Title: River Bank of De Soto v. Raymond Fisher
Citation: N/A
Docket Number: 1995AP000148-FT
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 26, 1996

No. 95-0148-FT 
 
 
 
 
 
 
 
 
 
 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
 
 
 
 
No.  95-0148-FT 
 
STATE OF WISCONSIN             :                IN SUPREME COURT 
                                                                   
 
 
River Bank of De Soto f/k/a De Soto State 
Bank, 
 
 
Plaintiff-Appellant, 
 
 
v. 
 
Raymond Fisher, 
 
 
Defendant, 
 
Karen Fisher Duncan, 
 
 
 
Defendant-Respondent-Petitioner. 
 
 
FILED 
 
 JUNE 26, 1996 
 
 
 Marilyn L. Graves 
  
Clerk of Supreme Court 
  
Madison, WI  
                                                                 
  
 
 
 REVIEW of a decision of the Court of Appeals.   Reversed. 
 
JON P. WILCOX, J.   The defendant-respondent-petitioner Karen 
Fisher Duncan (Duncan) seeks review of an unpublished decision of 
the court of appeals which reversed a judgment and order of the 
circuit court for Vernon County, Michael J. Rosborough, Judge.  
The circuit court had concluded that the plaintiff-appellant River 
Bank of De Soto's (Bank) conduct throughout a consumer loan 
transaction was "unconscionable" under the Wisconsin Consumer Act, 
Wis. Stat. § 425.107 (1991-92)
1, thereby relieving Duncan of her 
                     
     
1  All future references to Wisconsin Statutes will be to the 
 
No. 95-0148-FT 
 
 
 
2 
liability on a debt and awarding her a judgment of $100, as well 
as attorney fees and expenses of $2,251.09.  See Wis. Stat. 
§ 425.303.  The court of appeals reversed, holding that the Bank's 
conduct was not unconscionable, as that term is used in the 
Wisconsin Consumer Act.  See River Bank of De Soto v. Duncan, No. 
95-0148-FT, unpublished slip op. at 2 (Wis. Ct. App. July 6, 
1995).  Duncan appealed the decision, and her petition for review 
was granted by this court. 
 
The facts in this case are undisputed.  When Duncan and 
Raymond Fisher (Fisher) were divorced in 1990, Fisher was assigned 
an outstanding debt of $4,819 to River Bank as part of the divorce 
settlement.  Since the couple had dealt with the bank in the past, 
Fisher sought to arrange refinancing of this settlement debt 
through the Bank.  He was unable to qualify for the loan on his 
own, and therefore, the Bank required that Duncan co-sign the 
promissory note.  She agreed, and the note was executed in August 
1990.  The note was designated for a one-year period with a 
balloon payment due at the expiration of such term.  The 1990 note 
(..continued) 
1991-92 version.  Section 425.107(1) provides as follows: 
 
(1) With respect to a consumer credit transaction, if the 
court as a matter of law finds that any aspect of the 
transaction, any conduct directed against the customer 
by a party to the transaction, or any result of the 
transaction is unconscionable, the court shall, in 
addition to the remedy and penalty authorized in sub. 
(5), either refuse to enforce the transaction against 
the customer, or so limit the application of any 
unconscionable 
aspect 
or 
conduct 
to 
avoid 
any 
unconscionable result. 
 
No. 95-0148-FT 
 
 
 
3 
was secured by two antique automobiles owned by Fisher, which had 
also served to collateralize the couple's prior obligations to the 
Bank.  The Bank retained possession of the titles to the antique 
automobiles, which represented Fisher as the owner, and the Bank 
as first lienholder. 
 
During the term of this loan, Fisher failed to make payments 
in November and December 1990, as well as in January 1991.  Both 
Fisher and Duncan received notices of their right to cure the 
default from the bank, and the payments were made.  Upon the 
expiration of the life of the 1990 loan, in June of 1991, the Bank 
again required both parties to sign a renewal note, rather than 
call the note due.  The 1991 note was executed on June 26, 1991, 
and signed by both Fisher and Duncan.  The language in the 1991 
note was identical to that contained in the 1990 note and previous 
notes Fisher and Duncan had signed with the Bank since 1982.  The 
1991 Consumer Universal Note (Wisconsin Banking Association Form 
455) contained the following clause: 
Without affecting my liability or the liability of any 
endorser, surety or guarantor, Lender may, without 
notice, grant renewals or extensions, accept partial 
payments, release or impair any collateral security for 
this Note or agree not to sue any party liable on it.  
Presentment, protest, demand and notice of dishonor are 
waived . . . .  This Note may not be supplemented or 
modified except in writing. 
 
No. 95-0148-FT 
 
 
 
4 
 
A debtor is not given the opportunity to negotiate or delete the 
above clause when executing a consumer loan with the Bank, as it 
is part of a standard banking form expressly approved by the 
Office of the Commissioner of Banking, the administrator of the 
Wisconsin Consumer Act.  See Wis. Stat. § 426.104(4)(b).
2 
 
After the 1991 note was signed by both parties, Fisher moved 
to Texas in September of 1991.  Duncan immediately contacted the 
Bank, providing it with Fisher's new address, and expressing her 
concern that Fisher would thereafter try to hide the collateral.  
The antique automobiles were later moved to Texas without 
notification being provided to the Bank.  However, Fisher 
continued to remain current on his payments to the Bank on the 
1991 note through June of 1992.  During this period, the Bank did 
not contact either Fisher or Duncan regarding the 1991 note until 
it was set to expire on June 26, 1992. 
                     
     
2  Section 426.104(4)(b) provides as follows: 
 
(b) Any act, practice or procedure which has been submitted 
to the administrator in writing and either approved in 
writing by the administrator or not disapproved by the 
administrator within 60 days after its submission to the 
administrator shall not be deemed to be a violation of 
chs. 421 to 427 or any other statute to which chs. 421 
to 427 refer notwithstanding that the approval of the 
administrator or nondisapproval by the administrator may 
be subsequently amended or rescinded or be determined by 
judicial or other authority to be invalid for any 
reason. 
 
No. 95-0148-FT 
 
 
 
5 
 
Upon the expiration of the 1991 note, Fisher independently 
sought an extension of time in order to satisfy his obligation to 
the Bank.  He filled out a loan application in July of 1992, 
requesting a renewal of the 1991 note, which the Bank agreed to 
grant.  Despite its past practice of requiring Duncan to sign any 
promissory note or renewal of the same, Fisher and the Bank 
executed a consumer loan agreement for "renewal" of the 1991 note 
on August 10, 1992.  The Bank thereafter sought the co-signature 
of Duncan on what it deemed "renewal documents," evidencing 
Fisher's request for renewal.  Duncan refused to sign the papers, 
based upon Fisher's past delinquencies in paying on previous 
notes, and her belief that he intended to move the collateral to 
an undisclosed location.  Duncan insisted that the Bank call the 
1991 note due and liquidate Fisher's automobiles in satisfaction 
of the debt.  
 
Fisher continued to make regular payments on the debt until 
May 1993.  In early June 1993, when the debt was delinquent, 
Fisher notified the Bank that he was arranging refinancing in 
Texas to pay the debt in full.  He requested that the automobile 
titles be sent to him in Texas in order to facilitate the 
refinancing process.  The Bank complied, and sent them to Texas 
without signing the titles or intending to release its lien on the 
collateral.  In July 1993, Fisher informed the Bank that he did 
not intend to make any further payments on the note, and that the 
automobiles were now in Mexico. 
 
No. 95-0148-FT 
 
 
 
6 
 
The Bank explored the possibility of pursuing criminal 
charges against Fisher, and issued notices of Right to Cure to 
both Fisher and Duncan.  After these notices did not produce a 
response, the Bank commenced an action against Fisher and Duncan 
for their obligations on the 1992 note.  Fisher did not appear, 
and the Bank obtained a default judgment against him.  Duncan was 
present, and claimed that she was not liable under the terms of 
the 1992 note as she had not signed the document, and furthermore, 
because of the Bank's unconscionable conduct in releasing the car 
titles to Fisher. 
 
Following a bench trial, the circuit court found the Bank's 
course of conduct toward Duncan unconscionable and in violation of 
the Wisconsin Consumer Act, as defined in Wis. Stat. § 425.107.  
The court determined that the Bank's releasing of the unsigned 
titles to Fisher left Duncan in a position in which she had "an 
absence of meaningful choice,
3" and should therefore be relieved 
of any liability under the note.  The court of appeals reversed, 
finding it significant that Duncan had not shown that before the 
Bank mailed the titles to Fisher, she had a "meaningful choice."  
Therefore, the appellate court reasoned: 
Because Duncan failed to show that she had a "meaningful 
choice" regarding the security before the bank mailed 
the titles to Fisher, she failed to show the bank's 
conduct in that regard affected her choices after that 
event.  We conclude that the bank's conduct did not 
deprive Duncan of a meaningful choice.  For that reason 
                     
     
3  See Discount Fabric House v. Wisc. Telephone Co., 117 
Wis. 2d 587, 601, 345 N.W.2d 417 (1984). 
 
No. 95-0148-FT 
 
 
 
7 
we 
conclude 
that 
the 
bank's 
conduct 
was 
not 
"unconscionable." 
River Bank, No. 95-0148-FT, slip op. at 8.  (Emphasis added). 
 
The case before us requires this court to consider the 
obligations of the parties relative to a series of promissory 
notes, as well as their conduct under the Wisconsin Consumer Act, 
which have combined to produce the current litigation.  The 
interpretation and application of a statute to undisputed facts is 
a question of law, which this court reviews without deference to 
the lower courts.  IBM Credit Corp. v. Allouez, 188 Wis. 2d 143, 
149, 524 N.W.2d 132 (1994). 
 
Prior to any analysis of the alleged "unconscionable" conduct 
on the part of the Bank for purposes of the Wisconsin Consumer 
Act, we consider a procedural argument raised by Duncan in her 
brief as well as during oral argument.  Duncan argues that for the 
first time since the pleadings were filed in this case, the Bank, 
in its brief to this court, has conceded that Duncan was not 
liable under the terms of the 1992 note.  The pleadings, however, 
demonstrate that the 1992 note, once in default, had formed the 
basis for the Bank's suit against both Fisher and Duncan.  Yet, 
referring to Duncan's refusal to co-sign the 1992 note, the Bank 
states in its brief that "Duncan did not consider herself bound by 
its terms when the Bank renewed the [1992] note with Fisher.  At 
that point, neither did River Bank."  (Appellant's Brief, at 26). 
 
No. 95-0148-FT 
 
 
 
8 
 A position to the contrary has not thereafter been expressed by 
the Bank. 
 
Despite this concession before the court, the Bank seeks to 
rely upon a letter which it sent to Duncan in August 1992, stating 
that Duncan would remain legally obligated to repay the balance 
owing on the original promissory note, renewed in June 1991.  
Duncan, however, asserts that there is no unpaid balance on such 
note, as the Bank's own records demonstrate that the Bank applied 
the proceeds of the new 1992 note, which it executed with Fisher 
alone, to payment of the balance of the 1991 note, thereby closing 
the account on August 18, 1992.  Duncan concludes that the present 
balance due and payable on the 1992 note simply represents a legal 
obligation which Fisher undertook with the Bank in July 1992, and 
because she refused to co-sign, she is not obligated under its 
terms.  In light of this contention, we must therefore shift our 
focus to a consideration of the payment history of the notes in 
question, as provided in the record before us. 
 
The payment history of the 1990 note, as evidenced by the 
Bank's records, indicates that in June 1991, prior to the 
execution of the 1991 renewal note, the 1990 note had an unpaid 
balance of $4,694.16.  Shortly after the 1991 renewal note was 
signed by both Fisher and Duncan, the Bank records show that the 
1990 note was marked "paid by renewal" on June 29, 1991.  In 
accord with standard banking practices, this notation illustrated 
that the 1990 note was not extinguished, but was simply being 
 
No. 95-0148-FT 
 
 
 
9 
renewed by the Bank under the same terms and conditions, absent an 
express agreement to the contrary.  It is the long and well 
settled doctrine in this state that a renewal of a note or the 
extension of time in which to pay a pre-existing debt is not a 
discharge or extinguishment of the original obligation.  Bank of 
Verona v. Stewart, 223 Wis. 577, 270 N.W. 534 (1937); Rielly v. 
Arnsmeier, 220 Wis. 564, 265 N.W. 713 (1936) (citing Rosendale 
State Bank v. Holland, 195 Wis. 131, 127, 217 N.W. 645 (1928)).  
At this point in the parties' banking relationship, both Fisher 
and Duncan remained legally obligated under the original 1990 note 
by virtue of the 1991 renewal. 
 
The controversy in this case, however, focuses upon the 
payment history of the 1992 note.  Unlike the previously 
undisputed renewal in 1991, the execution of the 1992 note 
represented a significant departure from the parties' prior 
relations.  First, the loan application and promissory note were 
signed by Fisher alone.  The Bank had previously required Duncan 
to co-sign the notes, as Fisher had been unable to qualify for the 
original 1990 note nor the first renewal on his own.  This time, 
however, the Bank agreed to proceed with execution of a new 
promissory note with Fisher in the absence of Duncan's co-signing, 
though it later attempted to seek Duncan's signature on the note 
without success.   
The language of the note itself indicates 
that it was Fisher, as the borrower, who was requesting that the 
 
No. 95-0148-FT 
 
 
 
10 
1991 note be renewed: "[y]ou
4 executed a promissory note payable 
to our order dated July 26, 1991 (Note) evidencing a loan (Loan) 
which Note is further described as Note number 12068 in the 
principal amount of $4,694.16.  You have requested that the Note 
be renewed."  Thus, the 1992 note was not an automatic renewal by 
the Bank in accord with the renewal clause contained in the 
original note, nor was it a continuation of the same note under 
the same terms and conditions as the Bank had previously claimed, 
but later conceded in its brief to this court.
5 
 
Second, the terms of the 1992 note were substantially 
dissimilar to the prior loan documents.  The modified document 
drafted by the Bank included a provision which stated as follows: 
You acknowledge that we are under no duty to preserve or 
protect any Collateral until we are in actual, or 
constructive possession of the Collateral.  For purposes 
of this paragraph, we shall only be considered to be in 
`actual' possession of the Collateral when we have 
physical, immediate, and exclusive control over the 
Collateral and have affirmatively accepted such control. 
                     
     
4  The 1992 Consumer Loan Agreement provided that "as used 
herein, the pronouns "you" and "your" refer to Borrower and anyone 
who signs this form, individually and together . . . ." 
     
5  We do not reach the issue of the Bank's obligation in a 
consumer loan transaction where a co-signor expressly objects to 
the Bank's attempt to indefinitely renew a promissory note in 
accord with a standard renewal clause, in the absence of the co-
signor's consent. 
 
No. 95-0148-FT 
 
 
 
11 
 We shall only be considered to be in `constructive' 
possession of the Collateral when we have both the power 
and the intent to exercise control over the Collateral. 
Furthermore, the Bank explicitly permitted Fisher to relocate the 
antique automobiles to San Juan, Texas, a provision to which 
Duncan strongly objected, given her expressed concerns about 
Fisher's intent to relocate the collateral in an undisclosed 
location.  Duncan's prior willingness to co-sign the promissory 
note and first renewal had been predicated upon the readily 
accessible nature of the collateral, as it is undisputed that the 
value of the automobiles exceeded the amount of the note.  By the 
Bank's own admission at trial, the extensive modification of the 
terms of the 1992 note would have required the signature of Duncan 
in order to enforce the note against her in a later proceeding.  
The Bank has, therefore, conceded that Duncan is not liable under 
the terms of the 1992 note. 
 
Finally, and perhaps most convincing, is the payment history 
of the 1991 note contained within the record.  Unlike the 1990 
note which was designated as "paid by renewal," and exhibited an 
outstanding balance of $4,694.16, the Bank's records clearly 
demonstrate that a closing payment of $4,145.12 was made to 
account #12068, the 1991 note, on August 18, 1992.  A figure of 
$0.00 (zero) is plainly noted in the balance column, as the 
account includes an opening date of June 26, 1991, and an 
August 18, 1992, date of last payment and closing.  As Duncan 
 
No. 95-0148-FT 
 
 
 
12 
correctly contends, the closing payment by the Bank in this case 
extinguished her previously underlying obligation on the 1991 
note, as the Bank made a decision in the course of business to 
execute a new promissory note with Fisher in July 1992 which 
satisfied the debt. 
  
We therefore conclude that the 1992 note, an agreement 
between the Bank and Fisher alone, represents the only agreement 
in existence at this time which evidences the current debt which 
is in default.  Duncan was not made a party to this note, and 
therefore, its provisions cannot be enforced against her.  The 
Bank initiated the instant proceedings against Duncan under the 
mistaken belief that she remained liable on the 1992 note, prior 
to its concession in this court to the contrary.  The Bank was 
incorrect, and as such, no recovery may be had from Duncan.  
 
Duncan has requested that attorney fees be awarded to her in 
this case.  After a thorough examination of the record, we 
conclude that the Bank's conduct toward Duncan throughout the 
consumer loan transaction, though in error, did not rise to a 
level of unconscionability under the Wisconsin Consumer Act.
6  An 
order of even date has been issued by this court directing the 
parties to submit memorandum briefs discussing the issue of 
                     
     
6  Justice Abrahamson, however, would conclude that the Bank 
engaged in a course of conduct toward Duncan that was unfair and 
therefore was unconscionable.  Accordingly, Justice Abrahamson 
would hold that Duncan is entitled to attorney fees. 
 
No. 95-0148-FT 
 
 
 
13 
whether attorney fees should be awarded to Duncan on other 
grounds.   
 
By the Court.—The decision of the court of appeals is 
reversed.  
 
No. 95-0148-FT 
 
 
 
 
SUPREME COURT OF WISCONSIN 
 
                                                              
 
Case No.: 
 
95-0148-FT 
                                                              
 
Complete Title 
of Case: 
River Bank of De Soto f/n/a De Soto State  
 
 
 
Bank,   
 
 
        Plaintiff-Appellant,  
 
 
         v.  
 
 
 
Raymond Fisher,   
 
 
        Defendant,  
 
 
 
Karen Fisher Duncan,   
 
 
        Defendant-Respondent-Petitioner.  
  
 
 
______________________________________ 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
 
 
 
Reported at:  196 Wis. 2d 373, 539 N.W.2d 136 
 
 
 
 
 
 
 
(Ct. App. 1995) 
 
 
 
 
 
 
 
UNPUBLISHED 
 
 
                                                              
 
Opinion Filed:  
June 26, 1996 
Submitted on Briefs: 
 
Oral Argument: 
May 29, 1996 
 
                                                              
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Vernon 
 
JUDGE: 
MICHAEL J. ROSBOROUGH 
 
                                                              
 
JUSTICES: 
 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating: 
 
                                                              
 
ATTORNEYS:  
For the defendant-respondent-petitioner there were 
briefs by Ann I. Brandau and Hoffman, Addis, Pittman & Brandau, 
LaCrosse and oral argument by Ann I. Brandau and Phillip J. Addis. 
 
 
 
 
 
For the plaintiff-appellant there was a brief by Donald K. 
Schott, Valerie L. Bailey-Rihn and Quarles & Brady, Madison and 
 
No. 95-0148-FT 
 
 
Daniel J. Duke, LaCrosse and oral argument by Valerie L. Bailey-
Rihn. 
 
 
Amicus curiae brief was filed by John E. Knight, James E. 
Bartzen and Boardman, Suhr, Curry & Field, Madison for the 
Wisconsin Bankers Association.