Wojahn v. Nat'l Union Bank of Oshkosh

• Decision Date: 31 January 1911
• Citation: 129 N.W. 1068,144 Wis. 646
• Parties: WOJAHN v. NATIONAL UNION BANK OF OSHKOSH.
• Court: Wisconsin Supreme Court

144 Wis. 646

129 N.W. 1068

WOJAHN

v.NATIONAL UNION BANK OF OSHKOSH.

Supreme Court of Wisconsin.

Jan. 31, 1911.

Appeal from Circuit Court, Winnebago County; Geo. W. Burnell, Judge.

Action by C. J. Wojahn against the National Union Bank of Oshkosh. From a judgment for defendant, plaintiff appeals. Reversed and remanded, with directions.

Kerwin and Timlin, JJ., dissenting.

Plaintiff's claim, duly put in issue, was that he performed valuable services, covering a period of some five years and a half, for defendant at its request in supervising a mercantile business, in collecting some $25,000 for defendant; that the reasonable value of such services was $5,000, and that no part thereof had been paid, except $125.

The cause was, in due form, referred to John Harrington to hear, try and determine. The order of reference, as appears by recitals therein, was grounded on satisfactory proof that the trial would involve an examination of a long account.

The situation developed before the referee was substantially this:--In 1901, C. L. Brownell & Co., a mercantile partnership, had its place of business at Split Rock, some three miles from Tigerton, this state, which latter place was located within a short distance of Oshkosh, the home of the defendant. The business at Split Rock was important to the community and especially to any bank located at Tigerton, and that place, in a financial way, was tributary to Oshkosh. To promote defendant's business the officers and stockholders thereof caused a bank to be established at Tigerton under the name of the First National Bank of that place. Such stockholders and officers took a controlling interest. Defendant's president became president of the new bank and R. H. Hackett, cashier of the former, became vice president of the latter. Through Mr. Hackett plaintiff was given the office of cashier of the Tigerton bank and was enabled to become a stockholder therein. Immediately after organization thereof C. L. Brownell & Co. commenced doing its banking business therewith. After about two years the firm was succeeded by a corporation under the name of the C. L. Brownell Company. After the corporation continued the business for about three years some changes in stockholders and officers occurred, new capital was taken in and the name was changed to M. A. Sorley Company under which it was continued during the balance of the time material to this case. The business conducted by the company, from first to last, was important to the Tigerton bank. All the company's banking business was done there and some of its stockholders were stockholders of the bank. The company became a creditor of the bank to the extent the institution could well loan money to one borrower and so far as the company otherwise needed credit it was mainly accommodated through defendant, which was under the active management of Mr. Hackett. The relations between the two banks were such that they were mutually interested in the affairs of the Brownell Company, that of the Tigerton bank being in some respectsthe greater and that of defendant being for some reasons the greater. In 1901 the company procured from defendant a loan of $15,000. Application therefor to plaintiff at the Tigerton bank was referred to Mr. Hackett as cashier of defendant. At this time and thereafter, during all the period material to this case, the company, the Tigerton bank and defendant were quite closely affiliated; in all transactions in regard to financial matters the line of communication from the company to the defendant being, in the main, through the Tigerton bank. Mr. Hackett, acting for defendant, accepted the application of the company for a loan of $15,000. He took its notes with mortgage security running to himself in form, as a personal matter, but in fact to hold as trustee for defendant and any other party that might become interested in the indebtedness. The entire sum was advanced by the bank, the notes being turned over to it by Hackett. Later, Hackett, quite independently of plaintiff and as cashier of defendant, with a view of protecting the first loan and the mutual interests of the two banks, advanced to the company the additional sum of $10,000, taking notes and securities as before. This was regarded by Hackett as defendant's matter. Most of the notes were retained by it. He administered the matters appertaining to the entire indebtedness of $25,000, from first to last as a bank affair of defendant, although it did not retain all the paper. Security by way of indorsement was in time obtained upon $5,000 of the paper. The securities running to Hackett consisted of real and chattel mortgages covering substantially all assets of the company. The incumbrances rendered the company quite incapable of doing business on a credit basis outside the circle controlled by the two banks and according to their pleasure. Such securities were controlled by Hackett and his successor in the interest of the $25,000 of indebtedness, except as realized on, till the last of the loans were paid. Some little time after all the indebtedness accrued, Mr. Hackett and plaintiff became much disturbed respecting the financial affairs of the company. They were of the opinion that unless its business should be conducted with great care it might be forced into bankruptcy, in which event defendant might probably lose a large amount as it held the greater part of the two loans mentioned. To guard against that danger and because of the connection of defendant with the entire Brownell indebtedness, secured by the securities running to Hackett, he, acting for defendant, conceived the idea of having a representative of the holders of such indebtedness, particularly of defendant, supervise the company's affairs. The idea was carried out, plaintiff at Hackett's request, undertaking the task. For a considerable length of time, in doing such work, he visited Split Rock several times a week after banking hours. In time the work required was less, but he continued in some capacity and to some extent as supervisor of the company's affairs till the entire indebtedness was paid. He early concluded that he could not efficiently perform his work without being a stockholder and officer of the company and so advised Mr. Hackett. It was thereupon agreed that he should procure a controlling interest in the stock and that Hackett, as cashier of the bank, should aid by loaning the necessary money. Pursuant thereto the stock was purchased, half being placed in the name of plaintiff and half in the name of Mrs. Brownell, and $1,250, being loaned to each to pay for the property at the rate of 20 cents on the dollar. The stock was put into a voting trust composed of three persons, two being Hackett and the plaintiff, and it was agreed that a majority of the trustees might vote the entire trust stock and so control the policy of the company. After taking the stock plaintiff was made an officer of the company and allowed by it a salary of $200 per year for a time and after that of $150 per year for a few months. He received in all $367.47 for services rendered the company. For the purpose of giving the company credit standing Mr. Hackett released his chattel mortgage on its assets under an agreement that it might be reinstated at any time upon a vote in favor thereof of a majority of the voting trustees. From first to last plaintiff did not render any bill to defendant for services, nor did he make any specific claim or substantial demand till this action was commenced. He received from defendant $125. The circumstances in relation thereto were disputed. He claimed that about 1905 there was some talk about his being furnished a horse or a horse and buggy to enable him to more conveniently and efficiently perform his work of looking after the company's affairs, and that he finally informed defendant he would take $125 instead of being so furnished, and it was accordingly paid him. On behalf of defendant there was testimony of there having been talk about a horse and buggy, but that $125 was, in the end, paid in settlement of any claim plaintiff had against defendant. Plaintiff continued to supervise the company's affairs after he received the $125, exercising controlling authority in that regard, in some capacity, till the last of the indebtedness to defendant was paid, which occurred in 1908. Till Mr. Hackett severed his connection with defendant in 1905, he and plaintiff worked together in regard to the company's affairs, to the end that the indebtedness, particularly the large amount due defendant, might finally be paid. Plaintiff, as stated, continued till full payment was secured. At last he negotiated a loan for the company, becoming a surety himself, by which the last of the indebtedness was paid. He did not buy the stock with much, if any, expectation of profiting thereby. The thought was rather that there might be a loss so Mr. Hackett encouraged him to take the risk thereof with such chance as there might be for profit by binding himself to stand one-half the loss, in case of there being any. After efficiently promoting the company's business for some time and to such extent that the danger of loss to creditors was largely reduced, plaintiff sold his stock but shortly afterward, in order to further promote the purpose of his supervision he repurchased the same. A few months later he again sold, leaving the company at that time in a fairly safe condition. He did not make any gain out of the ownership of stock. If anything there was a loss of a small amount. His administration was taken, as stated, at the request of Mr. Hackett, acting for defendant, and was continued to the end with the knowledge of its officers. For the first two years or more the work of supervision required almost daily attention. Thereafter the labor was less. His services were quite valuable, especially to defendant. Such special value the evidence tends to prove was around $300...