First National Bank of Webster v. First National Bank of Mobridge

167 N.W. 623 | S.D. | 1922

SMITH, J.

[1] Defendant appeals from a judgment of the circuit court of Day county, and from an order denying a motion for a new trial. The complaint is quite voluminous, covering some 17 pages of the printed record, and sets forth, in detail, transactions between plaintiff and defendant banks wherein plaintiff purchased from defendant certain promissory notes commonly known as cattle paper, purporting to be secured by chattel mortgages on stock and other personal property. An attempt to state the details as alleged would extend this opinion beyond reasonable limits, and would serve no useful purpose. It is sufficient to say that plaintiff bases its action upon fraud and deceit in representations alleged to have been made by one Harris, president of defendant bank, in transactions on behalf of the bank, in which plaintiff purchased said cattle paper and securities. The making of the false, fraudulent, and deceitful representations by Harris is not controverted in the evidence. Appellant’s chief contention is that the evidenec is insufficient to sustain the verdict for plaintiff, for the reason that such evidence is alleged to show that defendant did not rely upon and was not induced to purchase said paper by the alleged false, fraudulent, and deceitful representations, appellant’s contention being that the evidence shows conclusively that the plaintiff accepted and relied upon a written guaranty of payment of said indebtedness, executed by the Mo-bridge Cattle Loan Company and certain of its officers, which accompanied the purchase and transfer of said notes and securities.

“It is not essential to redress that a representation or concealment should have been the sole cause of action, but it is sufficient if it constituted one of several inducements and exerted a material influence. In such case recovery may be had, although the representation was not the predominating inducement to action, or the representee’s injury was due partly to his own mistake. Thus, where the representation was a material inducement to action recovery may be had although the injured party was influenced to some extent .by the statements of a third person or by information gained through independent investigation * * * or where the party relied partly upon representations and partly upon a guaranty.” 26 C. J. 1165, 1166; Busch v. Wilcox, 82 Mich. 315, 46 N. W. 940.

[2] The refusal of a banker to warrant or guarantee the payment of notes held by the bank will not prevent the purchaser from recovering damages by reason of false representations concerning the solvency or financial responsibility of the makers of the notes. Dilenbeck v. Davis, 186 Iowa, 30, 172 N. W. 184; Barnes v. Union Pac. R. Co., 54 Fed. 87, 4 C. C. A. 199.

[3] A careful consideration of appellant’s brief leads us to the conclusion that appellant’s counsel may have misapprehended the grounds upon which the action is based. Their arguments suggest the assumption that plaintiff seeks to recover upon the promissory notes set out in the complaint or upon an implied guaranty of payment by defendant bank. However that may be, the complaint as a whole clearly discloses that the action is for damages for fraud and deceit, and the allegations descriptive of the notes and securities and the false and deceitful representations with reference to the securities affect only the grounds of the action and the measure of damages recoverable. The right to sue for damages for fraud and deceit without rescission and without an offer to return the property purchased and without resort to the securities is well established by the authorities.

[4,5] It is generally held, in actions for damages for fraud and deceit, or misrepresentations as to the value of securities accompanying a sale of promissory notes, that the injured party is not required, as a condition to his right to maintain an action, to exhaust securities or resort to the personal liability of the makers of the notes for the purpose of reducing the amount of damages recoverable. The general rule is that the measure of damages in such case is a sum equal to that portion of the mortgaged debt which the securities, properly applied, would fail to pay. Bergeron v. Miles, 88 Wis. 397, 60 N. W. 783, 43 Am. St. Rep. 911, Shaw v. Gilbert, 111 Wis. 165, 86 N. W. 188; Briggs v. Brushaber, 43 Mich. 330, 5 N. W. 383, 38 Am. Rep. 187. The record is entirely silent as to the actual value of the securities accompanying the notes, and the question of damages was submitted to the jury upon instructions not excepted to which have become the law of the case. Schmidt v. Carpenter, 27 S. D. 412, 131 N. W. 723, Ann. Cas. 1913D, 296; Gartner v. Mohan, 39 S. D. 202, 163 N. W. 674. The trial court instructed the jury that:

“Unless you believe and find from a preponderance of the evidence in this case that the defendant bank made to plaintiff representations in writing or otherwise relative to the financial standing, solvency or security offered by 'Donaldson, Smith' or Le Compte, and unless you further find that plaintiff relied upon such representations or any of them, and by reason thereof parted with its money or other things of value, and unless you' further find that such representations were false in whole or in part, and that by reason thereof the plaintiff suffered detriment, then, and in that case, you should return verdict finding for the defendant bank upon all the issues.”

[6] Appellant, however, contends, as a matter of law, that Harris, as president and active manager of defendant bank, was without power or authority to create a liability against' the bank, even though his statements and representations were false and untrue, and made with intent to deceive officers of plaintiff bank. Such is not the law. Harris, as president of defendant bank, had authority to sell the cattle paper held by his bank, and his fraudulent and deceitful representations were made in the course of business of the bank which he had authority to transact. Such acts and representations bound the bank, even though false and deceitful, and constitute actionable deceit. Binghampton Trust Co. v. Auten, 68 Ark. 299, 57 S. W. 1105, 82 Am. St. Rep. 295.

In this case the defendant hank received and accepted the benefits of the transactions, and cannot now deny the authority of Harris to act, even though such acts were fraudulent and deceitful. Johnson, etc., v. Nat. Bank, 4 Okl. 17, 44 Pac. 192. See, also, Nevada Bank v. Portland Nat. Bank (C. C.) 59 Fed. 338; Steward v. Wright, 147 Fed. 331, 77 C. C. A. 499.

[7] The rule is well settled in this, as in other courts having similar statutes, that where the evidence is conflicting, and the credibility of witnesses is involved, or where men of reasonable minds might draw different conclusions therefrom, and the trial court has denied a new trial, this court will not disturb the verdict for insufficiency of evidence. In such case this court cannot review conflicting evidence; and the only question which can be considered is whether there is any competent evidence which will sustain the verdict. Schmidt v. Carpenter, 27 S. D. 412, 131 N. W. 723, Ann. Cas. 1913D, 296; Gartner v. Mohan, 39 S. D. 202, 163 N. W. 674; Wingfield v. Little, 41 S. D. 60, 168 N. W. 716.

It would serve no useful purpose to attempt to state or review the evidence. It is sufficient to say, after a careful reading of the record, that in our judgment there is sufficient evidence to show that plaintiff relied in a large degree, if not wholly, upon the statements and representations of Harris, president of defendant bank, as to the character and responsibility of the makers of the note and the existence and sufficiency of the mortgage security accompanying them, and that such statements were materially false and untrue, and were made with intent to deceive the officers of defendant batik.

[8] The right to maintain an action for damages for fraud and deceit, and the measure of damages recoverable, are distinct questions. The rule as to measure of damages laid down by the trial court in its instructions to the jury was not excepted to, nor was any instruction asked by appellant upon that subject. There is evidence in the record from which the jury might have found that the securities were of little value, and that the purported indebtedness secured thereby exceeded the value of such securities in the amount of their verdict.

We must assume that the jury were correctly instructed as to the measure of damages, and that their verdict was in accordance with such instructions. In such case the amount of the verdict cannot be disturbed or questioned by this court.

■Alfter a careful consideration of the entire record and all the assignments of error, we find no reversible error, and the judgment and order of the trial court are affirmed.

ANDERSON, J., not sitting.