Iowa County Bank v. Graber

The following opinion was filed January 12, 1926: Doerfler, J. For many years prior to 1923 A. T. Graber was engaged as a sole trader in the cattle business, and no claim is herein made that the defendant was during such time interested in his business. The defendant was a man of large means, being the owner of 1,300 acres of land, and his financial condition was such, as testified to by the cashier — 282 — of the bank, that the bank would loan him $15,000 or $20,000 upon his own unsecured note. A. T. Graber’s signature to the $15,000 note was of little value as security, but made manifest the purpose for which the loan was made, namely, to secure for him ample funds to enable him to carry on the season’s operations of his business. He therefore became the principal debtor and the defendant the guarantor. The application for the loan was made by A. T. Graber; was in accordance with similar applications previously made by him for his own individual business-, and at a time when cattle dealers looked to- the bank for financial assistance to carry them over the season during which they prepared cattle for market. This general course of business was fully known to- the directors of the bank. The defendant had been a director of the plaintiff bank prior to 1923 for a period of over twenty years, and the business affairs of A. T. Graber and other cattle-men were periodically discussed when applications were made for loans. That the directors and officers of the bank were fully aware of the purpose of this $15,000 loan, and that it was for the benefit of A. T. Graber exclusively, is made manifest by the fact that the total amount was credited to his individual checking account, in which the defendant had no interest and over which he had no control. The amount when so credited was checked out by A. T. Graber from time to time to meet his obligations incurred while purchasing cattle; and from prior, experiences of the cashier and other officers of the bank it can readily be assumed that the bank was fully aware and had knowledge of the purpose for which these checks were issued. The undisputed evidence in the case conclusively shows that the defendant was not interested in his son’s business; that the cattle purchased belonged to the latter and remained his property until they were sold; that they were pastured upon the lands either owned by A. T. Graber or leased by him, or on- lands which had been assigned to him, or which he had received permission to use — 283 — for pasturage purposes; and that on the sale of the cattle the defendant received'no portion of the profits. It may be admitted that -evidence of transactions subsequent to the $15,000 loan would be of little value if it appeared from the evidence that the defendant and his son obtained the loan to further a joint enterprise, and'if the bank in fact relied upon representations which it had a right to rely upon with respect to an alleged joint enterprise. But viewing the testimony of the plaintiff’s witnesses as a whole, and taking into consideration all the surrounding facts and circumstances, no other conclusion can be arrived at excepting that the' bank fully knew that the loan was for the sole benefit of A. T. Graber and that the defendant had no interest in the proceeds of the loan or in the transactions subsequent to the loan. At any rate, any interest which the defendant might have had in procuring this loan, or any benefit which might have accrued to him, amounted to a mere incidental interest or benefit, and therefore was not the main object and purpose for which this loan was procured. But assuming that the defendant did have an interest in this loan, what consideration did the bank part with, and what advantage accrued to the defendant in the transaction ? There is no evidence in the case that the bank would have denied this loan ho either the defendant individually or to A. T. Graber and the defendant. The defendant’s individual note, unsecured, would have represented ample security to the bank, on account of his large financial ability. The responsibility of the defendant would have also amply secured a joint note. The alleged oral promise, therefore, of the defendant to assume the individual indebtedness of A. T. Graber, clearly amounted to an undertaking to pay the debt of a third party without consideration; and such obligation, not being in writing and expressing a consideration and not being signed by the person charged, plainly brings it within the purview of the statute of frauds above referred to. — 284 — The verdict of the jury was solely based upon the testimony of the directors of the plaintiff bank, from which it concluded that the defendant and his son were engaged in a joint enterprise; also- from a statement alleged to' have been made by the defendant to the directors that the cattle would be pastured upon his land and that they would be his cattle, and that they, the defendant and son, needed money with which to make money. These statements are not controlling, and, in view of all the evidence in the case and the surrounding facts and circumstances, have but little or no probative value. In McCord v. Edward Hines L. Co. 124 Wis. 509, 511, 512, 102 N. W. 334, the opinion, rendered by Mr. Justice Dodge, referring to sub. 2 of sec. 2307, Stats. 1898, being the statute involved herein, uses the following forcible and significant language: “This provision comes to us from the original statute of frauds, 29 Car. II, of which it has been said by an enthusiast that every line was worth a subsidy, and by a cynic that every line has cost a subsidy to interpret. The latter- statement has been gaining force as the ingenuity of greed has, through centuries, been strained to escape this apparently plain provision, until its application is now surrounded by such a cloud of decisions as to defy exhaustive -examination.” The statute of frauds was enacted to prevent perjury, and long before its enactment it had become apparent that ingenious devices and schemes had been resorted to by creditors to shift an indebtedness of an insolvent or impecunious debtor upon third persons not in any way involved or interested in the original debt. The original statute is couched in plain and unambiguous language. That it was a wise provision is made manifest by its retention for centuries in England and its enactment in the various states of the Union. The difficulties encountered in its enforcement do not arise from the language used, but from an application — 285 — of the statute to'the infinite complicated situations of facts in cases which require a determination of whether a given case lies within or without the purview of this enactment. A casual examination of the text-books, the reference books, and the authorities will reveal a conflict of views which are utterly irreconcilable, and yet these divergent views are supported by apparently sound logic and have been entertained by learned and able jurists and text-writers. Qrlotations of general principles contained in these decisions are of little value unless the facts are closely scrutinized and analyzed. An examination of the cases in Wisconsin discloses that this court has adopted the rule which is tersely embodied in the syllabus in the case of Clapp v. Webb, 52 Wis. 638, 9 N. W. 796, which reads as follows: “The mere fact that an advantage may incidentally result to the promisor from his oral promise to pay the debt of another is not sufficient to take it out of the statute of frauds, but there must be other evidence that such advantage was the object or consideration of the promise.” See, also, Emerick v. Sanders, 1 Wis. 77; Shook v. Vanmater, 22 Wis. 532; Vogel v. Melms, 31 Wis. 306; Young v. French, 35 Wis. 111; Hoile v. Bailey, 58 Wis. 434, 17 N. W. 322; Rietzloff v. Glover, 91 Wis. 65, 64 N. W. 298; Commercial Nat. Bank v. Smith, 107 Wis. 574, 83 N. W. 766. As above stated, any advantage or benefit in the instant case accruing to the defendant was a mere incidental one, and not sufficient to take the case out from under the statute. It would also seem, that, if it be deemed that the statute is not operative under, the peculiar facts and circumstances of this case, it would become almost completely emasculated, and in the future would fail of the original purpose for which it was enacted. Our conclusion herein is not based upon any view entertained that the testimony of the plaintiff’s witnesses is false — 286 — or perjured, but upon a construction of that testimony in view of all the surrounding facts and circumstances of the case. By the Court. — The judgment is reversed, and the cause is remanded with directions to dismiss the complaint. A motion for a rehearing was denied, with $25 costs, on March 9, 1926.