Action begun February 20, 1939, by Fred A. Rhyner as administrator of the estate of Robert Connor, deceased, against L. A. Hartl for an accounting. John L. Stauber was impleaded. Judgment was for plaintiff against Hartl. Hartl appeals.
The complaint shows that at the time of his death Robert Connor was indebted to the American National Bank of Marshfield upon a judgment in the sum of $5,574.71, with interest, and to the First National Bank of Stevens Point *Page 590 in the sum of $5,357.80. That he was the owner of a one-third interest in certain timber holdings, the balance being held one third by the First National Bank of Marshfield and one third by W. D. Connor, Jr., and others. That the real estate was subject to a judgment lien for $3,424.22, principal, interest, and costs, in favor of the Stratford State Bank. That the lien was a prior lien. That defendant Hartl acquired by assignment from the Stratford State Bank its judgment. That Hartl and the First National Bank of Stevens Point purchased the interest of said deceased Robert Connor in the real estate for the sum of $6,000. It is further alleged that plaintiff was induced to believe that the premises were unsalable and that the deceased's interest was of no greater value than $6,000. That Hartl well knew the character and value of the property and that it was reasonably worth substantially more than $6,000. That plaintiff relied upon the statements and representations made and believed them to be true. That he accepted the offer and filed a petition in the county court for an order authorizing him as administrator to sell and transfer the title of said deceased in said premises free and clear of the lien of the prior judgment of the Stratford State Bank and outstanding taxes. That an order was granted authorizing a deed from plaintiff to Hartl and J. W. Dunegan as trustees upon condition that there be paid to plaintiff $6,000 in cash, and directing plaintiff to pay to the First National Bank of Stevens Point $384.64 to reimburse said bank for taxes redeemed by it, and also to pay the sum of $4,109.24, with interest, in redemption of said premises under the execution sale upon the judgment in favor of the Stratford State Bank, and to hold the balance subject to the further order of the court. It is further alleged that the real estate was later sold in connection with the other two one-third interests for such a price that defendant Hartl received $8,229.41 for his share, and that he refuses to apply the same *Page 591 upon the claim against the Connor estate of the American National Bank for whom it is alleged he was acting as trustee. That Hartl claims title to the undivided one-half interest in the decedent's one-third interest in said premises as having been conveyed to him individually by said administrator's deed.
The defendant Hartl denies having made any representations or statements of the character complained of, and denies that he purchased the Stratford State Bank judgment and entered into the agreement to purchase decedent's one-third interest on behalf of the American National Bank.
The plaintiff testified on direct examination concerning the meeting at which the original purchase was agreed upon as follows:
"None of the men at the conference stated that they were familiar with the property, nor did it appear that they had made any investigation or cruise. While I was there there was no discussion of the quantity of merchantable timber on the land. Mr. Fisher [plaintiff's attorney] and I had discussed it privately. Mr. Fisher advised me that we had about 30 days to dispose of the property or lose the entire equity of the estate. I figured $6,000 was a reasonable value of the property. Certificate of sale had been issued on this property as a result of the execution of the Stratford State Bank judgment and the statutory period of time would have expired within 30 days or by the end of the year. There were some outstanding taxes and tax certificates that would soon be deedable. I was not advised that Mr. Hartl held the sheriff's certificate of sale. I believed that there was danger of the title of the estate being lost under the certificate of sale. Neither Hartl or Dunegan made any statements as to what their opinion was as to the value of the one-third interest. I had nothing to do with preparing the papers and I signed the contract . . . along with Dunegan as trustee and Hartl as trustee and Mr. Fisher took care of the court proceedings. Mr. Fordyce who was there was a representative of the American National Bank, a creditor of the Connor estate." *Page 592
Mr. Fisher gave this testimony as to the meeting:
"The Stratford Bank had the certificate of sale amounting to over $4,000. There were taxes, and a tax deed would have been taken before this if I had not prevailed upon Mr. Dunegan to pay the taxes. I was handling the business for the closed First National Bank of Marshfield and they had a one-third interest. That is how I knew about the property. Mr. Genrich of Wausau had been handling the business for the Stratford Bank. The sale on execution had been made on November 26, 1935. I had an arrangement with Genrich, he wanted me to buy the certificate and I was watching it. In the summer of 1936 I saw that the land was cruised to determine what the value was and about that time I had a letter from Mr. Peters, the receiver of the First National Bank of Marshfield, regarding the fire hazard. So in the summer of 1936 I started proceedings to be in a position to protect the property against loss by virtue of the certificate of sale. I first learned that Mr. Hartl had an assignment of the certificate of sale from Mr. Genrich. That was the latter part of October or first part of November, 1936. I had been holding off having my people buy during the summer, in view of the fire hazards. After I learned that Hartl had the certificate, I talked to Dunegan of the Stevens Point Bank and we decided to arrange a meeting to see if we could agree on something to protect my clients, the First National Bank, and the estate, against this outstanding certificate. I went to Marshfield to see if we could make some mutual satisfactory arrangement as a first choice, and as a second choice to buy the certificate, and the third choice would be to redeem it and have my bank, the Stevens Point Bank, advance the money to redeem the property from that sale. We had a conference at Marshfield. That was the meeting Mr. Rhyner testified about. I think Dunegan and I were in the other bank first and arranged to meet in the closed bank. Hartl, Peters, Fordyce, Rhyner and I were present at the First National Bank of Marshfield. Before going over there I think I talked to Mr. Fordyce. I don't know if Hartl was there then. Fordyce was receiver of the American National Bank, which owned a judgment. We wanted to contact Hartl, as I was sure I knew him personally. I think he was in the bank *Page 593 there for a few minutes. We did not want the owners of that certificate to take the title away. I am not sure whether we talked to Hartl then or made an appointment over the phone to meet us at the other conference. I think Hartl was at the bank when Fordyce and Dunegan were there, but I am not sure. We discussed the question of going together and purchasing the property together."
A number of other witnesses testified concerning the meeting but the foregoing gives a summary of the evidence bearing upon the material questions.
After deducting his expenses incurred in the purchase and sale of his interest in the land, defendant Hartl deposited the balance in the sum of $2,799.60 in the Citizens National Bank in his name as trustee for his daughter. In a letter to the receiver of the American National Bank, Hartl explained that the land was purchased "in the anticipation of recovering on a note of R. Connor in the principal sum of $5,000 to the American National Bank for the purpose of protecting the depositors up to 100%;" and authorized the bank to take from the amount deposited in the Citizens National Bank a sum sufficient to bring collections on the note up to its face value.
The trial judge in deciding the case said:
"In this action the defendant, Hartl, is charged with receiving secret profits upon the sale of an undivided one-third interest of the Robert Connor estate in certain timber lands located in Sawyer county, this state. This resulted because of the breach of fiduciary duties that he owed to the stockholders of the banking corporation of which he then was an officer, and also because of fraud, at least constructive fraud, in obtaining the administrator's deed to said lands.
"After a careful consideration of the record herein and the briefs submitted by counsel for the parties, it is the opinion of the court that the plaintiff has proven his cause of action against the defendant, Hartl, and is entitled to a judgment for the sum of $4,517.44, together with interest thereon at the rate of 6% from November 9th, 1937, and costs." *Page 594
Findings consistent with that determination were drawn and signed by the judge, and from the judgment accordingly entered this appeal is taken raising the following points:First. The plaintiff, as a debtor not a stockholder of the American National Bank, has no right of action against defendant Hartl compelling him to account to that bank. Second. The findings of fact and the judgment are contrary to the evidence and the law for the reasons that, (a) there was no trustee relationship shown to exist between defendant and the bank; (b) no fraud was shown to exist on the part of defendant in obtaining the administrator's deed. The findings concerning fraud and misrepresentations on which the judgment below were based are against the great weight and clear preponderance of the evidence. The record is barren of evidence either of active or constructive fraud practiced by appellant or of any act on the part of appellant that can be held capable of misleading respondent as to the value of the property or the advisability of selling the interest of the deceased when he did.
In order to have a cause of action there must be a right in the plaintiff and a wrongful invasion of that right by the defendant. Van De Yacht v. Holland (1935), 217 Wis. 455,457, 259 N.W. 604. This action is by an administrator of an estate for an accounting for profits alleged to have been made by defendant in breach of fiduciary duties owed to the American National Bank of Marshfield.
Respondent's decedent died in 1934, a resident of the state of Michigan, owner of a one-third interest in a tract of timberland lying in Sawyer county. Ancillary probate proceedings were had in Wood county, and plaintiff was appointed *Page 595 administrator of the estate in the Wisconsin proceedings on January 30, 1936. Prior to his death three judgments had been obtained against the decedent: One on November 16, 1932, by the Stratford State Bank in the sum of $3,424.22; one on May 16, 1933, by the American National Bank of Marshfield, in the sum of $5,574.21; and one on May 16, 1933, by the First National Bank of Stevens Point, in the sum of $4,835.24. Transcripts of all three judgments were filed in the circuit court of Sawyer county where the timber tract in question was located. Execution was issued by the Stratford State Bank in October, 1935, and the interest of Robert Connor was sold by the sheriff to the cashier of the creditor bank for the amount due on the judgment, a certificate of sale being issued therefor. The judgments of the other two banks above mentioned were filed as claims against the estate of Robert Connor.
The American National Bank of Marshfield, of which defendant Hartl had been a director, was closed on March 4, 1933. Fordyce, who had been appointed receiver for this bank by the comptroller of currency, sought to redeem the timberland covered by the certificate of sale before mentioned or to purchase such certificate in order to protect the judgment of the American Bank. Authority to take either of these courses was refused the receiver by the comptroller of currency. Fordyce then sought to get either the Citizens National Bank, which had been organized after the closing of the American Bank and of which Hartl was president, or the defendant Hartl to purchase the certificate. Both refused. Sometime later, in October, 1936, Fordyce again spoke of the judgment to Hartl who then made an offer of $3,500. This offer was accepted by the Stratford State Bank, and the certificate of sale and an assignment thereof, indorsed in blank, were sent to the Citizens National Bank. On November 6, 1936, Hartl purchased the certificate with money withdrawn from his daughter's savings account. *Page 596
Mr. Fisher, who was the attorney for the Connor estate, was interested in buying the certificate for the closed First National Bank of Marshfield which also was the owner of a one-third interest in the Sawyer county timberland. He had held off from making the purchase, however, because of the fire hazard. After learning of Hartl's purchase of the certificate, Mr. Fisher conferred with Dunegan, president of the First National Bank of Stevens Point, the third judgment creditor, and they decided to arrange to protect their various interests. A meeting was held on November 17, 1936, attended by defendant Hartl; Dunegan, president of the Stevens Point Bank; Fisher, attorney for the estate and the Marshfield Bank; Peters, trustee of the Marshfield Bank; Fordyce, receiver of the American National Bank; and plaintiff administrator. As a result of this conference Dunegan and Hartl consented to join together to purchase the interest of the Connor estate in the timberland for the sum of $6,000. This offer was accepted at the meeting; a formal contract, to be submitted to the court for its approval, was drawn; and after a hearing upon the petition to confirm the sale, the county court on November 24, 1936, authorized the sale. Nearly a year later, October, 1937, the full three-thirds interest was sold for $40,500. Out of the proceeds of this sale Hartl received $8,229.41. The administrator's deed ran to "J. W. Dunegan and L. A. Hartl, Trustee." As first drafted by Fisher the deed ran to "Dunegan, Trustee of the First National Bank of Stevens Point, and L. A. Hartl, as trustee of the American National Bank of Marshfield." The words defining the trusteeship of Hartl were deleted at his request.
Prior to the meeting of November, 1936, the estate had been inventoried and the three-thirds interest in the timber tract appraised at $25,000. In August, 1936, respondent had filed a petition for the sale of decedent's lands in order to pay debts and administration expenses. After an order *Page 597 for sale was issued in September, respondent tried to find buyers for his one-third interest but received no offers until the meeting of November, 1936.
Upon this state of facts, respondent brought his action for an accounting to recover secret profits alleged to have been made by appellant which in good conscience belonged to the American National Bank. That bank was a creditor of the estate represented by respondent. The complaint alleges the obtaining of a deed by means of fraud practiced upon the administrator. Unless that fraud exists, the respondent has no cause of action against anyone. Were we to assume that appellant failed in his duty to the American Bank, and that he could be held accountable therefor, it by no means follows that such conduct would give rise to a right of action in the respondent. But we need not explore that field, for the record before us does not suggest any occasion for appellant assuming to act for the bank.
The interest involved was a one-third ownership in a timber tract purchased by decedent, his brother, and another. The difficulties of disposing of an undivided one third would affect a sale price; and, as discussed in the statement of facts, the matter had been permitted, unavoidably no doubt, to run on until a sale by the sheriff was about to ripen into a deed under which the interest would be lost not only to the respondent but would leave outstanding and entirely unpaid judgments filed against the estate. The respondent in administering his office as administrator, and his attorney, were concerned with securing the best price for the timber holding. Neither respondent nor appellant were fully advised as to the value of the land and timber, and neither knew what could be obtained for it nor to whom it could be sold for a satisfactory price. Such knowledge as respondent possessed was based upon an appraisal and discussions with the attorney for the estate. In the effort to salvage something a meeting of some who might be interested was arranged for November 17, *Page 598 1936. Before that meeting, Mr. Fisher, a lawyer on whose judgment a client would be inclined to rely, had advised respondent that there were about thirty days left to dispose of the property before the estate would lose its entire equity. At the time of that meeting respondent considered that $6,000 represented a reasonable and acceptable price if the property could be sold. At that time, then, there is no doubt that the situation, so far as the estate was concerned, was, as described by Mr. Fisher, "critical." Neither appellant nor anyone else seems to have expressed any opinion as to the value of the holding. There is nothing appearing in the evidence to indicate that appellant had any advantage over others or that he was bound to protect the interest of the seller. Respondent had equal if not superior means of acquiring information to guide him. Aided by an able attorney, and with the knowledge that the interest of the estate was in danger of being cut off, respondent entered into a deal which ended his control over the property and there remains in him no just cause for complaint against appellant.
By the Court. — Judgment reversed, and cause remanded with directions to enter judgment dismissing the complaint with costs.
FOWLER, J., dissents. *Page 599