author: Currie, C. J.

text:
    Nelson, Administratrix, and another, Plaintiffs, v. Ohio Casualty Insurance Company, Defendant and Respondent: United Fire & Casualty Company, Impleaded Defendant and Appellant.

      November 29, 1965

    January 4, 1966.

      For the appellant there was a brief by Stanley F. Schel-linger, attorney, and James G. Doyle of counsel, both of Milwaukee, and oral argument by Mr. Schellinger.

    For the respondent there was a brief by O’Meara & O’Meara of West Bend, and oral argument by Stephen O’Meara.

   Currie, C. J.

Plaintiffs’ complaint seeks recovery from Ohio Casualty on the basis that the two fellow employees of the deceased were additional insureds under Ohio Casualty’s policy of automobile liability insurance. Plaintiffs’ cause of action could not be grounded on any negligence of the city of Hartford as the named insured because the city’s liability arising by reason of the instant accident is confined solely to that imposed by the Workmen’s Compensation Act. For this reason Ohio Casualty’s cross complaint against United is also grounded upon the liability of United under its policy for the alleged negligent acts of the two fellow employees. Inasmuch as these two fellow employees are not encompassed within the definition of “insured” contained in United’s policy, Ohio Casualty grounds its claim, that United’s policy extended coverage to these two fellow employees, on the omnibus coverage statute, sec. 204.30 (3), Stats.

United advances these three contentions as to why the omnibus coverage statute is not applicable under the instant facts:

(1) This statute does not apply to general liability policies such as United’s policy.

(2) The truck which fatally injured the deceased was not “any automobile described in this policy” within the meaning of the words of this statute.

(3) The accident did not occur on a public highway.

Type of Policy.

United maintains that the omnibus coverage statute does not apply to a comprehensive liability policy which only insures motor vehicles operated on private premises or ways adjoining thereto. It has been stressed that this policy is modeled after the form drafted by the National Bureau of Casualty Underwriters which has been on file for the past twenty years with the commissioner of insurance. During that time the commissioner has never questioned the absence of an omnibus coverage clause to meet the requirement of sec. 204.80 (3), Stats. Long-continued administrative interpretation of a statute is a significant aid in statutory interpretation. Here there is no showing of a positive act of administrative interpretation but only a passive failure to act. Disregarding this feature, administrative interpretation is only of significance where.there is an ambiguity in the statute. It cannot overcome the plain wording of a statute where there is no ambiguity.

We find no ambiguity in sub. (3) of sec. 204.30, Stats., with respect to the type of policy to which it is applicable. The commencing words, “No such policy . . .” plainly relate back to the type of policy described in sub. (1), which reads:

“No policy of insurance against loss or damage resulting from accident or injury to a person, and for which the insured is liable, or against loss or damage to property caused by animals or by any motor vehicle, and for which the insured is liable, . . .”

We interpret this language to apply to any policy which extends coverage to damage caused by motor vehicle for which the insured is liable. It is conceded that the instant policy does insure the city of Hartford against claims for damage caused by motor vehicle accidents on the city’s premises and adjoining ways. We deem it immaterial that this coverage is provided by a comprehensive liability policy rather than one confined to coverage of motor vehicles. This interpretation of sec. 204.30 (3), Stats., is consistent with that given the direct-liability statute, sec. 204.30 (4).

Truck Not Described in Policy.

Sub. (3) of sec. 204.30, Stats., extends coverage to “any person or persons while riding in or operating any automobile described in this policy . . .” subject to after-stated limitations. Because the motor truck which fatally injured the deceased was not described in its policy, United contends the statute is not applicable to the instant situation. We had this same question before us in Snorek v. Boyle with respect to the statutory words, “the vehicle described therein” appearing in sub. (4) of sec. 204.30, the direct-liability statute. It was there determined that if the policy extends coverage to the vehicle involved in a particular accident, then such vehicle is a “vehicle described therein” within the meaning of such direct-liability statute. In reaching such result we stressed the broad remedial purpose that motivated the legislature in enacting sub. (4) of sec. 204.30. We have also interpreted sub. (3) of sec. 204.30 as having a broad remedial purpose which requires it to be liberally construed. Therefore, we interpret “automobile described in this policy” appearing in sub. (3) as having the same meaning as “vehicle described therein” found in sub. (4) of sec. 204.30, i. e., as any vehicle to which the policy extends coverage. This is in accord with the statement made by this court in Culver v. Webb, wherein the court was considering the omnibus coverage statute:

“Neither is the description of a particular automobile owned by the assured of essential importance.”

Accident Not Occurring on Public Highway.

We find no merit to the further contention made by United that sec. 204.30(3), Stats., is limited to motor vehicle accidents occurring on a public highway. In Snorek v. Boyle and Smedley v. Milwaukee Automobile Ins. Co. we emphasized the operation of a vehicle on a public street or highway in considering whether it fulfilled the category of a “motor vehicle” within the meaning of sub. (4) of sec. 204.30, the direct-liability statute. However, as made clear in the recent case of Rice v. Gruetzmacher, we were in those cases dealing with a class of motor-propelled vehicles so designed that they might never be used for transporting or drawing persons or property on a public highway. The Rice Case established that such a class of vehicles were not motor vehicles within the meaning of sec. 204.30 (4) unless operated on a public highway at the time the accident occurred.

A United States district court sitting in Minnesota in Travelers Ins. Co. v. American Fidelity & Casualty Co. was called upon to consider the applicability of sec. 204.30 (3), Wis. Stats., in connection with an off-the-highway motor vehicle accident where the insurance policy, although issued in Wisconsin, contained no omnibus coverage clause. The court held that the statute applied even though the accident occurred off the highway. We approve of this holding as it is consistent with the liberal interpretation of this omnibus coverage statute which has been employed by our court.

It is our considered determination that sec. 204.30 (3), Stats., is applicable to a policy of insurance extending liability coverage to a motor-propelled vehicle which is designed to transport or draw persons or property on the public highways, and it is immaterial whether the accident which triggers the claim of liability arose on private premises. The truck involved in the accident which fatally injured the deceased obviously was such type of vehicle.

By the Court. — Order affirmed.

       This statute provides in part: “No such policy [insuring against damage to person or property caused by any motor vehicle] shall he issued or delivered in this state to the owner of a motor vehicle, unless it contains a provision reading substantially as follows: The indemnity provided by this policy is extended to apply, in the same manner and under the same provisions as it is applicable to the named assured, to any person or persons while riding in or operating any automobile described in this policy when such automobile is being used for purposes and in the manner described in said policy.

         Frankenthal v. Wisconsin Real Estate Brokers’ Board (1958), 3 Wis. (2d) 249, 255, 88 N. W. (2d) 352, 89 N. W. (2d) 825; Dunphy Boat Corp. v. Wisconsin Employment Relations Board (1954), 267 Wis. 316, 326, 64 N. W. (2d) 866.d

        Beghin v. State Personnel Board (1965), 28 Wis. (2d) 422, 430, 137 N. W. (2d) 29.

       The exclusion clause excludes coverage of “automobiles if the accident occurs away from such [the insured’s] premises or the ways immediately adjoining.” The word “automobiles” is a generic term which embraces trucks. Schmude v. Hansen (1965), 28 Wis. (2d) 326, 330, 137 N. W. (2d) 61; Wiese v. Polzer (1933), 212 Wis. 337, 343, 248 N. W. 113.

        Snorek v. Boyle (1962), 18 Wis. (2d) 202, 208, 118 N. W. (2d) 132; Goller v. White (1963), 20 Wis. (2d) 402, 406, 122 N. W. (2d) 193.

       That the word “automobile” embraces a truck, see footnote 5. Cf. Snorek v. Boyle, supra, footnote 6, at page 210.

        Supra, footnote 6.

        Pavelski v. Roginski (1957), 1 Wis. (2d) 345, 349, 351, 84 N. W. (2d) 84. See also Ducommun v. Inter-State Exchange (1927), 193 Wis. 179, 184, 212 N. W. 289, 214 N. W. 616; and Groth v. Farmers Mut. Automobile Ins. Co. (1963), 21 Wis. (2d) 655, 659, 124 N. W. (2d) 606.

       (1944), 244 Wis. 478, 12 N. W. (2d) 731.

         Id. at page 490.

        Supra, footnote 6, at page 208.

       (1961), 12 Wis. (2d) 460, 466, 107 N. W. (2d) 625.

       (1965), 27 Wis. (2d) 46, 51, 133 N. W. (2d) 401.

       (D. C. Minn. 1958), 164 Fed. Supp. 393.


source: Caselaw Access Project

license: Public Domain

text:
    Kohls and another, Plaintiffs, v. Glassman, Defendant: General Casualty Company of Wisconsin, Defendant and Respondent: United States Fidelity & Guaranty Company, Impleaded Defendant and Appellant.

      November 29, 1965

    January 4, 1966.

      For the appellant there was a brief by Petersen, Sutherland, Axley & Brynelson, and oral argument by Eugene O. Gehl, all of Madison.
    For the respondent there was a brief by Amo J. Miller of Portage, attorney, and Allen F. Root of Madison of counsel, and oral argument by Mr. Miller.

       Motion for rehearing denied, with costs, on March 1, 1966.

   Currie, C. J.

The provisions of the comprehensive liability policy issued by appellant U. S. F. & G. that are material to this appeal are practically identical to those of the policy issued by United Fire & Casualty Company in the case of Nelson v. Ohio Casualty Ins. Co., ante, p. 315, 139 N. W. (2d) 37, also decided on this assignment. Thus, unless the provisions of the omnibus coverage statute, sec. 204.30 (3), are to be imported into the policy, it extended no coverage to defendant Glassman. Appellant raises the same issue that was raised in the Nelson Case with respect to whether such statute is applicable to U. S. F. & G.’s policy under the instant fact situation. That issue has been decided adversely to appellant by the Nelson Case, thus rendering it unnecessary to consider it further herein.

Appellant raises the further issue that there was a failure by the insured Helms to comply with the notice requirement of the policy which precludes any recovery on its policy. The remainder of this opinion will be devoted to resolving that issue.

The U. S. F. & G. policy contained these provisions:

“8. Notice of accident When an accident occurs written notice shall be given by or on behalf of the Insured to the Company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the Insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.
“9. Notice of claim or suit If claim is made or suit is brought against the Insured, the Insured shall immediately forward to the Company every demand, notice, summons or other process received by him or his representative.
“11. Action against company No action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all the terms of this policy. . . .”

It is unnecessary to consider paragraph 9 pertaining to notice of claim or suit because of the conclusion which we reach with respect to the notice-of-accident requirement contained in paragraph 8.

The accident occurred on March 4, 1960, and the first notice of accident received by U. S. F. & G. was in a letter dated February 5, 1963, from an attorney representing the insured, Helms. This delay of almost three years in notifying the insurance company is not disputed and is, as a matter of law, a clear violation of the requirement in the policy that notice be given “as soon as practicable.”

Sec. 204.34, Stats., makes it clear that failure to give the notice of accident within the time prescribed by the policy does not relieve the insurer from liability on the policy unless it was prejudiced by such delay. This statute in part provides:

“(1) No policy of insurance, agreement of indemnity or bond covering liability or loss arising by reason of the ownership, maintenance or use of a motor vehicle issued in this state . . .
“ (3) . . . shall limit the time for the giving of notice of any accident or casualty covered thereby to a period less than that provided in subsection (1) of section 204.29. Failure to give such notice shall not bar liability under such policy of insurance, agreement of indemnity or bond as provided in subsection (1) if the insurer was not prejudiced or damaged by such failure, but the burden of proof to so show shall be upon the person claiming such liability.” (Italics supplied.)

We deem sec. 204.34 (3), Stats., to be in pari materia with sec. 204.30 (3). Thus, if sec. 204.30 (3) is held applicable to a particular policy, it necessarily follows that sec. 204.34 (3) is also.

Sec. 204.34 (3), Stats., creates a presumption of prejudice which General Casualty was required to rebut in the instant case. The affidavits filed by appellant in support of its motion for summary judgment set forth the fact that no notice of accident was given appellant until the letter of February 5,1963, sent by Helms’ lawyer to appellant. None of the affidavits filed by General Casualty on the motion for summary judgment dispute these averments with respect to the giving of notice of accident. Nor do these affidavits set forth facts tending to establish that appellant was not prejudiced by the delay in giving notice of accident. The agreed statement of facts which was also before the circuit court at time of deciding the motions is silent on the issue of delay in giving notice of accident and possible resulting prejudice to appellant.

Thus General Casualty did not meet the burden which sec. 204.34 (3), Stats., placed upon it of either establishing that appellant was not prejudiced by this delay or raising an issue of fact with respect to the issue of prejudice which would preclude granting summary judgment in appellant’s favor.

General Casualty relies on a finding made by the trial court in its memorandum decision that “No prejudice did actually result.” However, a reading of this sentence in context discloses that it has reference to failure to give notice of claim under paragraph 9 of the policy and not failure to give timely notice of the accident under paragraph 8. The memorandum opinion in this connection points out that “it was not reasonably possible to give notice as to this claim, in its particular form, until it was given.” Furthermore, the order for judgment is silent on the subject of failure to give timely notice of the accident, and merely states, “that no prejudice resulted to United States Fidelity & Guaranty Company by virtue of the time when notice of claim was given said company . . . .” We conclude that the trial court made no finding on the issue of prejudice which occurred because of the delay on the part of Helms of two years and eleven months in giving appellant notice of the accident.

We consider that Buss v. Clements is controlling of the result here. That case embraced an action for injuries sustained in an accident involving a truck insured by defendant insurance company. Defendant insurance company moved for summary judgment on the basis that the insured had not notified it of the accident until virtually three years after the accident, and this three-year delay constituted a failure to comply with the requirement in the policy that he notify the company “as soon as practicable.” The trial court denied the motion. This court reversed, finding that the three-year delay violated the policy provisions as a matter of law and that prejudice was presumed. In reaching this result the court stated:

“We conclude that since there is no showing in the affidavits of any evidentiary facts applicable to the contention that appellant had not been prejudiced, the respondents, who have the burden of proof, have failed to carry that burden. The failure of the insured to give notice, as demanded by the policy, created a bar to liability under the policy which bar remains effective when the person claiming such liability has not shown that the insurer was not prejudiced or damaged by such failure. Sec. 204.34 (3), Stats.”

By the Court. — Judgment reversed, and cause remanded with directions to enter judgment dismissing the cross complaint of General Casualty Company.

        Parrish v. Phillips (1938), 229 Wis. 439, 444, 282 N. W. 551 (delay of thirty-three days in giving notice held as a matter of law to be not “as soon as practicable”); Calhoun v. Western Casualty & Surety Co. (1951), 260 Wis. 34, 35, 49 N. W. (2d) 911 (delay of eleven months in giving notice held as a matter of law to he not “as soon as practicable”) ; Buss v. Clements (1963), 18 Wis. (2d) 407, 411, 412, 118 N. W. (2d) 928 (delay of practically three years in giving notice held as a matter of law to be not “as soon as practicable”).

        Parrish v. Phillips, supra, footnote 1, at page 445; Calhoun v. Western Casualty & Surety Co., supra, footnote 1, at page 36; Buss v. Clements, supra, footnote 1, at page 412.

        Supra, footnote 1.

       Id. at page 415.


author: Hallows, J.

text:
    Lee, Respondent, v. State Board of Dental Examiners, Appellant.

      November 30, 1965

    January 4, 1966.

      The cause was submitted for the appellant on the briefs of Bronson C. La Follette, attorney general, and Warren H. Besh, assistant attorney general, and for the respondent on the brief of Peter P. Woboril, Jr., attorney, and Werner J. Trimborn, special counsel, both of Milwaukee.
   Hallows, J.

This appeal involves only that part of the court’s order which held the conviction under 21 U. S. Code, sec. 331 (a), was not of a crime involving moral turpitude within the meaning of sec. 152.07 (2), Stats. The board agrees the matter should go back for further proceeding on the second ground.

Under sec. 152.07 (2), Stats., the conviction of a crime involving moral turpitude empowers the board to revoke a dentist’s license to practice and the record of the conviction is conclusive evidence. It is argued by Lee that his conviction under 21 U. S. Code, secs. 331 (a) and 352 (a), cannot be considered a conviction in this revocation proceeding because the conviction is based upon a plea of nolo contendere. The view that a conviction based on a plea of nolo contendere is clothed with the same attributes as the plea is a minority view which this court has not followed. The essential characteristic of a plea of nolo contendere is that it cannot be used collaterally as an admission. Such a plea is not a plea of right and may be refused by a court, sec. 957.25; but when accepted by the court it constitutes an implied confession of guilt for the purposes of the case to support a judgment of conviction and in that respect is equivalent to a plea of guilty. State v. Suick (1928), 195 Wis. 175, 217 N. W. 743. But the plea of nolo contendere differs from a plea of guilty in its collateral effects. Because a plea of guilty is an unqualified express admission by the defendant it may be used against him in a collateral or subsequent civil action; but a plea of nolo contendere is not such an admission against interest and may not be used in a subsequent or collateral civil action for that purpose. State v. Suick, supra; Brozosky v. State (1928), 197 Wis. 446, 222 N. W. 311; Ellsworth v. State (1951), 258 Wis. 636, 46 N. W. (2d) 746. See Anno. Plea of nolo contendere or non vult con-tendere, 89 A. L. R. (2d) 540, 600, and 152 A. L. R. 253; 20 Am. Jur., Evidence (1965 Supp.), p. 125, sec. 648; 28A Words & Phrases (perm, ed.), Nolo Contendere, p. 293. The plea is extensively discussed in Hudson v. United States (1926), 272 U. S. 451, 47 Sup. Ct. 127, 71 L. Ed. 347.

Under the majority rule this distinction in the pleas does not carry over to the conviction. A judgment of conviction based on a plea of nolo contendere is a conviction which contains all the consequences of a conviction based on a plea of guilty or a verdict of guilty. There is no difference in the nature, character or force of a judgment of conviction depending upon the nature of the underlying plea. State v. Suick, supra; Ellsworth v. State, supra; see Anno. Plea of nolo contendere or non vult contendere, 89 A. L. R. (2d) 540, 604; Anno. What constitutes former “conviction” within statute enhancing penalty for second or subsequent offense, 5 A. L. R. (2d) 1080, 1103, sec. 15, Plea of nolo contendere. Consequently we have a conviction which is attributable to Lee.

In determining whether the conviction is of an offense involving moral turpitude for the purpose of applying sec. 152.07 (2), Stats., this court agrees with the circuit judge that “the crime itself must be one with the inherent elements of moral turpitude.” This court is restricted in its consideration to the elements of the offense disassociated from the particular facts and circumstances surrounding its commission, and the crime by extraneous evidence can be neither gilded with virtue nor tarnished with vice. This view follows from the fact sec. 152.07 (2) makes the record of the conviction conclusive evidence. A similar view was taken in State v. Willstead (1946), 248 Wis. 240, 21 N. W. (2d) 271, of sec. 147.20, Stats. 1945, which authorized a revocation of a license to practice medicine upon a conviction of a crime involving moral turpitude. In that case we held the defendant had no right to explain or qualify the facts and circumstances surrounding his conviction upon a plea of guilty to the unlawful sale of narcotics because the statute made the conviction and not the facts upon which it was grounded the cause for revoking the license. This view was also taken by the California court in Lorenz v. Board of Medical Examiners (1956), 46 Cal. (2d) 684, 298 Pac. (2d) 537, which involved a revocation of a license to practice medicine upon a conviction under the Alcoholic Beverage Control Act. This does not mean, however, that evidence is not admissible of the nature of the crime and its relationship to the mores of the community to determine whether the elements of the crime constitute moral turpitude.

We think a violation of 21 U. S. Code, secs. 331 (a) and 352 (a), does not constitute a crime involving moral turpitude for several reasons. The introduction into interstate commerce of a misbranded drug or food product prohibited in sec. 331 (a) is made a misdemeanor by sec. 333 (a) and the offense does not include an element of the intent to defraud or mislead. Violations of sec. 331 (a) committed with such an animus or intention constitute an offense under sec. 333 (b) which provides much more serious penalties of imprisonment not exceeding three years or a fine of not more than $10,000, or both. Nor did the offense of which Lee was convicted involve the elements of fraud, deceit, criminal intent or any of the usual elements of moral turpitude. V. E. Irons, Inc., v. United States (1st Cir. 1957), 244 Fed. (2d) 34, 43, certiorari denied, 354 U. S. 923, 77 Sup. Ct. 1383, 1 L. Ed. (2d) 1437. Neither is it necessary to a conviction under sec. 331 (a) of 21 U. S. Code to charge and prove any awareness of wrongdoing, bad faith or motives. United States v. Greenbaum (3d Cir. 1943), 138 Fed. (2d) 437; Triangle Candy Co. v. United States (9th Cir. 1944), 144 Fed. (2d) 195; United States v. Kaadt (7th Cir. 1948), 171 Fed. (2d) 600; United States v. Sprague (E. D. New York Cir. 1913), 208 Fed. 419; United States v. H. Wool & Son (2d Cir. 1954), 215 Fed. (2d) 95, 98.

Since the mere fact the introduction in interstate commerce of a misbranded drug is sufficient to constitute the crime, there is no moral turpitude involved. In United States v. Dotterweich (1943), 320 U. S. 277, 280, 64 Sup. Ct. 134, 88 L. Ed. 48, which involved a charge of mis-branding in violation of the federal food and drug laws, the court characterized such law as “legislation whereby penalties serve as effective means of regulation. Such legislation dispenses with the conventional requirement for criminal conduct — awareness of some wrongdoing. In the interest of the larger good it puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.” This case was approved in Morissette v. United States (1952), 342 U. S. 246, 259, 72 Sup. Ct. 240, 96 L. Ed. 288.

For purposes of revocation of licenses, a crime involving moral turpitude has been considered in this state as an offense which involved some guilty knowledge or wrongful intent or an act which is considered inherently wrongful regardless of whether it was punishable by law or not. It was the doing of the act of such character rather than its prohibition by law which determined the moral turpitude. It is said that such acts are malum per se, not malum prohibitum. State v. McCarthy (1949), 255 Wis. 234, 38 N. W. (2d) 679; State v. McKinnon (1953), 263 Wis. 413, 57 N. W. (2d) 404; State v. Brodson (1960), 11 Wis. (2d) 124, 103 N. W. (2d) 912; State v. Roggensack (1963), 19 Wis. (2d) 38, 119 N. W. (2d) 412. In Roggensack this court broadened the grounds of what constituted unprofessional conduct on the part of an attorney by including therein conduct not involving moral turpitude. These cases, however, are not authority for a changing concept of moral turpitude.

Many of the established cases take the definition of moral turpitude as “an act of baseness, vileness or depravity in the private and social duties which a man owes to his fellow men or to society in general.” 20 Am. and Eng. Enc. Law (2d ed.), 872. See Anno. What offenses involve moral turpitude within statute providing grounds for denying or revoking license of dentist, physician, or surgeon, 109 A. L. R. 1459; 41 Am. Jur., Physicians & Surgeons, p. 180, sec. 55. Webster’s New International Dictionary (3d ed.) defines “moral turpitude” as “an act or behavior that gravely violates the moral sentiment or accepted moral standards of the community” and “the morally culpable quality held to be present in some criminal offenses as distinguished from others.”

But it is contended by the board that the concept of moral turpitude is changing and in shaping that concept the purpose of ch. 152, Stats., to protect public health must be considered. It is not to be denied the many accepted moral standards of a community vary from time to time and thus may affect what constitutes moral turpitude. But even on the appellant’s theory that morals are pretty much a matter of time and geography, we have not yet arrived at the time and place when a misdemeanor for introducing in interstate commerce misbranded food or drugs without an intent to deceive or defraud involves moral turpitude. We do not agree the concept of moral turpitude, like some other legally sanctioned concepts, is dependent upon “the felt necessities of the time” (Holmes, The Common Law, p. 1). Such an argument would logically make all acts which are prohibited by law involve moral turpitude simply because they are prohibited. While the legislature in the interest of public health could create an offense involving moral turpitude, Congress did not do so in creating sec. 331 (a) of Title 21 U. S. Code.

The board also contends it is inherently immoral to peddle drugs on the representation they will be adequate and effective for the prevention and treatment of innumerable diseases when Lee knew such claims were preposterous. It alleges misbranding by Lee in his labeling of the drug Vitamin G as containing representations or suggestions it would be adequate and effective for the prevention and treatment of some 48 serious diseases ranging from alopecia to varicose veins and in the labeling of Cyroplex, a concentrate “from alfalfa, carrot, beef and fish liver lipoids, yeast, wheat germ, rice bran, liver, mushroom, green peas (whole plant), biologically processed corn,” as being adequate to treat 79 serious illnesses from abortion to virus infections. It may be as claimed by the board that what Lee calls a food nutritional supplement is what the board calls a nostrum, but that question is not before us by virtue of Lee’s conviction, nor is Lee’s knowledge.

If the board wants to use the offense which does not involve moral turpitude and show that the act was committed by Lee under circumstances which did involve moral turpitude, then the issue is not the conviction as a ground for revocation but rather Lee’s conduct as constituting conduct unbecoming a professional man. Proof of the misbranding and of the fraud or deceit may be made on such issue and the board’s argument based on public health would be pertinent.

By the Court. — Judgment affirmed.

Wilkie, J., took no part.

       Sec. 331. “Prohibited acts.
      “The following acts and the causing thereof are prohibited:
      “(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded.”
      See. 352. “Misbranded drugs and devices.

        “A drug or device shall be deemed to be misbranded—
      “ (a) False or misleading label.

      “If its labeling is false or misleading in any particular.”


author: Gordon, J.

text:
    Marion, Executrix, Respondent, v. Orson’s Camera Centers, Inc., Appellant.

      November 30, 1965

    January 4, 1966.

      For the appellant there was a brief by Posner & Rubin, attorneys, and Francis X. Krembs of counsel, all of Milwaukee, and oral argument by Mr. Krembs.

    For the respondent there was a brief by Michael Klein, attorney, and Morris Karon of counsel, both of Milwaukee, and oral argument by Mr. Klein.

       Motion for rehearing denied, with costs, on March 1, 1966.

   Gordon, J.

The disputed endorsement on the stock certificate consists of but three sentences. We are obliged to give the expressions used their common and ordinary meanings. State ex rel. Siciliano v. Johnson (1963), 21 Wis. (2d) 482, 124 N. W. (2d) 624; Langer v. Stegerwald Lumber Co. (1951), 259 Wis. 189, 47 N. W. (2d) 734. It is not the office of a judicial tribunal to find a meaning which is contrary to the language used in an agreement. Siler v. Read Investment Co. (1956), 273 Wis. 255, 261, 77 N. W. (2d) 504.

We are of the opinion that the import of the stock certificate’s endorsement is pellucid and that the third sentence thereof governs this case. That sentence commences with the words, “In the event of the death of the stockholder, . . .” This is precisely the event that occurred here.

There are four basic arguments advanced by the respondent in support of her position. First, it is urged that death was an “involuntary” event which resulted in the termination of the employment, as contemplated in the second sentence of the endorsement. We are persuaded that while the second sentence covers such things as resignation, firing, or discharge, it does not encompass death; this is because death is expressly covered in the third sentence of the endorsement. The problem presented in this argument is analytically related to the matter which was presented to the court in Kraus v. Wisconsin Life Ins. Co. (1965), 27 Wis. (2d) 611, 135 N. W. (2d) 329, where we considered whether the event of death was included in the phrase “total disability.”

Secondly, the respondent urges that the final sentence of the endorsement should be regarded as being repugnant to the previous provisions of the endorsement and treated as surplusage. This contention rests in part upon the recognized rule of construction which directs that any doubt as to the meaning of an instrument is to be construed against the party who drafted it. Kuranda v. O’Connor (1964), 23 Wis. (2d) 51, 56, 57, 126 N. W. (2d) 568; Estate of Schmitz (1962), 17 Wis. (2d) 412, 420, 117 N. W. (2d) 249; Strong v. Shawano Canning Co. (1961), 13 Wis. (2d) 604, 609, 109 N. W. (2d) 355. However, we find no pervading ambiguity in the endorsement, and thus there is no occasion for interpreting the terminology adversely to the draftsman. For the same reason, we are unable to treat the third sentence as surplusage.

A third argument advanced by the respondent is that the last sentence of the endorsement was designed to enable the corporation to procure the stock certificate from the “heirs, assigns or legal representatives” of Mr. Marion in the event, after his death, that the certificate fell into the hands of one who refused to surrender it to the corporation. It is urged that this construction of the endorsement is one “which gives harmonious effect to all its covenants,” to use the words of Bitker & Gerner Co. v. Green Investment Co. (1956), 273 Wis. 116, 120, 76 N. W. (2d) 549. In our opinion, the foregoing viewpoint adopts a strained construction of the terms used in the endorsement.

It is true that under the rule discussed in the Bitker & Gerner Case where there are two permissible interpretations of a contract, the court will adopt the one which tends to harmonize all the clauses of the contract; however, this argument presupposes the existence of a conflict in permissible interpretations — a circumstance which we do not find to be existent in the instant case.

The fourth argument advanced by the respondent is that the true meaning of the endorsement is demonstrated by the fact that the corporation carried a policy of insurance on Mr. Marion’s life in a sum comparable to that which would enable the corporation to repurchase his stock by using the proceeds of such policy after his death. This is not a controlling argument for the reason that there was no legal irregularity in the corporation’s having insured Mr. Marion’s life only for the purpose of enabling it to be in a position to do that which it had an option to do. There is nothing implicit in the corporation’s having carried insurance on Mr. Marion’s life which establishes that the corporation thereby acknowledged that it would be bound to purchase Mr. Marion’s stock upon his death (under the second sentence) as opposed to its having the option to do so (under the third sentence).

In our opinion, all of the arguments of the respondent fail in light of the palpably plain language employed in the endorsement itself. There is applicable the rule set forth long ago in Wisconsin Marine & Fire Ins. Co. Bank v. Wilkin (1897), 95 Wis. 111, 115, 69 N. W. 354:

“It must be borne in mind that the office of judicial construction is not to make contracts or to reform them, but to determine what the parties contracted to do; not necessarily what they intended to agree to, but what, in a legal sense, they did agree to, as evidenced by the language they saw fit to use.”

The court is fully mindful of the hardship which may be visited upon the widow of Mr. Marion by this ruling. There is a caustic saying which perhaps is befitting the result of this case: “In a thousand pounds of law I find not a single ounce of love.”

We consider that our holding, however stringent, is necessitated by the manifest clarity of the language of the endorsement. We note, however, that the corporation has expressly conceded that the plaintiff will henceforth be free to dispose of the stock without the restriction of the endorsement.

By the Court. — Judgment reversed.


author: Wilkie, J. Gordon and Beilfuss, JJ.

text:
    Delaney, Respondent, v. Prudential Insurance Company of America, Appellant.

      November 30, 1965

    January 4, 1966.

      For the appellant there was a brief and oral argument by Hubert V. Fuller of La Crosse.
    For the respondent there was a brief and oral argument by Ingolf E. Rasmus of Chippewa Falls.
   Wilkie, J.

This case is controlled by sec. 209.06 (1), Stats., which has been interpreted to mean that there are three alternative grounds for avoiding such a policy:

“ (1) If the statement was false and made with intent to deceive; (2) if the statement increased the risk; or (3) if the statement contributed to the loss.”

In the instant case there was no contention that the respondent’s statements contributed to the loss.

The principal issue presented on this appeal is whether there was credible evidence to support the jury verdict that there was no increase in the risk resulting from any false statements made by Mrs. Delaney in her application. To resolve this issue we must judge the jury verdict in the light of the familiar rules that (1) a jury verdict will not be upset if there is any credible evidence which under any reasonable view fairly admits of an inference supporting the findings, (2) this is particularly true when the verdict has the blessing of the trial court, and (3) the evidence is to be viewed in the light most favorable to the verdict.

We are satisfied that the failure of the respondent to disclose her hospitalizations in January, 1961, relating to angina pectoris, in September, 1958, relating to asthma, and in February, 1958, relating to nervous tension (tachycardia) , was a misrepresentation which, under the facts of this case, as a matter of law, increased the risk and therefore voided the policy. We are also satisfied that her failure to disclose her eight hospitalizations (excluding from the 14 hospitalizations the two reported on the application and four others — two for childbirth, one for abdominal infection which developed as a result of the birth of the first daughter, and one for an infected toenail) was a misrepresentation which, under the facts of this case, as a matter of law, increased the risk and also voided the policy.

Three earlier cases are directly in point: Demirjian v. New York Life Ins. Co., McGowan v. Supreme Court of Independent Order of Foresters and Peterson v. Independent Order of Foresters. In Demirjian, the jury found that the applicant had made false statements that “(1) the insured had not had or consulted a physician for any disease of the stomach; (2) had never consulted a physician for any ailment; (8) had never consulted or been examined or treated by any physician for five years prior to his application.” Although the jury also found that “the insured suffered from ulcers of the stomach during April and May next prior to his application, . . . this ailment did not increase the risk ....” On appeal this court let stand the jury’s verdict that the statements of the applicant, though false, were made without intent to deceive. This court, however, did hold that the jury’s finding that the ulcers did not increase the risk was in error and that the risk was increased as a matter of law. In McGowan, this court held that “[a] 11 of the questions as to the health ... of the ancestors or brothers and sisters” of the applicant “were material to the risk as a matter of law.” In Peterson, because the applicant admittedly had been treated by a physician within five years of the application for contusion of the chest, laceration of the leg, the trial court voided the policy, holding that the applicant’s representation to the effect that he had suffered no injuries within the last five years was “necessarily material to the risk.”

In each of these cases there was a misrepresentation that increased the risk: The failure to give information about the applicant’s ulcers in Demirjian; the failure to give health information about close ancestors in McGowan; and the failure to report the leg injury which had to be treated, in Peterson. So here, the applicant failed to report hospitalizations concerning heart trouble, asthma, and tachycardia, and at least five other important hospitalizations. And, crucially, there was uncontradicted testimony by appellant’s witnesses that these misrepresentations increased the risk. Without competing testimony to bring about a jury question, we hold that such evidence increased the risk as a matter of law, thus voiding the policy.

In an attempt to raise a jury question, respondent, relying on the testimony of her physician, Dr. Henske, that since none of her conditions was actually serious and since she was in good health in 1963, argues that the jury could have inferred that the policy would have been issued even if all her hospitalizations were known. In the absence of qualified testimony to the effect that persons engaged in the same type of insurance business, acting reasonably and naturally in accordance with the practice usual in the insurance industry, would have issued the policy even in the face of these misrepresentations, there is no basis for drawing any such inference and no jury question is presented. Moreover, this argument ignores the testimony (also uncontradicted) of appellant’s underwriting and medical personnel that the fact that she was confined 14 times — regardless of the nature of her ailments — would be enough to cause the application to be rejected on the basis that she was either hospital prone or a hypochondriac.

Since the policy is voided as a matter of law because there were misrepresentations that increased the risk, it is unnecessary to consider whether, as a matter of law, the respondent made false statements with intent to deceive. No intent to deceive need be shown where there is a misrepresentation that increases the risk.

By the Court. — Judgment reversed.

Gordon and Beilfuss, JJ.

(dissenting). We respectfully dissent. The agents of the Prudential Insurance Company of America persuaded Mrs. Delaney to forsake her pre-existing Blue Cross hospital policy and to “switch” to a policy with their company. One of the salesmen wrote out the application in which Mrs. Delaney disclosed two past hospitalizations. She was not told how far back she was to go in giving her medical history.

After the policy was issued in June, 1963, she incurred hospital expenses in May, 1964, for the removal of a cancerous lump from her left breast and the subsequent removal of her uterus because of a cancerous condition. The defendant declined payments of the expenses for these hospitalizations.

The jury specifically found that Mrs. Delaney did not make a “false application concerning her hospital records.” The jury also expressly found that no false statement was made by her which materially affected the risk of the insurance company. The trial court accepted the jury’s verdict which, in our opinion, reached a result that is supported by credible evidence. The majority opinion, however, concludes that her nondisclosures increased the insurance company’s risk as a matter of law.

The majority opinion acknowledges the familiar rule that if there is any credible evidence which under any reasonable view fairly admits of an inference supporting the jury’s verdict it may not be upset. Zweifel v. Milwaukee Automobile Mut. Ins. Co. (1965), 28 Wis. (2d) 249, 254, 137 N. W. (2d) 6; Ide v. Wamser (1964), 22 Wis. (2d) 325, 331, 126 N. W. (2d) 59.

The majority of the court is impressed by the fact that two employees of the defendant’s underwriting department and one employee of its medical department testified that the company would not have written this policy if they had been in possession of all the facts. In our opinion, the jury (knowing that the company was disputing the claim) may have considered that its employees were mistakenly using hindsight to describe what they previously might have done. Less charitably, the jury may even have believed that such witnesses were merely protecting their jobs and, thus, may have wholly rejected their testimony as self-serving and false. There is nothing inherently true or uncontrovertibly trustworthy about such testimony so as to warrant a finding that these interested witnesses were correct as a matter of law. In Martell v. Klingman (1960), 11 Wis. (2d) 296, 105 N. W. (2d) 446, this court declined to hold that the nondis-closures increased the risk as a matter of law.

In a case decided at this assignment, State ex rel. Stollberg v. Crittenden, post, p. 413, 139 N. W. (2d) 94, the court made the following observation about uncontra-dicted evidence in a paternity case:

“Counsel for relator stress the fact that her testimony, that she did not have intercourse with any men other than defendant during the conception period, was not directly controverted. However, the jury were the judges of her credibility and were not required to accept her testimony as true.”

A related view is expressed in two other recent decisions of this court. Estate of Staniszewski (1965), 28 Wis. (2d) 403, 409, 137 N. W. (2d) 57; Lazarus v. American Motors Corp. (1963), 21 Wis. (2d) 76, 84, 123 N. W. (2d) 548. In view of the interest in the lawsuit held by these witnesses for the defendant, the jury was not obligated to adopt their testimony.

The jury may have believed that if Mrs. Delaney had been out to cheat the company she would not have even disclosed the two hospitalizations which she did report. Platke v. John Hancock Mut. Life Ins. Co. (1965), 27 Wis. (2d) 1, 10, 133 N. W. (2d) 277. In addition, the jury may have weighed the fact that Mrs. Delaney already had a perfectly valid policy of insurance with Blue Cross and would have had no purpose in practicing deceit in order to obtain a policy from the defendant.

There is no apparent nexus between Mrs. Delaney’s past medical attention and her recent hospitalizations which concerned cancer; a full disclosure of such medical history would not have alerted the company to the prospective peril of her having hospitalization for cancerous conditions. At least, the jury was entitled to have reached such a conclusion upon the evidence in this case; this is especially true since Dr. Henske testified that Mrs. Delaney’s pre-existing ailments did not increase the probability that she would have cancer.

The failure to disclose the five-day hospitalization in 1961 for angina pectoris would appear to be a serious omission; however, the jury had before it credible evidence which would significantly diminish the weight to be given to this omission. Dr. Henske testified that he “certainly didn’t tell her that she had heart trouble. . . .” He explained that Mrs. Delaney had been under stress from marital difficulties and went on to state:

“I think at that time Mrs. Delaney was having family trouble and I think the worry of the family trouble and everything caused her pain around her heart and I thought it was serious enough to affect her heart because she had a pain there and I sent her to the hospital for that reason.”

The jury could have interpreted Dr. Henske’s testimony to mean that she did not in fact have anything more than a suspected heart condition. In Dr. Henske’s opinion, Mrs. Delaney’s general health at the time she applied for the policy with the defendant was “perfectly all right.”

The case would be a closer one if Mrs. Delaney’s claims against the defendant concerned hospitalizations which were for the treatment of a heart ailment; in such case, it would be more plausible to argue that her failure to have disclosed the previous episode was material as a matter of law. Upon this record, can it be said that her past hospitalizations for hemorrhoids, asthma, childbirth, or angina pectoris (let alone an infected toenail) had any relationship to breast-lump surgery? We think not.

In our opinion, there was a jury issue here, and the jury’s conclusions may not properly be upset. We would affirm the judgment of the trial court.

       “209.06 Insurance; application; effect. (1) No oral or written statement, representation or warranty made by the insured or in his behalf in the negotiation of a contract of insurance shall be deemed material or defeat or avoid the policy, unless such statement, representation or warranty was false and made with intent to deceive, or unless the matter misrepresented or made a warranty increased the risk or contributed to the loss.”

        Polar Mfg. Co. v. Integrity Mut. Ins. Co. (1959), 7 Wis. (2d) 443, 447, 96 N. W. (2d) 822. See also Langlois v. Wisconsin National Life Ins. Co. (1963), 19 Wis. (2d) 151, 119 N. W. (2d) 400, 120 N. W. (2d) 884; Stockinger v. Central National Ins. Co. (1964), 24 Wis. (2d) 245, 128 N. W. (2d) 433.

        Zweifel v. Milwaukee Automobile Mut. Ins. Co. (1965), 28 Wis. (2d) 249, 137 N. W. (2d) 6; St. Paul Fire & Marine Ins. Co. v. Burchard (1964), 25 Wis. (2d) 288, 130 N. W. (2d) 866.

        Metcalf v. Consolidated Badger Co-operative (1965), 28 Wis. (2d) 552, 137 N. W. (2d) 457; Erdmann v. Milwaukee Automobile Mut. Ins. Co. (1963), 20 Wis. (2d) 439, 122 N. W. (2d) 430.

        Brunette v. Dade (1964), 25 Wis. (2d) 617, 131 N. W. (2d) 340; St. Paul Fire & Marine Ins. Co. v. Burchard, supra, footnote 4.

         (1931), 205 Wis. 71, 236 N. W. 566.

       (1899), 104 Wis. 173, 80 N. W. 603.

       (1916), 162 Wis. 562, 156 N. W. 951.

        Demirjian v. New York Life Ins. Co., supra, footnote 7, at page 72.

         Ibid.

        McGowan v. Supreme Court of Independent Order of Foresters, supra, footnote 8, at page 183.

        Peterson v. Independent Order of Foresters, supra, footnote 9, at page 564.

       Wis J I—Civil, Part II, 3110; Polar Mfg. Co. v. Integrity Mut. Ins. Co. (1960), 11 Wis. (2d) 105, 109, 110, 104 N. W. (2d) 164.

         Polar Mfg. Co. v. Integrity Mut. Ins. Co.; Langlois v. Wisconsin National Life Ins. Co.; Stockinger v. Central National Ins. Co.; all supra, footnote 3.


author: Beilfuss, J.

text:
    Acme Equipment Corporation, Respondent, v. Montgomery Co-operative Creamery Association, Appellant.

      November 30, 1965

    January 4, 1966.

      For the appellant there were briefs by Doherty, Bumble & Butler of St. Paul, Minnesota, and Orr, Isaksen, Wer-ner, Lathrop & Heaney of Madison, and oral argument by Harold Jordan of St. Paul, Minnesota, and Leon E. Isak-sen.

    For the respondent there was a brief by Callahan, Arnold & Van Metre of Columbus, and oral argument by E. Clarke Arnold.

   Beilfuss, J.

There are three issues involved on this appeal: (1) Existence of an express warranty, (2) breach of the warranty, and (3) right to rescind the contract.

Sec. 121.12, Stats., identical to Uniform Sales Act, sec. 12, defines express warranty:

“Any affirmation of fact or any promise by the seller relating to the goods is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the goods, and if the buyer purchases the goods relying thereon. No affirmation of the value of the goods, nor any statement purporting to be a statement of the seller’s opinion only shall be construed as a warranty.”

The trial court did not make a specific finding concerning the existence of an express warranty. However, the court based its decision upon the ground that there was no breach of warranty proved. It, therefore, necessarily determined that art express warranty resulted out of the sales transaction. In any event, we have no hesitation in concluding as a matter of law that an express warranty existed.

The statute requires that the seller make an affirmation of fact or a promise, as distinguished from opinion or mere sales talk. The statute then requires that the buyer be induced to purchase because of the affirmation of fact or promise.

The written statement of Temkin was, “To be in good shape and good working order.” It is clear from cases decided under the Uniform Sales Act, sec. 12, that no special wording is necessary to create an express warranty. Distillers Distributing Corp. v. Sherwood Distilling Co. (4th Cir. 1950), 180 Fed. (2d) 800; Nichols v. Lea (1950), 216 Ark. 388, 225 S. W. (2d) 684; Stott v. Johnston (1951), 36 Cal. (2d) 864, 229 Pac. (2d) 348; Rudd v. Rogerson (1956), 133 Colo. 506, 297 Pac. (2d) 533.

In Saunders v. Cowl (1938), 201 Minn. 574, 277 N. W. 12, an express warranty was found to have been created when a seller selling a six or seven-year-old tent stated that it was “in good condition.”

“ ‘. . . Quality of goods’ includes their state or condition. The word ‘good’ itself, when used in connection with chattels, refers to their condition — that they are sound, reliable, right, and not depreciated and the like. . . .” Saunders v. Cowl, supra, page 576.

Similarly, the statement that a piano was “in good condition” created an express warranty. Schwartz v. Gross (1952), 93 Ohio App. 445, 114 N. E. (2d) 103.

“. . . When the word ‘good’ is used to describe the ‘quality’ or ‘condition’ of a chattel, it may be found to be an affirmation of fact that the chattel is sound, reliable and right, as opposed to the characterization ‘poor condition.’ ” Schwartz v. Gross, supra, page 451.

Temkin’s statement was clearly an affirmation of fact going to the quality of the goods. Equally clear is the reliance on the statement by Folie and Turna. They would not close the deal or pay the purchase price until Temkin had written the requested statement on the delivery receipt. In fact they were not satisfied with Temkin’s first statement and required him to add to it before they would give him the check. The reliance on the warranty need not be the sole inducement to purchase. 1 Williston, Sales (rev. ed.), pp. 534, 535, sec. 206.

The affirmation of fact and the reliance by Folie and Tuma were sufficient to create an express warranty as a matter of law.

Appellant contends that the trial court erred in finding that appellant failed to prove breach of the warranty. The trial court noted that although Storck found scored cylinder walls, loose packing glands, and the forty-year-old age of the machine, Folie conceded that the packing glands and the age would be no real problem and would make no real difference. This makes the scored cylinder walls and valves the vital issue.

Storck testified variously that the machine was not in good shape and was not in good working order, and that the machine would not run. He also testified, mostly on cross-examination, that the machine would probably run but probably would not perform its function, and that the defects would impair the efficiency of the compressor only.

The trial court found nothing in the record to define “in good shape and good working order.” We deem that this phrase is one of common parlance, for which a specific contractual definition was not required. It constituted a sufficient standard for use by the trier of fact in determining whether or not a breach of warranty occurred.

We have already quoted from the opinions of two courts which have considered the definition of “good” in relation to the condition or quality of goods. In Ward v. Schofferman (1947), 135 N. J. L. 596, 52 Atl. (2d) 804, the words “good operating condition” were a sufficient warranty to present a fact question on breach.

“[I]n good shape and good working order” is a common phrase made up of words of common, well-known meanings. The trier of fact was presented with a sufficient standard from this phrase to determine whether or not a breach occurred.

The trial court placed great weight on the concession of Storck that the machine would function if installed, and that the scoring on the cylinder walls would affect efficiency only. Then, finding no evidence in the record to indicate to what degree efficiency would be impaired, the trial court concluded that no breach of warranty was proved. The machine was not warranted as a new machine and cannot be expected to work perfectly. An old machine is not a new machine and is not expected to act like one.

While reasonable men might differ on the basis of this record as to whether or not there was a breach of warranty, the findings of the trial court must stand under our familiar and unwavering rule that findings of fact may not be altered on review unless against the great weight and clear preponderance of the evidence. Guinther v. Schucht (1965), 26 Wis. (2d) 97, 131 N. W. (2d) 861; Tiedeman v. Middleton (1964), 25 Wis. (2d) 443, 130 N. W. (2d) 783; Estate of Beat (1964), 25 Wis. (2d) 315, 130 N. W. (2d) 739.

Appellant contends that the rule that the trial court’s findings of fact cannot be set aside unless against the great weight and clear preponderance of the evidence cannot apply in this case because the facts are not in dispute. While there was no testimony offered to refute that of Storck, his testimony contains internal inconsistencies which required resolution by the trier of fact. The ultimate inference to be drawn from the facts depends upon the relative weight given to the inconsistencies in the evidence, or the lack of sufficient evidence to establish the breach. If undisputed facts reasonably admit of more than one inference, the trier of fact must draw the inference. It is well established that the trier of fact judges credibility of witnesses, weighs the evidence, and draws the inferences from the evidence. Guinther v. Schucht, supra; Ace Associates v. Nagy (1961), 13 Wis. (2d) 612, 109 N. W. (2d) 359; Estate of Fillar (1960), 10 Wis. (2d) 141, 102 N. W. (2d) 210. Expert opinion is subject to these same rules. Fehrman v. Smirl (1963), 20 Wis. (2d) 1, 121 N. W. (2d) 255, 122 N. W. (2d) 439; Morrill v. Komasinski (1950), 256 Wis. 417, 41 N. W. (2d) 620. We, therefore, conclude that the relative weight to be given to the inconsistencies in the evidence, or the determination of sufficiency of the evidence was for the trier of fact. The inferences to be drawn from the evidence were also for the trier of fact. Then, the against the great-weight-and-clear-preponder-anee-of-the-evidence rule becomes applicable.

In looking at the evidence most favorable to respondent and bearing in mind the rule that we cannot change a finding of fact unless against the great weight and clear preponderance of the evidence, we cannot reverse the trial court on this record. The finding “[t]hat there is insufficient evidence to find that the machine was not in good working order” must stand.

Assuming that a breach of warranty had been proved, we note that Montgomery’s attempt at rescission was premature. Appellant’s own witnesses testified that Temkin told them, in response to their inquiries concerning guarantee, that if something went wrong he would go up and fix it. Courts faced with the question have generally concluded that an agreed remedy is the exclusive remedy of an injured party. Clark Implement Co. v. Priebe (1928), 52 S. D. 606, 219 N. W. 475; Becker Roofing Co. v. Carroll (1953), 37 Ala. App. 385, 69 So. (2d) 295; Marion Machine Foundry & Supply Co. v. Cincinnati Coffin Co. (1955), 162 Ohio St. 455, 124 N. E. (2d) 132.

The agreed remedy was for Temkin to go to Montgomery and fix the machine. However, Folie stopped payment on the check immediately and never gave Temkin an opportunity to repair any defects. This is a drastic act and is especially so when the drawer and payee are strangers and are 275 miles apart.

Even when Folie did call Temkin, he told Temkin only that he was returning the machine. He never gave Tem-kin an opportunity to make good on any defects, and thus, Montgomery’s attempt at rescission was premature.

By the Court. — Judgment affirmed.


author: Heffernan, J.

text:
    Ivers & Pond Piano Company, Inc., Appellant, v. Peckham, Respondent.

      November 30, 1965

    January 4, 1966.

      For the appellant there was a brief by Loeb & Cady, and oral argument by Andrew L. Somers, Jr., all of Madison.
    For the respondent there was a brief by Oldenburg & Peckham and Verlin H. Peckham, all of Madison, and oral argument by Verlin H. Peckham.

   Heffernan, J.

The trial court found that Robert H. Hoyman, agent for the piano company, knew that the $2,000 paid on May 12, 1961, originating with the defendant, Ellsworth L. Peckham, was for the purpose of satisfying the guaranty contract and, therefore, held that the defendant discharged his guaranty by payment. We deem that the court applied the correct rule of law. Where a creditor accepts payment from a third person knowing it came from the guarantor, the payment must be applied in satisfaction of the guaranty.

“. . . if the creditor is aware of the source of the payment, he should apply it to the note guaranteed by the surety.” Sorge Ice Cream & Dairy Co. v. Wahlgren (1965), 28 Wis. (2d) 220, 226, 137 N. W. (2d) 118.
“. . . when he so pays, the creditor must apply the payment on the indebtedness guaranteed, as he must where payments are made on the contract of guaranty to the creditor by the guarantor through the agency of a third person, of which facts the creditor has knowledge.” 38 C. J. S., Guaranty, p. 1249, sec. 79.

The trial judge made the finding that Hoyman was the agent for Ivers & Pond, that the agent, Hoyman, was told by the son that the money came from the guarantor, and that Hoyman knew payment was made for the purpose of satisfying the guaranty.

These findings of the court must be sustained on appeal unless they are contrary to the great weight and clear preponderance of the evidence. Bie v. Ingersoll (1965), 27 Wis. (2d) 490, 493, 135 N. W. (2d) 250; Kirchen v. Gottschalk (1965), 26 Wis. (2d) 123, 125, 131 N. W. (2d) 885; Rische Construction Co. v. May (1961), 15 Wis. (2d) 123, 127, 112 N. W. (2d) 165.

There was evidence that Linter, the credit manager of the piano company, had told the son that his account was out of line and that they would “have to go to my father,” the guarantor. Shortly thereafter, Hoyman, the sales agent for Ivers & Pond, appeared at the son’s place of business and stated that he wanted the $2,000 or the son would get no more merchandise. Hoyman admitted that he knew the son would have to get the $2,000 from the father. There was evidence that Hoyman stated he would not leave town until he got the $2,000 and that he was waiting at the son’s place of business to see the check that was obtained from the father.

Some of the facts stated above are minimized or discounted by the plaintiff, yet there is no testimony in direct contradiction to these facts. In any event, even to the extent that there is conflict in the testimony, it is apparent that the court’s finding, that Hoyman knew the source of the $2,000 payment, was not contrary to the great weight and clear preponderance of the evidence. The finding is supported by the evidence and must be sustained.

However, though Hoyman, the agent, knew that the father in fact made the payment, was that knowledge imputable to the principal, Ivers & Pond? We conclude that it was. There is evidence to support this conclusion. The finding is not contrary to the great weight and clear preponderance of the evidence.

Where an agent has authority to deal in general with the subject matter of a transaction, knowledge that he gains in the course of that transaction is imputable to the principal, and he is charged with the consequences of that knowledge. (See 3 Am. Jur. (2d), Agency, p. 635, sec. 273; 3 C. J. S., Agency, p. 194, sec. 262.) This court has stated the rule in Johnson v. Associated Seed Growers, Inc. (1942), 240 Wis. 278, 282, 3 N. W. (2d) 332:

“. . . the principal is chargeable with and bound and affected by such knowledge and notice as his agent received in relation to the matter over which the authority extended while acting within the scope of his authority in negotiating or attending to a particular transaction.”

The same case pointed out that the agency authority need not be expressly proved when it appears that a contract negotiated by a putative agent on behalf of a principal was acquiesced in and performed. The knowledge of an agent may be imputed to a principal irrespective of whether the agency is founded on express or implied authority.

In the instant case, it is not denied that the representative of Ivers & Pond was the agent for sales purposes. It is equally obvious that his duties entailed the collection of past-due accounts. When Peckham (the son) decided to go into the piano business, he wrote to Ivers & Pond; and Hoyman was sent, as the piano company’s representative, to outline the conditions under which a future course of dealings might be possible. He ascertained the son’s credit standing and advised him that he could not be afforded credit privileges on an open-account basis without a guaranteed line of credit.

After the course of business between the parties resulted in a substantial indebtedness, the son was informed by the credit manager for Ivers & Pond, that “the figure . . . was just way out of line” and “they would have to go to my father to satisfy his part of it.” Thereafter, the son was visited by Hoyman, who announced that he had been told not to leave Madison until he had the $2,000.

The entire course of relations between Ivers & Pond, Peckham (the son), and Hoyman leads to the inescapable conclusion that Hoyman was at least clothed with the powers of a general agent under the doctrine of apparent authority. This court has stated that three elements are required to establish apparent authority: (1) Acts by the agent or principal justifying belief in the agency; (2) knowledge thereof by the party sought to be charged; and (3) reasonable reliance thereon by a third party. Hansche v. A. J. Conroy, Inc. (1936), 222 Wis. 553, 560, 269 N. W. 309; Sell v. General Electric Supply Corp. (1938), 227 Wis. 242, 248, 278 N. W. 442. One standard work on agency states:

“. . . apparent authority results from conduct by the principal which causes a third person reasonably to believe that a particular person, who may or may not be the principal’s agent, has authority to enter into negotiations or to make representations as his agent.” Seavey, Law of Agency (hornbook series), p. 13, sec. 8.

The undisputed facts are sufficient to establish that Hoyman was clothed with apparent authority to negotiate generally in regard to all aspects of the dealings between the parties and, specifically, the piano company knew of, and through its credit manager directed, collection of the guaranty. Hoyman stated he was directed to not leave town until he got the $2,000.

While a finding of express agency is not necessary to the determination of this case, the facts are sufficient to establish an express agency to collect the guaranty.

The trial judge also inferred that the piano company had actual knowledge of the collection of the amount of the guaranty. He found that, after the $2,000 payment, no further credit was extended to the plaintiff’s son. While conflicting inferences can be drawn from this stoppage of credit, it is clear that it was the trial judge’s conclusion that Ivers & Pond did so because it knew its recourse under the guaranty agreement was exhausted. If not, why did it cease to extend credit? It should also be noted that no further demand was made upon the father, although the son remained indebted to the piano company in amounts up to $3,500 for almost a year until the time of bankruptcy. This finding by the trial judge also supports the inference of knowledge of the payment. This court said in the Estate of Beale (1962), 15 Wis. (2d) 546, 556, 113 N. W. (2d) 380:

“ Tt is the function of the trial court, in cases tried to the court, to draw such inferences from the established facts as deemed proper, and the supreme court cannot disturb the same unless they are against the great weight and clear preponderance of the evidence.’ ”

Hence, we conclude that Hoyman was an agent whose knowledge that the payment was made by the father was imputable to Ivers & Pond. We also conclude that the evidence supports the inference drawn by the trial judge that the piano company had actual knowledge of the payment.

We therefore conclude that Ellsworth Peckham’s contract of guaranty was discharged by payment.

By the Court. — Judgment affirmed.


author: Fairchild, J. Hallows, J.

text:
    Monday, Plaintiff and Appellant (P. C. Monday Tea Company, Original Plaintiff), v. Milwaukee County Expressway Commission, Defendant: United States of America, Intervenor and Respondent.

      December 1, 1965

    January 4, 1966.

      For the appellant there were briefs by Martin J. Torphy and E. Campion Kersten, both of Milwaukee, and oral argument by Mr. Kersten.

    For the respondent there was a brief by James B. Brennan, United States attorney, Robert J. Lerner, assistant United States attorney, and Stanton Sornsen, Internal Revenue Service, and oral argument by Mr. Lerner.

   Fairchild, J.

On this appeal, we are concerned with only one of the claims of the United States to the fund under the control of the circuit court. The claim of lien here involved is grounded upon the alleged individual liability of Mr. Monday to the United States. The existence of such liability is attacked in Mr. Monday’s counterclaim, and jurisdiction to determine such liability is challenged by the demurrer.

The complaint of the United States as an intervening party, and Mr. Monday’s answer thereto, relate to the claim by the United States of a lien grounded upon the tax liability of the corporation, but any issues posed by the complaint and answer are not before us now.

The United States does not appear to challenge the jurisdiction of the circuit court to determine Mr. Monday’s individual liability on the ground that the United States is immune from suit without its consent. Whether the request of the United States that it be made a party in order to assert its claim grounded on liability of the corporation is sufficient consent to the adjudication by the circuit court of its claim grounded on Monday’s individua,! liability, or whether the service upon the clerk of the notice of levy, expressly referring to this action, standing alone, would he a consent to such adjudication, need not be decided. There appears to be no claim that the United States attorney exceeded his lawful authority in entering into the stipulation with reference to the disposition of the fund, and we deem that such stipulation, within his authority, is consent that the court determine the matter if and insofar as it has jurisdiction of the subject matter.

The question presented, as we see it, is whether a state court which has under its control a fund upon which the United States claims a lien for assessed and unpaid taxes, and against which the United States seeks to enforce its lien, has jurisdiction to go behind the assessment and determine the existence or amount of the taxpayer’s liability. It should be noted that none of Mr. Monday’s allegations in paragraph 5 of his counterclaim challenges the fact of the making of the assessment, nor alleges any defect in procedure thereafter, nor is there any issue of priority over any other claimant. All the allegations challenge the merits of the grounds for the assessment, i. e., whether Mr. Monday is really liable to the United States. In order to consider these objections, the circuit court must have jurisdiction to determine liability notwithstanding the determination made by the federal officer who entered the assessment.

We find no federal statute which confers such jurisdiction upon a state court, nor any court decisions which persuade us that such jurisdiction exists. To the contrary, we conclude, by reason of the considerations applicable to tax collection, and the general policy adopted by Congress, that such jurisdiction does not exist.

The United States acquires a lien where a person “liable to pay any tax neglects or refuses to pay the same after demand, ...” The lien arises at the time the assessment is made. The assessment, though made ex parte, is an administrative act of an officer of the United States. It is made by recording the liability of the taxpayer in the office of the secretary of the treasury or his delegate. It is at least presumptively correct and is conclusive for the purpose of some types of proceedings. The question is whether it is conclusive in the action before us.

The broad, general policy with respect to the collection of disputed federal taxes has been succinctly summarized as “pay first and litigate later.”

As stated, generally, in Bull v. United States:

“Thus the usual procedure for the recovery of debts is reversed in the field of taxation. Payment precedes defense, and the burden of proof, normally on the claimant, is shifted to the taxpayer. The assessment supersedes the pleading, proof and judgment necessary in an action at law, and has the force of such a judgment. The ordinary defendant stands in judgment only after a hearing. The taxpayer often is afforded his hearing after judgment and after payment, and his only redress for unjust administrative action is the right to claim restitution.”

Congress has expressed and implemented such policy. A federal statute prohibits the maintenance in any court of a suit to restrain the assessment or collection of any tax, although the courts have allowed such suits in certain exceptional circumstances.

A tax may be collected by seizure and sale of all property and rights to property belonging to the taxpayer or subject to the lien provided by sec. 6321. For this purpose the assessment is conclusive.

After claim for refund, an action may be brought in a district court or the court of claims for the recovery of a tax alleged to have been erroneously or illegally assessed or collected.

In 1935, Congress showed its preference for “pay first and litigate later” by amending the Federal Declaratory Judgment Act so as to except disputes with respect to federal taxes.

28 USCA, sec. 2410, authorizes the naming of the United States as a party in any quiet-title or foreclosure action in a state or federal court where the United States claims a mortgage or other lien on the property involved. The federal court of appeals for the second circuit has decided, with reasoning which we find persuasive, that this statute does not confer jurisdiction to go behind an assessment of tax and adjudicate the liability of the taxpayer.

A decision in the ninth circuit, relied on by Mr. Monday decided in an action under sec. 2410 that there were procedural defects in a federal tax lien, but noted that it did not decide whether it could consider the merits of the assessment.

Thus in the normal course of events, except where resort to the tax court is permitted, payment must be made in full before the taxpayer can litigate the question of liability for the tax.

There are several exceptions to the broad rule requiring payment before litigation. One is the express authorization to resort to the tax court where certain types of taxes are involved.

Another exception occurs where the United States brings an action at law to recover judgment for the amount of the tax. In such an action the assessment is not conclusive, but presumptive only. Recognition of this exception began many years ago in Clinkenbeard v. United States and United States v. Rindskopf.

A further exception has been found by the court of appeals for the second circuit. In United States v. O’Connor the United States brought an action in a federal district court, under the authority of 26 USCA, sec. 7403, seeking enforcement of its lien. The court concluded that the court could adjudicate the issue of liability in such action, saying, “We think the closer analogy is to the action at law on the assessment; when the Government seeks the aid of the courts in enforcing the assessment in any form, it opens the assessment to judicial scrutiny in all respects.” Although the language quoted is not restricted to an action in a federal court, we emphasize that the particular action was one in federal court brought there pursuant to a statute.

If Monday’s counterclaim be treated as if it were the complaint in an action to quiet title to the fund, we would nevertheless find persuasive the reasoning in Falik that congressional policy requires that the assessment be taken as conclusive in such an action.

It seems somewhat more realistic, however, to view the government’s service of its notice of levy upon the clerk, with its express reference to this action, as a demand that the circuit court recognize its lien upon Mr. Monday’s cause of action against the county and require payment to the United States accordingly. If the notice be so viewed, the counterclaim becomes a defensive pleading in effect though not in form. So viewed we reach the question whether the enactments and doctrines which make up the federal scheme of tax collection impliedly exclude state courts from jurisdiction to set aside assessments of federal taxes made by federal officers. We conclude that even if the O’Connor decision is sound when applied to an action in a federal court pursuant to the authority of a federal statute, there is nevertheless an implied exclusion of state court jurisdiction to examine the merits of an assessment, at least in the type of situation now before us, where the United States is demanding payment out of a fund in the control of the state court.

We read such implication from the existence of the general rule — pay first, litigate later, and the anomaly of according to a state court the power to review the administrative decisions of a federal officer. We also see an anomaly in a state court’s deciding the issue of an individual’s liability to the United States under the tax laws of the latter. Although state courts are bound by the laws of the United States as part of the supreme law of the land, our duty to give full recognition to such laws does not compel the conclusion that Congress intended state courts to have jurisdiction to determine disputes over liability for federal taxes.

Congressional policy appears to favor adjudication of such disputes in federal courts after payment of the tax assessed. We conclude, therefore, that the state courts are not to adjudicate them, at least in the situation present here. We confess to some uneasiness in reaching this proposition because it is in accord with a contention appearing in the brief submitted on behalf of the United States, but expressly withdrawn by the United States attorney upon oral argument. Nevertheless it seems the sounder view.

We should, indeed, acknowledge that Mr. Monday has cited a case in which a state court decided a dispute over liability of the taxpayer to the United States. There the United States had intervened in a state court action. It sought a personal judgment for the penalty, as well as for foreclosure of its lien. The court did not discuss the propriety of its examination of the liability issue.

Other state court cases cited by Mr. Monday do not adjudicate the merits of a dispute over tax liability, but determine the relative priority of the claims of the United States and others.

By the Court. — Order affirmed.

Hallows, J.

(dissenting). I think United States v. O’Connor (2d Cir. 1961), 291 Fed. (2d) 520, applies to a suit or application to enforce a lien in a state court as it does to a federal court. I can find no implied exclusion of a state court’s jurisdiction, as the majority does, nor do I see any anomaly in according this power to a state court to decide this issue. The United States sought this result when it applied to the state court for the enforcement of its lien against money not in the hands of a litigant but in the custody of the state court.

       The two claims are related. The counterclaim discloses that the assessment against Mr. Monday was made on the premise that he was a person required to collect, account for, and pay over the tax of the corporation and wilfully failed to do so. 26 USCA, sec. 6672. Such penalty is to be assessed and collected in the same manner as a tax. 26 USCA, sec. 6671.

       26 USC A, see. 6321.

       26 USC A, sec. 6322.

       26 USC A, sec. 6203.

        United States v. O’Connor (2d Cir. 1961), 291 Fed. (2d) 520, 527.

        Flora v. United States (1960), 362 U. S. 145, 159, 164, 80 Sup. Ct. 630, 4 L. Ed. (2d) 623.

       (1935), 295 U. S. 247, 260, 55 Sup. Ct. 695, 79 L. Ed. 1421.

       26 USCA, sec. 7421.

       See Miller v. Standard Nut Margarine Co. (1932), 284 U. S. 498, 52 Sup. Ct. 260, 76 L. Ed. 422; Enochs v. Williams Packing Co. (1962), 370 U. S. 1, 82 Sup. Ct. 1125, 8 L. Ed. (2d) 292.

       26 USCA, sec. 6331.

         Bull v. United States, supra, page 260, footnote 8; Bowers v. American Surety Co. (2d Cir. 1929), 30 Fed. (2d) 244.

       26 USCA, see. 7422, 28 USCA, see. 1346.

        Flora v. United States, supra, page 164, footnote 7.

        Falik v. United States (2d Cir. 1965), 343 Fed. (2d) 38. Although one basis for the same holding in an earlier case in the same court, Pipola v. Chicco (2d Cir. 1960), 274 Fed. (2d) 909, was disavowed by that court in United States v. O’Connor, supra, footnote 6, the court again reached the same conclusion in Falik as in Pipola.

        United States v. Coson (9th Cir. 1961), 286 Fed. (2d) 453.

       Ibid. at 463, 464. It was specifically pointed out in Cooper Agency, Inc., v. McLeod (D. C. S. C. 1964), 235 Fed. Supp. 276, 285, that Coson was decided “from a procedural standpoint only.”

       (1874), 88 U. S. (21 Wall.) 65, 22 L. Ed. 477.

       (1881), 105 U. S. 418, 26 L. Ed. 1131.

        Supra, footnote 6.

       Ibid. page 527.

       See Note, Merits of a Tax Assessment, 71 Yale Law Journal (1962), 1329, 1336, criticizing O’Connor as contrary to the policy of summary tax collection.

       See Restatement, Conflicts, p. 728, sec. 610.

        Paddock v. Siemoneit (1949), 147 Tex. 571, 218 S. W. (2d) 428.

       New York v. Gilmore’s Steak House (1958), 15 Misc. (2d) 730, 183 N. Y. Supp. (2d) 110; Ryan Ready Mixed Concrete Corp. v. Tallini Construction Corp. (1959), 23 Misc. (2d) 547, 194 N. Y. Supp. (2d) 330, and Oxford Distributing Co. v. Famous Robert’s, Inc. (1958), 5 App. Div. (2d) 507, 173 N. Y. Supp. (2d) 468. While In re Estate of Dwyer (1959), 168 Cal. App. (2d) 264, 335 Pac. (2d) 718, is not a priority ease, it is not a redetermination of an assessed tax liability.


author: Hallows, J. Currie, C. J., and Gordon, J.

text:
    Zelof, Appellant, v. Capital City Transfer, Inc., Respondent.

      December 1, 1965

    January 4, 1966.

      For the appellant there were briefs by Ted C. Boyle, attorney, and Richard R. Rynders of counsel, both of Madison, and oral argument by Mr. Boyle.

    For the respondent there was a brief and oral argument by Richard E. Gordon of Madison.
   Hallows, J.

The trial court with some justification relied on McCartie v. Muth (1939), 230 Wis. 604, 284 N. W. 529, which stated “we consider that in a case where the damages are unliquidated, as here, the granting of the amendment should be denied except on condition of a new trial, at least on the question of damages.” The McCartie Case, which involved an ad damnum clause of $4,000 and a verdict of $5,000, relied on Pierce v. Northey (1861), 14 Wis. 10 (*9). The Pierce Case clearly held that leave to amend the ad damnum clause to increase it to the amount of the verdict should have been upon the condition the moving party relinquishes the verdict, pays the other party’s costs of trial and submits to a new trial. The court stated this was a rule before the code and the reason for it still exists, namely, the opposite party had no opportunity of reducing the damages which on the trial he had no occasion to do because of the moderate amount claimed against him. In that case the demand in the complaint was $248.50 and the verdict $365.

The reason given for the rule should be read in light of the amount of money involved and neither the Pierce nor the McCartie Cases should represent under modern practice a hard or fast or an inexorable rule. To that extent, language to the contrary is overruled. We think the trial court has the power after trial and before judgment to grant on terms as may be just an amendment of the ad damnum clause so the verdict will conform to the pleading.

This problem has been a troublesome one, both in this state and elsewhere, and one is guided to an answer depending on the emphasis put upon the function of the ad damnum clause. At common law the plaintiff in an action for damages was limited by his demand in the complaint and could recover no more than the amount specified. Amendment of pleading after the submission of the case to a jury was a rarity. See Beranek v. Beranek (1902), 113 Wis. 272, 89 N. W. 146; 22 Am. Jur. (2d), Damages, p. 371, sec. 276. This gave rise to the view that a defendant had a right to rely on the ad damnum clause and presumably did rely in making his defense. The Pierce Case recognized the code but hardly its liberality and allowed the amendment at the expense of a new trial. The right to rely on the demand for relief in a complaint finds some basis in the first sentence of sec. 270.57, Stats., which provides in cases of default the relief granted cannot exceed that demanded. However, the rest of sec. 270.57 states that where an answer is put in and a contest made the pleadings may be amended to grant greater relief. Wauwatosa v. Union Free High School District (1934), 214 Wis. 35, 252 N. W. 351.

An ad damnum clause is required by sec. 263.03 (3), Stats., which requires a statement of the relief to which the plaintiff supposes he is entitled and if money relief is demanded, the amount thereof. It has been stated the ad damnum, clause serves to limit the amount of the defendant’s maximum potential liability and the jury has no authority to award an amount in excess of the demand and any amendment after verdict would affect a substantial right of the defendant. Phillips v. Rolston (1965), 376 Mich. 264, 137 N. W. (2d) 158. Another view is that the primary function of the ad damnum clause is jurisdictional and to furnish the key to the courtroom where a court’s jurisdiction is dependent upon jurisdictional amounts. The ad damnum clause may even be talismanic in getting into a federal court. The function of the ad damnum clause also varies in importance depending upon whether or not in a given jurisdiction the clause may be submitted to the jury either in the opening statements, in the arguments to the jury or in the instruction. From one point of view it is claimed the ad damnum clause has created serious problems in the law and has been abolished in several states. See The Ad Damnum Clause, The Problem and Solution, monograph (August, 1965), The Defense Eesearch Institute, Inc.

In Wisconsin the ad damnum clause does not have as much significance as it has in some states. It is not allowed to be mentioned to the jury in the opening statements or in arguments to the jury. Affett v. Milwaukee & Suburban Transport Corp. (1960), 11 Wis. (2d) 604, 106 N. W. (2d) 274. Nor can the court instruct upon it. In Otto v. Milwaukee Northern R. Co. (1912), 148 Wis. 54, 61, 134 N. W. 157, the trial court instructed the jury if the plaintiff was entitled to recover, his damages should be fixed at such a sum as to fully compensate him but not exceeding $5,000, the amount of the ad damnum clause. In holding such an instruction was error, the court stated: “The law placed no such limit as a guide for the jury. The pleading placed no such limit. True, the prayer was for $5,000, but that did not govern the amount of the recovery. It might have been more if the evidence warranted it notwithstanding the prayer. Why refer to the matter at all, especially in such a case where the danger is ever present of overestimating reasonable recoverable damages?”

Subsequent to McCartie this court decided Pietsch v. Groholski (1949), 255 Wis. 302, 38 N. W. (2d) 500, wherein the defendant had filed a counterclaim and demanded $25,000 damages for personal injuries. The jury found the plaintiff negligent and assessed damages at $26,170.50. Judgment was granted on the verdict. It does not appear that a motion was made to amend the ad damnum clause. In affirming on appeal the court stated it was not error for a jury to award damages in excess of the amount prayed for and if the verdict was not excessive and bore a true relationship to the injuries, it should stand. The McCartie Case was not referred to in the opinion.

However, in Schwartz v. Schneuriger (1955), 269 Wis. 535, 69 N. W. (2d) 756, this court considered both the McCartie and the Pietsch Cases in reference to a complaint which asked for $25,000 damages and to an award of $27,000. Judgment was entered on the verdict and on appeal the verdict was found not to be excessive on the evidence, and the judgment was affirmed. It does not appear a motion was made to amend the ad damnum clause in the complaint. The court did not follow the McCartie Case and arrived at its result on the basis of sec. 270.57, Stats. We do not contend either of these cases stands for the proposition a verdict in excess of an ad damnum clause can stand and support a judgment without an amendment to the pleadings but they indicate a verdict in excess of the ad damnum clause is not necessarily lost for that reason.

We hold under sec. 270.57, Stats., and sec. 269.44, the court has the power after verdict and before judgment in furtherance of justice and upon such terms as may be just to allow an amendment to increase the amount of the ad damnum clause to the amount of the verdict so the pleadings and verdict will support a judgment of the amount awarded.

What are just terms necessarily depends upon the facts of the case. When a defendant is in fact misled by the amount of the ad damnum clause, the court may well impose different terms than when the defendant cannot prove he has been misled. No mathematical rule of disparity between the amount of the verdict and the ad damnum clause can be formulated. Where an amendment to the ad damnum clause if claimed originally would have permitted the removal to the federal court, the motion has been held to come too late because it deprived the defendant of his choice of forum. Cordrey v. Steamship “Bee” (1921), 102 Or. 636, 201 Pac. 202. In addition when a verdict is supported by the evidence and is in excess of the ad damnum clause, there exists a variance between the pleading and the proof. Such a variance under see. 263.28, Stats., is not deemed material unless it misleads the adverse party to its prejudice, and it must be proved to the satisfaction of the court that a party has been so misled and in what respect he has been misled. But even when a party is misled the court is not foreclosed from allowing an amendment but may order the pleading amended upon such terms as may be just. We see no reason why the statutes quoted should not apply full force to the ad damnum clause in a complaint as they do to other aspects of pleadings.

In some states there is a presumption a defendant regulated his conduct at the trial with reference to the claim for the amount of damages stated and might have modified his course of defense had a larger claim been asserted. Excelsior Electric Co. v. Sweet (1895), 59 N. J. L. 441, 31 Atl. 721. But under our pleading statutes we think the correct rule is stated in Clute v. Clintonville Mut. Fire Ins. Co. (1911), 144 Wis. 638, 644, 129 N. W. 661, when it said: “In the absence of any showing that the defendants were misled or placed at any disadvantage by reason of the averments of the complaint in reference to the amount of damage sustained, it was within the sound discretion of the trial court to permit the amendment.”

The liberality of allowing amendments of the pleadings, of course, diminishes as a trial proceeds, but the point of no return must be decided in reference to the facts of each case. The trial court originally allowed the amendment to the ad damnum clause and ordered judgment on the verdict stating in his opinion the defendant was not surprised by the verdict. This had some basis at least in what transpired at a pretrial conference. Unfortunately no record was made of this conference. To fulfil its proper function, a record should be made of a pretrial conference if there is any agreement made. Sec. 269.65, Stats. Schneck v. Mutual Service Casualty Co. (1963), 18 Wis. (2d) 566, 572, 573, 119 N. W. (2d) 342. However, if this conference was. in the nature of a conciliation hearing, which is sometimes miscalled a pretrial conference, it is understandable that no record was made. In any event, we cannot take notice of what took place by what might be said in oral argument or in the briefs because it is not in the record. However, we may recognize the finding of the trial court that the defendant was not surprised although we cannot review the basis for it. It is also apparent from the record the defendant had not proved to the satisfaction of the court that it was misled by the ad damnum, clause. On this basis we think the trial court was correct in its first determination in allowing the amendment to the ad damnum clause without the condition of granting a new trial. Consequently, the order granting a new trial should be reversed and the order granting the motion to amend the ad damnum clause and for judgment on the verdict reinstated.

However, the defendant argues on this appeal the damages are excessive and, therefore, he is entitled to a new trial on that ground. While no cross appeal or notice of review was filed, the defendant is entitled to raise this question under sec. 274.12 (2), Stats., because it sustains the order appealed from. The verdict is no more excessive because it is three times the amount of the ad damnum clause than it would be inadequate if it were one third of the amount of the demand. The ad damnum clause is not the test of the sufficiency of the amount of the verdict. The ad damnum clause is the plaintiff’s asking price, not a measuring stick. Whether or not the verdict is supported by the evidence we cannot decide because the transcript of the reporter’s notes is not in the record. Consequently, it is impossible for this court to review the sufficiency of the evidence and necessarily the scope of our review is confined to the record. Stelloh v. Liban (1963), 21 Wis. (2d) 119, 124 N. W. (2d) 101; Nichols v. United States Fidelity & Guaranty Co. (1961), 13 Wis. (2d) 491, 109 N. W. (2d) 131. On the record we cannot find the verdict excessive. It had the support of the trial judge against attack and the court granted the motion to amend the pleadings.

By the Court. — The order is reversed with directions to reinstate the order amending the ad damnum clause and granting judgment on the verdict.

Currie, C. J., and Gordon, J.

(dissenting). The verdict exceeded the demand of the complaint by almost 300 percent. We would hold that as a matter of law this verdict was one upon which the court could not grant a judgment without offering to the defendant an option for a new trial.

It is a realistic fact that small cases are defended less vigorously than large cases. We believe that the trial court should have the discretion to grant an amendment to a complaint even after verdict when the verdict exceeds the ad damnum clause by a fraction — even a significant fraction. However, when the verdict is three times the amount of the demand, the impropriety of a post-verdict amendment should be apparent as a matter of law.

An ad damnum clause is a necessary part of a complaint under sec. 263.03 (3), Stats. Such a clause has heretofore served the useful purpose of focusing the attention of the defendant and his counsel upon the approximate area of exposure. We fear that the majority’s view will mean that hereafter defendants will have to resist the trial of every case with all-out effort, lest a vastly larger verdict be awarded in a case in which only a small or modest demand had been made.

        Good v. Schiltz (1928), 195 Wis. 481, 218 N. W. 727, explained
      “The reason for the rule has been stated thus: ‘The reason and fairness of this statutory rule, which is practically the old equity rule, is obvious. The defendant by his default submits, without contest on his part, to the court, only the claim of the plaintiff for the relief prayed in the complaint. But if a different or greater relief were demanded, he might appear and contest it as unjust; hence the statute wisely limits the power of the court in awarding judgment by default to that asked for in the complaint, to the end that defendant may safely omit to appear in cases where he is willing to submit to the court, without contest, the claim of the plaintiff to the specific relief invoked in his complaint.’ Northern Trust Co. v. Albert Lea College, 68 Minn. 112, 71 N. W. 9. See Whitehill v. Jacobs, 75 Wis. 474, 44 N. W. 630.”

       270.5V “MEASURE of relief. The relief granted to the plaintiff, if there be no answer, cannot exceed that which he shall have demanded in his complaint; but in any other case the court may grant him any relief consistent with the case made by the complaint and embraced within the issue.”

       269.44 “Amendments op processes, pleadings and proceedings. The court may, at any stage of any action or special proceeding before or after judgment, in furtherance of justice and upon such terms as may be just, amend any process, pleading or proceeding, . . .”

       263.28 “Variances, materiality. (1) No variance between the allegation in a pleading and the proof shall be deemed material unless it misleads the adverse party to his prejudice. Whenever it shall be proved to the satisfaction of the court that a party has been so misled, and in what respect he has been misled, the court may order the pleading amended upon such terms as may be just.”