their special verdict, which the jury rendered in each case. The cases were tried to gether. The court, Snow, J., without further evidence, made its findings of fact and conclusions of law in each case, and ordered judgment discharging the garnishee. From the judgments entered pursuant to such order plaintiffs severally appealed. Affirmed.
Garnishment of Insurer -- Fraud in Reducing Oral Agreement to Writing -- Reformation and Rescission.
Garnishee proceedings, under G.S. 1894, § 5319, to hold the garnishee liable as the debtor of the defendants on its policy insuring them against their "employer's liability." Held, where parties have entered into a valid oral agreement, but in reducing it to writing, through the fraud of one party, and the mistake of the other, induced thereby, the writing fails to express the actual agreement, this may be ground for reforming the written instrument, but not for rescinding the contract.
Garnishment of Insurer -- Release of Policy -- Finding Sustained by Evidence.
Evidence held sufficient to justify the finding that, at the time the defendant L. delivered to the garnishee a written release of the policy, he had full knowledge of the contents of the instrument.
Attaching Creditor Cannot Attack Merely because of Fraud on Debtor.
An attaching creditor is not in privity with his debtor, and cannot attack a transaction solely upon the ground that it was a fraud upon his debtor, although the effect of it may have been to reduce his debtor's ability to pay.
Attaching Creditor Cannot Attack Merely because of Fraud on Debtor -- Equity -- Inaction of Debtor.
Whether equity will ever permit a creditor to reach a fraud upon his insolvent debtor, which has depleted his assets, where the debtor himself refuses to exercise his right to seek redress, quaere?
Delivery of Release by one Partner Voidable, not Void.
Assuming, without deciding, that the act of L. in delivering the release of the policy was a fraud upon his partner, defendant M., the act was, as to M., at most, merely voidable at his election, and it rested with him alone to determine whether he would ratify or repudiate the act.
Delivery of Release by one Partner Voidable, not Void -- Attaching Creditors cannot Act for Debtor.
The plaintiffs, as attaching creditors, are not in position to redress his wrong, and repudiate the act for him.
Brown & Abbott, for appellants.
The jury found, and the court adopted the finding, that the release of the garnishee from its policy of accident insurance was procured from defendants Libera and Mlnazek by the fraud of the garnishee. The trial court substantially held that, defendants having signed the alleged release, no one but defendants could rescind it, and that in order to rescind a restoration of the consideration must be made, which admittedly has not been done. If it would be necessary for defendants to rescind and restore in order to maintain an action against the garnishee, there would be reason in this position, but this is not the law. Plaintiffs are not attacking a fraudulent conveyance, but deny that defendants ever made any agreement for release, or ever received any money for a release, or did any act requiring rescission. The alleged contract for a release was void ab initio, and not voidable. C. Aultman & Co. v. Olson, 34 Minn. 450; Bishop, Cont. §§ 614, 646; Burroughs v. Pacific Guano, 81 Ala. 255; Kerr, Fraud & M. 49, 50; Benjamin, Sales, § 433.
Defendant Libera was not guilty of negligence or want of ordinary business prudence in relying on the garnishee's representations as to the contents of the alleged release, and in failing to read it, though he had it in his possession for four of five days. Eaton v. Winnie, 20 Mich. 156; Waterhouse v. Jamieson, L.R. 2 H.L. Sc. 29; Foreman v. Bigelow, 7 Cent. L.J. 430. At any rate it does not lie in the mouth of the garnishee to plead such lack of business prudence in order to consummate its fraud, and hold the fruits of it. Maxfield v. Schwartz, 45 Minn. 150; Redding v. Wright, 49 Minn. 322; Erickson v. Fisher, 51 Minn. 300.
Even if Libera knew the contents of the paper when he delivered it to the garnishee's agent, his knowledge did not bind Mlnazek, his partner, who never learned the contents of the release before its delivery. 1 Bates, Partn. §§ 325, 405; Yeager v. Wallace, 57 Pa. St. 365; Gallway v. Mathew, 10 East, 264; Knox v. Buffington, 50 Iowa 320.
McLaughlin & Boyesen, for respondent.
The case at bar is not one where the defrauded party seeks to set aside the instrument, without paying or tendering the consideration received by him thereon, but where his creditors, in garnishee proceedings, are endeavoring to obtain this relief. The consideration received must first be paid or tendered. Parsons v. McKinley, 56 Minn. 464; McMahon v. Plummer, 6 Dak. 42; Johnson v. Merry Mount, 53 F. 569; Cobb v. Hatfield, 46 N.Y. 533; McMichael v. Kilmer, 76 N.Y. 36; Schiffer v. Dietz, 83 N.Y. 300; Kreuzen v. Forty-Second, 13 N.Y.S. 588.
The release was not void, but at most merely voidable. Johnson v. Merry Mount, supra; Brown v. Brown, 50 N.H. 538; Kellogg v. Curtis, 65 Me. 59; Williams v. Stoll, 79 Ind. 80; 28 Am. & Eng. Enc. 477.
Libera was invested with plenary powers as a partner to execute the release in the partnership name, and on its behalf. Mlnazek's signature or assent was entirely unnecessary. A release by one partner operates as a release by the partnership. 1 Lindley, Partn. (2d Am. Ed.) 146, 169; Christ v. Firestone (Pa. St.) 11 A. 395; Crites v. Wilkinson, 65 Cal. 559; Deakin v. Underwood, 37 Minn. 98; King v. Remington, 36 Minn. 15; 17 Am. & Eng. Enc. 995-998.
An instrument, knowingly executed, becomes a strong wall of evidence, not to be lightly overcome by unsatisfactory oral testimony, and, upon grounds of public policy, it is inexpedient to set aside such an instrument for fraud, unless the proof be clear and strong. Roth v. Barrett, 96 Wis 615; Oxford v. Nichols & Shepherd Co., 57 Minn. 206; Wallace v. Chicago, 67 Iowa 551; McCall v. Bushnell, 41 Minn. 37; Jenkins v. Clyde, 82 Iowa 618; Christianson v. Chicago, St. P., M. & O. Ry. Co., 67 Minn. 94; Hazard v. Griswold, 21 F. 178; Taylor v. Fleckenstein, 30 F. 103; Hawkins v. Hawkins, 50 Cal. 558.
From any standpoint, plaintiffs in this case are in no position to question the release. A fraud which will authorize a creditor to impeach a transaction with his debtor must be a fraud against the creditor, not an overreaching of the debtor. Bump, Fraud, Conv. §§ 18, 28; Johnson v. Bennett, 39 Barb. 237; Buell v. Buckingham, 16 Iowa 284; McAlpine v. Sweetser, 76 Ind. 78; Goddard v. Guittar, 80 Iowa 129; Colbern v. Robinson, 80 Mo. 541; Parker v. Roberts, 116 Mo. 657; Kingman v. Perkins, 105 Mass. 111; Sweet v. Converse, 88 Mich. 1; Gumberg v. Treusch, 103 Mich. 543; Fearey v. Cummings, 41 Mich. 376, 384; Thurber v. Blanck, 50 N.Y. 80; Lewis v. Rice, 61 Mich. 97; Dayton v. Fargo, 45 Mich. 153; Treusch v. Ottenburg, 54 F. 867; Johns v. Jordan, 59 Kan. 771.
These were actions or proceedings in garnishment, under G.S. 1894, § 5319.
The supplemental complaints filed by the plaintiffs alleged the following facts, viz.: That the defendants were engaged in the business of contracting and building, which required the employment of servants or employees; that in June, 1894, the garnishee executed to the defendants an employer's liability policy, insuring them for 12 months against liability for damages on account of injuries suffered by their employees, to an amount not exceeding $2,500 on any one employee, and not exceeding $10,000 in the aggregate; that in July, 1894, the plaintiff's intestates were killed while in the employment of the defendants; that on October 19, and November 4, respectively, in 1896, each of the plaintiffs recovered a judgment against the defendants for $3,079.92 for damages caused by such deaths; that they caused summons to be served upon the garnishee, requiring it to appear and answer touching its indebtedness to the defendants; that upon such examination the garnishee denied being indebted to the defendants in any sum whatever, when in fact it was, upon the facts stated, indebted to them on the policy in the sum of $5,000.
It is sufficiently accurate for present purposes to say that by its answer the garnishee admitted all the facts alleged in this complaint, but alleged that in September, 1896, for a valuable consideration by it paid to them, the defendants surrendered the policy, and in writing released it from all liability whatever under and on account of it. A copy of the policy was attached to the answer, from which it appeared that one of its provisions was that the assured should, at the expense of the insurer, render all reasonable assistance in obtaining...
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