Case ID: wis_129/html/0476-01.html
Source: Caselaw Access Project
Author: {"author": "Maesiiall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Kaufer, Appellant, vs. Stumpf and wife, imp., Respondents.
    
      October 9
    
    November 7, 1906.
    
    
      Statute of frauds: Pleading: Oral promise to pay debt of another: Contracts relating to land: Judgment: Costs: Harmless irregularity.
    
    1. Where a complaint alleged that defendant agreed to indorse a note of J. S. and agreed to pay it in consideration of a transfer of land to J. S., defendant may, without pleading it, rely upon the statute of frauds (sec. 2307, Stats. 1898) declaring void an oral promise to answer for the debt of another.
    
      2. A promise in form to guarantee payment of tlie debt of another, but in fact to pay the promisor’s own debt, is not within the statute.
    3. An oral agreement between the parties that plaintiff should advance moneys to buy land at a foreclosure sale, take the title' in his own name, and transfer it to defendant upon the latter reimbursing him, and that defendant should reimburse him for the advances, such agreement being executed by plaintiff to the extent of purchasing at the sale, was within the statute of' frauds (sec. 2302, Stats. 1898) and void.
    4. Defendant’s oral promise in such case to repay plaintiff’s advances being void, his subsequent oral promise, in consideration of a transfer of the land to his brother, to indorse his brother’s note for said advances and to pay such note, was not a promise to pay his own debt, but'a collateral promise to pay the debt of another, and hence void under sec. 2307, Stats. 1898.
    5. Entry of judgment for costs in favor of a defendant who had' been served with notice that no personal claim was made-against her, was a harmless irregularity where the costs taxed ■ were no greater than they would have been had the judgment been in favor of her husband only, in whose answer she had' joined.
    Appeal from a judgment of tbe circuit court for Milwaukee county: WareeN D. TarraNT, Circuit Judge.
    Affirmed.
    Action to foreclose a mortgage and to .obtain a judgment against Charles J. Btuw/pf as one personally liable for tbe mortgage indebtedness, as well as against John Stumpf, Jr.,, maker of tbe note mentioned in tbe mortgage.
    Tbe complaint contained all tbe usual allegations for tbe foreclosure of a mortgage as to tbe defendant John Stumpf,. Jr. Tbe note was for $3,500, payable two years after-date witb interest at tbe rate of six per cent, per annum, payable according to tbe tenor and effect of coupons attached thereto,, which provided for interest at tbe rate of seven per cent, per annum after due. There were appropriate allegations -showing tbe due execution of tbe mortgage, tbe conditions thereof,, tbe recording of tbe same, and default in tbe performance of such conditions creating tbe cause of action for foreclosure. There were also allegations as grounds for the alleged liability of Gharles J. Stumpf, in effect as follows: On or about May 29, 1899, at a sheriff’s sale to enforce a judgment of foreclosure of a mortgage wherein Gharles J. Stumpf was adjudged to be personally liable for the mortgage indebtedness, the property involved was bid in by the plaintiff, acting through an agent, in his own name for said Gharles J. Stumpf for $3,400, pursuant to an agreement between them that the sheriff’s deed should run to the plaintiff, and upon the sale being confirmed that he should deed the property to said Stumpf and receive from him reimbursement for all money advanced in so securing the property. The total sum so advanced was $3,500. Subsequent to the sale it was duly confirmed, and thereafter on or about June 13, 1899, said 1Gharles J. Stumpf informed plaintiff that he was unable at ■once to pay back the advances, but could and would secure the same by a mortgage on the premises; that he would have the title to the property vested in his brother John Stumpf, ■Jr., and then have the latter give a note for $3,500 and a mortgage on the property to secure the payment thereof, and that he, the said Gharles J. Stumpf, would indorse said note and would pay the indebtedness with interest as provided in said note. Plaintiff accepted the proposition of said Gharles J. Stumpf, deeded the property to said John Stumpf, Jr., delivered the deed to Gharles, and received from him the note of John Stumpf, Jr., and the mortgage on the property in suit.
    The defendant Gharles J. Stumpf answered, among other things, admitting that plaintiff purchased the property involved under the circumstances stated in the complaint, and alleging that it was agreed that plaintiff should convey the property to said Gharles J. Stumpf or such person as should be mutually agreed upon, and that he should pay plaintiff, such sum over and above $3,500 as might be necessary to make up the difference between the latter sum and the amount due under the judgment of foreclosure, and as security for the said $3,600 a mortgage should be given, by the person ■so receiving the conveyance of the premises; that pursuant thereto $638 was paid plaintiff and he conveyed the property to John Stumpf, Jr., who executed the note and mortgage in suit and delivered the same to plaintiff. The answer contained a specific denial that Charles J. Stumpf agreed to pay the note.
    As a defense sec. 2302, Stats. 1898, was invoked upon the ground that the agreement between plaintiff and Charles J. Stumpf was merely verbal.
    No issue was taken on any of the allegations of the complaint as to the cause of action against John Stumpf, Jr.
    The court found all the facts requisite to a judgment of foreclosure as to John Stjimpf, Jr., and found that there was justly due plaintiff upon the note and mortgage covering the indebtedness of Charles J. Stumpf, for which the note and mortgage were given, $5,038.62. The court further found, as regards the liability of Charles J. Stumpf, that he merely promised orally to guarantee the payment of the note and mortgage and that such promise was void under the statute •of frauds.
    The court further found, as to the liability of Charles J. ■Stumpf: Plaintiff purchased the mortgaged property for 'Charles J. Stumpf at a foreclosure sale, as alleged in the complaint, under an agreement that the sheriff’s deed should run to the plaintiff and that upon its being confirmed Charles J. Stumpf should reimburse plaintiff for all moneys advanced by him in the matter. To complete the purchase plaintiff advanced $3,400, took the sheriff’s deed, and the same was thereafter confirmed. Plaintiff also advanced for said Charles ■J. Stumpf, at his request, a further sum of $100 towards discharging the deficiency of $73.8.44 due on the foreclosure judgment, for which said Charles J. Stumpf was liable. Thereafter, having in view the carrying out of the aforesaid agreement, said Charles J. Stumpf, representing that he was unable at once to pay back tbe said sum of $3,500, said tO' plaintiff’s agent that he would secure the same by a mortgage on the premises; that to avoid injuring his financial standing he would have the title to the property transferred to his brother John Stumpf, Jr., and have him give the mortgage to plaintiff to secure said sum of $3,500, and that he would guarantee the payment of his brother’s note. On June 13, 1899, $638.44, the balance of the. deficiency on the foreclosure judgment, was paid by said Charles Stumpf. Relying upon such representations and promises plaintiff deeded the property in question to said John Stumpf, Jr., and received from him, at the same time, the note and mortgage in suit. Such note and mortgage were given to secure the $3,500 and interest due to plaintiff from said Charles J. Stumpf at the time the note and mortgage were given.
    Upon such decision and findings the court concluded that Charles J. Stumpf was not liable for the mortgage indebtedness and that he and his wife Agnes, who was made a defendant, were entitled to judgment against plaintiff dismissing the complaint as to them, with costs. Judgment, in due form, for a foreclosure sale was rendered as to John Stumpf, Jr., and as to Charles J. Stumpf and wife in accordance with the foregoing. From such judgment dismissing the cause with costs as to Charles J. Stumpf this appeal was taken.
    For the appellant there were briefs by Nath. Teretes & Sons, and oral argument by C. S. Carter and W. H. Churchill.
    
    To the point that, even if the agreement of Charles J. Stumpf to guarantee payment of his brother’s note were within sec. 2307, Stats. 1898, the defense of the statute of frauds, to be available, must be pleaded, they cited Matthews v. Matthews, 154 N. T. 288; Crane v. Powell, 139 N. N.-379; Sanger v. French, 157 N. T. 213; Ilamill v. Hall, 4 Colo. App. 290; Chicago & W. C. Co. v. Liddell, 69 Ill. 639; Osborne v. Fndicott, 6 Cal'. 149, 65 Am." Dec. 498; Citty vJ 
      
      Manufacturing Go. 93 Teim. 276, 42 Am. St. R. 919; 9 Ency. PL & Pr. 705, 716, and cases there cited.
    Por the respondents there was a brief by McElroy, Esch-weiler & Wetzler, and oral argument by F. G. Eschweiler.
    
   Maesiiall, J.

At the outset on this appeal stands the contention of appellant that respondent waived the statute of frauds (sec. 2307, Stats. 1898), relating to the validity of any agreement to answer for the debt, default, or miscarriage of another, by not pleading it, and, therefore, that the court erred in applying such statute to the guaranty found 'to have been made by respondent and upon which his liability rests, if he is liable at all.

As no contract of guaranty, valid or invalid, was set forth in the complaint respondent was in no position to plead the statute on that subject as a defense. The claim set forth in the complaint was that respondent agreed to indorse John Stumpf’s note and agreed to pay it in consideration of the transfer of the land to John. That was put in issue and the finding was substantially in respondent’s favor. There is much authority to the effect that when the contract-pleaded is put in issue the plaintiff in order to recover must establish a valid agreement. The defendant is not called upon to anticipate that an invalid contract will be established and to plead thereto. Taylor v. Merrill, 55 Ill. 52; Hunter v. Randall, 62 Me. 423; Russell v. W., M. & P. R. Co. 39 Minn. 145, 39 N. W. 302; Bernhardt v. Walls, 29 Mo. App. 206; Allen v. Richard, 83 Mo. 55, 60.

The principal contention relied on, as it seems, is that tho court erred in deciding that the agreement made by Charles Stumpf to guarantee the payment of John Stumpf’s note was a purely collateral promise and so void under sec. 2307, Stats. 1898, before referred to. It is insisted by appellant’s counsel that the promise was original in character in that it was to pay tbe promisor’s own debt to appellant. This court bas often held, as claimed by counsel, that a promise, in form, by one person to guarantee payment of the debt of another, where such promise is in fact to pay such person’s own debt, is not within the statute because not collateral. Dyer v. Gibson, 16 Wis. 557; Wyman v. Goodrich, 26 Wis. 21; Putney v. Farnham, 27 Wis. 187; Young v. French, 35 Wis. 111; Hoile v. Bailey, 58 Wis. 434, 17 N. W. 322; McCord v. Edward Hines L. Co. 124 Wis. 509, 102 N. W. 334. In order that such doctrine could be applied here, it would be necessary for it to appear that at the time Gharles Stumpf made the agreement to guarantee his brother’s note he was indebted to appellant and that the agreement was in reality to pay such indebtedness.

Whether an indebtedness existed as above suggested depends upon the facts found by the court, not upon mere language contained in the findings referring to the relations between appellant and respondent Gharles Stumpf as those of debtor and creditor. It seems that the court did not mean in using such language that a valid indebtedness existed between the parties, because that would be plainly inconsistent with the decision that the guaranty was a mere collateral promise. True, with considerable significance the court mentioned such relations as those of debtor and creditor. It was said in the findings that the note and mortgage made by John Stumpf, Jr., were delivered to appellant to secure Gharles Stumpfs indebtedness, and further, that when Gharles Stumpf suggested to appellant the deeding of the property to John he said he would secure his indebtedness to appellant by a note and mortgage on the property given by John and that he would guarantee such note. We do not deem the use of such language by any means conclusive that the trial court held that there was a valid indebtedness of Gharles Stumpf to appellant, and if it were otherwise such holding would be in the nature of a conclusion of law and not stand in the way of tbe real relations between tbe parties as shown by tbe facts found.

Now at tbe time tbe arrangement was made between appellant and Charles Stumpf as to tbe property acquired by tbe former being deeded over to John Stumpf, there existed, •according to tbe findings, merely an agreement that appellant should advance tbe necessary money to buy in tbe property at tbe foreclosure sale, take tbe title in bis own name, and transfer it to Charles thereafter upon tbe latter’s reimbursing him for such advances, such agreement being carried out to tbe extent of acquiring tbe property at such sale and making such advances. We are unable to see why at that stage tbe agreement was not within tbe statute of frauds (sec. 2302, Stats. 1898), requiring agreements relating to real estate to be in writing, which was pleaded. It seems to fall clearly within tbe principle of Scheuer v. Cochem, 126 Wis. 209, 105 N. W. 573, where it was held, as indicated by tbe syllabus:

“An oral agreement by which tbe parties were to become jointly interested, as partners, in tbe purchase of land — one to advance tbe whole purchase price and take tbe title in bis own name and afterwards, on repayment to him of one half tbe sum so advanced, with interest, to convey an undivided half to tbe other party, is within the statute of frauds (sec. 2302, Stats. 1898) ; and it is immaterial whether tbe party so orally agreeing to convey was tbe owner of tbe land at-tbe time or whether be afterwards acquired tbe title.”

Tbe basic idea of the decision is that so long as tbe obligation to convey tbe land rests in a mere oral agreement it is void.

It seems to follow necessarily that when Charles Stumpf agreed to guarantee bis brother’s note there was no binding agreement existing between him and appellant to take tbe land and repay tbe advances. There existed a mere void promise in that regard. It would seem to logically follow that tbe agreement as to tbe note was collateral, as tbe court found, and within sec! 2307 of tbe statute of frauds (Stats. 1898). While it' does not clearly appear that the learned circuit judge thus reached a conclusion we apprehend that he did, and, in any event, it seems that such conclusion is the necessary result of the facts found and the law as laid down in the decisions of this court.

Error is claimed because the court allowed judgment to go in favor of respondent Agnes Q. Stumpf for costs although no personal claim was made against her, she being joined as a defendant, as the wife of Charles Stumpf. At the worst that was a mere harmless irregularity. The two defendants joined in answering the complaint. They appeared by the same attorneys. So far as we can discover the costs were no greater than they would have been had judgment been rendered therefor in favor of Charles Stumpf only.

By the Court.- — Judgment affirmed.