*1 Ellen Johnson Griffin Waterbury William Griffin and Bank of R. A. 2d 400]
[217 Term, 1965 June Holden, Barney, J., Shangraw, Keyser,
Present: JJ. C. Smith and
Opinion Filed October Opinion Reargument February 25, Filed *2 A. Burgess and and for plaintiff. Theriault Joslin John Charles for defendant bank Black original appeal; Adams J. Plante, and for defendant brief, with Frank G. Mahady bank on reargument. Smith, J. This is an action brought by Griffin Ellen Johnson under
against husband, William Griffin and the of Waterbury Ellen Griffin Act. The action Declaratory brought by Judgment *3 both of interest and ually delinquent payments principal notes, above tax on their home place. request payments made to them Bank at frequent pay intervals the various Bank delinquencies, demonstrate that the was aware clearly of their precarious financial situation. William Griffin business, success, logging joint without much for the check- apparently ing account used to of bills such pay operations was overdrawn intervals. frequent
In the fall Meaker and Director of President Brisbin of the Meaker, visited home Bank, of addition to petitioner. President and Director of the was an and his being attorney, for firm also acted as the Bank. He had lawyers handled business legal for Ellen and William in the income past, preparing their principally tax returns over years. to the home purpose visit Griffin at this time was to its value and to warn the appraise Griffins that un- der the conditions then it for existing might the Bank to necessary institute foreclosure proceedings against property. Bank officials at
Ellen advised the the time of this visit that she an inheritance of soon to receive and stocks money and that as she inheritance she soon as received this would bring delinquencies as the loans on to date as far the home up place were concerned. On 1959, Ellen received her November inheritance which consisted $5,111.52 in cash and stocks then having $20,000. value market 428 understanding an for below, is necessary stocks, given
A listing on this appeal: presented the questions Corporations No. shares Electric General 11 (1) Cement General Portland 22 Insurance (2) 8 General Railway Great Northern 11 Oil Corporation 7 Gulf Metal and Thermit 55 Association 11 Monmouth Racing Stock Lead Common 71 National Go. (4) 13 Pacific Railway Northern 17 Riegal Paper Southern Company United States Steel Tobacco U.S. Texas Company Two days inheritance, after Ellen made total pay- receiving ments to the Bank mentioned of interest and on the above principal $684.24, notes of dated later, and a short in full a note time paid December Bank’s with a $1,308.91, then at the balance request. into on,
It is from Ellen came is, the time point Bank stocks, money plain- possession tiff con- subject entered into the transactions which are the of this troversy. here
Involved are five notes which Ellen’s signature appears, upon 29, 1960. to the Bank between December given April listed Also involved are various stocks, above, Griffin, Ellen collateral signed by ostensibly given as Plaintiff, com- of some or all five in her notes. payment asserts that she for the notes plaint, given, received no consideration Bank, through and that reason of the constructive fraud *4 its officers, she induced stock. the of sign assignments various relief she in her deter- seeks action is a declaratory judgment certificates, as mination to the actual various ownership as well as to her notes. on various liability of chancellor decree .the. relative Before proceeding stocks, and liability peti- in the various .the right ownership initial- notes, must the questions we first resolve respective tioner brief of the us in the Bank. ly presented
429' her did seek not that by prayers, The Bank contends the plaintiff, of the notes given to have determine validity the chancellor Vt. But, Knights, said Blanchard v. her Bank. we by 36, 146 A. 173: 2d determined, not by
“The of a bill in to be scope equity relief, the case stated.” but by special prayers particular 75, 79, In the earlier case Vt. A. 2d Hoadley Hoadley, the Court stated: have relief may agreeable “Under the general prayer to the case bill.” by made bill,
In she seeks her states that one the questions petitioner to have “as certain notes and determined is validity of all Such were before validity questions the assignments...” the chancellor for determination. his
The Bank also advances that both the argument validity and of note the various stock was conceded assignments petitioner in her the introduction as well pleadings, peti- tioner, in evidence of the notes involved. is true assignments It notes, petitioner her admitted pleadings signing various and the chancellor found. so It is also true that introduced petitioner into evidence the various of stock and her assignments signatures stated she has “a full her assignment” of stock. complete But such were pleadings evidence consistent with her further and evidence, pleadings, that such were assignments ob- fraudulently tained, and that certain of such notes invalid. It was essential for existence and execution petitioner plead of the various notes and stock of which she assignments, the validity sought to have determined, as aswell to introduce them into evidence. None of the cases cited to us the defendant hold that such allegations in a pleading stops plaintiff from the same asserting pleading that such
430 us to 312, cited A. 262-263, 73 2d 261, Vt. Gadapee, v. Lunnie evidence parole state, says, as defendant does by the the created by obligation of an the enforcement where
rule applies toon But the opinion goes action. cause of substantially is the writing where rule applicable evidence the parole that an exception hold the same, but the the are writing and to litigation parties of the action. instrument, here, is not the basis as errors claimed brief, out that Nor has the in its defendant, pointed the attention was ever brought in the such evidence admission of brought shall be below. question of the chancellor No hearing it to appear Court which is made the Supreme except upon Langevin has judgment. the trial court had fair to pass opportunity Gilman, v. A. 340. Vt. 2d it. exceptions
We now turn to decree made below raises the question Defendant Bank’s decree only exception Lorenz found. to whether the facts the decretal order is supported Vt. A. 364. Rowley, 486,177 2d What now notes signed by petition- concerns us a series of five er between with 1960, together December 1959 and April certain all stock of the covering plaintiff, The defendant Bank these notes. claims to be payment total $22,000.00. of such amount notes exceeds were chancellor of stock found that such notes and assignments signed by They under set of circumstances. petitioner the following were her an signed either while automobile following hospital accident in injuries, which she and her three children suffered personal or soon after leaving received none hospital. proceeds from such made in loans, for certain except deposits joint account used busi- checking William Griffin in his by defendant ness. The were loans never of Water- passed Directors upon by Bank until after bury they made. In view of the plaintiff’s claims of constructive fraud the part of the Bank through officers, relationship between the Meaker, Griffin, President of the Mr. Ellen are plaintiff, Meaker, in his as an important. capacity attorney, husband, had acted as her for both the lawyer principally out their income tax returns for a of several making period years. However, the chancellor also found that Mr. Meaker acted as had for the in connection matters concerning legal in November, Also, accident automobile found the chan- these tranactions was the plaintiff was that at no time during cellor of these ever advised of her transactions rights effects legal Bank officials. *6 on December
The first of notes was such signed her accident. It was in the following while she still hospital was $2,500.00. time of such signing, language amount of At the 40 shares on the face the note concerning assignment appeared Texaco, note.” Inc. additional of this payment stock “as security of the Texaco shares an time, signed assignment same At the Chase, witnessed Bank, assignment and while to the Bank Chase, nor other official was any neither of the Treasurer such signing. at the time of present note, the Bank caused of the after the signing
Sometime on such note shares security listed as collateral added to stocks Can (such of American Company Oil of Gulf shares Corporation, shares) Metal and Thermit of the had been received place shares had been Texaco which Texaco and 40 shares of Company, from the Texaco after corporation in a for one stock split received one of the stock the Bank note and the assignment making . plaintiff 28, 1959, December The second in this on signed note series $4,000.00 and contained on the amount of plaintiff, note, face a statement that 11 shares at the time it was signed, been Bank as National Lead stock had assigned Company collateral A of such shares assignment for its security payment. general date. of stock to the Bank on the same was signed by At a later in and without the or consent of the time, point knowledge the Bank collateral described plaintiff, caused to be added as security Oil Certificate exchanged Gulf No. G025131 such note “also 8/ Bank American Can common.” The Company, for 41 shares 29/63 to the collateral in both notes were security as changes admitted of the note and without the signing made following is that no had made to assignment been finding knowledge. stocks the note was later added signed Bank at the time that both of these notes were altered by The chancellor found it. collateral to the list stocks assigned Bank adding on each.
The decretal order relative to these two notes is that stock and the is entitled to hold the Texaco National Lead Com- only notes, of these stock for the two left any sums pany payments after over to the such notes are being paid satisfied plaintiff, *7 course holder in due Bank, establish that the not a note, notes set-
of the added certain stocks the memoranda on the after secured, forth the collateral ting notes security by were their executions, and the assent or respective knowledge without liable thereon. party
The test laid
are material
down to determine which alterations
not,
which are
al,
is set forth in
91
Gray v. Williams et
Vt.
117,
“A material alteration is one which speak makes the instrument a different in effect from language what it legal originally spoke; an alteration which interests some produces change right, of the instrument.” obligations parties Also notes we are now pertinent considering following quotation from the same case:
“The rule is that if a an general memorandum written on instrument at foot is made before or the time margin at of its execution, it is it; considered a and if it part the operation affects instrument, terms of the body it is a material part Williams, of it.” v. Gray supra, p.
We have no that the notes now under hesitancy two holding discussion were altered. Siich materially alteration affected materially in that certain securities, interest of the pledged
433 them, were executed notes at the time she for the payment alteration. unauthorized because of the subject to such liability the instrument upon Such altered the effect of changes materially and her property. which states that However, the decretal order part materially notes which is liable to Bank the two altered, the Texaco of, and that the Bank is entitled to use the proceeds alteration stock, and National Lead Co. is inconsistent with material of such notes. it,
A material alteration the note party destructive of its Trust Co. validity. Savings Barton Stephenson, follows 438-439, Vt. Atl. 639. It pgs. necessarily decree, accordance with should have declared the findings, the plaintiff not liable on such reason such altera *8 Tractor,
The Crawler stated on the note security be collateral loan, was, 7th, for the March loan, on the date of under a the mortgage to the State Co. This was off the Equipment mortgage paid by proceeds loan, received from the and the Bank then first took a on mortgage Bank, The equipment. to its valued this according appraiser’s report, $15,000 $18,000. at and Such between equipment appraiser’s report also states: “add’l various certificates of stocks Ellen security (see c/o $6,000.00.” value It was the the chancellor Griffin) of present finding on $11,705.52, of reason of the mortgage equipment loan the by than not less in an amount secured was and the stock assignments, $28,000. $25,000 more than assign- stock that such believed was that the plaintiff Also found loan, Bank on such the securing ment for the temporary purpose was Crawler on the Co. Equipment the to the State until indebtedness only its by secured on loan the Bank was been and
Tractor had paid, effect of the the explanation on such No equipment. mortgage although Bank official to the was made assignment by plaintiff, drawn out none and the her, assignments requested by was None to her for her signature. and then presence, presented the note was received the proceeds by plaintiff. above, the securities listed that all of directs decretal order which Bank, returned the plaintiff, the plaintiff by
assigned Bank. by is excepted is us. in the cause before It contention us to brings This principal made of stock Bank that all the defendant position her, such assign- all notes signed by
to it secured plaintiff, by The facts no attached. and with conditions being ments unequivocal Bank, fraud on chancellor, do not establish found asserts by Bank, assigned and the decretal order returning so part stocks cannot be sustained. plaintiff
The chancellor finds that Bank obtained such stock assignments reason virtue of its confidential relationship plaintiff, aof failure on the Bank’s inform advise the fully plaintiff part nature, found extent effect Also assignments. the Bank contracts, had superior knowledge not available to the a confidential chancellor found plaintiff. President, between existed relationship plaintiff through Meaker, husband, who was also for the and her plaintiff on matters, tax only but for the on matters relating her automobile Further, accident. found chancellor was the defendant Bank was on tractor loan of adquately secured March 7, without the most of her stock general assignments of that time. 1960, the and the defendant On March husband signed $11,705.52. sum of note in the the face principal Upon discount secured Chattel 1 International of the note “This note appears collateral Crawler Tractor.” No other TD-14 set forth note. said at the and at the same time,
While requested *9 for her until certain were prepared signa- to wait assignments form, Such were in entitled “Assignment ture. assignments general Certificate”, Bank of Waterbury From assigned to Separate number and kind of stock certificates listed above. that, states, It is the Bank’s taken its brief “the position stocks in on March 1960 were considered the Bank be additional by for the loan state: of that date.” The brief also on to goes “As far concerned, as the Bank was all certificates all notes.” secured This because, asserts, is Bank the written and de- assignments signations of for transfer of the stock are all unequivocal Admitted the Bank is no discussion by no conditions attached. that officials, and the Bank and its regarding held between the under which were made. assignments By terms or conditions any the Bank’s unilateral described above (and virtue of the assignments their the Bank that all contends legal significance), understanding due it from the is secured by assignments. indebtedness The in the matter is set forth in No. 13 of plaintiff’s position of fact: “That the Chancellor the Petitioner be- findings that finds lieved when she to the Bank in connection with transaction went to the relating of International TD-14 Tractor Defendant purchase husband, that the of her shares of stock as above set forth assignment 7, 1960, March was a to enable arrangement temporary to take tractor, title to the dozer and winch, which equipment then under a to the State mortgage Equipment Company; Petitioner believed she was in no liable for the way payments indebtedness in connection tractor, with the dozer and winch State Equipment and that Company, did not receive petitioner any the proceeds of the note of March 1960.....” others, This like all is finding, not brief the Bank excepted herd. But if it were we think it would be amply supported, only testimony but the circumstances surrounding assignments. The note had listed as collateral only equipment its face. upon Further, the value of the once in Bank’s equipment, possession, had an $15,000 admitted value of between $18,000, sum greater than the face of the note. Added to this the conceded lack of other of such explanation part Bank to the plaintiff. decretal order directs that above, all of the securities listed
assigned by be returned It to the plaintiff. that the Chancellor made such apparent order on the ground there was fraud on the constructive of the Bank in part its dealings no Chancellor Bank asserts
with the plaintiff. constructive fraud finding a composite upon be made. Bank could on the part *10 Chancellor finds “That the of facts states: findings the No. $11,705.52 (Plain- note for she the signed at the time the Petitioner that Bank informed Defendant by and fairly was not fully tiff’s exhibit 3) transaction; that effect of such nature, extent and legal full as to the contract, know- as to a the party Bank had knowledge the superior Peti- of the fair and reasonable reach not the which was within ledge reasonable discover the exercise of she could by tioner and which relationship confidential Bank stood in a close that the diligence; Defendant President, Meaker, who was also for its attorney through as in fact had acted finds that Griffin and the Chancellor further in matters concerning for the Petitioner connection with legal November, 1959; defendant her accident as late that the automobile the tractor (Plaintiff’s Bank had for so-called loan security adequate exhibit reason of its then value without Petitioner 3) assigning the by 18.” of stock Plaintiff’s exhibits through shares represented by The last exhibits referred to are the stock here dispute. assignments “Even where there is no actual fraud courts of will equity frequently relieve hard contracts been and unconscionable which have against neces- procured by condition, of the circumstances or taking advantage sities of the other if such contracts are made party, especially by parties in a acting Deceit, Fraud and capacity.” 23 Am. fiduciary § Jur. p. Bank that the loaned thousands of dollars disclose Bank Petitioner to defendant Griffin the when the during period well aware of the financial straits of Griffin. was defendant desperate the Bank Pre- least, At had been obtained by part, knowledge in his with the Griffins as their sident, attorney, fiduciary relationship tax In out their income returns. the for making year example, the tax return the Bank official showed by prepared Griffin had a from his business of $949.32~hardly profit logging only sufficient to meet the to the Bank then existing. obligation Bank well aware that doubt that the was
There can be little the Bank to her stocks the to by plaintiff of all general assignment her husband the of the secure all the indebtedness plaintiff the time the transactions Bank benefit to it. At would be of great its close the stock virtue of 7th, of March assignments, by leading the fiduciary and confidential with the through relationship President, Bank the resources and knew that relationship wife husband and the were inade- of the defendant income advanced them to return Bank the quate money already of the then ownership possession unless stocks all loans. made collateral for general 7th, note The loan made on March and for which the actually have as we secured signed by already seen, plaintiff, amply stated to be collateral on the note. As equipment found, commented, chancellor and as have none of cir- we note cumstances relative signing assignments note on March signing 7th exception plaintiff (with form of the legal served assignments) notify then stocks her were to be used collateral all her indebtedness the Bank, past, present and future.
There is no here of- disagreement at no ever time, fered to the plaintiff she situation in explanation would herself place stock. signing general assignments The constructive fraud found *11 find- chancellor in No. of 23 is that there a ings duty upon because of the relationship of the parties, disclose to the plaintiff the liabilities she as- would sume on her of signing stock assignments. Howard, 32,
As stated in Howard v. Vt. 861: A2d “Fraud reaches an intentional in act and concealment equity confidence, of breach or un volving duty by which undue or conscientious is obtained.” advantage
The
of
distinction between
concealment in cases
active and passive
fraud
well
v.
Brothers
pointed out in the earlier case of Newell
Hanson,
97 Vt.
303-304,
“The law between what is termed active fraud distinguishes passive silence, concealment. Mere disclose known or mere failure fact, though material, are not be fraudulent. Where may persons at ‘arms dealing length' as where the facts are within equally of knowledge neither is the absence both, required to speak, inquiry such respecting matters. But fraud be committed by may of truth as suppression well as of falsehood. suggestion for failure to The test disclose facts material the trans liability legal equitable, action is some or the relations duty, arising as that of trust confidence, of the or know or parties, superior When in the knowledge. means circumstances of ledge case such failure to a material particular duty present, disclose a fraud defraud equivalent to mislead or with intention fact af better than the and stands no concealment of the fact ulent of material misrepresentation.” firmation the defendant In these the plaintiff transactions obviously President The defendant’s length. were not at arm’s dealing confidence virtue of his as engagement plaintiff’s gained arising fidelity no breach of other matters. While there was not tie creates a fiduciary from that its existence representation, very and lender. between borrower usual present bargaining position that Meaker entertained findings contain no implication Nonetheless, conscious to take purpose advantage plaintiff. when the frequently defendant elected to deal with the plaintiff through who served the president, had previously confidential stricter than advisor, it became charged something the “morals of situation, silent and secret, In this marketplace.” .undisclosed objectives will fair equity demands satisfy Salmon, dealing. Minehard N.E. 546. N.Y. is clear It acquisition from the record presented that defendant’s assignment on March 1960 was the combined product plaintiff’s hand, advant- the one and the misunderstanding superior mislead- on the other. its silence and the Through of the defendant age to secure the obligation, description security designated ing contributed to the misunderstanding. These considerations the intervention of support equity way certi- a decree that the restored to possession now ficates held the defendant. decree below is 1. It is as to No. to No. amended affirmed in that the stocks there set shall be returned to plaintiff, forth the notes herein described are void. It as to the declared is affirmed decree,
remainder to which no have been exceptions briefed. *12 Reargument
On Holden, J., Barney Shangraw, Keyser, JJ. C. Present: Holden, case in this was filed at October C. J. opinion After Bank of in due time Waterbury requested the defendant 1965 Term was ordered and heard Term February Reargument reargument. 1966.
439
twelve
undertook to challenge
At
rehearing
that the facts
on the ground
the chancellor
fact
findings
evidence.
None
are not supported
in these findings
stated
were briefed when
findings
now claimed
to the
the deficiencies
as
first
was
presented.
appeal
to
The office of
to the Court some
reargument
point
present
overlooked,
fact,
whether
or
in the brief
of law
which was presented
of the case. New
for
upon
are not
original argument
questions
consideration nor are issues that have been
and decided
argued
upon
due consideration of the
law and facts. Goodwin Admx.
pertinent
Gaston,
772;
v.
point. trial. received at the the evidence of November out, until the middle As main opinion points Their difficulty. in severe financial and her husband were
the plaintiff continuously notes were on five different to the bank joint obligations their Taxes both interest and principal. delinquent payments Griffins The bank requested were in arrears. repeatedly homeplace from the findings It manifest delinquencies. various pay aware of their financial stress. record the bank became increasingly ac- and his checking The husband was business logging plaintiffs frequently used to business obligations, count with the plaintiff, pay November, 1959, the overdrawn. During August period than other bank account showed more overdrafts statement this critical of the Griffin entries. The bank examiners became increasingly loans and the bank obtain a current financial statement requested Mr. the Griffin It was in this logging enterprise. background Meaker, Brisbin, as the defendant’s and Mr. one of the president, defendant’s called on The directors, the fall of 1959. plaintiff object $7,200, their visit was the bank’s concern over the note of dated November secured mort- aby government guaranteed on the Griffin home. It was gage their to examine the purpose premises purposes its value. the course this visit reappraising During informed Mrs. Griffin they that unless the current, was made obligation foreclosure would be proceedings instituted. Mr.
To this the Meaker plaintiff Mr. responded by informing Brisbin she when was about to inherit stocks and that money she received these insofar funds she would arrearage take care of the as the home was concerned. She officers property visited with the bank about her securities and to borrow whether it would be best inquired or sell stocks to this satisfy The defendant’s obligation. president, Meaker, declined to advise her in should this she regard suggested but seek advice from someone in assured the stock business. The plaintiff them she would take care of the home loan. inheritance. after this conference the received her
Shortly plaintiff 16, 1959, the bank later, Two on November went to days In the amount due home paid past delinquent mortgage. addition, on all loans the bank and received requested apply $698.70 re- $1,485.53 the note of dated December 1958. The bank except com- full. quested particular obligation paid plied. children and her transactions these after
Shortly and all hospitalized. an accident bécame involved in automobile five months the next chancellor found that during in- $22,000, which induced to a series of new notes aggregating sign *14 $11,000 $33,000. Although indebtedness creased the from original the from these received plaintiff, none of the loans were proceeds secure most her was transferred to the defendant inheritance these obligations. controver-
The bank’s in result is the crux of this this participation fact that its Its in sy. part these transactions is complicated by president and for the Griffins counsel had served previously attorney in the that of income tax returns. Mr. Meaker testified preparation him in in con- plaintiff her husband had consulted his office nection with the automobile accident of There is no claim of violation or breach confidence professional
of professional However, ethics. reliance question plaintiff’s on the bank officers, and its without the need for legal independent advice, must be Mr. of the light relationships. considered past Meaker’s prior of the representation and her husband is also in significance on his an bearing officer of knowledge, as bank, of the financial distress and the circumstances which family attended these transactions. As a result of assisting her husband in the of income preparation tax returns for president of knew, the bank or known, should have the interest that on past before obligations, assignment stock, was plaintiff’s more than twice the amount received husband as earnings for that year. That the bank was additional interested keenly obtaining for from the overdue from is manifest obligations the plaintiff treasurer, record. Its Mr. Chase, testified “We had been promised care of time that the be taken long period would delinquencies treasurer the inheritance.” It from the appears testimony he that urged husband in this direction. plaintiff’s It of some of substan- significance, too, plaintiff’s pledge tially all her inheritance went far her commitment to the beyond bank officers at the time On occa- of the threatened foreclosure. that sion she Her promised homeplace. to take care of the on their mortgage but November, exceeded this assurance $2,000 payment or that they there from the of its officials was no indication bank any business would to secure future obligations look to the plaintiff an her husband to extent that past be incurred might tripled indebtedness. those and fair dealing the integrity relied on That solicited She in the record. is demonstrated the bank representing the govern- take care of could as to how she officials advice of the bank She or bank, pledge. loan whether mortgage
ment insured treas- bank’s box in the custody to her safety deposit left key officials to her by presented the instruments urer. She signed bank without question. securities, that the bank’s contention
The record bears out cross- From his of Mr. in the custody before assignment, Joslin. that the bank’s it president, appears examination of Joslin inheritance derived. the estate from which the plaintiff’s handling any called event, upon it that the plaintiff In does not any appear Neither question. for advice before making faith bad there indication she had reason to suspect There is nothing undue of the bank at time. advantage part advice to indicate she it independent seek necessary felt con- of this subject connection with the which are the transactions *15 troversy. from the plaintiff’s the resources gained desire to apply The bank’s treasurer, testimony her inheritance appears assignment of the notes given in the alteration resulted
Mr. Chase. This purpose The excess of security gained and December 10 December will on March was at applied tractor loan in the transaction the bank. treasurer for expedient as the thought to prior obligations the increase material since to they purported These writings notes, directly had committed to these the which both rights parties. affecting
The stock certificates in blank on March 7 were assigned accepted the bank at a time when the that prospect would by past obligations be honored was Two after on March hopeless. days assignment, bank’s treasurer wrote to the husband him of plaintiff’s reminding an overdraft account. on The communication called to his checking attention that the “G.I. Loan” on the homeplace delinquent “otherwise, immediate satisfaction of these we requested obligations must make note for this amount secured up small the stock are now to wife... we holding belonging your wrote Mrs. 30, the bank’s to Mr. and president on Later, June ar- advised this time unless some definite must be “You Griffin sell the which made, next will be to our securities step rangement collateral, take possession your personal property equip- here as are and, proceed if necessary, sale ment and have sheriff’s home.” your foreclosure of her bank of
In intimation to the first retrospect, plaintiff’s inheritance, as a the mortgage means to care of prospective take Those home, became the increased new obligations. signal vastly known, that repayment bank or should have representing knew, except all financial to beyond repay capability obligors resort to became plaintiff’s inheritance. And the new loans vehicle in- which bank possession obtained plaintiff’s heritance. Griffin,
It defendant, cannot be questioned that William in the inducement participated to enter these trans actions. We recognize most dominant influence of all relations is that of the husband over the wife. Transactions between them valid, be her, reasonable, as to must fair particularly voluntarily and understandably made. Such are transactions scrutinized jealously prevent wife from overreached being or defrauded undue influence or conduct on improper her husband. part of When are they about brought fraud anything amounting constructive on his part, they are voidable all against other persons participating than bona fide purchasers. Peyton v. William Del. Peyton Corp., 23 Ch. 321 7A.2d 737; 123 A.L.R. and annotation follows; Am. Husband Wife, §269; also, See §514. Jur. C.J.S. Plan, Commercial Credit Beebe, Inc. v. 123 Vt. A.2d 502. inducement, While bank refrained from direct persuasion the evidence establishes its treasurer the codefendant hus- urged band to access his wife’s Mr. Chase he gain inheritance. testified had conversations with the husband, when his plaintiff’s inquiring wife was and make going some get money payments bank. As a result of these activities bank moved from status *16 creditor, and meager scant security delinquent obligations
of $11,000, to the comfortable position of abundant protection combined obligations excess of of was ex- $35,000. All this at the of pence the plaintiff’s inheritance. newly acquired no Perhaps circumstance, alone, single justify would standing interference of In in- equity. necessary combination they present gredients for equitable relief. fraud, constructive advantage and undue point
Unfairness it is enough Ordinarily of circumstances. from a derived variety may attempted “vendee has actively if a the intervention equity to justify into ensnared, making the vendor in fact ensnare, and has Thomas, 83 Vt. and v. Beedle Crompton an unconscionable contract.” Howard, 32, A.2d Vt. v. 287, 297, 331; 75 Atl. Howard 861. although “those cases where party, extends to jurisdiction
Equity sus- law, the strict so to be still within the limits of keeping perhaps act unconscientious courts, committed some tained the law had an undue advantage breach of and had obtained faith, or good thereby not would another, even equity over which advantage, though legal, (Fifth suffer him to retain.” 3 Pomeroy’s Equity Jurisprudence, §873 Edition). and
The term “fraud” as
to the bank’s
applied
participation
officers,
that of its
be understood
innocent sense without
in its
Will,
involvement of evil intent. In re
It is that the March was disputed nego- assignment tiated when the under the acting misapprehension of her was to be misunderstanding pledge temporary only during The bank did refinancing nothing tractor. or said illusion; dispel it remained silent. “As far as the bank con- cerned, all certificates secured all notes.” that the bank Beyond present- ed for the a note plaintiff’s which mention her signature made no stocks and bonds as note, security. men- security, designated tioned chattel, only and this the bank had left undisturbed. the bank was Certainly aware of knew, its own The bank intentions. known, have should that if this was to be taken as pledge a blanket as- inheritance signment, plaintiff’s would be consumed to irretrievably satisfy obligations yielded no consideration. and her asso predicament past the plaintiff’s
In light officers, there was a on the bank duty and its the bank ciation with consequences plaintiff. impending its intention disclose at least that. In these and fairness required of candor Considerations facts calculated mislead important the suppression circumstances *17 Dana, C.J.) 29Vt. Brigham (Redfield, vitiate the assignment. will 1, 11. to posses- restores the plaintiff which chancellor, decree of with, founded on fundamental is well
sion of the securities thus parted considerations of equity. are
The other raised reargument fully disposed points first opinion.
Let go down. entry full
Shangraw, J. contractual aspects I cannot Dissenting. ignore of this is issue is case. It view that limited controlling my For what make following. general did purpose then on March these assignments 1960? Were date, $11,705.52 secure the same bearing one note payment they did understood on be, the facts to or the contrary secure claim- and future payment present, obligations past, ed hearing the bank? this I would for a further Upon basis remand if necessary, issue, one crux of the this which finding controversy and would on which determine result. This is the axis this case should be decided. It is also view that the bank my president’s representation prior matters entirely unrelated with transactions
bank, the stock particularly of no assignments, significance, should not be reflected in the or its opinion result. In my judgment, all desire on considering and the factors, apparent part assist her husband in his business dealings bank, the determination of unfairness on the part the bank is, officials I believe, and unwarranted. unnecessary assignment of stocks was an over-the-counter Plaintiff transaction.
neither sought obtained the advice of of the officers of the bank concerning transaction. The effect of the majority and the opinion, grounds upon final based, determination is far presents implications incident reaching to an attorney-banker and also leaves area to relationship, a grey what extent bank officers are advice, furnish unsolicited required to with possible legal implications, may customers with whom they deal. $2,500
I $4,000, the notes of to in agree that referred have been altered within our opinion, materially concept of Nego- tiable Instrument Act. notes held by determine the of certain and assignments validity the Bank The defendant and Waterbury signed by petitioner. Bank of here the Decree of Waterbury has brought appeal Court Washington County Chancery. The facts found none were chancellor, excepted of which by disclose the situation: here, factual following and R. Griffin were husband William Griffin and defendant Ellen and 1, 1960, apart, had been since about wife, they living although June had been her husband against brought by petitioner a divorce action Court since County July, pending Washington hearing. time his and 15, 1959, Griffin, Prior to Ellen her husband November reason and the Bank by mother father were indebted to of Waterbury of notes follows: mortgages 2, 1956, a. A note in amount of dated March original $800.00 William Griffin, Dennis Griffin Ina Ellen and signed Griffin. b. A note in the March amount of dated original $7,200.00, 1956 and Ellen and William. signed by c. A note in the $379.00, amount of October dated original 1957, and Ellen signed and William. d. A note in December original $1,485.53, amount dated 1958, and signed Ellen and William. e. A note in the $3,150.00, amount of dated March original 1958, and signed Ellen Griffin. and William Dennis and Ina and by November, 1959, that until the middle of disclose contin- Ellen and in severe financial straits. William were They
Notes
notes assignments were invalid because of or failure fraud of consideration. sustain Bank’s had We cannot position so that she: was estopped cast herself pleadings denying, below, notes and on validity hearing the. fraud and failure of of constructive consideration. grounds Nor can we sustain the Bank’s brief that the should have been allowed to introduce evidence to terms vary the or legal instruments introduced effects the written case. case
notes stocks to the addition Bank claims Defendant and was matter a “bookkeeping” only of signing the date after alteration. a material Act provides: Instruments the Negotiable 576 of 9 V.S.A § without altered is materially instrument a negotiable “Where avoided, against thereon, except it is liable all assent of parties alter- assented to or made, authorized has himself a who party been instrument an has indorsers; but when ation, subsequent course, in due holder of a and is in the hands altered materially ac- thereof alteration, payment he enforce may not a party tenor.” to its original cording in part: V.S.A provided § a material alteration: “What constitutes An alteration is material which changes: of pay- ... where place or which adds (6) place payment which alters other or addition ment not specified, change the effect of the instrument any respect.”
notes material tion, and the stock, notes, if secure only given would also become invalid. On March 1960, the husband signed a discount note in the $11,705.52, sum of in install- principal payable ments and secured by 1 International TD-14 Tractor, Crawler Bank. Waterbury No other collateral forth in the set note. At the same time and place, plaintiff signed assign- general ments to the Bank of the shares of stock: following 11 shares of General Co. Electric shares General Portland Cement Co. 21 shares of Gulf Oil Corporation 55 shares of Metal and Thermit Corporation 17 shares of Riegal Paper Corporation shares Northern Pacific shares of U.S. Tobacco Company 22 shares of United Steel Corporation 13 shares of Southern Company.