Case Name: Burke, Respondent, vs. The Milwaukee, Lake Shore & Western Railway Company, Appellant
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1892-11-15
Citations: 83 Wis. 410
Docket Number: 
Parties: Burke, Respondent, vs. The Milwaukee, Lake Shore & Western Railway Company, Appellant.
Judges: 
Reporter: Wisconsin Reports
Volume: 83
Pages: 410–415

Head Matter:
Burke, Respondent, vs. The Milwaukee, Lake Shore & Western Railway Company, Appellant.
October 27
November 15, 1892.
Pleading: Money obtained by false representations: Ratification.
1. An allegation that defendant had and received of plaintiff a certain sum of money for the use of plaintiff, negatives a voluntary gift.
2. After examining the accounts of a station agent, an auditor of the defendant company assured plaintiff that there was a shortage of $600 only, that payment of that amount would make the accounts straight and satisfactory, and that if it were paid the station agent would not be discharged. Relying on this representation, plaintiff contributed $900 to make up the said amount (the balance being contributed by others), which was paid directly to the company. The station agent took no part in this negotiation. Afterwards it was discovered that the shortage was about $1,200, and the station agent was discharged. The company, however, refused to repay to plaintiff the $200. Held, that the money was obtained by the company by the false representation of its auditor as to the amount of the shortage, and that plaintiff was entitled to recover it, although the auditor believed his statement to be true when he made it.
3. The refusal of the company to repay the $200 was a ratification of the acts of the auditor in making the representation.
APPEAL from the Circuit Court for Marathon County.
The facts are sufficiently stated in the opinion. The defendant appeals from a judgment in favor of the plaintiff.
For the appellant there was a brief by Silverthorn, Hurley, Ryan & Jones, attorneys, and Alfred L. Cary and Bradley G. Schley, of counsel, and oral argument by Mr. Gary.
They contended, inter alia, that the promise made by the defendant’s auditor that the station agent would not be discharged cannot bind the defendant. Kelly v. Troy F. Ins. Go. 3 Wis. 254; National L. Ins. Co. v. Minch, 53 U. T. 144-150; 1 Am. & Eng. Ency. of Law, 423. The acceptance and retention of the money advanced by plaintiff was not a ratification of the unauthorized acts and statements of the auditor. Ratification to be binding must be made with a full knowledge of all the material facts. Dodge ~v. McDonnell, 14 Wis. 553-558; JEtm.a Ins. Go. v. N. W. I. Go. 21 id. 458,.464; Ladd v. Hildebrant, 21 id. 135-144.
For the respondent there was a brief by Brown & Pradt, and oral argument by Neal Brown.

Opinion:
Orton, J.
One Sky Yerbeck was station agent of the appellant company at Wausau, in this state, in March, 1889. One Merrill was traveling auditor of the company, whose business it was to visit station agents and look into the state of their accounts with the company. He found Yer-beck behind about $600 in his business with the company. They both together called upon the respondent, and Merrill told him that one Clayton and one Alexander had consented to contribute $200 each towards making up such shortage of Yerbeck, if he, the respondent, would also pay $200. Merrill assured him that Yerbeck only owed the company $600, and no more; and if he would so contribute $200 with the other two friends of Yerbeck, the matter would be adjusted, and Yerbeck's accounts with the company would be straightened out, and his standing as station agent would not be impaired. The respondent hesitated until again assured by Merrill that $600 only was needed to pay up the shortage of Yerbeck, and then reluctantly consented to contribute $200, with the others, for such purpose. Alexander paid his $200 in money, and the respondent, together with Clayton, Merrill, and Yerbeck/went to the Marathon County Eank, and explained the matter to the cashier;- and it was arranged that the respondent and Clayton should give their joint note to the bank, payable in thirty days, and the bank should give the company a draft for the'amount, or the sum of $400. The note was afterwards paid before due. It was afterwards ascertained that Yerbeck's defalcation was $1,200, instead of $600, and he was at once removed from his office on that account. Thus the object and consideration of the respondent's contribution entirely failed. It may be presumed that he would not have joined in the contribution if he had not been assured by Merrill, the auditor, that $600 only was needed to pay the debt of Yerbeck to the company and save his standing as station agent.
These are the main facts upon which this suit is brought against the company for the $200, as for money had and received. The company received the money, and was informed of the facts both by Merrill and the respondent: and the respondent demanded the money he had so paid of the company, which was refused. The action is based upon the false representation as to the amount of Yerbeck's indebtedness to the company, by which the $200 of the respondent's money was obtained. The complaint is, in short form, " that the defendant had and received of the plaintiff the sum of $200 for the use of the plaintiff, wholly without consideration whatever from any person," and a demand of the money was made and refused. The jury found a special verdict of substantially the above facts of the false representation, and that the respondent believed it to be true and paid the $200 to the company by reason of such belief; and that the money was not a loan to Yerbeck or advanced on his responsibility. There were two other representations proved and found. One was that, if the $600 was so paid for Yerbeck, he should retain his place as station agent; and the other was that there were unpaid freight bills of about $600 which Yerbeck could make available in repaying the said $600. The first was not a representation, but a promise, and the other is not material. It is not disputed that Merrill falsely represented to the respondent that Yerbeck owed only $600 to the company, and that the payment of that amount would make his accounts straight and satisfactory, and that the respondent relied upon its truth, and it was the inducement of the payment. That is sufficient, so far as the facts are concerned.
There was a demurrer to the complaint ore tenus. It is contended by the learned counsel of the appellant that the complaint does not negative a voluntary gift of the money. The complaint alleges that the money was received " for the use of the plaintiff." This negatives a gift. The complaint appears to be a good common count for money had and received. In Grannis v. Hooker, 29 Wis. 65, such a complaint was held good and sufficient to allow proof that the money was obtained by false and fraudulent representations.
It is contended that the company did not obtain tbe money, and that it was advanced by the plaintiff, as the friend of Yerbeck, to him and for his benefit. This does not seem to be the legal effect of the transaction, and the jury negatived the fact. The negotiation was conducted, as well as the representations made, by Merrill on behalf of the company. Yerbeck did nothing and said nothing. Merrill, as auditor of the company, had examined Yerbeck's books, accounts, and vouchers for himself, and claimed to be sure that $600 was the only shortage, and so represented it to the plaintiff to get him to contribute the $200. The company was interested to the extent of $600, which Yer-beck was unable to pay; and the money was paid directly to the company. There is no evidence that Yerbeck borrowed the money, or was trusted for it, or agreed to repay it. It was, of course, intended as a favor to Yerbeck, to save him from a threatened defalcation to the company, and this makes the representation of the amount so material. The company obtained $200 from the plaintiff by such a misrepresentation, which it would not have otherwise obtained, and has had the benefit of it. But it would scarcely make any difference if the plaintiff had paid the money to Yerbeck and Yerbeck had paid it to the company, by the inducement of such a false representation. Even a disinterested third person may be held liable for his false representation, by which an insolvent person obtains the goods of another. The liability depends upon the fraud. Law v. Grant, 37 Wis. 548.
It is contended that at the time Merrill supposed that $000 was all that was due, and it was by subsequent discovery that it was ascertained that Yerbeck's shortage was twice that amount. That may be, but that does not relieve Merrill from the charge of making the false representation that no more than the $000 was due. He should have been certain of the fact before he so represented it. He claimed to know, and must be presumed to have known, the truth of his statement, for this obtained the money of the plaintiff. When the company afterwards ascertained that such was not the fact, and that $600 would not relieve Yerbeck of his indebtedness, and that it was at least twice as much, in equity and good conscience it should have paid back the money obtained by the false representation, and by the same rule the plaintiff is entitled to recover it. There was no condition or reservation in the statement that it might be more than $600. It was only because it was ascertained by the positive statement of Merrill that the $600 would relieve Yerbeck that the plaintiff consented to contribute his $200.
It is contended that the receipt and retention of the money by the company was no ratification of the agency of Merrill to make such a representation. The company refused to pay back the money on the demand of the plaintiff, after having been informed of all the circumstances attending its payment, by Merrill, as well as by the plaintiff. But, " if one accepts the benefits of a contract made in his name by a person professing to act as his agent, he cannot object to evidence of fraudulent representations made by him in procuring the same, on the ground that he was not his agent, or that the representations were not authorized by him." Morse v. Ryan, 26 Wis. 356.
These are all the contentions of the learned counsel of the appellant, except such as relate to the other two representations, one of which, as we have seen, is a mere promise, and the other is immaterial. This would seem to be a very plain case in the law, as well as in justice and equity.
By the Court.— The judgment of the circuit court is affirmed.