author: Fairchild, J.

text:
    State ex rel. Gudlin, Appellant, v. Civil Service Commission of City of West Allis, Respondent.

      February 1

    March 30, 1965.

      For the appellant there were briefs by Goldberg, Previant & Uelmen and oral argument by John S. Williamson, Jr., all of Milwaukee.
    For the respondent there was a brief and oral argument by William T. Schmid, city attorney of West Allis.
   Fairchild, J.

Sec. 66.19 (1), Stats., empowers any city or village to establish “a civil service system of selection, tenure and status. . . Such a system is required to include a civil service board or commission, but the statute imposes no other requirements pertinent to this case.

Sec. 2.47 of the ordinances of the city of West Allis established a civil-service system and a commission. Sec. 2.47 (3) authorizes the commissioners to adopt “such rules and regulations to carry out the provisions of this section as in their judgment shall be necessary to secure the best service for the city and each department affected thereby. . . .”

Sec. 2.47 (7) is entitled “Demotion and Dismissal Procedure.” It provides in part:

“(a) Whenever a person possessing appointing power in the city believes that an officer or employee in the classified service in his department has acted in such a manner as to show him to be incompetent or to have merited suspension, demotion or dismissal, he shall report in writing to the civil service commission, setting forth specifically his complaint, and may suspend the officer or employee at the time such complaint is filed.”

Provision is also made for notice to the employee of the charges and of a hearing thereon. Sec. 2.47 (7) further provides:

“At the termination of the hearing, the commission shall determine whether the charge is well founded and shall take such action by way of suspension, demotion, discharge or re-instatement, as it may deem requisite and proper under the circumstances and as its rules may provide . . . The decision of the commission shall be final and conclusive upon both the city and the accused.”

The commission has adopted a set of rules and regulations. Rule X is entitled “Discharge,” and provides, in part:

“The following will be considered as causes for discharge, suspension or reduction although discharges, suspensions or reductions may be made for other causes:
“That an officer or employee in the classified civil service “(a) Has been convicted of a criminal offense or of a misdemeanor involving moral turpitude; or
“(b) Has been guilty of an immoral or criminal act . . . “(e) Has been guilty of any conduct unbecoming an officer or employee of the City; or
“(j) Is wantonly offensive in his conduct or language towards the public or towards City officers or employees.

The city attorney conceded that the commission should not apply (a), above, because the convictions of ordinance violations were not convictions of criminal offenses or misdemeanors involving moral turpitude. The commission concluded that appellant’s conduct constituted cause for discharge under (b), (e), and (j). It should be observed that although no criminal prosecution was instituted, appellant’s admitted conduct included criminal offenses repeated over a long period of time. The record suggests his divorce was not final and that he was guilty of adultery, a felony. He was at least guilty of fornication, a misdemeanor. Very probably his activity also constituted lewd and lascivious conduct, a misdemeanor.

There is no statutory provision for judicial review of the action of the commission. Review by certiorari is limited to the following questions:

“(1) Whether the board kept within its jurisdiction, (2) whether it acted according to law, (3) whether its action was arbitrary, oppressive, or unreasonable and represented its will and not its judgment, and (4) whether the evidence was such that it might reasonably make the order or determination in question.”

The record does not describe appellant’s duties as a water tradesman. Thus it cannot be said that appellant’s willingness to conduct his personal life in violation of accepted standards, nor the instance of failure to cooperate with the police directly impairs the adequacy of his performance of his duties. Appellant argues that the commission has no jurisdiction over an employee’s off-the-job conduct unrelated to the performance of his duties or the efficiency of his department. He argues further that the phrases “immoral act,” “conduct unbecoming an employee of the city,” and “conduct wantonly offensive toward the public” are so vague when applied to conduct unrelated to duties that any such application is arbitrary and capricious.

The principal question, as we see it, is whether the municipal employer has any legitimate concern with the maintenance by its employees of acceptable standards of personal conduct outside their work; i.e.} whether a departure from such standards has a rational bearing upon general fitness to continue in public employment. This question, in the instant case, can be answered only by resort to general principles. Neither the statute authorizing creation of a “civil service system of selection, tenure and status,” nor the ordinance establishing this system contains any relevant express limitation upon the power of discharge. The provisions in the ordinance, relied upon by appellant, that the regulations shall be those “necessary to secure the best service for the city and each department affected thereby” impose no closer restriction than would be implied in any event from the concept of “tenure and status” in the statute.

“Such [civil service] laws usually provide that employees under the civil service can be removed only for some dereliction, or neglect or incapacity to perform some duty, or some general delinquency affecting their general character and fitness for officej and upon written charges, a hearing and evidence, and not otherwise.” (Italics supplied.)

The supreme court of Pennsylvania has said, “Unbecoming conduct is also any conduct which has a tendency to destroy public respect for municipal employees and confidence in the operation of municipal services.” In the particular case a city fireman was indefinitely suspended for improper conduct with a mentally retarded minor girl.

The supreme court of Nebraska held that a city council could properly make a rule that members of the fire department “will be governed by the ordinary rules of good behavior observed by law-abiding citizens.” In that case a fireman was discharged for conduct off duty and at his home, fighting with police officers while in the apparently proper performance of their duties.

The court said :

“It is contended that a fireman’s conduct while off duty is of no concern to the city and that authority is lacking to suspend or discharge a fireman for conduct, while off duty, necessary for ‘the proper management or discipline, or for the more effective working or service of the fire department.' We think a city under the quoted section of the statute is authorized not only to inquire into the private character and conduct of an applicant for a position on the fire department to determine whether they meet the standards required by the city of those seeking such employment, but to make such inquiries after employment at any and all times. A city is not required to keep persons in its employ whose conduct is embarrassing or inimical to the interests of the city. Kennett v. Barber, 159 Fla. 81, 31 So. 2d 44; Arehart v. School District, 137 Neb. 369, 289 N. W. 540.”

It has been held that a foreman in a city street department was properly discharged for cause when he had been convicted of abortion. “Obviously, conviction of a crime involving moral turpitude constitutes such cause.”

The supreme court of Florida upheld the discharge of a fireman who became drunk while off duty and beat his wife and another woman.

The supreme court of Arkansas decided that off-duty operation of a gambling device by an employee in the city health department “was of such a nature as to bring him into disrepute as a municipal employee” and was a proper basis for discharge.

A trial court in New York upheld the dismissal of a civil engineer who was found to have committed sodomy, although the criminal prosecution had been dismissed.

There are a number of cases where discharges of police officers have been upheld where, off duty, they maintained improper association with girls or women. The principle of these cases may not, however, apply with equal force to the instant case because a policeman’s failure to live up to acceptable moral standards has a more-palpable tendency to undermine public respect for law enforcement than would be the case with many other employees.

Appellant relies upon a line of authority holding that a municipal officer may be removed only for cause specially relating to the administration of his office. It is apparent that there are inconsistent statements in some of the decisions with respect to removal of public officers and employees. In McQuillin’s text, separate treatment to some extent is given to elective officers, officers appointed for a definite term, civil service employees, appointive officers without term, and employees usually holding at the pleasure of a superior. Some of the differences in treatment are of historical origin. One might explain more restrictive rules as to the removal of officers elected or appointed for fixed terms on the basis that their entire fitness is periodically reviewed by the electorate or appointing authority, whereas the fitness of an employee with civil-service tenure is not ordinarily reviewed except in disciplinary proceedings. We conclude that the authority cited by appellant, and applicable to elected officers, does not control the present case.

Appellant cites statements of this court in proceedings for the discipline of attorneys indicating that the court would not ordinarily seek out nor concern itself with moral delinquencies in the private life of an attorney which do not affect his duties and responsibilities as an attorney. In this case, however, we are reviewing the power of the commission and the question whether its action was arbitrary or capricious. We are not reviewing the exercise of its discretion, if within proper bounds. This court, moreover, has long recognized conduct amounting to moral turpitude as a proper ground for disbarment.

Appellant argues that the phrases of the commission’s rule defining cause for discharge are too vague. We point out that the impropriety of appellant’s conduct has been determined by the legislature, in prescribing criminal penalties for it, and the commission did not need to resort to any subjective standard in order to deem it immoral, unbecoming, and offensive. Moreover, courts have often upheld discharges for conduct described by similar phrases : “Unbecoming conduct,” “conduct prejudicial to good order,” and for “conduct unbecoming an officer,” or “employee,” or “gentleman.”

We are of the opinion that there must be an area where conduct of an employee of a municipality or other unit of government in violation of important and fundamental standards of propriety is of legitimate concern to the municipality. This is so because the municipality is part of the apparatus of government and the public reasonably expects all government to be concerned with the maintenance of good order. When an employee’s unacceptable conduct falls within this area of concern, we find no implication in the statute or ordinance that such conduct cannot be cause for discharge unless it can be shown directly to impair performance of duties.

We summarize our conclusions in this case as follows:

Where a municipal employee has-been discharged under a statute or ordinance which endows him with tenure, one appropriate question is whether some deficiency has been demonstrated which can reasonably be said to have a tendency to impair his performance of the duties of his position or the efficiency of the group with which he works. The record here provides no basis for finding that the irregularities in appellant’s conduct have any such tendency. It must, however, also be true that conduct of a municipal employee, with tenure, in violation of important standards of good order can be so substantial, oft repeated, flagrant, or serious that his retention in service will undermine public confidence in the municipal service. In such case the conduct can reasonably be deemed cause for suspension or discharge even though it has no direct bearing upon his performance of his duties. Because arbitrary and capricious action must be avoided, the concept of “cause” should be the more strictly construed the less the relevance of the conduct complained of to the performance of duty.

Appellant’s long-continued, unlawful, and morally unacceptable conduct involved in the major charge against him could reasonably be placed by the commission in the second category. Thus it provided, with the other charge as makeweight, sufficient grounds for suspension or discharge if the commission saw fit. Although a period of suspension, with reinstatement conditioned upon proof of a change in appellant’s relationship, might have been adequate to protect the city’s interests, we cannot say that the choice of discharge was arbitrary, oppressive, or unreasonable, nor that it represented will rather than judgment.

The learned circuit judge correctly concluded that the action must be dismissed.

By the Court. — Judgment affirmed.

       Much more detailed provisions appear in statutes providing for civil service systems for the city of Milwaukee, sec. 63.18, Stats., et seq., for counties, secs. 63.01-63.17 (see also sec. 59.07 (20)), and for state employees, secs. 16.01-16.32.

        State ex rel. Wasilewski v. Board of School Directors (1961), 14 Wis. (2d) 243, 255, 111 N. W. (2d) 198.

       4 McQuillin, Mun. Corp. (3d ed.), p. 296, sec. 12.248.

        In re Zeber’s Appeal (1959), 398 Pa. 35, 43, 156 Atl. (2d) 821, 825.

         Lewis v. Omaha (1950), 153 Neb. 11, 13, 43 N. W. (2d) 419.

       Id., page 13.

         Ballurio v. Castellini (1954), 29 N. J. Super. 383, 102 Atl. (2d) 662, 666.

         Kennett v. Barber (1947), 159 Fla. 81, 31 So. (2d) 44.

         McNeal v. Civil Service Comm. (1963), 237 Ark. 301, 372 S. W. (2d) 614.

        Berman v. Gillroy (1950), 198 Misc. 369, 97 N. Y. Supp. (2d) 521, affirmed 305 N. Y. 688, 112 N. E. (2d) 771, 105 N. Y. Supp. (2d) 902, certiorari denied 347 U. S. 921, 74 Sup. Ct. 521, 98 L. Ed. 1076.

       37 Am. Jur., Municipal Corporations, p. 870, sec. 242; Wilson v. Highland Park (1938), 284 Mich. 96, 278 N. W. 778, 116 A. L. R. 352.

       4 McQuillin, Mun. Corp. (3d ed.), p. 239, sec. 12.231.

       Ibid, page 242, sec. 12.232.

       Ibid, page 280, sec. 12.247.

       Ibid, page 298, sec. 12.249.

       Ibid, page 305, sec. 12.250.

        In re Richter (1925), 187 Wis. 490, 504, 204 N. W. 492; In re Stolen (1927), 193 Wis. 602, 613, 214 N. W. 379, 216 N. W. 127.

         State v. McCarthy (1949), 255 Wis. 234, 246, 38 N. W. (2d) 679; State v. McKinnon (1953), 263 Wis. 413, 416, 57 N. W. (2d) 404.

        In re Zeber’s Appeal, supra, footnote 4; 3 Antieau, Mun. Corp. Law, p. 288.42, sec. 22.22.

        Bolieu v. San Antonio (Tex. Civ. App. 1959), 330 S. W. (2d) 234.

        Appeal of Emmons (1960), 63 N. J. Super. 136, 164 Atl. (2d) 184; McNiff v. Waterbury (1909), 82 Conn. 43, 72 Atl. 572.

        Bruno v. Civil Service Comm. (1962), 38 Ill. App. (2d) 100, 186 N. E. (2d) 108.

        McNeal v. Civil Service Comm., supra, footnote 9.


source: Caselaw Access Project

author: Hallows, J.

license: Public Domain

text:
    Marshall, Appellant, v. Bellin, Respondent.

      March 1

    March 30, 1965.

      For the appellant there was a brief by Jerome H. Block, and oral argument by Gerald J. Bloch, both of Appleton.
    For the respondent there was a brief by Van Susteren, Bollenbeck, Patterson, Froelich & Jensen and Edward R. Bollenbeck, all of Appleton, and oral argument by Joseph A. Van Susteren.

   Hallows, J.

The facts giving rise to the issue are not disputed. Only the plaintiff and a physical therapist testified. Marie Brown suffered a fracture of her ankle on March 28, 1959, and was taken to the Appleton Memorial Hospital where her personal physician Dr. James Laird called in the plaintiff, an orthopedic surgeon, to treat her. The plaintiff gave Marie Brown emergency treatment but since she was under sedation did not discuss with her the payment of any bill for his services which she would incur. The next day the plaintiff talked to the defendant in the hall outside Marie Brown’s hospital room about her injuries. The plaintiff did not know either the defendant or Marie Brown and thought the defendant was her husband. According to the uncon-tradicted testimony of the plaintiff, the defendant “volunteered at that time that I shouldn’t worry about the medical expenses; that he would take care of the expenses.” In reference to this meeting the plaintiff also testified the defendant said, “The usual thing which is — Don’t worry about the bill Doc, I’ll take care of everything.”,

On April 2d the plaintiff performed surgery on Marie Brown’s ankle and she was discharged from the hospital on April 7th but continued treatments at the plaintiff’s office. During one of these visits, either on April 22d or 27th, the defendant according to the testimony of the plaintiff “brought up again the question of her account” and “he wanted to know how Marie was coming along and he again volunteered that he would take care of the account.”

Sometime in July, 1959, thé plaintiff was informed Marie Brown was not the wife of the defendant but that she was going to marry him. About this time the plaintiff according to his office practice commenced sending bills to Marie Brown monthly. In March and in May, 1960, the defendant sent a $10 check to the plaintiff with a notation thereon that it was for Marie Brown’s account. At the trial the plaintiff’s bill of $640 was stipulated as reasonable.

The issue is whether the defendant’s oral promise is an unconditional and a primary or original one, and thus outside the statute of frauds, sec. 241.02 (2), Stats., or is a collateral promise to answer for the debt of another and void because not in writing and subscribed by the defendant. While the facts are not in dispute, the distinction between a promise to answer for the debt of another within the statute and an independent principal promise which is without the statute is universally and traditionally difficult to make.

Many mechanical tests have been evolved and espoused in the cases for determining the nature of the undertaking. Recently in Mann v. Erie Mfg. Co. (1963), 19 Wis. (2d) 455, 462, 120 N. W. (2d) 711, we examined the nature of this problem in relation to the statute of frauds and especially to the beneficial-consideration theory as the test of an original promise. We stated the nature of an oral promise should be determined as a matter of the parties’ intent free from “the mechanical application of generalized rules of assumed intention.” We pointed out the important considerations were “the form of the promise, the nature of the consideration, the language of the promise used in light of the circumstances, the motive and object-of making the promise.”

The trial court found the defendant did not intend his oral promise to be an original undertaking. The evidence is skimpy and unsatisfactory to sustain the plaintiff’s burden of proof. The exact language of the oral promise is not in the record and therefore there is considerable doubt just what the defendant promised or intended to promise. It is pointed out that the trial court’s finding that the defendant’s promise was not an original undertaking is a finding of fact based upon a reasonable inference and not against the great weight and clear preponderance of the evidence and should not be disturbed on appeal. Had the trial court found the opposite, namely, that it was an original undertaking, we would have upheld that result.

The plaintiff argues the defendant’s oral promise.is taken out of the statute of frauds because the payment by the two checks constitutes part performance. This activity was by the promisor rather than the promisee which is required under the fraud theory of part performance. However, we think the equitable doctrine does not apply to oral promises to answer for the debt of another. See Rowell v. Smith. (1905), 123 Wis. 510, 102 N. W. 1. The equitable doctrine of part performance applies generally to the sale of land. See 3 Williston, Contracts (3d ed.), p. 770, sec. 533; Huntoon v. Powell (1928), 88 Cal. App. 657, 263 Pac. 1030; Andress Motor Co. v. Hamilton & Horn Motor Co. (La. App. 1948), 35 So. (2d) 272; 49 Am. Jur., Statute of Frauds, p. 803, sec. 500; and 37 C. J. S., Frauds, Statute of, p. 773, sec. 253.

By the Court. — Judgment affirmed.

       “241.02 Agreements, what must be written. In the following' case every agreement shall be void unless such agreement or some note or memorandum thereof, expressing the consideration, be in writing and subscribed by the party charged therewith: . . . .
      “(2) Every special promise to answer for the debt, default or miscarriage of another person.”


text:
    Sparkman, Plaintiff in error, v. State, Defendant in error.

      March 5

    April 2, 1965.

      For the plaintiff in error there was a brief and oral argument by Lloyd A. Barbee of Milwaukee.
    For the defendant in error the cause was argued by Betty R. Brown and William A. Plats, assistant attorneys general, with whom on the brief was Bronson C. La Follette, attorney general.

       Motion for rehearing denied, without costs, on June 25, 1965.

   Hallows, J.

The defendant makes three claims for reversal: (1) He was constitutionally entitled as an indigent to appointed counsel at his preliminary hearing; (2) he appeared manacled or handcuffed at the preliminary hearing and subsequently three times before the trial court; and (3) there is not. sufficient credible evidence to sustain the verdict of guilty. We will consider these alleged grounds for reversal in reverse order.

Defendant did not move for a new trial or to set aside the verdict on the ground of insufficient evidence and therefore has no right to a review of the evidence. Dascenzo v. State (1965), 26 Wis. (2d) 225, 132 N. W. (2d) 231; State v. Tuttle (1963), 21 Wis. (2d) 147, 124 N. W. (2d) 9; State v. Dunn (1960), 10 Wis. (2d) 447, 103 N. W. (2d) 36; and Ferry v. State (1954), 266 Wis. 508, 63 N. W. (2d) 741. Moreover, the defendant’s contention that he cannot be convicted on uncorroborated evidence of an accomplice is not true as a rule of law and is not supported by the facts. It is true that in some states by statute uncorroborated testimony of an accomplice will not support a conviction; however, that was not the rule at common law where uncorroborated testimony of an accomplice could be accepted by the jury unless it was bald perjury, preposterous, or self-contradictory. 20 Am. Jur., Evidence, pp. 1087-1091, secs. 1235, 1237, 1238. If the court allowed the case based on uncorroborated testimony of an accomplice to go to the jury it was customary for the court to caution the jury not only as to the danger of acting upon such testimony but also to scrutinize such testimony and accept it with caution. The uncorroborated testimony of an accomplice is, however, competent evidence upon which to base a verdict of guilty if it is of such a nature that it is entitled to belief and the jury believes it. Varga v. State (1930), 201 Wis. 579, 230 N. W. 629; Millin v. State (1926), 191 Wis. 188, 210 N. W. 411; Murphy v. State (1905), 124 Wis. 635, 102 N. W. 1087; Means v. State (1905), 125 Wis. 650, 104 N. W. 815; and Porath v. State (1895), 90 Wis. 527, 63 N. W. 1061.

A fortiori testimony of an accomplice which is corroborated by physical facts or other testimony is sufficient to sustain a conviction. State v. Ketchum (1952), 263 Wis. 82, 56 N. W. (2d) 531; Anno. 96 A. L. R. (2d) 1185, Witness-Accomplice-Corroboration. Here, the corroborating testimony of other witnesses and the physical evidence confirmed material parts of the accomplice’s testimony and also connected the defendant with the commission of the crime.

The defendant argues reversal is required because he was manacled during the preliminary hearing and on three other occasions before the court prior to his trial. No claim is made the defendant was manacled at his arraignment or at his trial before the jury. A review upon a writ of error is limited in scope to the correction of mistakes appearing on the face of the record. Babbitt v. State (1964), 23 Wis. (2d) 446, 127 N. W. (2d) 405; Martin v. State (1941), 236 Wis. 571, 295 N. W. 681; and Ogden v. State (1916), 162 Wis. 500, 156 N. W. 476. Procedurally, therefore, this issue is not before us because the record does not disclose the defendant was manacled at the preliminary hearing; but even if he were it would not be a ground for reversal.

We must point out that the evils sought to be avoided by permitting the defendant to appear free from shackles is the creation of prejudice in the minds of the jury before whom the defendant is tried. The rule that the accused should not be manacled at his trial is not absolute as the safety of the prisoner and others may demand shackles even in the presence of the jury. It is for the trial court rather than the police to determine whether such caution is necessary to prevent violence or escape. Such action on the part of the trial court should not be reversed on appeal unless it amounts to abuse of discretion. 14 Am. Jur., Criminal Law, p. 855, sec. 132. The general rule is stated in Way v. United States (10th Cir. 1960), 285 Fed. (2d) 253, 254, as:

“It is the general rule that under ordinary circumstances freedom from handcuffs, shackles, or manacles of a defendant during the trial of a criminal case is an important component of a fair and impartial trial. In other words, such procedure should not be permitted except to prevent the escape of the accused, to prevent him from injuring others, and to maintain a quiet and peaceable trial. . . .”

To the same effect are the cases cited by the defendant, Blair v. Commonwealth (1916), 171 Ky. 319, 188 S. W. 390; French v. State (Okla. Crim. 1963), 377 Pac. (2d) 501; and State v. Coursolle (1959), 255 Minn. 384, 97 N. W. (2d) 472, which condemn the practice of handcuffing the accused or his witnesses in the presence of the jury.

The defendant contends the due-process and the equal-protection clauses of the Fourteenth amendment of the federal constitution and sec. 7, art. I of the state constitution providing “in all criminal prosecutions” the accused has the right to the assistance of counsel entitle him as an indigent to appointed counsel at his preliminary hearing. Our last expression on this issue was in State ex rel. Offerdahl v. State (1962), 17 Wis. (2d) 334, 116 N. W. (2d) 809, when we stated there was no constitutional right to be provided with counsel at a preliminary hearing arising under either the state or federal constitution because a preliminary hearing was not a criminal prosecution within the meaning of the constitutional provisions. We stated, however, the practice of appointing counsel prior to the preliminary hearing was to be encouraged.

We do not reach the question whether an indigent has a constitutional right to appointed counsel at a preliminary hearing on this record. Although extradition papers are not in the record, it is stated in several places the defendant was extradited from Illinois. A fugitive from justice within the meaning of the constitution and the laws of the United States is not entitled to a preliminary hearing before an information is filed against him. This is one of the exceptions to the requirement of a preliminary hearing in sec. 955.18 (1), Stats. Johns v. State (1961), 14 Wis. (2d) 119, 109 N. W. (2d) 490. Although the defendant was not entitled to a preliminary hearing, he did in fact have one. No testimony given by the defendant at that hearing was used against him at his trial and no claim is made he was prejudiced at the trial because of the denial of counsel at the preliminary hearing. Although there have been some developments in the constitutional right to appointed counsel since our decision in State ex rel. Offerdahl v. State, supra, we reserve for future consideration the constitutional aspect of appointing counsel for an indigent at the preliminary-hearing level.

However, on grounds of public policy we adopt a rule for prospective application only that an indigent is entitled to appointed counsel at or prior to a preliminary hearing unless intelligently waived. Wisconsin from early statehood has been concerned with its duty to provide counsel in criminal cases for indigents and has not depended upon or awaited the increasing scope of the commands of the Fourteenth amendment. In the very early cases of Carpenter v. County of Dane (1859), 9 Wis. 249 (*274), and Dane County v. Smith (1861), 13 Wis. 654 (*585), this court recognized a trial court had the power and the duty to appoint counsel at county expense for an indigent accused. The grounds for the existence of this power sprang from “necessities of the case” and the demands of “public justice and sound policy.” This power and duty were based on common law and supported by arguments from the various provisions of sec. 7, art. I of the Wisconsin constitution providing an accused with the right to assistance of counsel and with other rights calculated as necessary to secure a fair trial; the justice and humane result arising from the exercise of such power; the interest of the public in the correct and fair administration of its criminal laws; and the practice of the courts from the first organization of the government. These reasons, although used to sustain the right to appoint counsel at the trial, take on new significance and meaning under modern criminal procedure which often demands earlier representation if it is to be effective.

There are many statutory provisions recognizing an accused needs counsel before trial if such representation is to be effective and the accused is to be afforded the opportunity to be fairly tried. Appointment of counsel for an indigent charged with a felony must be made in time to enable counsel to attend the taking of any deposition. Sec. 957.26, Stats. A preliminary hearing since 1849, has been considered an essential step in the criminal process involving felonies. Sec. 954.04, and ch. 145, sec. 8, R. S. 1849. Since 1875 the statutes have provided that with two exceptions no information shall be filed without first holding a preliminary examination. Sec. 955.18 (1) and sec. 4654, R. S. 1878. An accused may have retained counsel at a preliminary hearing and cross-examine prosecution witnesses. Sec. 954.08 (1), and ch. 145, sec. 13, R. S. 1849. It is a crime for one holding a person in custody whether that person is charged with a crime or not to deny him the right to consult and be advised by an attorney at his own expense if he requests a named attorney. Sec. 946.75. A district attorney is commanded in sec. 270.125 (4) to inform the prisoners awaiting trial of their right to counsel and to compulsory process to procure the attendance of witnesses at least ten days before each general term of court.

Other compelling reasons for requiring the defendant to be represented by counsel at least as early as the preliminary hearing include the avoidance of the adverse psychological factors affecting an unrepresented defendant, the furnishing of opportunity for effectively preparing the defense of cross-examining government witnesses at the preliminary, and the preservation of testimony of other witnesses which might be lost. Equal Justice for the Accused, Report by the Special Committee of 'the Association of the Bar of the City of New York and National Legal Aid and Defender Association (1959), page 60; Beaney, Right to Counsel Before Arraignment, 45 Minnesota Law Review (1961), 771. See Wyatt v. Wolf (Okla. Crim. 1958), 324 Pac. (2d) 548; Application of Gillette (Okla. Crim. 1960), 349 Pac. (2d) 769. At a preliminary hearing the prosecution is generally represented by the district attorney and it is often desirable for the defendant to be so represented. A preliminary hearing is to determine probable cause for denying the accused his right to liberty and it is important that at that determination the defendant’s right to freedom is fairly represented.

But we think a most compelling ground of public policy is the prevention of the possibility of the violation of constitutional right of a fair trial occurring at the trial itself. Up to the present, the United States supreme court has not decided'that failure to appoint counsel at a preliminary hearing is a violation per se of the due-process clause. The “fair trial” rule considers the lack of counsel as only one pertinent element in determining whether a trial was unfair, but its retrospective approach does not require counsel to be initially appointed. In Crooker v. California (1958), 357 U. S. 433, 439, 78 Sup. Ct. 1287, 2 L. Ed. (2d) 1448, the court said:

“Under these principles, state refusal of a request to engage counsel violates due process not only if the accused is deprived of counsel at trial on the merits, Chandler v. Fretag, supra, but also if he is deprived of counsel for any part of the pretrial proceedings, provided that he is so prejudiced thereby as to infect his subsequent trial with an absence of ‘that fundamental fairness essential to the very concept of justice.’ ”

The concept of the critical stage when the appointment of counsel should have been made as developed in Hamilton v. Alabama (1961), 368 U. S. 52, 82 Sup. Ct. 157, 7 L. Ed. (2d) 114, and in White v. Maryland (1963), 373 U. S. 59, 83 Sup. Ct. 1050, 10 L. Ed. (2d) 193, appears to depend not per se on the absence of counsel prior to trial but on whether there was some occurrence or omission which subsequently affected the fairness of the trial and which occurrence or omission presumably would have been avoided if the accused had been represented by counsel. In Hamilton the arraignment was held to be a critical stage because under Alabama state law certain pleas were required to be made at that time or they were waived. In White the indigent entered a plea of guilty at a preliminary hearing although not required to do so and such plea was later admitted in evidence against him.

The cases since Hamilton and White have continued to find a violation of due process only in situations where actual prejudice resulted. Latham v. Crouse (10th Cir. 1963), 320 Fed. (2d) 120; United States v. Reincke (2d Cir. 1964), 333 Fed. (2d) 608; State v. Sullivan (10th Cir. 1955), 227 Fed. (2d) 511; DeToro v. Pepersack (4th Cir. 1964), 332 Fed. (2d) 341; Commonwealth ex rel. Maisenhelder v. Rundle (1964), 414 Pa. 11, 198 Atl. (2d) 565; Sanders v. Cox (1964), 74 N. M. 525, 395 Pac. (2d) 353; Headen v. United States (C. A. D. C. 1963), 317 Fed. (2d) 145. However, it must be recognized that the appointment of counsel at the preliminary hearing examination would tend to insure fairness at the trial stage and to avoid the type of situation which led to a reversal in White v. Maryland, supra.

This holding that the indigent accused is entitled to representation at public expense at a preliminary hearing is made prospective only and any violation thereof is subject to the harmless-error rule. Pulaski v. State (1964), 24 Wis. (2d) 450, 129 N. W. (2d) 204. In the instant case no claim of prejudice is made; reversal is urged solely because the denial of counsel was per se a violation of a claimed constitutional right to counsel. But the question of a constitutional right to counsel we expressly reserve for future consideration. In addition Mr. Justice Wilkie and the writer would reach the constitutional question on this record and hold that the indigent accused has a constitutional right to appointed counsel at a preliminary hearing on the grounds: (1) Such hearing is a necessary part of “in all criminal prosecutions” under sec. 7, art. I of the Wisconsin constitution, (2) to insure a fair trial under the due-process clause of the Fourteenth amendment of the United States constitution, and (3) because an accused has a statutory right to retained counsel at a preliminary hearing, an accused who is indigent is entitled to appointed counsel under the equal-protection clause of the Fourteenth amendment.

By the Court. — Judgment affirmed.

       Three days after this decision was handed down the United States supreme court reserved the same question in Pointer v. State of Texas (1965), 380 U. S. 400, 85 Sup. Ct. 1065, 13 L. Ed. (2d) 923.


author: Heffernan, J.

text:
    Bornemann and wife, Appellants, v. City of New Berlin, Respondent.

      February 4

    March 2, 1965.

      For the appellants there were briefs and oral argument by Paul E. Bornemann of Milwaukee.
    For the respondent there was a brief and oral argument by Clayton A. Cramer of Waukesha.
   Heffernan, J.

This appeal presents these issues:

(1) Did the trial court abuse its discretion in granting an extension of time to the city in which to answer the complaint ?

(2) Did the city’s answer meet the requirements of sec. 263.13, Stats. ?

(3) Was it prejudicial error for the trial court to grant the city’s motion for summary judgment when such notice of motion was given more than forty days after the joinder of issue and no extension of time had been granted within which to make this motion ?

(4) Which of the two statutes of limitations, sec. 66.60 (12) (a) and (e) or sec. 330.24, Stats., is applicable to plaintiffs’ cause of action ?

(5) Can plaintiffs question the taxation of costs on this appeal ?

Extension of Time to Answer.

The time for answering the complaint expired May 10th. On May 20th, only ten days later, the order to show cause for extension of time to answer was served. In passing on the question of whether a court abuses its discretion in granting an enlargement of time under sec. 269.45, Stats., prompt action by a defaulting party to remedy the situation caused by his neglect is a material factor to be considered in determining whether such neglect is “excusable” within the meaning of sec. 269.45. Cruis Along Boats, Inc., v. Standard Steel Products Mfg. Co. (1964), 22 Wis. (2d) 403, 410, 126 N. W. (2d) 85, and cases therein cited. See also Daugherty v. Herte (1946), 249 Wis. 543, 549, 550, 25 N. W. (2d) 437. An enlargement of time granted by a trial court pursuant to sec. 269.45, Stats., is highly discretionary. Valentine v. Patrick Warren Construction Co. (1953), 263 Wis. 143, 170, 56 N. W. (2d) 860. Rarely will this court interfere with such exercise of discretion. We find no abuse of discretion in the instant case.

Sufficiency of Answer.

Plaintiffs contend that, when the trial court passed on the motions for summary judgment, there was no defense pleaded to the cause of action set forth in plaintiffs’ complaint because the city’s answer was a nullity. This contention is grounded on the premise that the answer was merely a general denial, and, therefore, did not comply with sec. 263.13, Stats., which provides in part as follows:

“The answer of the defendant must contain:
“(1) A specific denial of each material allegation of the complaint controverted by the defendant, or of any knowledge or information thereof sufficient to form a belief.”

A summary of the answer is as follows: It specifically admits the allegations contained in the first five paragraphs of the complaint; it admits one of the allegations of paragraph 6, denies the remaining allegations of this paragraph, and alleges that the rules and regulations governing the assessment were established by.the common council of the city in the manner provided by law; it admits the allegations of paragraph 7; as to the allegations contained in paragraph 8, it denies that the assessment against plaintiffs’ property was arbitrary, capricious, and contrary to the rules of the common council and state statutes, and alleges the assessment was made in the manner provided by law; it admits the allegations of paragraph 9, and denies each and every allegation of paragraph 10; it denies each and every allegation of paragraph 11; it admits certain of the allegations of paragraph 12 and denies the others; alleges plaintiffs made a voluntary payment of the $4,180.50 special assessment, and their cause of action is barred by sec. 66.60 (12) (a) and (e), Stats., because they failed to pursue the remedy provided by sec. 66.60 (12) (a), (b), (d), (e),and(f).

We find no merit whatever to plaintiffs’ assertion that this answer constituted a general denial. While the admissions were surplusage the denials were specific enough to meet the requirements of sec. 263.13, Stats. Furthermore, the answer contained the proper pleading of an affirmative defense, i.e., a statute of limitations.

Granting of City's Motion for Summary Judgment.

While plaintiffs moved for summary judgment within forty days after the joinder of issue, the city’s notice of motion for summary judgment was served after the expiration of such forty-day period. The city made no application for enlargement of time in which .to serve such notice of motion. Sec. 270.635 (1), Stats., in part provides, “Notice of motion for summary judgment and the papers in support thereof shall be served within 40 days after issue is joined, subject to enlargement of time as provided in s. 269.45.”

This forty-day requirement was written into the statute by a court rule promulgated by this court in March, 1961, effective June 1, 1961. See 11 Wis. (2d) vi. The objective of this requirement was to prevent the employment of a motion for summary judgment for the purposes of delay and harassment. Clearly the city’s motion in this instance made only after plaintiffs had moved for summary judgment, and to be heard at the same time as plaintiffs’ motion, did not cause any delay. In fact, it expedited the disposition of the-case.

While sub. (3) of sec. 270.635, Stats., contains an express authorization for entry of summary judgment for plaintiff upon defendant’s moving for summary judgment even though plaintiff has not moved for such judgment, the converse is not expressly provided. However, we deem the trial court has inherent power to grant judgment for defendant under the fact situation in this case regardless of whether or not defendant’s motion for summary judgment was timely made. Cf. Costello v. Polenska (1943), 242 Wis. 204, 210, 7 N. W. (2d) 593, 8 N. W. (2d) 307. Furthermore, plaintiffs do not point out any reason why they were prejudiced by the court’s granting summary judgment for the city instead of proceeding to trial. They do not contend that they would be in any better position at trial to meet the city’s statute-of-limitations defense than they were at the hearing on the motions for summary judgment. In order to predicate a reversal on error, the error must be prejudicial. Sec. 274.37.

Applicable Statute of Limitations.

The trial court grounded its summary judgment in behalf of the city on sec. 66.60 (12) (a) and;(e), Stats. These statutes provide in part as follows:

“(a) If any person having an interest in any parcel of land affected by any determination of the governing body, pursuant to subs. (8) (c), (10) or (11), feels himself aggrieved thereby he may, within 40 days after the date of the notice or of the publication of the final resolution pursuant to sub. (8) (d), appeal therefrom to the circuit court of the county in which such property is situated. ... .
“(e) An appeal under .this subsection shall be the sole remedy of any person aggrieved by a determination of the governing body, . . . The limitation provided for in par. (a) shall not apply to appeals based upon fraud or upon latent defects in the construction of the improvement discovered after such period.”

Bornemann attached to his affidavit in support of plaintiffs’ motion for summary judgment a photostatic copy of the notice of special assessment he received from the city treasurer. This notice stated that the $4,180.50 special assessment had been made pursuant to a resolution of the common council adopted April 15, 1963. While the notice is undated, Bornemann’s affidavit states it was received on July 24 or 25, 1963. There is no issue of fraud or latent defect in the improvement. While par. (e) -of sec. 66.60 (12), Stats., states that the appeal provided for in par. (a) of this statute is the property owner’s exclusive remedy for attacking the assessment, plaintiffs contend that sec. 330.24 is the controlling statute of limitations. This latter statute provides:

“Every action or proceeding to avoid any special assessment, or taxes levied pursuant to the same, or to restrain the levy of such taxes or the sale of lands- for the nonpayment of such taxes, shall be brought within 9 months from the notice thereof, and not thereafter. This limitation shall cure all defects in the proceedings, and defects of power on the part of the officers making the assessment, except in cases where the lands are not liable to the assessment, or the city has no power to make any such assessment, or the amount of the assessment has been paid or a redemption made.” (Italics supplied.)

There is an apparent conflict between secs. 66.60 (12) (a) and (e), and 330.24, Stats. However, sec. 66.60 (12) (a) and (e) is limited to special assessments made by cities and villages pursuant to sec. 66.60 (1) (a), while sec. 330.24 is applicable to all special assessments. One of the well-recognized canons of statutory construction is that, in event of a conflict between a general and a specific statute, the latter controls. Wauwatosa v. Grunewald (1962), 18 Wis. (2d) 83, 87, 118 N. W. (2d) 128; Estate of Miller (1952), 261 Wis. 534, 536, 53 N. W. (2d) 172. The trial court, therefore, properly held that sec. 66.60 (12) (a) and (e) was the controlling statute and that plaintiffs’ alleged cause of action was barred thereby.

Review of Taxation of Costs.

Sec. 271.10 (4), Stats., provides in part as follows:

“The clerk shall note on the bill all items disallowed, and all items allowed, which have been objected to; and his action may be reviewed by the court on motion of the party aggrieved made and served within ten days after taxation, which review shall be founded on the bill of costs and the objections and proof on file in respect thereto.”

While plaintiffs, prior to the taxation of costs, filed written objections to certain items of disbursements specified in the notice to tax costs, they did not move for any review of the costs as taxed by the clerk within the ten-day period allotted by sec. 271.10 (4), Stats. Not having so moved they are barred from raising any issue on this appeal with respect to the costs taxed.

By the Court. — Judgment affirmed.


author: Beilfuss, J.

text:
    Stebane Nash Company, Respondent, v. Campbellsport Mutual Insurance Company and others, Appellants.

      March 1

    March 30, 1965.

      For the appellants there were briefs by Benton, Bosser, Fulton, Menn & Nehs of Appleton, for the Campbellsport Mutual Insurance Company and Equity Town Mutual Insurance Company, and by Bradford & Gabert of Appleton, for the American Mutual Fire Insurance Company, attorneys, and Peter S. Nelson of Appleton of counsel, and oral argument by Mr. Nelson and Mr. Stanley R. Gabert.

    For the respondent there was a brief by Don R. Herrling of Appleton, attorney, and Henry P. Hughes of Oshkosh of counsel, and oral argument by Mr. Herrling.

   Beilfuss, J.

The defendants raise several issues upon appeal. We will first consider their contention that there is no proof of damage as to any insurable interest possessed by the plaintiff corporation.

It is clear that the plaintiff corporation did not and does not own the real estate, including the garage building destroyed in the fire. It is also without dispute that the real estate was owned by the four Stebane brothers individually, and that they had leased it to the corporation for a rental of $80 per month.

We are committed to what has been characterized by other courts and text.writers as the “Wisconsin rule” of indemnity. The ‘ Wisconsin rule” was enunciated in Ramsdell v. Insurance Co. of North America (1928), 197 Wis. 136, 138, 221 N. W. 654, as follows:

“There is no dispute that each policy was an indemnity contract providing for payment only in case of loss and only to the extent of that loss. While at one time gambling contracts in insurance were permitted, the modern view is to the contrary. Now it is practically the uniform rule that one must have an insurable interest and a loss before one can collect on a policy of insurance. This rule is based on public policy.”

In the recent case of Ben-Hur Mfg. Co. v. Firemen’s Ins. Co. (1962), 18 Wis. (2d) 259, 262, 118 N. W. (2d) 159, we stated:

“Public policy requires an insurable interest in property insured. A gambling or wagering agreement is void, sec. 331.055, Stats.; but that section provides a contract of insurance made in good faith for the security or indemnity of the party insured shall be lawful and valid. A fire insurance policy is an agreement to indemnify one for a loss caused by the specific peril insured against; but to constitute a loss for which indemnity can be made, one must have in the property an interest which is recognized as insurable. Such interest must consist of such valuable relationships as the law will recognize and enforce and must be susceptible of pecuniary value. Vance, Insurance (2d ed.), p. 118, sec. 48. A person has an insurable interest in property when the relationship between him and the property is such that he has a reasonable expectation, based upon a real or legal right, of benefit to be derived from the continued existence of the property and of loss or liability from its destruction. Riggs v. Commercial Mut. Ins. Co. (1890), 125 N. Y. 7, 25 N. E. 1058; 3 Couch, Insurance (2d ed.), p. 86, sec. 24:13.
“This court defined the nature of insurable interest m somewhat-broader terms. A person need not have an absolute insurable right of property in the thing insured or even a special limited interest. It is sufficient if a person’s relationship to the property is such he would reasonably be expected to suffer a loss by the destruction of the property or to derive a benefit from its continued existence. Neither a legal nor an equitable interest nor any property interest as such in the subject matter is necessary. Horsch v. Dwelling House Ins. Co. (1890), 77 Wis. 4, 45 N. W. 945; Tischendorf v. Lynn Mut. Fire Ins. Co. (1926), 190 Wis. 33, 38, 208 N. W. 917. See also 29 Am. Jur., Insurance, p. 781, sec. 438.”

The defendants do not dispute the rule that a tenant may have had an insurable interest in the premises leased but vigorously contend that the plaintiff has not in any way proved what its insurable interest was or the value thereof.

A tenant’s insurable interest can consist of a business-interruption loss under a lease for a definite term, for improvements made or the right to make improvements, the right or obligation to make repairs, and other interest, but recovery after loss is limited to the extent of his insurable interest.

“If the insured has an insurable but only a qualified, partial, or limited interest in the property insured against fire, he may not recover the full value or an amount exceeding his actual interest in the res. . . . the general rule is that the insured is limited in recovery to the value of his actual interest in the property insured.” 3 Richards, Insurance (5th ed.), p. 1613, sec. 503.

The American Mutual and Campbellsport policies insured plaintiff to the extent of its interest in the land and building. The policies stated:

“. . . does insure the insured named above and legal representatives, to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for loss resulting from interruption of business or manufacture, nor in any event for more than the interest of the insured, . . .”

Similarly, the Equity policy provided:

“. . . does insure Stebane Nash Co., Inc., Forest Junction, Wisconsin and legal representatives, to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for los§ resulting from interruption of business or manufacturing, nor in any event for more than the interest of the insured, . . .”

Under our indemnity-for-loss rule and the provisions of the policies issued, the plaintiff corporation’s right to recovery is limited to its actual loss as determined by the evidence in the record. The only proof offered was as to the value of the building. Neither the lease nor any of its terms, other than monthly rental of $80 per month, appear. There is no proof the plaintiff corporation had made any improvements to the building nor that it was obligated to repair or insure the premises. The record is void of any evidence indicating that the plaintiff corporation suffered any financial loss by the destruction of the building. The damages of $14,000 to the building as found by the jury represented the fair market value of the building. This loss was sustained by the Stebane brothers individually and not by the corporation. The record does not show any obligation on the part of the corporation to reimburse the owners.

The plaintiff contends that the corporation was only a form of doing business and that the interest of the corporation and the Stebane brothers, the owners of the land, were one and the same and that there was a continuity of interest. Upon these arguments it urges that equity permit the corporation to assert the insurable interest that the brothers had in the building. If we were to accept this argument we would have to disregard the corporate entity. To do so would be to reject our latest pronouncement on this subject:

“A corporation is treated as an entity separate from its stockholder or stockholders under all ordinary circumstances. Although courts have made exceptions under some circumstances, this has been done where applying the corporate fiction ‘would accomplish some fraudulent purpose, operate as a constructive fraud, or defeat some strong equitable claim.’ Those who are responsible for the existence of the corporation are, in those situations, prevented from using its separate existence to accomplish an unconscionable result. In the present case, those who created the corporation in order to enjoy advantages flowing from its existence as a separate entity are asking that such existence be disregarded where it works a disadvantage to them. We do not consider it good policy to do so.” Jonas v. State (1963), 19 Wis. (2d) 638, 644, 121 N. W. (2d) 235.

In this instance, as in Jonas, it is the incorporators, not innocent or deserving third parties, who ask uk to “pierce the corporate veil.” We -are not persuaded that the rule should be changed.

Shortly before the trial, and almost three and one-half years after the loss, the Stebanes executed a release of their interest in the proceeds of the policies, authorized the corporation to collect the proceeds, and ratified all acts the corporation had taken in that respect. The policies required that proofs of loss be filed within sixty days and that an action be started within one year of the loss. The Stebane brothers at no time filed a proof of loss, nor did they commence an action. Three and one-half years after the loss they had no enforceable rights to assign.

The plaintiff finally contends, with very little or no evidence in the record to support it, that the parties really intended to insure the building; that the companies collected and retained the premiums with no offer to refund them; that the companies did not affirmatively raise the defense of no insurable interest by pleading, nor until the plaintiff’s evidence had been presented; that they were “coy” in concealing this defense until it was too late for the plaintiff to take remedial action.

• If the defendants were in fact “coy” in concealing their defense, and we express no opinion as to whether they were, we have no admiration for those tactics.

Under the indemnity theory of fire insurance contracts the plaintiff has the burden of proving his insurable interest — it follows that the defendant is not required to affirmatively allege a lack of insurable interest to be able to rely upon it as a defense.

While the facts of this case arouse our equitable sympathies, the plaintiff has slept too long on the remedies available to it. Probably since the issuance of the policies, and certainly since the serving of the proofs of loss, the plaintiff has had knowledge and access to all the facts that might have entitled it to a reformation of the policies. It is too late for the plaintiff to ask for such relief now and too late for us to grant it.

The plaintiff is not entitled to recover for the loss of the building.

The defendants next contend that the plaintiff wilfully misrepresented the value of its loss in its sworn proof of loss as a matter of law, and that defendants are, therefore, entitled to a dismissal of the complaints.

The policies are standard statutory fire policies (secs. 203.01 and 202.085, Stats.), and contain the following statutory provision:

“This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”

The defendants also urge that the trial court committed prejudicial error as to the form of the question inquiring as to fraudulent proofs of loss, and that instructions and the re-instruction given concerning the question were incorrect and prejudicial.

The arguments as to these last three issues all go to the recovery sought because of the loss or destruction of the personal property and will be considered together.

Without detailing the evidence as to the value of the personal property as set forth in the statement of facts, we conclude without hesitation that values found by the jury were within and amply supported by the credible evidence presented to them. This is not a case where the plaintiff claimed a loss or destruction of property that did not exist or was not in the fire. The claim of the defendants in their answers is that the values of the personal-property loss were wilfully misrepresented and that proofs of loss were false and fraudulent.

The purpose of plaintiff in submitting proofs of loss with figures representing cost or replacement value rather than depreciated market value is conflicting and, therefore, a jury question is presented. Juneau Store Co. v. Badger Mut. Fire Ins. Co. (1934), 216 Wis. 342, 257 N. W. 144; Wiesman v. American Ins. Co. (1924), 184 Wis. 523, 199 N. W. 55, 200 N. W. 304.

Overvaluation raises a presumption of fraud in proportion to the excess. However, there must be a showing that the statement is false and that such false statement is made with the knowledge that it is false and with the intent to deceive the insurer. Actual damage to the insurer is not required. An intent to deceive or defraud is required; this may be inferred from the circumstances. Where a party acts in good faith and with the honest belief that the property was worth the amount claimed, an excess found by the jury will not avoid recovery where intent to defraud is not shown. Juneau Store Co. v. Badger Mut. Fire Ins. Co., supra. For cases dealing with related problems see: Monahan v. Mutual Life Ins. Co. (1927), 192 Wis. 102, 212 N. W. 269; Wiesman v. American Ins. Co., supra; Meyer v. Home Ins. Co. (1906), 127 Wis. 293, 106 N. W. 1087; Beyer v. St. Paul Fire & Marine Ins. Co. (1901), 112 Wis. 138, 88 N. W. 57; F. Dohmen Co. (Ltd.) v. Niagara Fire Ins. Co. (1897), 96 Wis. 38, 71 N. W. 69.

There seems to be no room for dispute that plaintiff’s proofs of loss did not reflect the actual market value of all the property that was destroyed at the time of the fires. Many of the parts and much of the equipment were 'old, nevertheless replacement cost was submitted as the value of the goods. Rueben Stebane testified that if he could not obtain an old replacement part or piece of equipment he would have to purchase a new one. Often prices were obtained- from new-parts catalogues. Of course, for new parts, their value would remain at or near their “new” value.

Overvaluation on one hand and wilful misrepresentation and fraud on the other do not follow ipso jacto.

It could be argued quite fairly that Rueben acted in good faith, although misguided in his actions. The cases cited, supra, reflect the rule that even where overvaluation is great, and the circumstances would support a finding of fraud, nevertheless the question is one of fact for the jury.

Brief comment should be made as to defendants’ argument over the disparity between the values on the plaintiff’s tax return and the proofs of loss. “. . . statements made by a taxpayer as to the amount of his taxable property are not conclusive against him in actions between him and third parties.” Wiesman v. American Ins. Co., supra, page 532. Defendants’ argument overlooks the fact that in many instances the “depreciated tax value” is legitimately not related to actual market value. Accelerated-depreciation formulas are illustrative of this fact. Thus, when a depreciable asset is sold for more than its book value the gain is treated as taxable income. Suffice it to say — the disparity was evidence ; its weight was for the jury.

Question four of the special verdict, and the answers thereto, read as follows:

“Did the plaintiff file false and fraudulent proofs of loss in violation of the policies of defendants:
“(a) As to the damages resulting from the fire of July 17, 1959? Answer: No.
“(b) As to the damages resulting from the fire of July 23, 1959? Answer: No.”

The court instructed the jury as follows :

“Question 4 inquires as to whether or not the plaintiffs Stebane Nash Company — now known as Stebane Rambler, Incorporated — fraudulently represented to the three insurance companies, and the question reads as follows: [Question read.]
“This question is known, as the Court has previously indicated, as the ‘fraud question,’ and the burden of proof required to establish fraud is upon the party who claims to have been defrauded. In this case, as I have previously pointed out,.the burden is upon the three defendant insurance companies.
“In order to establish fraud there must have been made a representation which is false. The false representation does not have to be by word of mouth but may be by action or conduct on the part of the plaintiff.
“On the other hand, a mere expression of opinion does not constitute fraud. Whether or not the expression is made as a fact or as an opinion depends upon the circumstances as existed between the parties hereto. You are obliged to interpret the representations made in the light of the circumstances under which they were made.
“I have previously indicated that the defendant insurance companies contend that the plaintiff is guilty of fraudulent misrepresentation. A person is guilty of fraudulent misrepresentation if he or his agents at any time after a loss misrepresents the value of any of the property insured with the intent to deceive or mislead the insurer.
“To constitute a fraudulent misrepresentation there must be a false statement relating to a present or past state of facts.
“A statement is false if it states as fact or truth that which is known by the person making the statement to be false. When a misrepresentation as to the amount or extent of loss is made by a person who has the knowledge of its falsity for the purpose of having the insurer act thereon, the law infers that it was done for the purpose of misleading or deceiving the insurer.”

While deliberating, the jury returned to the courtroom for additional instructions. The following appears in the record:

“Foreman Hipke: Did the plaintiff file false and fraudulent proofs of loss in violation of the policies of the defendants?
“The jury wonders if it might have been meant false or fraudulent, rather than false and fraudulent!
“The Court: In other words, if you have to find both elements rather than just one element?
“Foreman Hipke: That is correct, your honor.”

The court’s reinstruction was as follows:

“In a situation of this kind the Court usually re-reads the instructions on the subject. However, in view of the fact there was a specific question here as to whether the sole question — as the Court understands it — is if the jury has to find both false and fraudulent in order to answer this question ‘yes’ or whether they can answer it ‘yes’ simply by finding one or the other, the Court will reply to the jury’s inquiry by saying that it is the duty of the jury in order to answer the question ‘yes’ to find both false and fraudulent. They must find both elements. In other words, if they find this were false but not fraudulent, they must answer this question ‘no.’ The words we used here were false and fraudulent, not ‘or.’ Therefore, you should find both elements in order to answer this question ‘yes.’ ”

The statutory policy provision is as follows :

“This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”

In construing this provision and the jury instructions given in connection therewith, the court stated in Juneau Store Co. v. Badger Mut. Fire Ins. Co., supra, at page 348:

“The second of the fundamental controversies arises from the claim that although the loss occurred, the respondent cannot recover because of wilfully false and fraudulent acts and deceits practiced in its representations. As to this second phase of this case, the learned trial judge said in substance, that even if there were an overvaluation of the stock of merchandise, if the insured acted in good faith, in the honest belief that the property destroyed was worth the amount of the valuation placed upon it, and did not intend it to deceive or defraud the insurance companies, it was entitled to a finding that such overvaluation was not fraudulent. He instructed the jury that ‘the proof must go further and satisfy ... by a clear and satisfactory preponderance of the evidence, that in making such overvaluation and in submitting sworn proof of it to the insurance companies, the plaintiff insured intended to deceive or defraud the insurance companies.’ He also told the jury, in connection with the quoted instructions, that the intentional falsification of books, records, invoices, or proof of loss, so as to show a greater amount of property on hand than existed, was fraudulent and would sustain a finding of fraud. Thus the facts may show an overvaluation by the insured, or the insured may admit it but deny any intention to defraud; the insurers then have the responsibility of meeting the requirements of the burden of proof to show the wilfulness and fraudulent character of such overvaluation.”

And in Meyer v. Home Ins. Co., supra, at page 299, we said:

“If there was false swearing within the meaning of the policy, it was immaterial whether plaintiffs derived any advantage to the prejudice of the defendants in consequence thereof or not. . . . The use of the words ‘false swearing’ in connection with the word ‘fraud’ plainly indicates that either fraud or false swearing was designed to have the effect of defeating the policy, regardless of the ultimate effect of the false swearing upon either party to the contract. False swearing, when knowingly and wilfully done with intent to defraud the insurer, avoids the policy regardless of the ultimate effect of such false swearing, and it is very plain that the word ‘fraud’ was used in connection with the words ‘false swearing’ so as to cover frauds otherwise than by false swearing. It is clear that if the words ‘false swearing’ be given their plain, ordinary meaning they cannot be held to mean that it was only ‘false swearing’ which worked an advantage to the insured to the prejudice or injury of the insurer in the adjustment and payment of the loss that can avoid the policy.”

The answers of the defendants affirmatively allege the plaintiff wilfully misrepresented its loss and served false and fraudulent proofs of loss.

The verdict question and the instructions, including the reinstructions, could have been presented so as to fix the issue more clearly. In addition to defining a wilful misrepresentation and fraud, the jury more properly should have been instructed to the effect that wilful misrepresentation or false swearing need not actually mislead or defraud the insurance company in order to avoid the policy. In passing upon this instruction we must note that the instruction did not inform the jury that the insurance companies must have been misled or defrauded but only advised them that false statements must have been made with intent to deceive. The instruction is not an erroneous statement of the law but it could have been more explicit.

The reinstruction, taken with the original instruction, does not change the import of the original instruction.

The evidence in the record amply supports a factual conclusion that the misrepresentations of the plaintiff in the proofs of loss as to value of the personal property, if they be such, were not wilfully or falsely made with the intention to deceive the insurer. The inadequacy of the verdict question and the instructions do not constitute prejudicial error.

The defendants contend it was error to send the insurance policies to the jury because the policy limits were exposed to the jury. The jury’s verdict in no way reflected any improper influence. The policies were given to the jury to aid them in their consideration of the misrepresentation or fraud question under a proper cautionary instruction.

We are asked to grant a new trial in the interest of justice under our discretionary power contained in sec. 251.09, Stats. We are not convinced it should be done.

By the Court. — Judgment affirmed in part and reversed in part, with directions to enter judgment for the plaintiff limited to a recovery for personal-property loss, consistent with the opinion. No costs to be taxed.

       See Bannon v. Insurance Co. of North America (1902), 115 Wis. 250, 91 N. W. 666.


author: Wilkie, J.

text:
    Hennington, Respondent, v. Valuch, d/b/a Paul Valuch Plumbing & Hardware, Appellant.

      March 1

    March 30, 1965.

      For the appellant there was a brief and oral argument by Stephen J. Hajduch of Milwaukee.
    For the respondent there was a brief by Peregrine, Schi-mens & Marcuvits of Milwaukee, and oral argument by Mathias G. Schimens.

   Wilkie, J.

The sole issue presented on this appeal is whether the trial court erred in entering judgment notwithstanding the verdict for respondent. A judgment notwithstanding the verdict admits the findings of the verdict to be true, but grants judgment on grounds other than decided by the jury. It is undisputed that the lateral from the Hen-nington building was not connected to the city’s sewer as specifically called for by the contract. Indeed appellant admitted in his answer that “sewer connections were made to an abandoned sewer not in operation.” Appellant defended the action on the ground that, while he did fail to tie into the proper sewer, the job that he did perform was done in a workmanlike manner. It is undisputed that what was done was done well. But appellant’s reason or excuse for not performing is not germane to the question of performance or nonperformance. No matter how finespun the justifications for failing to perform become, the fact is that what appellant connected Hennington’s lateral to was not a sewer. Thus appellant has failed to perform the terms of the contract wherein he promised: “Sewer to be connected at Curb.” Upon the undisputed facts, respondent was entitled to recover for appellant’s failure to carry out the contract.

By the Court. — Judgment affirmed.

        Shumway v. Milwaukee Athletic Club (1945), 247 Wis. 393, 20 N. W. (2d) 123.


text:
    Foryan, by Guardian ad litem, and another, Plaintiffs and Respondents, v. Firemen’s Fund Insurance Company, Defendant and Appellant: Schlitt and another, Defendants.

      March 1

    March 30, 1965.

      For the appellant there were briefs by Moen, Sheehan & Meyer and L. E. Sheehan, all of La Crosse, and oral argument by L. E. Sheehan.

    For the respondents there was a brief by Thomas M. Anich of Ashland, attorney, and Roy T. Traynor of Med-ford of counsel, and oral argument by Mr. Anich.

   Beilfuss, J.

The pertinent policy provisions are as follows :

“Part I — Liability
“Coverage A — Bodily Injury Liability:
“(Company agrees) to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:
“A. Bodily Injury . . . sustained by any person; arising out of the ownership, maintenance or use of the owned automobile or any nonowned automobile. . .
“Persons Insured: The following are insured under Part I: (b) with respect to a nonowned automobile: (1) the named insured, (2) any relative, but only with respect to a private passenger automobile or a trailer, provided the actual use thereof is with the permission of the owner ;
“Definition: Under Part I:
“ ‘Insured’ means a person or organization described under ‘persons insured’;
“ ‘Relative’ means a relative of the named insured who is a resident of the same household;
“ ‘Nonowned Automobile’ means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative other than a temporary substitute automobile.”

The defendant, Firemen’s Fund Insurance Company, in support of its motion for summary judgment, filed affidavits of Edward Schlitt and Helene Schlitt in which they state that they had on previous occasions given Cheryl permission to use the car but had instructed her not to let others drive it; that prior to April 13, 1961, Cheryl had lost her driver’s license; that they had forbidden her to drive thereafter and that her use of the car from April 13 to April 16, 1961, was not with their permission.

Prior to the time of the hearing on the motion, the whereabouts of Cheryl was unknown and no affidavits by her were submitted by either party.

In opposition to the affidavits filed on behalf of Firemen’s Fund which deny the owner’s permission to use the vehicle, the plaintiffs filed an' affidavit by Bruce Gillman, an attorney-at-law. Mr. Gillman’s affidavit states that shortly after the accident he was retained by Edward Schlitt, Helene Schlitt, and Cheryl to represent them in making claim for damages they sustained by virtue of the accident of April 16, 1961; that he, shortly after the accident, interviewed Edward Schlitt and Helene Schlitt with respect to whether Cheryl had permission to operate the automobile; and that:

“. . . Helene and Edward Schlitt explicitly replied that Cheryl McCutcheon Schlitt [sic] had general permission to operate the family automobile while at home, and that she had express permission to use said automobile the day of the accident, which occurred on April 16, 1961; that at no time was affiant advised directly or indirectly as to any limitations being imposed upon Cheryl McCutcheon Schlitt’s [sic] permission to use the automobile or to allow any of her friends to operate said automobile while in the company of their daughter, and that affiant to the present date has never been advised to the contrary.”

The'-affidavit further alleges that he, Gillman, is presently cocounsel for the Schlitts in an action for their damages now pending in the circuit court for Milwaukee county; that the nature and place of his employment has changed; and that the action is now being prosecuted by cocounsel.

The question before us is whether the Gillman affidavit raises a question of fact as to the permission of Sandra Sabbath to drive the Schlitt car.

In passing upon this question we reiterate our statements as they appear in Voysey v. Labisky (1960), 10 Wis. (2d) 274, 277, 103 N. W. (2d) 9:

“The rule is well established in this state that when it is shown there is a substantial issue of fact, or when the evidence on a material issue is in conflict, or if the inferences to be drawn from credible evidence are doubtful and uncertain, the motion for summary judgment should be denied. Likewise, when there is credible evidence which under any reasonable view will either support or admit of an inference in support or in denial of a claim of either party, it is for the jury to draw the proper inference and not for the court to determine which of two or more permissible inferences should prevail. Elder v. Sage (1950), 257 Wis. 214, 42 N. W. (2d) 919. We have often said that the power of the courts under the summary-judgment statute (sec. 270.635, 33 W. S. A., p. 309) is drastic and should be exercised only when it is plain there is no substantial issue of fact or of permissible inference from undisputed facts to be tried. De Bonville v. Travelers Ins. Co. (1959), 7 Wis. (2d) 255, 96 N. W. (2d) 509, 97 N. W. (2d) 392; Ondrejka v. Ondrejka (1958), 4 Wis. (2d) 277, 90 N. W. (2d) 615; Braun v. Jewett (1957), 1 Wis. (2d) 531, 85 N. W. (2d) 364; Undovc v. Ross (1954), 267 Wis. 182, 64 N. W. (2d) 747, 66 N. W. (2d) 200.”

And at page 280:

“Summary-judgment procedure is not to be a trial on affidavits and adverse examinations. It is aimed at a sham answer which is interposed to secure delay. Stafford v. General Supply Co. (1958), 5 Wis. (2d) 137, 92 N. W. (2d) 267. The plaintiff should not be foreclosed from proving his cause of action. It is not the duty of one opposing summary judgment to prove his case or to put in all his evidence on summary judgment. He defeats the motion if he shows by affidavit or other proof that there are issues of fact or reasonable inferences which can be drawn from the evidence. Parish v. Awschu Properties, Inc. (1945), 247 Wis. 166, 19 N. W. (2d) 276; Pelon v. Becco (1948), 253 Wis. 278, 34 N. W. (2d) 236. The court does not try the issues but decides on summary judgment whether there is an issue of fact to be tried. Bryan v. Nolle (1958), 5 Wis. (2d) 48, 92 N. W. (2d) 226.”

The question as to sufficiency of the Gillman affidavit is twofold: First, is the affiant competent to testify; and second, does the affidavit state facts sufficient to warrant a trial on the question of permission.

The affidavit alleges an attorney-client relationship between Gillman and the Schlitts, and the substance of a conversation made during the course of such relationship. Can the attorney, by affidavit, divulge the substance of that conversation ?

Sec. 325.22, Stats., provides as follows:

“Communications to attorneys. An attorney or counselor at law shall not be allowed to disclose a communication made by his client to him, or his advice given thereon in the course of his professional employment. This prohibition may be waived by the client, and does not include communications which the attorney needs to divulge for his own protection, or the protection of those with whom he deals, or which were made to him for the express purpose of being communicated to another, or being made public.”

Gillman does not stand in an attorney-client relationship to the plaintiffs, the defendant Firemen’s Fund, nor its assureds Michael Sabbath and Sandra Sabbath, and owes them no duty of statutory confidence. His clients, Cheryl Schlitt and Helene Schlitt, are not parties to the action. Edward Schlitt, as characterized by Firemen’s counsel, is only a “nominal party.”

The statute quoted above provides the “prohibition may be waived by the client, and does not include communications . . . which were made to him for the express purpose of being communicated to another, or being made public.” It does not appear that the disclosures made by Gillman in his affidavit are antagonistic to the purpose for which he was employed — on the contrary it is probable they were made to be communicated to others, or made public for a successful prosecution of any claims they might have. If Gillman’s affidavit violates the privileged-communications statute (sec. 325.22, supra), or any legal ethical standards, and upon the record before us we do not characterize it as such, the persons to whom the privilege is extended, the Schlitts, may independently pursue the remedy provided.

The affidavit of C. Wosick, a claims representative of Firemen’s Fund, filed in support of its motion for summary judgment, states he attempted to get Gillman to divulge the information as to permission. Firemen’s Fund is not now in a position to say Gillman’s action was improper.

At this stage of the proceedings, as the record now stands, it appears that Gillman can be called as a competent witness.

The Schlitt affidavits, in their bare essentials, state that Cheryl did not have permission to use the car at the time in question, and that she was never permitted to allow others to drive. Gillman’s affidavit states the Schlitts told him Cheryl had express permission to use the car at the time in question and that he was not advised of any limitation imposed upon Cheryl to allow others to drive.

In the event the Schlitts are called at the trial and testify on direct or cross-examination pursuant to their affidavits, the plaintiffs should be allowed to challenge their testimony by showing a prior, inconsistent statement. A prior inconsistent statement, if otherwise admissible, is a recognized exception to the hearsay rule and goes to credibility of the witness and the weight of the testimony as an aid to the trier of the fact.

The plaintiffs should not be required to prove their case by affidavits to defeat a motion for summary judgment, nor should the court speculate as to what the trial evidence may be. The plaintiffs defeat the motion if they show by affidavit or other proof that there are material issues of fact or reasonable inferences therefrom that are in dispute.

We conclude that there is a disputed issue of fact as to permission to drive the Schlitt automobile and the trial court correctly denied the motion for summary judgment.

Counsel for the parties set forth rules of express and implied permission in their briefs and oral arguments. The arguments and citations presented apply to the statutory omnibus-coverage policy provisions as required by sec. 204.-30 (3), Stats.

The omnibus insurance protection required by sec. 204.30 (3), Stats., follows the vehicle insured. The extended or additional insurance afforded by the family coverage of the use of nonowned automobiles, permitted but not required by statute, follows the driver insured.

Omnibus coverage insurance (wherein the car rather than the driver is covered) is, in part at least, for the benefit of the injured party, Pavelski v. Roginski (1957), 1 Wis. (2d) 345, 84 N. W. (2d) 84; the purpose thereof is to increase, rather than restrict, coverage, Groth v. Farmers Mut. Automobile Ins. Co. (1963), 21 Wis. (2d) 655, 124 N. W. (2d) 606; and, this court is committed to a broad or liberal construction of “permission” as used in the omnibus clauses, required to be included in automobile liability policies. Sec. 204.30 (3), Stats. Krebsbach v. Miller (1963), 22 Wis. (2d) 171, 125 N. W. (2d) 408.

Counsel for the parties have not attempted to discuss the difference in the concept of implied permission, if there be one, between the required omnibus policy provision and permissible extended family coverage while operating nonowned vehicles. Query — is implied permission to be viewed from the point of view of the driver of the car or the owner? We regret that this case will be sent back for trial without more explicit guidelines as to the question of implied permission as it applies to family coverage of nonowned automobiles, but we deem it desirable to do so for the reason that this issue has not been specifically raised nor presented on the appeal before us.

By the Court. — Order affirmed.

       Other supporting affidavits have been filed by both parties but will not be discussed herein for the reason that they are not determinative of the limited issue stated above.

       Canon 37, Canons of Professional Ethics.

       Firemen’s Fund cites Forbus v. La Crosse (1963), 21 Wis. (2d) 171, 124 N. W. (2d) 66, as authority for disregarding the Gillman affidavit. Forbus must be distinguished on its facts and does not control herein.

       “344.33 ‘Motor vehicle liability policy’ defined. (7) Excess or Additional Coverage. Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy and such excess or additional coverage is not subject to the provisions of this chapter. With respect to a policy which grants such excess or additional coverage the term ‘motor vehicle liability policy’ applies only to that part of the coverage which is required by this section.”


author: Per Curiam.

text:
    Graebner and another, Respondents, v. Industrial Commission, Appellant.

      March 1

    March 30, 1965.

    For the appellant the cause was argued by Roy G. Mita, assistant attorney general, with whom on the brief was Bronson C. La Follette, attorney general.
    For the respondents there was a brief and oral argument by Russell /. Mittelstadt, attorney, and Frank A. Ross, Sr., of counsel, both of Madison.
   Per Curiam.

Mr. Justice Wilkie having taken no part in the decision upon this appeal, and the other members of the court being equally divided on the question whether the judgment should be affirmed or reversed, Mr. Chief Justice Currie, Mr. Justice Fairchild, and Mr. Justice Gordon being of the opinion that the judgment should be reversed, and Mr. Justice Hallows, Mr. Justice Beilfuss, and Mr. Justice Heffernan being of the opinion that the judgment should be affirmed.

The judgment appealed from is affirmed.