Rostad v. Thorsen

163 P. 423 | Or. | 1917

Lead Opinion

Opinion by

Mr. Chief Justice McBride.

1. We think it is established by the preponderance of the evidence that the defendants, at least, impliedly gave Rostad to understand that if he made restitution, he would not be prosecuted; and that there was an implied threat that unless he did make restitution the law would be permitted to take its course. The matter was in such a position that it was evident his only chance of escaping the penitentiary was to make restitution for the amount of his theft. The evidence also indicates that Rostad, previous to the visit of Hendricksen to the plaintiff, informed her of the circumstances and gave her to understand that unless she assisted him he would be sent to the penitentiary. We think the evidence also establishes the fact that when Hendricksen visited her, while he did not in terms threaten that Rostad would be prosecuted unless he made restitution, he used language which conveyed that impression, and that he certainly went so far as to give her to understand so far as the bank or its officers were concerned no prosecution would be instituted in case she joined with Rostad in executing such papers as would make her jointly liable for the amount embezzled by him. In fact, Mr. Hendricksen admits having gone this far. We are satisfied from the testimony that Mrs. Rostad was induced to sign the papers in question solely to prevent her husband from being prosecuted, and that the defendants understood this, and that she understood that his prosecution would certainly ensue unless the defalcation was made good through her assistance; and that this and no other consideration was the cause of her signing the notes in question. While no actual threat to put her husband in the penitentiary was made in words, the situation was placed before her in such a light as to make it suggest to her that the only way she could save him from imprisonment and disgrace was by executing the notes. There was no other consideration for them. She had not had the benefit of the stolen money so far as the testimony shows, and did not know of her husband’s thefts until they were disclosed to her by him and Mr. Hendricksen. Naturally, in her disturbed condition of mind, by reason of the shock of these revelations and the thought of the disgrace that would be inflicted upon her husband, herself, and her two children, she consented to sign. We think that this was not her voluntary act. Whether we call it duress or undue influence matters little. The fact remains that she signed the papers under the promise from the defendants to do everything in their power to stifle the prosecution, and we think the modern authorities are practically unanimous in holding that an instrument executed under such circumstance's is void, or at least voidable at the option of the party executing it.

Considerations of policy and morality dictate that no person shall make a trade of a felony, or if he is aware that a crime has been committed, he shall not convert that crime into a source of profit or benefit to himself. The defendants knew Rostad was guilty of a felony; they knew he was unable to make restitution; they knew the only way. to recoup themselves was to induce his wife to execute the documents in question- and they undoubtedly knew she was doing so for the purpose of preventing her husband’s prosecution. By agreeing that they would not prosecute, which, in effect, was promising that so far as they were concerned they would stifle the prosecution, they obtained an additional advantage to themselves at the expense of a woman unadvised by counsel, distracted by grief and fear for the safety of her husband, and oppressed by a sense of the disgrace ensuing to her and to her children. The case of Williams v. Bayley, 1 Law Rep. Eng. & Irish App. 200, is exactly in point. In that case a son had forged the name of his father to a large number of notes. When confronted with the proofs of the crime he admitted it, and although no threat was made to prosecute him the father was informed of the forgeries and told of the consequences to his son, and was asked to charge his own property to secure the amount of the forgeries. Concerning this Lord West-bury in his opinion makes the following remarks:

“The bankers admit, most clearly and distinctly, that they all knew that it was a case of transportation for life. It is perfectly clear that they did not pretend that the father was liable. What remained then as a motive for the father? The only motive to induce him to adopt the debt was the hope that by so doing he would relieve his son from the inevitable consequences of his crime. The question, therefore, is whether a father appealed to under such circumstances, to take upon himself an amount of civil liability, with the knowledge that, unless he does so, his son will be exposed to a criminal prosecution, with the certainty of conviction,caribe regarded as a free and voluntary agent? I have no hesitation in saying that no man is safe, or ought to be safe, who takes a security for the debt of a felon, from the father of the felon under such circumstances. A contract to give security for the debt of another, which is a contract without consideration, is, above all things, a contract that should be based upon the free and voluntary agency of the individual who enters into it. But it is clear that the power of considering whether he ought to do it or not, whether it is prudent to do it or not, is altogether taken away from a father who is brought into the situation of either refusing, and leaving his son in that perilous condition, or of taking on himself the amount of a civil obligation. I have, therefore, in that view of the case, no difficulty in saying that, as far as my opinion is concerned, the security given for the debt of the son by the father under such circumstances was not the security of a man who acted with that freedom of power of deliberation that must, undoubtedly, be considered as necessary to validate a transaction of such description.”

With how much greater force does this language apply to the plaintiff in the present case. In the case cited the party who was induced to sign the instrument was a man of mature years and accustomed to business. In the case at bar it was a helpless woman, without counsel, overpowered by the most distressing situation that a woman could be placed in, and terrified for the future of her husband, her own future, and that of her little children. The case does not differ in principle from Baldwin Co. v. Savage, 81 Or. 379 (159 Pac. 80). In that case the agent for plaintiff informed the father of the embezzler that his son had appropriated his employer’s money, and that he would be prosecuted unless he could obtain security for the amount embezzled. Here, although more guarded language was used, the implication was the same. In the opinion in that case Mr. Chief Justice Moore cites with approval Bentley v. Robson, 117 Mich. 691 (76 N. W. 146), the syllabus of which is as follows:

“A mortgage given by a wife at the instance of her husband, who, unknown to her, had committed a forgery, and thereby defrauded an insurance company, and had upon its discovery been required, though ill, to accompany an officer from Ms house, and, after a consultation with the representative of the company and the prosecuting attorney, in which the latter had suggested that he ask his wife to give a mortgage to the company, had returned home in the custody of the officer, accompanied by the assistant prosecutor, and had told her that she would have to sign the mortgage to save him from jail, and which mortgage was signed by her on this assurance, without her knowing the nature of the charge against him, is void for duress, although no threats were employed by the officers to induce its execution.”

The cases cited in Baldwin v. Savage, 81 Or. 379 (159 Pac. 80), tend strongly to support the contention of plaintiff in the case at bar.

The decree of the Circuit Court is affirmed.

Affirmed.

Mr. Justice Moore, Mr. Justice Bean and Mr. Justice McCamant concur.

---

Rehearing

Modified March 27, 1917.

On Petition for Rehearing.

(163 Pac. 987.)

Decree modified on rehearing.

Mr. Charles A. Johns and Mr. Claude M. Johns, for the petition.

Messrs. Clarke, Skulason & Clark, contra.

Department 2. Opinion by

Mr. Chief Justice McBride.

2. In a petition for rehearing it is urged that the $10,000 advanced by the defendants for the purpose of assisting the Multnomah State Bank of Lents to carry on business was in itself a sufficient consideration to uphold these conveyances. To this it may be answered that, while it may have been consideration so far as Hacon Rostad was concerned, the evidence fails to show that it was any consideration for the execution of the conveyances by Mrs. Rostad, the plaintiff, that she had any clear understanding or knowledge that the $10,000 was to be advanced, or that she received, or was to receive, any benefit from the advancement of this sum. The sole consideration so far as she was concerned was the promise that her husband should not be prosecuted by the officers of the bank, and in making this agreement they “kept the word of promise to the ear, but broke it to the hope,” because they well knew that they would be incapable of preventing the prosecution if the matter were reported to the district attorney, as the evidence shows they knew it would be. Besides this the transactions being illegal for the reasons •shown in the principal opinion cannot be relieved of their taint of illegality by showing that a portion of the consideration was valuable and in itself legal. Upon this proposition we adhere to our former decision.

3. But there is another matter which escaped our attention while preparing the original opinion, but which upon a reconsideration of the evidence has some bearing, we think, upon the defendants ’ equities in this case. It is shown that the purchase of lot 6, in block 9, in South Sunnyside Addition to the City , of Portland, and in Sycamore Acres, in Multnomah County, was made by Hacon Rostad while the forgeries and peculations by him were being carried on, and that the property was taken and always held in his own name until lot 6 was conveyed to Henry Harkson; that Henry Harkson was the owner of the legal title to lot 6 at the time the conveyance was . made to the Oregon Securities Company. It is further shown that the 29-acre tract situated in Multnomah County, and known as Sycamore Acres, was also purchased by him and taken in his own name and so held until the conveyance to the Oregon Securities Company. "While he says they were' purchased with his own money, it is evident they were purchased at the expense of the bank of which he was cashier, and really with money which was practically stolen from them. Under the circumstances we think the plaintiff at the time of the conveyances to the Oregon Securities Company had no equities in this property, and has none now. The proceeds in justice ought to go toward reimbursing the bank, which in the final analysis paid for the property so far as anybody ever paid for it; and as to these properties the plaintiff has shown no such equities as entitle her to a cancellation of the conveyances and other muniments of title to these tracts made by her in December, 1914. As to the 160-acre tract of land situated in Klickitat County, Washington, the evidence shows that it was purchased by Hacon Eostad before the bank at Lents was organized, and as to that tract Mrs. Eostad has whatever interest to which she is entitled under the laws of Washington.

The decree will, therefore, be modified so as to direct the delivery to her of the notes recited in the principal' opinion and declaring her conveyances of the tract in the State of Washington and the power of attorney as to the last-named tract of no effect so far as it relates to her'interest in that tract, but allowing the conveyances to stand as to the two parcels of property first mentioned. The plaintiff will recover her costs in the court below, and neither party will recover costs here.

Modified on Rehearing.

Me. Justice Moore, Me. Justice Bean and Mb. Justice McCamant concur.