Hathaway v. Arnold

The following opinion was filed February 24, 1914: Baeites, J. The plaintiff assigns the following errors upon which he relies to reverse the judgment: (1) The court erred in excluding evidence offered to show that the deed from the Roosevelt Terrace Company to Mabel A. Arnold was forged and void. (2) The court erred in denying the motion of the plaintiff to amend the complaint upon the trial so as to allege that said deed was forged and void. (3) The court erred in denying the motion of the plaintiff, made after the testimony had been taken and before the findings of fact- and conclusions of law had been filed, to be permitted to procure testimony as to the domestic relations existing between Mabel A. Arnold and her husband at the time an alleged settlement was made between them on July 6, 1906. (4) The court erred in making the seventeenth finding of fact and — 26 — in making the conclusions of law based thereon. (5) The court erred in denying tbe motion of the plaintiff after judgment to be permitted to offer in evidence the notice of Us ■pendens which was filed after the action was begun. Some other errors are assigned, but the foregoing raise all of the questions that are argued in the briefs or that were argued at the bar. 1. The first error assigned is not well taken. Three questions were asked which it is claimed would tend to show that the deed under which. Mabel A. Arnold claimed was forged, if the court had permitted .them to be answered. The court did allow one of them to be answered, and the other two were merely preliminary and did not indicate that plaintiff was attempting to prove forgery. Besides, no such issue was raised by the pleadings. 2. The plaintiff during the trial moved to amend the complaint by alleging that the deed to Mrs. Arnold was a forgery. This motion was based on an affidavit made by the plaintiff. The material statements contained in the affidavit were that E. A. Arnold had chemicals in his office which would remove ink stains and that he was an expert in their use; that by the use of such chemicals the descriptions inserted in the deed which was acknowledged might have been erased and others substituted, and that plaintiff verily believed this had been done; that Charles Highfield, one of the witnesses to the deed, would testify that when he signed the deed as a witness it had not been signed by the president and secretary of the corporation, and that he signed without knowing what the deed contained; that Arnold had stated to C. A. Russell that plaintiff would have “a h — 1 of a time getting those lots back,” as he had deeded three of them to his wife and two to his little girl, and that the plaintiff expected to prove that the deed offered in evidence was not acknowledged by 0. A. Russell. The affidavit further showed that defendants refused to produce the deed and relied on the record of the same. — 27 — The evidence at the time the motion was made was to the effect that the deed was lost. The court denied the application on the merits, evidently believing that it would not he in furtherance of justice to grant it. We do not think the court abused the discretion vested in it by sec. 2830, Stats. If all of the statements of fact contained in the affidavit were taken to be true they would not have much tendency to prove the commission of a forgery. It is true the plaintiff states that he believes a forgery was committed, but this is only his conclusion drawn from the facts which he states in his affidavit. It is likewise true that plaintiff stated he expected to prove that Russell did not acknowledge the deed, the record of which was offered in evidence. No affidavit to this effect was made by Russell, ah though he was plaintiff’s principal witness on the trial and admittedly hostile to the defendants. It is pretty evident that if plaintiff could produce any evidence tending to show forgery, he expected to get it from Russell. Russell was equally interested with E. A. Arnold in the E. A. Arnold Land Company, and participated with Arnold in the fraud which had been practiced on' the plaintiff, and apparently shared in the profits of the transaction. Russell had been examined and cross-examined at great length before the motion to amend was made, and the court might well have reached the conclusion that he was not a witness whose testimony was entitled to credence. 3. Long after the parties had submitted their proofs, the plaintiff sought to have the case reopened for the purpose of taking certain testimony. The Arnolds claimed that they had a settlement July 6, 1906, by which certain real property was to be conveyed to Mrs. Arnold on account of moneys furnished from her separate estate to her husband for investment. These lands were part of the consideration which she claimed to have paid the Roosevelt Terrace Company for the — 28 — lots conveyed to her by that company. The proof which plaintiff proposed to offer was to the effect that when the settlement of 1906 was made the parties were contemplating ■divorce proceedings and were agreeing upon a division of property preparatory to the commencement of the divorce ■case. We think it is quite clear that on the showing made the motion was properly denied. 4. The principal contention arises over the seventeenth finding of fact. The appellant insists that the court was wrong in holding that Mrs. Arnold was a bona fide purchaser without notice, and that in any event E. A. Arnold acted as the agent of his wife in the transaction and that his knowledge was imputable to her as a matter of law. A transaction by which a husband fraudulently secures the title to the property of another, and then so manipulates it as to get the title transferred to his wife, and at the same time makes her a good-faith purchaser so that the property is lost to its true owner, is naturally and properly viewed with suspicion by the courts. The transaction here involved has many earmarks that tend to show that it was crooked. There was some direct evidence which indicated that Mrs. Arnold had knowledge of the fraud that had been perpetrated. Legitimate inferences to the same effect might have been drawn from other testimony. We would have been better satisfied had the trial court held that the evidence failed to establish the bona fides of the transaction by clear and satisfactory evidence as the law requires. Horton v. Dewey, 53 Wis. 410, 10 N. W. 599; Fisher v. Shelver, 53 Wis. 498, 10 N. W. 681; Le Saulnier v. Krueger, 85 Wis. 214, 54 N. W. 774; Martin v. Remington, 100 Wis. 540, 545, 76 N. W. 614; Disch v. Timm, 101 Wis. 179, 192, 77 N. W. 196. There is nothing, however, to show that the court did not have the correct rule of law in mind when deciding the case. All of the direct evidence except that given by Russell tended to show that Mrs. Arnold had no knowledge of the fraud and that she had property acquired from her separate estate at the — 29 — time she received a conveyance of the lots and that she paid full value for them by conveying property which she owned to the Roosevelt Terrace Company and by canceling a debt of $802 which that company owed her. It may well he that the court disbelieved Russell’s testimony, for reasons before stated as well as for other more cogent reasons. The court was evidently impressed with the sincerity and candor of Mrs. Arnold and must have been clearly satisfied that, notwithstanding the suspicious circumstances alluded to, she was in reality a good-faith purchaser. Probably no great amount of credence was given to either Arnold or Russell. While we are doubtful about justice having been done, we are not at all •certain that a reversal might not work injustice, and we conclude that the finding should not be set aside unless knowledge of the fraud was chargeable to Mrs. Arnold as a matter of law. Appellant concedes that the evidence showed that Mrs. Arnold had a separate estate. She testified that she had her earnings and the profits derived from them invested in real estate; that she always relied upon her husband in all her real-estate matters; that substantially all of her money had been so invested by him; that she never purchased anything without Arnold having something to do with it; that' he bought tax certificates for her and acted on his own judgment as to what to buy, and that he bought lands with her money and that she did not know whether he took the title in her name or not. If the alleged settlement made between Arnold and his wife in 1906, and the deed made conveying the lots in controversy, be left out of consideration, the proof shows that Arnold had a free hand in investing his wife’s money and that she did not have any accurate knowledge of what was bought with it or who held the title to it. In one portion of her testimony Mrs. Arnold testified that the deal for the lots in question was made entirely through Mr. Arnold. At another time she said she should judge it was, that he was to look after the details for. her, to close up the transaction. — 30 — Her narrative of how she came to acquire the lots was that she owned 406 acres of land in Douglas county which her husband wanted her to convey to the Roosevelt Terrace Company, and that she refused to do so unless she was paid what they were worth; that her husband desired her to take the note of the company for the purchase price and that she refused; that she knew the Terrace Company owned or claimed to own the lots in question, as they were next to the house in which she lived and which she owned; that she offered to trade the lands for the lots and also to cancel an indebtedness from the Terrace Company to her as an additional consideration; that she talked the matter over with her husband, who was president of the corporation, and with Dr. Andrews, who was secretary thereof, and that they finally agreed to a trade, she representing herself in the transaction and they -representing the corporation in which they owned or controlled practically all of the stock. The appellant’s proposition on this branch of the case is that Arnold acted as the agent of his wife in the purchase of the lots in controversy; that he having committed the fraud by which his corporation acquired them he knew all about it, and that there is a conclusive presumption that Mrs. Arnold had actual or constructive knowledge of the acts of her agent, under such decisions as Andrews v. Robertson, 111 Wis. 334, 87 N. W. 190; Brothers v. Bank of Kaukauna, 84 Wis. 381, 54 N. W. 786; Wolf Co. v. Kutch, 147 Wis. 209, 215, 132 N. W. 981; and Pluto P. Co. v. Cuba City State Bank, 153 Wis. 324, 331, 141 N. W. 220. The contention cannot be upheld for two reasons. In the first place the evidence justified the court in finding that Arnold did not act as his wife’s agent in the sale of the lots to her, and it has in substance so found. In the next place, the information which the agent had in this case was of such a character and his relation to the previous transaction was of such a. nature that he would not disclose the fraud that had been perpetrated. On such a state — 31 — of facts there is no conelnsiye presumption of notice to the principal. Cole v. Getzinger, 96 Wis. 559, 576, 71 N. W. 75; Melms v. Pabst B. Co. 93 Wis. 153, 169, 66 N. W. 518; Allen v. South Boston R. Co. 150 Mass. 200, 22 N. E. 917. We have not overlooked an item of evidence to the effect that about November 1, 1907, Mrs. Arnold requested her husband to secure one of the lots in question for her which was adjacent to her homestead. This request was made about four months after the Roosevelt Terrace Company had fraudulently acquired the property, and it does not appear that Arnold paid any attention to the request or that it figured in the transaction of February 1, 1908, when the five lots were conveyed to Mrs. Arnold. Had it been otherwise, under the' rule in Cole v. Getzinger, the agent’s knowledge would not be imputable to the principal as a matter of law. 5. We do not see how the introduction in evidence of the notice of lis pendens could have affected the plaintiff’s rights or changed the result of the suit in any way. The property had been conveyed to Mrs. Arnold before the action was commenced and plaintiff acquired no right in the lots after the deed was given and before it was recorded which he did not possess before. By the Court. — Judgment affirmed. Yiktjb, J., took no part. A motion for a rehearing was denied, with $25 costs, on May 1, 1914.