Peoples State Bank of Cannon Falls v. Drake-Ballard Co. , 164 Minn. 175 ( 1925 )

¹ Reported in 205 N.W. 59. Defendant appeals from an order refusing to amend the findings or grant a new trial.

Plaintiff, a bank, purchased from defendant, a corporation engaged in the business of buying and selling bonds, warrants and other securities, certain warrants issued by the city of Edgeley, North Dakota, paying therefor $4,000, their face value. When the warrants fell due, payment was refused. Plaintiff employed attorneys, and negotiations with defendant took place looking to the recovery of what plaintiff had paid. Defendant concedes that it was agreed that plaintiff, instead of suing it, as threatened, should sue the city of Edgeley in the courts of North Dakota to collect the warrants and that defendant should render aid through the counsel of its attorneys and pay court costs. Such suit was thereafter started in the summer of 1921. The warrants were held void and unenforceable by the court of North Dakota in August, 1922. Thereupon this action was brought on two grounds, viz: That the warrants were sold upon misrepresentation; and that in the negotiations mentioned the agreement was reached not only that plaintiff should bring suit, as stated against the city of Edgeley, but that, in the event of that suit being determined adversely to plaintiff, defendant would then take the warrants off plaintiff's hands, return to it the money paid for them with interest, and also pay the attorneys' fees expended by plaintiff in the action. The court found no misrepresentations in the sale of the warrants, but found the agreement as alleged by plaintiff and ordered judgment accordingly.

As we view the appeal its determination turns on the proposition whether or not the finding alluded to has adequate support in the record. The negotiations between the parties hereto were conducted by Mr. George H. Selover and Mr. Mansfield on behalf of plaintiff and Mr. Hassett representing defendant. After the North Dakota litigation started, Mr. Williams also looked after the interest of defendant to some extent. All were lawyers. Those for plaintiff took the position from the start that the warrants were invalid, demanded that defendant take them back, and threatened suit. Mr. Hassett desired that suit be brought against the city of Edgeley in North Dakota. This is admitted and defendant concedes the negotiations went to the extent of an agreement as first above stated. But Mr. Hassett positively denies that it was agreed that defendant should take the warrants off plaintiff's hands and refund the money received or pay attorneys' fees in the event there was no recovery in the North Dakota suit. Mr. Williams denies he ever met either of plaintiff's attorneys personally before the result of the North Dakota suit was known. Mr. Selover and Mr. Mansfield as stoutly assert that the agreement they made with Mr. Hassett was as found by the trial court. Neither assert with any assurance that Mr. Williams was then present, but claim he was in their office in subsequent interviews concerning the matter. Counsel for defendant frankly stated in the argument that, were there no other evidence than the oral testimony of these four witnesses who represented the parties in these negotiations, this court would not be justified in disturbing the findings. Mr. Selover was not sure of any date. Mr. Mansfield thought the agreement, as claimed by plaintiff, was made in the first part of June, 1921. The court found it was made on May 19, 1921. This likely is an inadvertence of no importance, for a letter of that date from defendant to plaintiff and a copy thereof mailed to plaintiff's attorneys indicates that no agreement has as yet been concluded, for it contains an offer of aid and court costs. Mr. Selover testified that the agreement was made subsequent to that letter coming to their attention. The suit in North Dakota was started after July 20 and before October 25, 1921, and was decided in August, 1922.

Now the point of defendant's contention that the record does not sustain the finding of the agreement as alleged by plaintiff is this: That, after it was supposed to have been made, Mr. Selover, who testified to participating in making it, wrote two letters, one of date October 25, 1921, and one of date November 5, 1921, which contain no reference thereto — in fact, their tone refutes the existence of any agreement of the sort now claimed. The apparent conflict between the letters and the writer's testimony is explainable only on the theory, inferable from the letters, that some evidence had lately come to the writer's notice which tended to establish a cause of action against defendant for actual misrepresentations inducing the sale of warrants to plaintiff, and that this might prevail on defendant to rescind the sale and refund the money without waiting for the outcome of the North Dakota suit. Mr. Mansfield, who testified most clearly as to the agreement, wrote no letter impeaching his testimony, nor is there anything showing that he knew of the two letters mentioned.

It is to be regretted that attorneys of ripe experience, as all of the four were, should not have reduced the agreement, whatever it was, to writing. But courts have to determine cases upon such evidence as the parties adduce. We are mindful of the fact that the burden of proof was upon plaintiff, and that written evidence is more reliable than that depending upon the recollection of past events apt to be somewhat swayed, though perhaps unconsciously, by interest. And respondent is not aided by the impossible hypothesis advanced that the agreement was made after the two letters were written. Notwithstanding all that, we think there is nothing in the two letters so contradictory of the oral testimony of plaintiff that this court should interfere with the finding of the learned trial judge. Anticipating, as plaintiff's counsel clearly did, defeat in the North Dakota suit, their efforts to induce a rescission of the sale on other grounds than the alleged agreement and thus avoid the delay necessarily involved in getting back the money thereunder does not appeal to us as unreasonable. The evidence sustaining these findings seems to be governed more by the case of Peterson v. Mystic Workers of the World, 141 Minn. 175,169 N.W. 598, than by Voge v. Penney, 74 Minn. 525, 77 N.W. 422.

We cannot concur in appellant's view that there is either want of consideration for the alleged agreement or that it comes within the statute of frauds. A good-faith dispute as to the validity of a claim is sufficient consideration for its compromise or settlement. Demars v. Musser-Sauntry L.L. M. Co.37 Minn. 418, 35 N.W. 1; Peterson v. Hegna, 158 Minn. 289,197 N.W. 484. That a bona fide dispute here existed, we need but point to the able arguments, fortified by numerous authorities, which counsel present pro and con on the proposition of an implied warranty of collectibility and validity arising upon the sale of warrants such as these which on their face do not pledge the general credit of the municipality for their payment. The avoidance of a lawsuit upon an issue which is uncertain is an adequate consideration, to say nothing of the promise to carry on a suit in the name of the bank against the city of Edgeley to test the validity of an issue of warrants defendant had underwritten and sold. This included other warrants than those disposed of to plaintiff. The agreement was not to pay the debt of another and within the statute of frauds. It was rather in the nature of a rescission of the sale of the warrants made dependent on the contingency of the result of a lawsuit to be undertaken by plaintiff, and out of which defendant expected to derive some benefit and the carrying on of which was of some detriment to plaintiff. Crane v. Wheeler, 48 Minn. 207, 50 N.W. 1033; Emerson v. Slater, 22 How. (U.S.) 28, 16 L. ed. 360.

In view of the conclusion we reach in respect to the findings of fact, a decision on the point of implied warranty as a basis of recovery is unnecessary and, in a sense, would be obiter, though the able briefs thereon are inviting.

The order is affirmed.