Knott v. Tidyman

Winslow, J. These cases present phases of human nature not pleasant to contemplate. A man, weak in mind and fond of liquor, falls into the hands of a designing and shrewd man whom he thinks to be his friend. The supposed friend plies him with liquor, plays on his fears as to the action of supposed creditors, threatens and cajoles him, until, in a state of intoxication and not realizing what he is doing, the victim at various times signs notes, chattel and real-estate mortgages, covering all his property, amounting to more than $3,000, without a shadow of consideration. That this constitutes fraud cannot be doubted. If courts cannot relieve against such impositions, they fail in an important part of their mission. But they can and do frequently relieve against just such machinations. Kuelkamp v. Hidding, 31 Wis. 503. See cases cited in the opinion of Dixon, C. J. In the hands of Boby or his wife these securities were ' invalid for two reasons: First, because made.absolutely without consideration; and, second, because they are the fruit of imposition, oppression, and undue advantage obtained by a cunning, sharp nature over a weak mind. They were conceived in sin and born in iniquity. But it is claimed that they are now in the hands of bona fide purchasers for value, and consequently the defenses of fraud and lack of consideration are no longer available. We shall not detail the evidence bearing on the manner in [168] which these securities came into the possession of the plaintiffs. They came through the hands of P. B. Barnes, who obtained them in some manner and at some time from the Bobys. The court found, and we agree in the conclusion, that Barnes paid no value for them, so that he cannot be considered a bona fide purchaser. The evidence shows, also, to our satisfaction, and evidently to the satisfaction of the court below, that Barnes had notice of the equities claimed by Tidyman as early as the middle of September, 1888. He obtained this knowledge by being employed by the Bobys to defend an action in equity brought by Tidyman in March, 1888, to set aside and cancel the mortgage and its accompanying note, also the $125 note, on the ground of the fraud practiced by Boby on Tidyman. Then seems to have followed the jugglery by which Barnes endeavored to put the securities into the hands of the plaintiffs as bona fide purchasers. But the evidence shows they are not bona fide purchasers. Barnes was confessedly the agent of John Knott for the investment of his moneys, and had been such since May, 1888. The evidence shows that he attempted to invest part of John's funds in the mortgage and part in the notes. Just when this attempted investment of John's funds took place is not clear, but the evidence entirely satisfies us that it was after Barnes had knowledge of the fraudulent character of the securities. The $500 note and the $125 note were in the possession of the First National Bank of Wau-pun, as collateral to a note given by the Bobys, from November 10, 1887, until September 18, 1888, so they could not have been used by Barnes until after that date. The $700 note is indorsed, “ Knott collateral, Oct., ’88.” The conclusion is very strong to pur minds, from the evidence, that the alleged interest of John Knott in these notes and in the mortgage was not acquired until after September 18, 1888, and after Barnes had full notice of the equities of [169] the defendants. Notice to Barnes was notice to his principal. It was fresh in Barnes' mind; it is incredible that he could have forgotten it. Brothers v. Bank of Kaukauna, 84 Wis. 381. It is strenuously denied by the plaintiff James that Barnes was ever his agent for the investment of his moneys, but that he {James) obtained his interest in the securities by deals made by him "personally with Barnes, and without notice of any equities. Even if this were the fact, the plaintiff James, under his own evidence, would not be a bona fide purchaser of the notes not secured by the real-estate mortgage. He testifies substantially that they were turned over to him by Barnes in October or November, 1888, as - collateral security for the paymént of a pre-exist-ing indebtedness owing from Barnes to him, and that two of them, at least, were past due. Under these circumstances he was not a bona fide purchaser of the notes. Jenkins v. Schaub, 11 Wis. 1; Bowman v. Van Kuren, 29 Wis. 219. There are many circumstances in the case which tend to throw doubt on the direct testimony of Janies that Barnes was not his agent for the investing of money. It seems that James, John, and their mother had funds in the spring of 1888 derived from the settlement of the estate of the father of James and John. The shares of John and the mother were confessedly handed over to Barnes to invest and reinvest. Bonnes was the attorney of the estate, and James was the administrator. James admittedly gave securities to Barnes to collect. The note and mortgage were left in Barnes' possession after the alleged transfer to James. There was direct testimony to the effect that James admitted that Bonnes had all their money to invest. From- all the evidence we conclude that the testimony shows Barnes to have been the agent of James as well as John, and consequently that James is also chargeable with [170] the knowledge that Barnes had of the fraudulent character of these securities. No other questions require consideration. By the Gourt.— Judgments affirmed.