150 Minn. 337 | Minn. | 1921
Action to rescind a contract on the ground of fraud, and to recover what plaintiff parted with in the transaction. Issue was joined by_the answer of defendant Blocker; defendant Holm made no appearance. At the conclusion of the trial a verdict was directed in favor of plaintiff for the relief demanded by the complaint, and defendant Blocker appealed from an order denying his alternative motion for judgment or a new trial.
The assignments of error present three principal questions, namely: (1) Whether on the facts disclosed by the pleadings and evidence an action in equity for a rescission of the contract may be maintained; (3) whether the trial court erred in directing a verdict for plaintiff, the contention being that the issues should have been submitted to the jury, and (3) whether there was error in the rulings on the admission or exclusion of evidence.
As we read the record, there is little or no dispute as to the substantial oi’ material facts in the case. Plaintiff is a banking corporation
“This is certainly a good loan, and it is good stuff and a good man back of it, but of course it is an excessive loan and we cannot take it here in the bank, so I was thinking I would run it to myself and if agreeable let you people carry it.
“I shall be pleased to hear from you at once in regard to this, for if you are not interested I shall be obliged to look elsewhere. I can absolutely assure you, Mr. Skinner, that there will be no additional time asked on this loan and that six months will be the absolute limit for this to run, and I certainly hope you will see fit to grant me this accommodation.”
Plaintiff had other prior dealings with Blocker and he had the full confidence of Mr. Skinner who was in pharge of this matter for the bank. And upon the faith and in reliance upon Blocker’s representations that the loan was a good one, with a good man behind it, the loan was made
“This is an A No. 1 note in every respect, and I can assure you absolutely it will be paid at maturity. In fact, if present prices prevail, I believe it will be paid some time in September.”
Plaintiff then closed the deal and transmitted the necessary credit upon which the full amount of $50,000 was paid over to Holm through the Bowman bank.
On the date of the letter last above quoted Holm had not yet acquired the steers nor any of them, a fact known to Blocker, but not by him communicated to plaintiff. Holm had, prior to the date of the letter, made a trip to Texas and entered into negotiations to purchase some cattle, but none thereof had been selected or set apart to him by the owner. Nevertheless, as security for the payment of the note, 'Blocker transmitted, with the letter just referred to, 'a chattel mortgage executed by Holm to Blocker on May 7, 1919, upon 600 head of cattle, recited in the mortgage as being the property of Holm and then in Custer county, Montana. Holm at the time owned no cattle in Montana of the description contained in the mortgage; he did have an option on a herd of like cattle in Texas, but did not own them and could not make a valid mortgage thereon to Blocker. The situation was kept from plaintiff, and when the mortgage was received by Mr. Skinner he was justified in concluding that it covered cattle in fact owned by Holm. Thereafter Holm made a second trip to Texas and then selected a herd of 630 cattle, steers and cows, and subsequently brought them to the range in North Dakota. Witnesses described the cattle in their testimony as poor and drouth stricken, and of value not exceeding $50 per
“Your assumption that the * * * steers are ready for the market is correct, and whenever the market looks satisfactory to Mr. Holm he intends to ship; but he is so busy making hay now that he has no time to think about making a shipment."
In reliance upon the situation thus presented, the bank agreed to advance the additional funds. The representations of Blocker to induce the bank to that end, like those which brought about the first loan, were false and untrue. When the new loan was so applied for, the cattle were not in prime condition as represented, and that fact was known to Blocker, and it was also known to him, by reason of the failure of the cattle to fatten on the range during the summer and fall, it was necessary to carry them through the winter at a considerable expense. There was at the time no intention on the part of Holm or Blocker of shipping any of the cattle to the market for sale, either in 100 or 200
On'December 1, 1919, plaintiff was advised of the poor condition of the cattle, and of the falsity of the representations, on the faith of which the money had been loaned to Holm, and after due investigation into the matter promptly brought this action to rescind the contract under which the money was so loaned, and recover the amount so parted with.
Manifestly plaintiff’s remedy against him was not limited to an action for damages for the fraud; the relief here sought may be had in such case at the election of the defrauded party. I. L. Corse & Co. v. Minn. Grain Co. 94 Minn. 331, 102 N. W. 728. The fact that Blocker may have had no evil motive and did not intend to deceive or defraud plaintiff, is of no controlling importance. It is sufficient in this form of action that the representations were untrue in fact, and that the falsity thereof resulted in injury to plaintiff; fraud as a matter of law follows a showing of such facts from which relief may be had. Schlechter v. Felton, 134 Minn. 143, 158 N. W. 813, L.R.A. 1917A, 556; Helvetia Copper Co. v. Hart-Parr Co. 137 Minn. 321, 163 N. W. 665; Jacobson v. Chicago, M. & St. P. Ry. Co. 132 Minn. 181, 156 N. W. 251, L.R.A. 1916D, 144, Ann. Cas. 1918A, 355; Pennington v. Roberge, 122 Minn. 295, 142 N. W. 710.
Nor was it necessary to the maintenance of the action, one in equity to rescind the transaction, that prior notice of rescission be served upon defendant, coupled with an offer to return the securities received in the transaction. That an action of the kind stated may be maintained and that an offer to return may be made in the complaint or on the trial is supported by all our decisions. Knappen v. Freeman, 47 Minn. 491, 50 N. W. 533; 3 Notes on Minn. Reports 660, and citations. The rule is somewhat different where the defrauded party attempts to rescind by his own act. I. L. Corse & Co. v. Minn. Grain Co. 94 Minn. 331, 102 N. W. 728.
That the action was promptly commenced on the discovery of the fraud cannot be questioned on the record. No time was lost in invoking the aid of the court and by the suit advising defendants of its claim to a rescission. The Bowman Bank was not involved in the transaction. The money passed through that institution, but with no secret or other interest in the matter. Blocker made no attempt to act for it, and his own appearance in the deal was as an individual and copartner of Holm and not as an officer of the Bowman Bank.
From all this the final conclusion is that the order appealed from must be and it is in all things affirmed.