Williams v. Hasshagen

The superintendent of hanks, having taken charge of the affairs of the State Savings and Commercial Bank, an insolvent corporation, commenced this action against Adeline Hasshagen upon a promissory note signed by her and payable to said banking corporation. The bank was permitted to intervene. The defendant pleaded want of consideration for the promissory note and fraud in its procurement, these same defenses being urged against the plaintiff and the bank and in her cross-complaint she sought judgment for the cancellation of the note, for recovery of certain of her securities which had been hypothecated with the note, and for moneys which had been collected on said securities. The defendant was given a favorable judgment upon both defenses, and upon her cross-complaint the judg

The principal contention upon which the appellants ask for a reversal of the superior court’s action is that the evidence fails to sustain the findings in favor of the respondent both as to want of consideration and upon the issue of fraud. We will examine the testimony relating to want of consideration, but first we will set down some facts which are shown without contradiction. Mrs. Hasshagen was an old woman, seventy-six years of age, and not accustomed to business transactions. Her son was the president of the banking corporation. W. C. Hays was the manager of the bank. It was admitted that the promissory note, which was for thirty-four thousand dollars, together with a check for nineteen thousand dollars signed by the Hasshagens, was received by the State Savings and Commercial Bank in payment of four promissory notes of W. C. Hays, T. A. Bechtel, C. T. Hasshagen (respondent’s son), and F. V. Kington, all officers of the bank, the aggregate amount of the notes being fifty-three thousand dollars. These notes were canceled on June 24, 1909, the date of Mrs. Hasshagen’s note to the bank.

Upon the subject of want of consideration the old lady, testifying in her own behalf, said: “Mr. Hays, he came to my house and always begging that I sign the note. I said that I would come down to the bank at another time there. I went to the bank. He said, ‘I assure you that you will not lose anything by it if you sign this note.’ ” “I did not receive any money or any property of any kind from Mr. Hays or from any one else for that note. I never knew that the bank held a note of 'Mr. Hays. I did not know at the time I signed that note that the bank held a note of Mr. Kington’s or of Mr. Bechtel.

Cross-examination.

“I don’t think there was anybody else but Mr. Hays present when I signed the note. Mr. Hays said to me, ‘ Sign this note and I promise you you will lose nothing by it.’ ” At another time during the trial she testified: “At the time 1 executed the promissory note here sued upon I had no knowledge of the failing circumstances of the State Savings and Commercial Bank. I knew nothing about its financial con

dition; my son didn’t discuss his business with me. I did not know that the bank held any note of his. They all told me the bank was prosperous, and I believed it.” And again: “As a matter of fact I did not receive anything for the note. I never received any stock. I never talked with any one about having any of that stock assigned to me. I never saw any of the stock.” Appellants assert that the stock of the bank which had been pledged as collateral security for the four notes was transferred to Mrs. Hasshagen, and that therefore the note was supported by a consideration. It is true that some days after the signing and delivery of the note the bank’s secretary wrote to Mr. Harrison, who was Mrs. Hasshagen’s attorney, informing him that the bank held his client’s note for thirty-four thousand dollars, and that certain stock, certificates for which were delivered with the latter, was “to be held by Mrs. Hasshagen pending the settlement of the above note.” There was no direct statement in the letter nor was there any testimony at the trial that this stock constituted a consideration for the note. Mr. Harrison testified to the possession by him, in Mrs. Hasshagen’s behalf, of certain stock which he desired to vote with other stockholders in an effort to oust W. C. Hays from the directorate of the bank. Of this he said: “The certificates of shares of stock which I said were turned over to be utilized for that purpose was not derived by Mrs. Hasshagen by virtue of the thirty-four thousand dollar note which she gave to the bank.” The counsel for appellants refer to this stock as “pledged with respondent and returned.” We can see no reason why the payee of a note should pledge its own stock with the maker unless there were some agreement by which the maker was to be indemnified ag'ainst any claim on the note. But whether this was such an agreement of indemnity or not, the pledge of its stock to the maker of the note would not support the theory that said stock was given by way of consideration for the note.

But appellants seem to rely upon the legal presumption of a consideration arising from the note itself, from the promise of Hays to reimburse Mrs. Hasshagen, from the benefit which she supposed her son would obtain from the transaction and from the cancellation of the four promissory notes. While it is true that the execution of the note

Nor did her hope that her son might profit by the use of' the note in the purchase of stock from another bank amount to a consideration. Mere motive or inducement or hope of profit is not consideration. “If a motive alone were equivalent to a consideration, every promise made free from fraud, duress and the like, would necessarily be enforceable without any consideration.” (Page on Contracts, sec. 275. See, also, 9 Cyc. 320.)

There was, therefore, sufficient evidence to support the court’s finding that there was a want of consideration for the note.

Fraud was also sufficiently established. We have adverted to the advanced age of Mrs. Hasshagen and her ignorance of business and her statement that she knew nothing of the existence of the notes which were discharged by the substitu

Appellants deny the existence of any evidence that the note would not have been signed except for the representations of Hays. Of course, it is a necessary constituent element of actual fraud that the consent of the person defrauded would not have been given save for the false representations. (Civ. Code, sec. 1568.) But the aged cross-complainant, after describing the importunities and promises of Hays, said: “Mr. Hays came there so often, and then he always asked me, and then he assured me that it was all right. I should not be afraid, it was all right. That is the reason I signed it.” In addition to this direct statement there was evidence sufficient to justify the court in drawing the conclusion that the false statements of Hays must have been the inducing cause of Mrs. Hasshagen’s action and that without his misrepresentations no contract would have been made.

Appellants suggest that Hays was a mere agent and that his fraud is not imputable to his principal. It is to be remembered in the first place that the intervener is the corpo

The cross-complainant alleged that respondent hypothecated as security for the note sued upon certain promissory notes, among them a note of the Auburn Motor Car Company for three thousand dollars. The court found that this was true, and appellants contend that absolutely no evidence was introduced showing that the Auburn Motor Car Company note was deposited as security for the note in suit. Mr. Grange testified that Mrs. Hasshagen owned a certain note of the Union State Bank for twelve thousand five hundred dollars, secured by certain instruments, which were the same securities mentioned in the cross-complaint including the note of the Auburn Motor Car Company. S. P. Young testified that there was in the bank a note of the Auburn Motor Car Company for five thousand dollars on which two thousand dollars was paid April 23, 1909, and three thousand dollars July 9, 1909. The letter of the bank’s secretary and cashier, Mr. Bechtel, dated July 13, 1909, written to Mr. Harrison and put in evidence by the corporation shows Mrs. Hasshagen’s right to a credit of three thousand dollars. These proven facts indicated that the bank had received three thousand dollars upon Mrs. Hasshagen’s account from the note of the Auburn Motor Car Company. There was no effort to show that this sum of three thousand dollars had ever been paid to Mrs. Hasshagen, or that the credit was applicable to some other transaction, and we cannot say under all these circumstances that the evidence fails to sustain the finding with reference to this item.

The judgment and order are affirmed.

Lorigan, J.} and Henshaw, J., coneurrred.