Opinion
No. 2096
August 22, 1939
OFFER OF PROOF — EVIDENCE — BANKS AND BANKING — CROSS-PETITION — PLEADINGS — APPEAL AND ERROR — BURDEN OF PROOF — PROOF OF FRAUD.
1. An offer of proof to be admissible must correspond with and not be broader than the question. 2. Where defendant cross-petitioned for damages resulting from foreclosure of mortgage allegedly procured by national bank by fraud, and witness was asked question regarding value placed on realty by bank directors in fixing amount of mortgage at $4,000, objection to offer of proof that directors valued realty at sum in excess of $8,000, and that rule of Comptroller of Currency prohibited national bank from making a loan on realty in excess of 50 per cent. of its value, was properly sustained, since offer was broader than the question and the rule of Comptroller was inadmissible. 3. Where defendant cross-petitioned for damages resulting from foreclosure of mortgage allegedly procured by national bank by fraud, rule of Comptroller of Currency prohibiting a national bank from making a loan on realty in excess of 50 per cent. of value thereof was not admissible. 4. If several facts are included in an offer of proof some admissible and others inadmissible, then the whole is inadmissible. 5. In action by national bank, wherein defendant set up cross-petition alleging that he had been caused to execute mortgage to bank by false representations of bank's officers and that he had been deprived of his land by foreclosure of mortgage, exclusion of testimony as to value of yearly rental of land was not error, though it might have had some bearing on value of land, in view of defendant's allegation that officers represented that they would collect from lessee of land a sufficient sum over period of five years to pay all the taxes and repay amount of proposed mortgage. 6. The Supreme Court is not the trier of the facts, and where the evidence is conflicting and there is any substantial evidence to support the judgment below, such judgment will be affirmed. 7. In action by national bank, wherein defendant set up cross-petition alleging that he had been caused to execute mortgage to bank by false representations of bank's officers and that he had been deprived of his land by foreclosure of mortgage, burden was upon defendant to sustain his cross-petition. 8. A charge that mortgage was procured by fraud must be established by clear and convincing evidence. 9. In action by national bank, wherein defendant set up a cross-petition alleging that he had been caused to execute mortgage to bank by false representations of bank's officers and that he had been deprived of his land by foreclosure of mortgage, finding of trial court that no false representations were made to defendant by officers at time of execution of mortgage, and judgment dismissing cross-petition, were correct and in accordance with law under evidence.
APPEAL from the District Court, Sweetwater County; H.R. CHRISTMAS, Judge.
Action by the First National Bank of Green River, Wyoming, a United States banking corporation, against James Barrett, wherein the defendant filed a cross-petition. From a judgment for the plaintiff and denying defendant's cross-petition, the defendant appeals.
Before Riner, C.J.; Kimball, J.; and Burgess, District Judge.
For the appellant, the cause was submitted upon the brief of Walter Q. Phelan of Cheyenne.
Defendant James Barrett dealt with T.S. Taliaferro, Jr., throughout the negotiations leading up to the execution and delivery of the note in controversy. Mr. Taliaferro was acting in at least three capacities, viz., he was attorney for defendant James Barrett; he was a director and president of the First National Bank of Green River, and he was also a director, treasurer and manager of the Big Sandy Livestock Company. Acts of fraud by agent, committed in the course or scope of his employment, are binding on the principal, even though the principal was without knowledge of the acts and derived no benefit therefrom. 2 C.J. 849-850. The authorities on this point seem to be unanimous, where the fraudulent act is for the principal's benefit, as in the case where the bank acquires a valuable piece of property for less than one-half of its value. 26 C.J. 1091. False representations as to what will result in the future, when made by one having, or professing to have superior knowledge based on past experience, are false representations of existing conditions. Wendell v. Orchard Company (Mo.) 200 S.W. 747; Trust Company v. Henry (Idaho) 206 P. 175; Kritzer v. Moffat (Wash.) 240 P. 355; 44 A.L.R. 681; 26 C.J. 1091; Daniel v. Daniel (Ky.) 226 S.W. 1070; Kefuff v. Whitley (Mich.) 189 N.W. 76; Bank v. Yelverton (N.C.) 117 S.E. 229; Company v. Wilson (Vt.) 120 A. 895; Lloyd v. Smith (Va.) 142 S.E. 363. Fraud may be predicated upon the non-performance of a promise, where the promise is made for the purpose of accomplishing fraud. 12 R.C.L. 216; Foster v. Dwire (N.D.) 199 N.W. 1017; 51 A.L.R. 21. Defendant appears in the picture in 1931 as the owner of 8,000 acres of land worth from eight thousand dollars to twelve thousand dollars, with an annual rental value of from one thousand dollars to one thousand two hundred fifty dollars. He winds up in 1937 empty handed; he has been entirely deprived of the income from the lands. The plaintiff now has the lands. His relations in 1931 with Mr. Taliaferro were of a confidential nature, being that of attorney and client. He therefore depended upon the representations, agreements and promises made to him on behalf of the plaintiff bank. He relied on such representations and promises and has been defrauded. Appellant therefore prays that the findings and judgment of the lower court should be reversed.
For the respondent, the cause was submitted on the brief of T.S. Taliaferro, Jr. and L.H. Brown, both of Rock Springs.
The record fails to show any fraud practiced upon appellant. Plaintiff's exhibit 18 was received in evidence, but for some reason was not included in the record. James Barrett had already leased the land from the Livestock Company before the execution of Exhibits 1, 2 and 5. The same thing is shown by the facts found by this court in Barrett v. First National Bank, 62 P.2d 318. Important phases of this controversy were disposed of by this court in the case of Barrett v. First National Bank, 62 P.2d 318. It is sometimes said that notwithstanding the rule that all negotiations and inducements anteceding a written contract, are merged in the writing, yet an unscrupulous litigant can get rid of this rule by alleging fraud. We believe that the case at bar furnishes facts which will enable this court to clear up a question which has been giving trouble. In the case of Barrett v. First National Bank, supra, it was held that the fraud alleged must have been coincident or connected with the signing and execution of the written instrument, and that the averment and proof of statements, made at different times prior to the signing and execution, could be used to predicate the claim of fraud in written instruments, complete in themselves and which speak for themselves. The authorities hold that the fraudulent representation must have induced the instrument to be signed. If the first party signed the instrument without undue influence, at the time and place of the signing, he will not be heard to say that he had not read it, or that the instrument was different from what he intended to sign under the circumstances. 13 C.J. 372; Terry v. Mutual Life Company (Ala.) 22 So. 533; Bostwick v. Mutual Life Co. (Wis.) 92 N.W. 248; Pimpinello v. Swift (N.Y.) 170 N.E. 531; New York Central v. Difendeffer, 125 Fed. 696; In re Greenfield's Estate, 14 Pa. 496; Upton v. Tribilcock, 91 U.S. 45; Androus v. St. Louis Co., 130 U.S. 643; In Stone's Estate (N.Y.) 5 N.E.2d 62; Aetna Insurance v. Detjen (Mo.) 211 S.W. 912; Furst v. Merritt (N.C.) 130 S.E. 44; Parker v. Parish (Ga.) 89 S.E. 381; Butler Company v. Campbell (Ala.) 78 So. 644; Finkelstein v. Henslin (Minn.) 188 N.W. 737; Widincamp v. Patterson (Ga.) 127 S.E. 158; Lillie v. Shriver (Ia.) 179 N.W. 633; Midland Company v. Rice (Ia.) 198 N.W. 25. There is no pretense either in the defendant's cross-petition or in the evidence, that Barrett was in any manner prevented by artifice from ascertaining the contents of the mortgage deed and notes. There is not one scintilla of evidence that any trick was perpetrated against the defendant by the plaintiff. The facts are quite similar to those reported in Lovell v. Potts (Ore.) 226 P. 1114; Dunham Lumber Company v. Holt (Ala.) 26 So. 664; Pollock v. Conn. Ins. Co. (Ill.) 199 N.E. 821; 26 C.J. 1165. The writer believes that the Supreme Court can render a real service to the Bar by explaining its holding in Barrett v. First National Bank (Wyo.) 62 P.2d 318, to the effect that it was not claimed that the plaintiff signed or executed the lease through fraud or mistake. The trial court did not err in admitting plaintiff's exhibits 7 and 8, nor in sustaining its objection to the reception of certain evidence offered by the defendant. The appellant has never sought a reformation of the mortgage deed or the notes secured thereby. This fact was referred to in the case of Barrett v. First National Bank, 62 P.2d 319. Upon the whole record, it is respectfully submitted that the judgment of the trial court should be affirmed.
The First National Bank of Green River, Wyoming, brought suit in the District Court of Sweetwater County against James Barrett, setting up two causes of action. Barrett filed an answer and cross-petition. Upon the trial judgment was entered in favor of the Bank for the sum of $54.58, and the prayer of the cross-petition was denied. Barrett brings the case here for review. His only complaint revolves around the finding of the court against him on his cross-petition.
In his cross-petition Barrett alleges that he was the owner of certain lands in Sweetwater County; that the Bank acting through its president and attorney suggested to him that he make and deliver to it a mortgage on said lands and that as consideration therefor the Bank would advance sufficient funds to pay up the delinquent taxes upon the lands and to finance certain litigation then pending and involving the same; that as further inducement to the making of said mortgage the Bank promised and represented that it would collect from the lessee of said lands a sufficient sum over a period of five years to pay all the taxes levied against said property and to repay the amount represented in the proposed mortgage; that the Bank represented that the giving of the mortgage was necessary in order for Barrett to recover a certain certificate of stock in the Rock Springs Grazing Association which the Bank represented to him had been forfeited to association and cancelled by it; that as a result of said promises he executed and delivered to the Bank his mortgage upon said lands; that the Bank did not fulfill or carry out its promises, agreements and representations; that they were fraudulently made; that the mortgage was foreclosed and he was deprived of his land and that he has been damaged in the sum of $7,000.
The District Court made findings of fact and conclusions of law among which was "That no false representations were made to the defendant by the plaintiff acting through its officers at the time of the execution of the mortgage and the notes secured thereby."
The errors complained of by the appellant fall into:
First — The reception and exclusion of evidence.
Second — That the judgment entered is not in conformity with the evidence or the law applicable to the case.
We find no discussion in appellant's brief of the alleged errors in the reception and exclusion of the evidence. He does not point out to us wherein the evidence received or rejected over his objection was erroneous or prejudicial to his rights or had a bearing upon the material issues in the case. He says, p. 16, of his brief, "In addition to the above proven facts the defendant offered to prove" and then follows a statement of the offered evidence, but this is a part of his discussion of the sufficiency of the evidence to sustain the judgment and there is no discussion as to why it should have been received.
Notwithstanding, however, we shall discuss the excluded evidence referred to in the brief.
A witness had testified that the directors of the bank had fixed the amount of the mortgage loan to be made on the lands and that the amount was $4,000. Counsel for appellant then asked the witness:
Q. "And upon what value was that?" An objection to the question on the ground that it was incompetent, irrelevant and immaterial and not within the issues was sustained and then counsel for appellant said:
"We offer to prove by the witness on the stand that at the time of the execution of the mortgage, Plaintiff's Exhibit 5, the lands described in that mortgage and in the petition in this case were valued by the Plaintiff, the board of directors of the plaintiffs, at a sum in excess of $8,000.00. We further offer to prove by the witness now on the stand that the rules and regulations of the Comptroller of Currency governing national banks provides that no national bank shall loan more than fifty per cent of the value of the land, make a loan on real estate in excess of fifty per cent of the value of the real estate; that at the time the mortgage was executed these lands were of a value in excess of $8,000.00, and that at the time of the alleged foreclosure and sale by the sheriff the lands were of a value in excess of $8,000.00." Objection was made to the offer and sustained.
It will be observed that the offer was much broader than the question and did not correspond with it except the first part. Says 64 C.J., p. 30, "an offer of proof must correspond with and not be broader than the question." If the part of the offer as to the value of the lands was admissible certainly the rule of the comptroller that national banks should not loan in excess of fifty per cent of the value of the land was not admissible. Wigmore says, Vol. 1, Sec. 17, "If several facts are included in an offer some admissible and others inadmissible then the whole is inadmissible."
There was also excluded evidence that the value of the yearly rental for the use and occupancy of the lands in question in January, 1931, and again in June, 1936, was $1,250. It might have had some bearing upon the value of the land; for land which will rent for $1,250 per year must be more valuable than that which rents for $100, but in view of the issues presented by the cross-petition the value of the land is unimportant, or at least is not controlling. It was immaterial what the land rented for — whether $100 or $1,250, in view of the allegation in the cross-petition "that the plaintiff agreed, promised and represented * * * that it would collect from the lessee of said lands * * * a sufficient sum over a period of five years to pay all the taxes assessed against the property and to repay the plaintiff the amount represented in said proposed mortgage." If it so agreed then it was bound to do so regardless of the rental value of the land and what the rental value was is of no consequence.
Coming now to the specifications of error that the findings of the lower court are contrary to the evidence may we say what we have many times said before that this court is not the trier of the facts, that if the evidence is conflicting and there is any substantial evidence to support the judgment below that judgment will be affirmed. Counsel for the appellant must appreciate, too, the fact that the burden was upon him to sustain his cross-petition and that he charged fraud which must be established by clear and convincing evidence.
We see no useful purpose to be served in discussing at length the evidence in the case. It was all heard, sifted and weighed by an able and conscientious trial judge and we can not but feel, after reviewing the record, that the findings made by him and the judgment entered in the case are correct and in accordance with law.
The judgment of the District Court will, therefore, be affirmed.
RINER, Ch. J., and KIMBALL, J., concur.