Fricke v. International Harvester Co.

SANBORN, Circuit Judge (after stating the facts as above). [1, t\ It is the duty of the trial court to direct a verdict at the close of the evidence in two classes of-cases: (1) That class in which the evidence is undisputed; and (2) that class in which the evidence is conflicting, hut is of so conclusive a character that the court, in the exercise of a sound judicial discretion, would set aside a verdict in opposition to it. And when the trial court has directed a verdict upon conflicting evidence the appellate court may not lawfully reverse it, or the judgment founded upon it, unless, upon a consideration of the evidence, it is convinced that it, was not of such a conclusive character that the court below, in the exercise of a sound judicial discretion, should not have sustained a verdict in the opposite direction. Patton v. Texas & Pacific [872] Ry. Co., 179 U. S. 658, 660, 21 Sup. Ct. 275, 45 L. Ed. 361; Woodward v. Chicago, M. & St. Paul Ry. Co., 145 Fed. 577, 578, 75 C. C. A. 591, 592, and cases there cited; Canadian Northern Ry. Co. v. Senske, 201 Fed. 637, 644, 120 C. C. A. 65, 72. [3, 4] The defendant seeks to avoid her contract to pay the plaintiff $3,381.64 on the ground that she was induced to make it by the false representations of the plaintiff relative to the financial standing of Mr. Bard. False representations a,nd acts induced thereby, which constitute actual or legal fraud, are essential to such a cause of action or defense. Indispensable elements of such a fraud are: (1) The materiality of the misrepresentations to the contract or transaction at the time they were made; (2) the misrepresented facts must be facts concerning which the victim is ignorant, and of Avhich a person of ordinary sagacity and diligence in his place would have acquired no knowledge; (3) the misrepresentations must be well - calculated to deceive and to induce the victim to make the contract; and (4) they must have induced him to do so. Farwell v. Colonial Trust Co., 147 Fed. 480, 483, 78 C. C. A. 22, 25. Mrs. Fricke and Mr. Bard had been friends before the death of her husband in 1893, and have been so ever since. She always wanted to help him. From 1904 until March 4, 1912, she had signed agency contracts, guaranty contracts, and promissory notes for and with him at his request, without any' consideration and without any suggestion or representation by the plaintiff or its agents, until she had become indebted thereon for more than $12,000. On March 5, 1912, she knew that she owed on Bard’s notes and contracts $12,000, that $7,094 of this indebtedness arose out of transactions prior to 1911, that this prior indebtedness was overdue, that Bard could not pay it then, and that during the year 1911 he had lost $4,784.83, for which she had given her note in January, 1912. At Bard’s request she signed new notes for the $7,094 on March 5, 1912. She was not so ignorant of Bard’s precarious financial condition that a person of ordinary sagacity and diligence in her place would not have acquired knowledge of it. She tiren met Lyons and Kilbourn for the first time, and it is incredible that she was induced by the statement as to her friend Bard’s financial standing of one of these strangers, acting for the opposing party to the contracts, for her creditor, to sign the renewal notes of that date. On February 1*4, 1913, she knew all she had theretofore known of Bard’s doubtful financial.situation and this much more: That he had not paid the notes for $4,784.83 which she had signed with him in January, 1912, that his indebtedness had not decreased, but -had increased since March 5, 1912, that he could not then pay that indebtedness, that plaintiff would apply for a receiver of his property and business, or for a judgment on the notes which she and Bard had signed, unless its claim was secured by a mortgage upon her farm. She said at first that she would not give the security, but when she found that by making the mortgage she could get such an extension of the time of payment, that Bard would be required to pay only $2,000 a year for six years, and Bard requested her to make the new notes and mortgage, she said, “Can you malee it Mr. Bard?” and he replied, “I have $2,000 to pay [873] on the first payment, and if you give me so many years, I forgot how many years, five or six, I can make it.” Thereupon she signed. It is true that Lyons and Kilbourn told her that Bard was good, that he was worth $5,000 above his debts, that there was no harm, and they would guarantee that. But she was already bound by notes and contracts she had signed to pay the debt for which she gave the new notes and the mortgage. Receivership for her friend or judgments against both of them was the alternative, if she failed to give the security. If she believed the statement of the agents that Bard was good, and if sold out then would have a surplus of $5,000 above his debts, why did she not permit the receivership or the judgments, and thus relieve herself of the entire liability? The evidence in this case is too conclusive to leave a doubt that it was not because of the statements of the agents about the financial situation of Bard, but because of her friendship for Bard and of his request for her help, that she signed the notes and the mortgage. Moreover, neither she nor any person with ordinary sagacity and diligence in her circumstances and with her knowledge of Bard’s repeated failures, his increased indebtedness, and his inability to pay, could have failed to be aware of his precarious financial situation. For these reasons, and also because the representations of March 5, 1912, and P'ebruary 14, 1913, were not made by the agents for the purpose of inducing the making of the note of October 27, 1914, and it was not the natural and probable effect of those representations to induce the making of that note, and those representations were so remote in time and under such different circumstances that it is preposterous to believe that they induced the making thereof, or of the guaranty contract, or agency contract of June 5, 1914, these representations are here laid aside. The note in suit was not given for any part of the indebtedness for whieh the notes and contracts of 1913 and prior years were made. It. was given for the amount due at its date, October 27, 1914, under the agency contract and guaranty contract oí June 5, 1914. There was no representation made at the time the note was given or after June 5, 1914, and all the representation that was made on that day was that of Boltz, the plaintiff’s agent, in the words: “Don’t talk foolish; Bard is good for it; why not sign? We don’t want any fuss about it” At that time Bard had been able, since the mortgage was given in February, 1913, to pay all the liabilities incurred that year and one of the six notes for $2,000, which had been given on February 14, 1913, for the indebtedness of prior years. It is too great a stretch of faith or of imagination to believe that Mrs. P'ricke was so ignorant of Bard’s financial situation and so influenced by this statement of Boltz that it either caused, or assisted to cause, her to sign these contracts or the note she made more than four months later, and the conclusion is irresistible that upon the evidence in this case the court below, in the exercise of a sound judicial discretion, could not have sustained a verdict in her favor. The judgment below must therefore be affirmed; and it is so ordered.