Grauman, Marx & Cline Co. v. Krienitz

MaRShaul, J. The situation, in brief, stating it as favorably for respondent as the moving papers will reasonably permit of, is this: Respondent and its agent believed, as above indicated, that when appellant signed the guaranty, he was of age, and, so believing, accepted him as security for payment of the indebtedness afterwards incurred. It did not, at the time the note was given, concede that he was not liable on the guaranty. When the note was signed respondent’s agent believed that, if appellant were not of age in the first instance, he had arrived at his majority in the meantime. Respondent in the last instance, as in the first, was led to do what it did, by appellant, either by express declaration or otherwise, suggesting that he was of - age and, manifestly, for the purpose of inducing the former to so believe. Respondent relied upon such belief in all that it did to enforce collection of the claim up to the time appellant claimed, in the supplementary proceeding, that he was still in his minority. It incurred danger of loss by selling goods on the faith of the guaranty and incurred loss to a considerable amount in reliance upon the note, if he shall'be heard, successfully, to ■claim he was a minor when he signed the paper and when he — 560 — petitioned for leave to defend against the same notwithstanding the judgment. If he were an adult his laches after service of the summons would justify the refusal to grant relief. An application to set aside a default, in a case of this sort, notwithstanding the minority of appellant, is addressed to the sound discretion of the court, but such discretion must he guided by the settled policy of the law, that a person under disability is entitled to reasonable opportunity to be heard in court by a qualified representative during his disability, or by himself after the disability shall have been removed. Such exceptions as there are to such policy are so rare that the rule is well nigh universal. So, whether the trial court failed to-exercise its discretion in this instance, either because of misconception of the law or abused it by too severe an application thereof, or by misconceiving the effect of the facts, must be-answered from the standpoint of the well settled policy referred to. That a minor defendant should be represented by a guardian ad litem,, is too familiar to require to be more than stated. It is laid down in the elementary works thus: “It is an almost universal rule that where an infant is a defendant a guardian ad litem, must be appointed for him to-conduct the defense. The reason of this rule is plain, for it is evident that the privileges of an infant with regard to contracts and other transactions would be of slight utility if he-were liable to be dragged into court and exposed there, unprotected- in his ignorance, to contend with learning and experience. It is to protect him against such danger that the-law assigns him a guardian in the suit.” 10 Ency. Pl. & Pr. 618. Going back to the guaranty on the note, it is conceded, as-the fact is, that the contract of a minor, other than for necessaries, is either void or voidable at his option, exercised within a reasonable time after his coming of age. Such a contract-, not for necessaries, is, as a rule, voidable by the minor at his option, reasonably exercised, upon his coming of — 561 — age and restoring tbe former situation as far as be is reasonably capable of doing so. There is an exception to that, generally recognized by tbe courts, including our own, of wbicb Knaggs v. Green, 48 Wis. 601, 4 N. W. 760, and Thormaehlen v. Kaeppel, 86 Wis. 378, 56 N. W. 1089, are illustrations. That is this, a minor may, in mating a contract beneficial to himself, under some circumstances, preclude himself, by equitable estoppel, from subsequently avoiding it on the ground of his infancy. The basic circumstance rendering that applicable is actual fraud; express representation of capacity to contract, inducing the adverse party to enter into the agreement. Many illustrative cases are cited in the brief of counsel for respondent. The following are a few of them, and others: Hayes v. Parker, 41 N. J. Eq. 630, 7 Atl. 511; Commander v. Brazil, 88 Miss. 668, 41 South. 497; Ostrander v. Quin, 84 Miss. 230, 36 South. 257; Whittington v. Wright, 9 Ga. 23; Sanger v. Hibbard, 2 Ind. Terr. 547, 53 S. W. 330; Steed v. Petty, 65 Tex. 490; Williamson v. Jones, 43 W. Va. 562, 27 S. E. 411; Harmon v. Smith, 38 Fed. 482. An examination of the cited cases will demonstrate that the rule that an infant may bind himself by his actual fraud, but not by mere conduct or silence when he ought to speah, is very guarded. It forms an exception to the one that an infant or other person under disability cannot bind him or herself by estoppel. It is confined to cases where the infant, though under legal discretion, is in fact developed to the condition of actual discretion. It is further confined to cases of actual fraud and where the contract or transaction is beneficial to the minor. The rule being purely of equitable nature, it may be that, in a case of great hardship to the adverse party and substantially the same discretion on the part of the minor as if he were of age, the equity of the law will stand in the way of the latter to prevent such injury by closing the judicial ear to his appeal for assistance to avoid his — 562 — obligation. But tbe decided cases do not furnish illustrations of such extension. However, tbe precedents would not limit tbe power of tbe court to extend the principles of equity where necessary to effect justice. This court recognized tbe general rule in Thormaehlen v. Kaeppel, supra, in these words: “We suppose, of course, that a court of equity would refuse to relieve an infant of bis contract if bis own fraud induced tbe other party to enter into it.” And further, in effect, but if tbe minor merely fails to impart information of bis age, unasked, there being no misrepresentation of fact and po artifice employed to mislead the other party, be is not guilty of that species of fraud which will estop him from pleading bis minority to avoid tbe contract. Tbe court bad no need at that point, to deal with tbe other feature essential to create tbe estoppel, viz., that tbe contract must be beneficial to tbe minor. So one might be misled by reading tbe court’s observation, which was not so guarded as to suggest such essential. Enough has been said to demonstrate that a minor cannot, unless in some extreme cases of which this is not a type, even by actual fraud, estop himself from pleading bis minority to avoid a contract which is not beneficial to him; as in case of his becoming a mere surety or accommodation maker of a promissory note. The element of actual discretion on the part of the minor, characterized the instant transaction, but not that of beneficial nature to the minor, nor such extreme hardship to the other party as to warrant the doctrine of estoppel being applied. The learned trial court, quite likely, was misled by the general language in Thormaehlen v. Kaeppel, supra, and by overlooking the closeness with which the doctrine that a minor may estop himself by his fraud from asserting his infancy to avoid his contract, is fenced about: (1st) By necessity for actual discretion; (2d) necessity for actual fraud; (3d) necessity for beneficial nature of the transaction to the — 563 — minor. Had these-essentials been appreciated fully, the application for leave to defend against respondent’s claim, notwithstanding the default, would probably have been granted. True, a judgment rendered against a minor where he is not represented by a guardian ad litem, is not void. Such representation is not jurisdictional, notwithstanding absence of it the judgment is proof against collateral attack It can only be avoided by appeal for error, where the minority appears of record, or otherwise by motion or other direct proceeding in the action seasonably resorted to. This, of course, contemplates jurisdiction obtained by proper service of the summons as required by law. There was such service in this case. "While the mere neglect, regardless of the cause of it, the court having jurisdiction to have a minor defendant represented by a guardian ad litem, is not jurisdictional, the rule indicated obtains- by the great weight of, though not the universal authority. 1 Black, Judgments, § 193, note 34. The federal supreme court is in the former class. O’Hara v. MacConnell, 93 U. S. 150. Some suggestions in authorities the other way are regarded as rather inconsequential. So appellant took the proper course to avoid the'effect of the judgment. He could not have reached the infirmity by appeal, since it does not appear of record. There is no question but that his motion was seasonably made as to the mere element of time. There was no element of actual fraud which stood in the way. Mere acquiescence, while under disability, was not sufficient to justify denying the motion. True, the court might, for sufficient equitable considerations in such a case, deny relief. But the policy of the law to afford a minor a day in court,'properly represented by guardian ad litem, or after removal of the disability to be heard, is so general that something of an extraordinary character would be required to create an exception; something far more serious than such mere inconvenience and cost of litigation to the adverse party, as in this case. It is not to be understood that judgments characterized by — 564 — irregularity, as in this case, can always lie set aside either during disability or after it has been removed.. In ease, notwithstanding the irregularity, the minor suffered no substantial injustice, relief is not, necessarily, grantable. That, of course, would not include a case like this where there was no enforceable liability in the first instance. It follows that the order appealed from must be reversed, and the cause remanded with directions to grant appellant’s motion. By the Cowri. — So ordered.