Luetzke v. Roberts

Siebecker, J. Error was assigned upon the court’s finding that two of the parties, appearing on the subscription contract [103] as purchasers of two shares in the company about to be organized for the purchase of the horse, were not bona >-fide subscribers, but that they had made such subscription with the express understanding between them and the defendants who owned the horse that they were not to be liable on such subscriptions. The evidence adduced on this issue is conflicting, but we can find no such clear preponderance of the evidence in support of appellants’ claim as to warrant reversing the conclusion of the trial court thereon. The effect of the transaction can scarcely be in doubt in view of the conditions under which the plaintiffs appended their signatures to the subscription agreement. The court finds the fact, by consent of counsel for all the parties to the action, that “plaintiffs [signed] the subscription contract for a share or shares of stock in the proposed horse company, upon an understanding and agreement between each of them, respectively, and the Westfield Importing Company that no signature to said contract would be binding until bona fide subscribers thereto for thirty shares had been obtained by said Westfield Importing Company.” An all-important fact to plaintiffs was that all the persons represented as being subscribers to this undertaking would be mutually bound to pay the $3,000 purchase money of the horse, hence their insistence that they were not to be liable on the subscriptions until the mutual agreement was subscribed by bona fide subscribers under the agreement with defendants. When defendants presented a list of persons, some of whom were not subscribers, and thereby induced plaintiffs to execute the notes in question, their action was a wrong, fraudulent in its nature, and rendering the transaction based on it void as against plaintiffs. The result is that the subscription contract, pursuant to which the notes were given, never became a binding agreement on the bona fide subscribers, and therefore could not be a valid basis for the notes. It is urged that the false representation by defendants’ agent, to the effect that all [104] subscribers to tbe subscription contract who had not signed-the notes when plaintiffs executed them would sign them or pay their amount in cash, and, in case of their refusal, payment would be enforced, was not a declaration on which plaintiffs could rely as a condition of executing the notes in question. This is urged upon the ground that it was merely an expression of opinion concerning the probable course of business, and was not a positive statement of fact. We cannot accede to this claim. The statement was that the parties whose names were on the subscription contract and who had not signed the notes when plaintiffs executed them were then ready and willing to become joint makers of the notes, and that if they did not so sign the notes they would pay in cash for the shares fox which they had apparently subscribed. These representations would be a material consideration in inducing plaintiffs to obligate themselves to join in the purchase of the horse, and they no doubt, were thereby induced to sign the notes. Their ^falsity being shown, it makes the representation a fraudulent one and renders the transaction voidable. Hodge v. Smith, post, p. 326. We deem well founded the trial court’s conclusion that these fraudulent acts infected the whole transaction, and rendered voidable the notes given by plaintiffs to the defendants Roberts, Legget, and Hanen. It is, however, claimed that the court erred in awarding judgment for damages. The action is one planted in equity, demanding cancellation of the notes upon the ground of fraud. Appellants contend in the first place that, since the service of the summons on the principal defendants was by substituted service, the action must be treated as one in rem, and no personal judgment could properly be rendered against them. The summons was served as claimed, but it appears that these defendants appeared in the action and answered generally in the case, denying the allegations of fraud and insisting upon the validity of the notes; and raised no question by their an [105] swer as to tbe rights of transferees of tbe notes. With such an answer they appeared at tbe trial and litigated all tbe issues raised by their answer. This appearance gave the court jurisdiction of them personally, and empowered it to render whatever personal judgment was warranted by tbe facts and circumstances adduced within tbe litigated issues of tbe cause. Tbe effect of such appearance is to waive tbe want of personal jurisdiction under substituted service, and operates to confer jurisdiction as to them, and thus changes tbe character of tbe proceeding from one in rein to one in personam. Pennoyer v. Neff, 95 U. S. 714; Upper Miss. Trans. Co. v. Whittaker, 16 Wis. 220; Heeron v. Beckwith, 1 Wis. 17; Heidenheim v. Sprague, 5 Wis. 258, and cases in note; Jarvis v. Barrett, 14 Wis. 591; Anderson v. Coburn, 27 Wis. 558; Damp v. Dane, 29 Wis. 419; German Mut. F. F. Ins. Co. v. Decker, 74 Wis. 556, 43 N. W. 500; 2 Ency. Pl. & Pr. 646 et seq., “Waiver of defective service.” Appellants further urge that, if tbe court acquired jurisdiction of tbe persons of these defendants, it bad no authority to enter a personal judgment against them, because such an adjudication improperly determines rights of tbe parties wholly outside of tbe issues presented. Tbe court found that plaintiffs bad ground to and did believe, at tbe time this action was commenced, that these defendants Roberts, Legget, and Hanen owned and held these notes; that they bad not pledged or hypothecated them; that they properly demanded that defendants be commanded to bring them into court to cancel and annul them; and that these defendants, through their further wrongful and fraudulent acts, had •transferred them to the defendant Nave, that he in turn transferred them to the defendant b$nk, and that both of, them were bona fide purchasers for value; that no relief of an equitable nature is now available, and that the only relief now available to offset plaintiffs’ liability on the notes is a pecuniary compensation. These facts present a case wherein the ^equitable relief sought cannot be awarded, and the only rein106 edy available is tbe one of damages. This brings the case-within the principle followed in a number of decisions of this-court, where the cause was retained and such legal remedy awarded as the facts and circumstances proven justified. In. the case of Cole v. Getzinger, 96 Wis. 559, 71 N. W. 75, in. treating of this subject, it is said: “It appears to be well settled that where a court of equity obtains jurisdiction for the purpose of granting some distinctively equitable relief, such as . . . the -rescission or cancellation of some instrument, and it appears from facts disclosed at the hearing, but not known to the plaintiff when he brought his suit, that the special relief prayed for has become impracticable, and the plaintiff is entitled to the only alternative relief possible,- — of damages, — the court may, and generally will, instead of compelling the plaintiff, to incur the double expense and trouble of an action at law, retain the cause, decide’ all the issues involved, and decree the payment of mere compensatory damages (Pom. Eq. Jur. § 237); especially since,, by the Oode, the distinction between courts of law and courts of equity has been abolished.” Hall v. Delaplaine, 5 Wis. 206; Hopkins v. Gilman, 22 Wis. 476; Combs v. Scott, 76 Wis. 662, 45 N. W. 532; Stevens v. Coates, 101 Wis. 569, 78 N. W. 180; Gates v. Paul, 117 Wis. 170, 94 N. W. 55. It is urged that compensatory damages cannot be awarded because they are not ascertainable under the facts found, and that plaintiffs must wait until they have made actual payment of the notes. This contention cannot be sustained. The court properly held that these notes in the hands of bona fide purchasers for value established a liability according to their terms against these plaintiffs, and that such liability was-measured by the amount they call for on their face, with interest. We deem this the correct measure of damages, in the-case, and within the principle of the case of Lyle v. McCormick H. M. Co. 108 Wis. 81, 84 N. W. 18. These considerations are decisive of the questions presented. We find no error in the record. By the Court. — Judgment affirmed.