Court Opinion

ID: 9576405
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:24:10.354064+00
Date Added: 2024-06-11T13:07:02.606741
License: Public Domain

DYKMAN, J.
(dissenting). When courts decide to make substantial changes in the way business must be done in Wisconsin, two problems usually arise. First, the impact of the change, and its burden on ordinary business transactions is not considered, because the usual inquiry and debate of the legislative process is bypassed. *30The beliefs of a very few persons are substituted for that process. The supreme court has cautioned:
[B]efore a change in the law is made, a court, if it is to act responsibly, must be able to foresee with reasonable clarity the results of its decision and to say with reasonable certainty that the change will serve the best interests of society.
Hoven v. Kelble, 79 Wis. 2d 444, 470, 256 N.W.2d 379, 392 (1977).
The second problem is that other issues in the case must be dealt with in a manner that permits the court to reach the main issue. This results in changes in other areas of law where no need for change exists. Here, unnecessary changes are made in summitry judgment methodology, punitive damages analysis and negligence law.
SUMMARY JUDGMENT
Summary judgment methodology is purely statutory and has been reviewed many times. See, e.g., In re Cherokee Park Plat, 113 Wis. 2d 112, 115-16, 334 N.W.2d 580, 582-83 (Ct. App. 1983). In Kallembach v. State, 129 Wis. 2d 402, 407, 385 N.W.2d 215, 218 (Ct. App. 1986), we considered whether a trial court's erroneous denial of a motion for summary judgment should be reviewed using standard summary judgment methodology. After noting the state's insistence that we ignore an adverse jury verdict, and review only the order denying its motion for summary judgment, we said:
We also note that this is not the first time that a plaintiff successful before a jury risks ultimate defeat for the trial court's failure to grant summary judgment to the defendant. In Gross v. Midwest Speed*31ways, Inc., 81 Wis. 2d 129, 260 N.W.2d 36 (1977), the plaintiff obtained a favorable judgment following a jury trial. The defendant appealed from the judgment on the ground that its motion for summary judgment should have been granted. The Gross court held that the defendant had not waived the right of review and that summary judgment should have been granted. The court reversed and remanded with instructions to grant summary judgment dismissing the complaint. (Footnote omitted.) Id.
The same situation presents itself here. There is no reason to limit Gross and Kallembach to cases where a motion for a directed verdict is not made. The majority further confuses summary judgment methodology because it suggests a "possible retrial" were it to follow Kallembach. A grant of summary judgment terminates the litigation. Summary judgment methodology is needlessly complicated where no one suggests that this complication is necessary.
PUNITIVE DAMAGES
The record does not reveal why Esser brought a counterclaim in which she alleged the same cause of action she had previously asserted as an affirmative defense. Section 802.02(3), Stats., provides that fraud is an affirmative defense, and that where a party has mistakenly designated a defense as a counterclaim, the court should permit amendment of the pleading to conform to a proper designation. However, the bank did not object to Esser's use of an affirmative defense as a counterclaim. This procedure led to unusual results, such as the trial court granting the bank's motion for a directed verdict, though the jury had yet to consider Esser's contention that she was not liable on her guarantee because of the bank's fraud.
*32Nonetheless, the parties ultimately concluded that the result of a verdict favorable to Esser would mean that Esser's "damages" would be identical to the amount owing on the note, causing neither party to owe each other anything. The court's judgment reflected this conclusion, and it is apparent from the majority opinion that this is a case where the plaintiff had no damages. "A general and perhaps almost universally accepted rule is that punitive damages cannot be awarded in the absence of actual damages." Tucker v. Marcus, 142 Wis. 2d 425, 438-39, 418 N.W.2d 818, 823 (1988).1
The majority's decision to announce a new tort necessarily requires that it overrule Tucker, for in debtor and creditor cases, the result of oral nondisclosure of the terms of a note or guarantee will always be that the "damages" of the debtor will equal the amount due on the note. Thus, a "universally accepted rule" falls because the majority has concluded that the relationship between debtor and creditor must be altered.
NEGLIGENCE
Another longstanding rule falls victim to the new tort promulgated today. We recently reaffirmed that generally, as a matter of law, "a person is negligent if he or she signs a contract without ascertaining its contents and is not prevented from doing so, even if induced to sign by fraudulent misrepresentations." Ritchie v. Clap*33pier, 109 Wis. 2d 399, 404-05, 326 N.W.2d 131, 134 (Ct. App. 1982). In Ritchie, the person who signed a document without reading it was a college graduate and a real estate salesman. The document was entitled "QUIT CLAIM DEED." We concluded that as a matter of law, the deed signer was negligent for not reading the deed. Id. at 406, 326 N.W.2d at 134-35.
Esser had one and one-half years of college where she studied accounting, and did well. She was a branch manager for an insurance company in Madison for ten years, and trained agents to sell life insurance. She also supervised secretaries and prepared information for tax returns. She had worked for six years for an insurance company in Appleton, where she was a junior executive. She had been an officer at Cottage Grove State Bank, and had worked at First Wisconsin National Bank in Madison. The document she signed was captioned "Wisconsin Banker's Association form 151 — CONTINUING GUARANTY (unlimited)."
I question the majority's assertion that Esser had no special experience or knowledge that would excuse her from reading and understanding the guarantee she signed. The majority admits that the general rule is that a person is negligent for not reading a document that he or she signs. Esser is at least an average bank customer, if not a seasoned veteran of the business world. I do not see much difference between Esser's financial sophistication and that of the real estate salesman in Ritchie. If Esser is not covered by the general rule, then virtually all bank customers are not covered by the general rule. The "general rule" is thus made applicable to virtually no one.
*34TORT OF ORAL NONDISCLOSURE
The majority finds the bank liable for punitive damages because its agent did not orally disclose a term of the guarantee Esser signed. The only statements made by the bank's loan officer were "These are the papers for the new loan" and "You sign here." The majority finds these two statements sufficient to subject the bank to punitive damages because the loan officer did not go further and orally explain the terms of Esser's guarantee to her.
The majority attempts to minimize the breadth of its new rule by suggesting "This is not a case where the bank officers simply failed to disclose the terms of a document." Majority opinion at 28. Were that assertion correct, this dissent would be unnecessary. The rule of stare decisis, however, is that similar fact situations should yield similar results. Therefore, those using this case as precedent will look not to the majority's assertions, but to the facts of this case. Those facts describe the usual, mine-run "closing," which occurs every day when a commercial or consumer loan is made. The facts of this case, and of most loan closings are:
1. A previous relationship between lender and borrower (here, 5 years).
2. A brief closing (here, less than two minutes) with little conversation.
3. Innocuous statements by lender's agent (here: "These are the papers for the new loan" and "you sign here.").
4. Several loan documents written on standard forms.
5. Testimony by the borrower that he or she trusted the lender's agent, and that he or she did *35not read the documents that the borrower signed.
6. Loan documents containing extensive agreements which protect the lender if the borrower defaults, together with disclosure documents required by federal and state legislation.
If these facts are present, and they will be in most cases, trial courts will follow the majority opinion and conclude that the tort of oral nondisclosure has been alleged, or proven. The jury will then determine the amount of punitive damages the lender should pay the borrower.
It is apparently irrelevant that a claim for punitive damages alone is not sufficient to support a cause of action. Hanson, 51 Wis. 2d at 474, 187 N.W.2d at 155. The disclosure requirements of the Wisconsin Consumer Act consumer credit transactions, subchapter III, ch. 422, Stats., and those of the Truth in Lending Act, 15 U.S.C. secs. 1601 et seq., even if followed exactly, sis they were here, are no defense to this new tort. It is not significant that a debtor signs a document which contains the terms of an agreement, and it is not enough that a debtor signs an "Explanation of Personal Obligation" which warns: "This explanation is not the agreement under which you are obligated, and the guaranty or agreement you have executed must be consulted for the exact terms of your obligations." Esser signed such documents.
The majority's rule requires a lender, at its peril, to assure that a debtor cannot testify that he or she did not understand a part of a contract that he or she signed. We do not require so strict a test when determining whether a guilty plea in a criminal case may be withdrawn. State v. Bangert, 131 Wis. 2d 246, 267-68, 389 N.W.2d 12, 23 (1986). Lending institutions are now de facto fiduciaries *36with respect to their customers, a holding we only recently disavowed except where "special circumstances" exist. Production Credit Ass'n v. Croft, 143 Wis. 2d 746, 755, 423 N.W.2d 544, 547 (Ct. App. 1988).
The result of adopting the new tort of oral nondisclosure will certainly affect the public. In Citizens State Bank v. Timm, Schmidt & Co., 113 Wis. 2d 376, 384, 335 N.W.2d 361, 365 (1983), the court considered the economic costs of its decision:
If relying third parties, such as creditors, are not allowed to recover, the cost of credit to the general public will increase because creditors will either have to absorb the costs of bad loans made in reliance on faulty information or hire independent accountants to verify the information received.
Few persons will benefit from the higher interest rates required to cover the costs of defending against the new tort of oral nondisclosure.
We are an error correcting court. State ex rel. Swan v. Elections Bd., 133 Wis. 2d 87, 94, 394 N.W.2d 732, 735 (1986). We will necessarily have a high volume of cases which should be reviewed soon after briefing is completed. Unnecessarily going beyond a search of existing law is time consuming, and interferes with our ability to timely address the issues of other cases. We could have easily avoided this. Until now, this type of case was decided by an inquiry into the relationship between the debt for which a mortgage was taken or a guarantee signed, and the debt sought to be included in the ambit of the mortgage or guarantee. Examples of this type of case are John Miller Supply Co. v. Western State Bank, 55 Wis. 2d 385, 199 N.W.2d 161 (1972), Capocasa v. First Nat. Bank, 36 Wis. 2d 714, 154 N.W.2d 271 (1967), *37and Schmitz v. Grudzinski, 141 Wis. 2d 867, 416 N.W.2d 639 (Ct. App. 1987).
John Miller, Capocasa and Schmitz examine dragnet clauses in documents similar to the clause in the guarantee Esser signed. In Schmitz, we repeated the rule that courts will examine the relationship between the debt sued upon and the document creating the debt. 141 Wis. 2d at 874-75, 416 N.W.2d at 642. The Schmitz document was a real estate security agreement, but the theory is no different here. Following Schmitz, we should determine whether the relationship between the truck loan and the business loan is "so . . . unclear that as a matter of public policy a court will refuse to enforce the clause . . .." Id.
I conclude that the nexus between the truck loan and the business loan which had been discharged in bankruptcy is so wholly unrelated that as a matter of public policy I would refiise to enforce the guarantee as it relates to the business loan. The "no big surprises" rule of Schmitz illustrates and dictates this result. 141 Wis. 2d at 874, 416 N.W.2d at 642. There is no need to adopt a new tort to reach a just result in the case before us.

 Tucker goes further to explain that actual damages does not mean a harm or injury, but an "actual injury which would justify an award of actual or compensatory damages . . .." Tucker, 142 Wis. 2d at 440, 418 N.W.2d at 823 (quoting Hanson v. Valdivia, 51 Wis. 2d 466, 474, 187 N.W.2d 151, 155 (1971)) (emphasis added in Tucker). There is nothing in this case which would justify an award of actual damages.