Wachowski v. Lutz

• Decision Date: 14 October 1924
• Citation: 184 Wis. 584,201 N.W. 234
• Parties: WACHOWSKI ET UX. v. LUTZ ET AL.
• Court: Wisconsin Supreme Court

184 Wis. 584

201 N.W. 234

WACHOWSKI ET UX.

v.LUTZ ET AL.

Supreme Court of Wisconsin.

Oct. 14, 1924.

Appeal from Circuit Court, Marathon County; A. H. Reid, Judge.

Action by Adam Wachowski and wife against H. S. Lutz and others. From judgment for plaintiffs for insufficient relief, they appeal. Modified and affirmed.

Eschweiler, J., dissenting.

This is an action to recover damages growing out of fraud perpetrated by the defendants on the plaintiffs in the exchange of farms. On the 29th day of March, 1921, the plaintiffs were the owners of a farm, near Pulaski which the court found to be worth $11,000 and upon which there was a mortgage of $3,000. The defendants were the owners of a farm in Marathon county, which the court found to be worth $5,500 and upon which there was a mortgage of $2,400. John Zywicki was the father of plaintiff Helen Wachowski and lived on a farm adjoining the defendants' farm.

Shortly prior to the 29th day of March, plaintiffs visited at the Zywicki home. Plaintiff Adam and Zywicki, upon the occasion of such visit, walked along the logging road which ran across the northern part of defendants' farm. There was, however, snow and ice on the ground, and the plaintiff Adam made no note or observation of the character of the soil, or anything else pertaining to the farm. At that time he entertained no thought of buying the farm. A few days thereafter the defendants Lutz and Zell and John Zywicki called at plaintiffs' home at Pulaski and entered into negotiations which culminated in an exchange of farms; the plaintiffs deeding their farm to the defendants, and the defendants deeding their farm to the plaintiffs, and the defendants paying to the plaintiffs $400 boot money. Thereafter plaintiffs moved onto the new farm. Shortly thereafter plaintiffs became dissatisfied with the deal, claiming that the farm was not as represented and, eventually, brought this action.

The complaint alleges, among other things:

“That the said defendants conspired to induce the plaintiffs to enter into the transaction hereinafter set forth through trick and artifice, false and fraudulent and misleading statements, acts, motions, pretenses and representations; that the said defendants, as part of their said conspiracy, through trick and artifice obtained the confidence of the plaintiff by employing plaintiffs' father-in-law, John Zywicki, as their secret agent, to aid and co-operate with them in negotiating an exchange of the properties described as aforesaid; that the said defendants, as part of their said conspiracy to cheat and defraud the plaintiffs out of their said farm, knowingly, and for the purpose of enlisting the confidence of the plaintiffs, induced John Zywicki, father-in-law of the plaintiff, in whom plaintiffs trusted and placed full confidence, to accompany them to the farm of the plaintiffs, where all negotiations as hereinafter set forth took place, under a secret agreement with the said John Zywicki that if they made a deal with the plaintiffs, they would pay him $100 and all expenses, but that if they did not make a deal he would get only his expenses.”

The complaint then goes on to allege that to induce the plaintiffs to enter into the transaction the said defendants made various false and fraudulent misrepresentations, among which were that their said farm was all of a good quality of good agricultural lands, that 35 acres thereof was under cultivation, that they had paid $8,500 therefor, that it was then marketable at $9,000 cash and was of the reasonable market value of at least $10,000 to $12,000; that it was clear of weeds, contained no Canada thistles, and that it was not stony.

The prayer demanded judgment against the defendants rescinding and setting aside the entire transaction set forth in the complaint, together with such other and further order, judgment, or relief as to the court may seem just and equitable.

The case was tried before the court. The court made and filed findings of fact in which it was found that plaintiffs were induced to enter into said contract and make said exchange by means of false and fraudulent representations on the part of defendants to the effect that there were 35 acres of cleared land on said farm, and that the soil thereof was as good as the soil of the plaintiffs' farm at Pulaski; whereas, in fact, there were not to exceed 9 acres of cleared land on the defendants' farm, and there were about 6 or 8 acres so underlaid and covered with rock that the same can never be made fit for cultivation. The court failed to find in favor of plaintiffs in respect to other alleged false representations. Plaintiffs' damages were assessed at the sum of $2,000, and from the judgment entered in favor of plaintiffs and against defendants for that amount plaintiffs bring this appeal.

Lehner & Lehner, of Oconto Falls, and Otto P. Lehner, of Slinger (A. H. Eberlein, of Wausau, of counsel), for appellants.

George W. Lippert and G. J. Boileau, both of Wausau, for respondents.

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

[1] The court construed the action as one at law for the recovery of damages. The appellants contend that it is an equitable action for rescission and that the judgment should have been for a cancellation of the deeds and a restoration of the status quo, or such other equitable relief as may be appropriate in the premises. There is no express or implied allegation in the complaint that plaintiffs acted with reasonable promptness in rescinding or offering to rescind, or in bringing the action, after the discovery of the alleged fraud. The court found as a fact that--

“The plaintiff has, since being in a position where he knew, or ought to have known, the falsity of the representations hereinbefore found, continued to live on the farm in the town of Kronenwetter, has cleared an additional four acres, has built a granary at an expense of about $600, and obtained new loans and given new mortgages on said farm, aggregating $4,100, which are now unpaid. The plaintiff did not give notice of any claim of misrepresentation nor demand any damages nor rescission of the exchange until after all of the foregoing transactions had occurred.”

[2] In order to entitle the plaintiffs to a rescission of the contract, they should have acted to that end with reasonable promptness after the discovery of the fraud perpetrated upon them. Mueller v. Michels (Wis.) 197 N. W. 203. The complaint was not only barren of such a necessary allegation, but the finding of the court, fully supported by the evidence, negatives such action on the part of the plaintiffs. The court correctly construed the action as one at law for the recovery of damages.

The appellants except to the failure of the court to find in their favor upon various other alleged misrepresentations. An examination of the record shows that as to such representations the testimony was in conflict and that there was no such preponderance of the evidence in favor of the plaintiffs' contentions as to warrant this court in disturbing the action of the trial court in refusing to so find. We are at a loss to understand how the appellants' counsel can seriously urge this as a ground for reversal. His attitude manifests a most partisan view of the evidence and a zeal for the interests of his clients that interferes with that fair and impartial presentation of facts by which alone attorneys can aid and win the confidence of courts.

[3] Appellants next contend that the judgment fails to compensate them for fraud perpetrated independent of actual misrepresentations. The fraud referred to is the secret employment by the defendants of the father-in-law of one of the plaintiffs to assist them in making the deal. The contention is that the defendants, knowing that the plaintiffs reposed trust and confidence in John Zywicki, the father-in-law of the plaintiff Adam Wachowski, agreed to pay Zywicki $100 in case the deal should be effected, that in consummating the deal they did rely upon the judgment of John Zywicki, but that such judgment had been tainted by reason of the secret employment of him by the defendants and their promise to pay him $100 in the event of the consummation of the deal, thus depriving them of the benefit of the honest judgment of said John Zywicki. This was a species of fraud which, if established, probablycould be redressed by a court of equity; but the plaintiffs lost their equitable remedies by their delay already mentioned. In Potter v. Necedah Lumber Co., 105 Wis. 25, 31, 80 N. W. 88, 90, it is said:

“The foundation principle upon which all rules for determining damages in a case of actionable fraud rests is that the wronged party is to be compensated for the loss he sustained by the fraud to the extent of the natural and proximate consequences of the wrong--for such results ‘as happen in the natural course of things and were to be expected to ensue according to the general experience of mankind.’ ”

Subordinate to this general principle, subrules by which damages for various kinds of fraud are to be measured have been established, as, for instance, the rule by which damages for fraudulent misrepresentations are to be measured.

We know of no rule of law which affords any measure of damages for fraud of this nature. It is a species of fraud comparable to that of a secret dual agency, such as was discussed in Weinhagen v. Hayes, 174 Wis. 233, 178 N. W. 780, 183 N. W. 162, 187 N. W. 756, and Mueller v. Michels (Wis.) 199 N. W. 380. It is apparent that such fraud may result in much damage or...