111 Wis. 361 | Wis. | 1901
The first point made against the sufficiency of the petition is that there is no sufficient averment of fraud to authorize a rescission of the transaction. The facts show that the bank was a going concern, and had been for some years, transacting a large business and receiving large sums for deposit; that it was conducted by its -president, O. M. Turner, who had the confidence of the people in and about the city of Stoughton; that it was advertised by said bank and its officers that it was a safe banking institution; that from time to time the claimant had done business with the bank, and believed that it was a safe and solvent bank; that at the time of said deposit it was hopelessly insolvent, and had been for several months prior to that time, and that said Turner knew, and had good reason to believe, that it was insolvent and unsafe. The demurrer admits the truth of these facts. Sec. 4541, Stats. 1898, makes it a penal
“ A bank implies capital, and capital invites confidence. A man holding himself out as a banker or broker thereby gives public proclamation that he has money, and property readily convertible into money, in his possession and subject to his control, and for that reason he may be fully trusted. It requires no argument to show that such assurance is most inviting and influential with the mass of the people, especially with those unacquainted with the history and character of the man. With them the banker or broker is intrusted with money simply because he is a banker or broker, and hence supposed to have surplus capital, as a standing guaranty of his agreements and his integrity. Eor an insolvent banker, company, or corporation to continue the business of banking is to hold out assurance of responsibility and surplus capital where neither exists. To do so knowingly is to secure the confidence;, and hence obtain the*366 money, of the ignorant and unwary by an implied deception. It is the old story of securing the victim by a display of false colors.”
Banks stand upon a somewhat different footing from individuals. This difference is indicated by the language just quoted. Moreover, a bank is prohibited by law from continuing business after it has become insolvent. This is the effect of the statute. Not so as to an individual engaged in his private business. As said in David Adler & Sons C. Co. v. Thorp, 102 Wis. 70, the individual may have “ an honest, though abortive, purpose to continue business,” though founded in delusion and unreasonable expectation, and yet not be guilty of a fraud. In such a case, mere knowledge of insolvency, unaccompanied with false statements or artifices to deceive the trusting, is not considered fraudulent. Under the statute the bank has no right to continue business when its officers know, or have good reason to know, that it is unsafe or insolvent. If it does continue business, then the intent to cheat and defraud whoever deals with it irresistibly arises. The dishonest purpose comes from the knowledge of the officers and extends to all persons having dealings with the bank, and it is immaterial whether there was or was not a distinct intent to cheat or defraud a particular customer; otherwise, the bank might hide behind the alleged bonafides of the official, and the very purpose of the statute be defeated.
Another reason suggested why the petition is insufficient is that there is no sufficient identification of the proceeds of the check to authorize the relief demanded. Since the decision in Nonotuck S. Co. v. Flanders, 87 Wis. 237, if the fund sought to be secured has been disposed of by the banker before the funds have come to the possession of the assignee or receiver,' or it has been so mixed with other funds as to lose its identity, it cannot be reclaimed. Burnham v. Barth, 89 Wis. 362; Thuemmler v. Barth, 89 Wis. 381; Stevens v.
“ Though the transaction between him and the bank was in fact tainted by fraud, yet the title to the money by him deposited passed to the bank, and left him, when the bank closed its doors, as it did all others who deposited money within the period when the bank was insolvent, namely, a general creditor, to share pro rata out of the fund realized from the assets of the bank.”
This court has never denied relief in such cases on the ground that the title to the money, draft, or check had passed to the bank. The decisions are based rather upon the fact that the claimant has been unable to identify the specific fund or thing demanded and trace it into the hands of the receiver or assignee of the estate. That is, the trust did not impress itself upon the whole corpus of the estate, but only followed the specific thing itself. If that could not be traced and identified, no relief was granted. The following language from the opinion in Burnham v. Barth, 89 Wis. 362, seems to cover the rule established in this state:
“ Since the decision of the court in the case of Nonotuck S. Co. v. Flanders, 87 Wis. 237, and In re Plankinton Bank, 87 Wis. 385, it must be regarded as settled, in this state at least, that, in order that the beneficiary or owner of a trust fund may be able to regain it out of the estate of a defaulting and insolvent trustee, he must be able to trace it into, and satisfactorily identify it in, the hands of the assignee or receiver of his estate, or its substitute or substantial ■equivalent; that, when the trust fund has been dissipated or so confounded and mixed up with the property and estate of the trustee that it cannot be traced or identified, there remains nothing to be the subject of the trust.”
What has been said is based upon the supposition that the claimant has placed himself in position to command the aid of a court of equity. This, however, is denied by the receiver, who claims that the petition is insufficient, because it contains no offer to do equity and does not show an offer of rescission or that it is within the power of the claimant to completely rescind the transaction. Beferring again to the facts, it appears that when the check was deposited the claimant received $284.10 in cash and a certificate of deposit for $1,000. Presumably, this certificate was negotiable paper. The petition contains no allegation that the claimant is the owner and holder thereof, no offer to return, or allegation that he is in a position to return it. Neither does it allege any offer to return the money received. The receiver invokes the well-known rule that, before a contract can be rescinded, the party claiming the benefit of such rescission must allege an offer to return what he received, or a readiness to return the same; or, instead of such offer, that he elected to rescind the contract and the other party denied his right to do so. As regards the return or offer to return the money received, no good reason exists why it should be done or made. The petition shows • that the Tobacco Exchange Bank paid the Dane County Bank $284.10 by draft to its credit at the Marshall & I-lsley Bank at Milwaukee. This effectually wipes out that item, and leaves the case free from any supposed complications arising therefrom. It would be far from equitable to require the claim
The proceeding is equitable in its nature, and the claimant ought not to succeed without a showing that the estate in the hands of the receiver will not suffer beyond the liability claimed. The petition simply alleges a demand on the receiver for this $1,000 as the proceeds of said check, and a refusal to pay. It does not appear that this demand upon the receiver was made upon a claim of a rescission of the former transaction, or that the refusal to pay was based upon a denial of the right of rescission, so as to bring the case within Potter v. Taggart, 54 Wis. 395. Nor do the allegations of the.petition bring it within .that class of cases of which O'Dell v. Burnham, 61 Wis. 562, is a type, where an offer to tender back money was not made before action brought. In this case the plaintiff offered to do so in his complaint, and it was held that the objection that he had not done so before suit was not available after the matter had gotten into court. At most, it could only affect the question of costs. Nor should the situation be confused with another class of cases, where the willingness or readiness to restore is not alleged in the complaint, and the absence of such allegations was not taken advantage of by demurrer. Where restoration is a mere matter of administration in a suit that has been litigated, the court can very easily preserve the rights of the parties by requiring restoration as a condition of relief. But, when the sufficiency of the pleading is tested by demurrer, a stricter rule is applied, and the party seeking relief must affirmatively show a readiness and willingness to do equity in order that his pleading shall withstand the test. This is necessary to prevent fruitless trials and the expense of useless litigation.
“ The plaintiff will not be permitted to repudiate his contract and still retain the benefits which he has derived from it; and his desire and willingness to restore what he has received must appear in the bill or complaint, otherwise he will have no standing in a court of equity.”
Again, page 831:
“ It is for the plaintiff to show clearly that he can restore to the defendant all that he has received under the contract, and that the parties can be placed in statu quo, and it is not for the defendant to show that it cannot be done.” Davis v. Tarwater, 15 Ark. 286.
In Ludington v. Patton, supra, this language is used:
• “ It is sufficient, in an action for rescission, to show in the ■complaint a willingness to do equity, to submit to a complete rescission so far as practicable, and to make the defendant good for what was received from him in such manner as the court may direct.”
See Eslava v. Elmore, 50 Ala. 587; Mohawk & H. R. Co. v. Clute, 4 Paige, 384. In order to secure relief in a court ■of equity, a party must so frame his pleading as to indicate a willingness that the court may deal with him as well as the defendant on such terms as to do complete justice. A' failure to offer to do equity where some affirmative action is necessary to restore the former condition or put the parties on an equality renders the pleading demurrable. The certificate of deposit was sufficient as a .foundation for a ■claim to dividends. The receiver was bound to protect his estate against double claims. The order of the court below must be sustained upon the sole ground that the petition is insufficient, in that it fails to meet the rule in equity above mentioned. The order of the trial court gives the privilege •of amendment, and it will undoubtedly be an easy matter for the claimant to amend his petition in the particulars referred to.
By the Court.— The order is affirmed, and the cause is remanded for further proceedings according to law.