Alexander's Estate, Matter of

• Decision Date: 06 January 1977
• Docket Number: No. 75--81,75--81
• Parties: In the Matter of the ESTATE of Ruth ALEXANDER, Deceased. M & I BANK et al., Appellants, v. FIRST AMERICAN NATIONAL BANK, Respondent.
• Court: Wisconsin Supreme Court

Page 475

248 N.W.2d 475

75 Wis.2d 168

In the Matter of the ESTATE of Ruth ALEXANDER, Deceased.

M & I BANK et al., Appellants, v. FIRST AMERICAN NATIONAL BANK, Respondent.

No. 75--81.

Supreme Court of Wisconsin.

Argued Nov. 29, 1976.

Decided Jan. 6, 1977.

William A. Stearns, Milwaukee, for appellants; F. William Haberman and Michael, Best & Friedrich, Robert L. Titley and Quarles & Brady, Milwaukee, on brief.

Richard P. Tinkham, Wausau, for respondent; John E. Bliss and Tinkham, Smith, Bliss, Patterson & Richards, Wausau, on brief.

HANLEY, Justice.

Five issues are presented on appeal:

1. Are certain of the findings of fact and conclusions of law entitled to no weight upon this appeal because they are inconsistent with the trial court's memorandum opinion?

2. Did the deceased ratify her signature upon the March 2 guaranty by entering the September 7 agreement?

3. Did the deceased waive the right to assert the defense of foregery against the assert the defense of forgery against the

4. Is the estate estopped from asserting the defense of forgery against the March 2 guaranty?

5. Is the bank's claim allowable on the basis of the September 7 agreement itself?

Findings of Fact

The estate contends the findings of fact and conclusions of law prepared by counsel for the bank and signed and filed by the trial judge are inconsistent with the trial judge's opinion and therefore entitled to no weight. The estate specifically objects to the findings numbered 9 and 11, which state Ruth Alexander ratified the March 2 guaranty and waived any objection to its validity. Counsel for the estate also argue that the findings and conclusions were submitted to the trial court and signed without prior submission or notice to the estate.

This latter contention is somewhat disputed by the bank, but it is not a matter of record, and therefore is not considered. The estate could have caused facts relative to the prior submission of findings and conclusions to be in the record by objecting to the findings and conclusions even after they were signed but before judgment was entered. The estate, however, chose not to do so.

The bank concedes that the trial court's opinion makes no mention of either ratification or waiver, but argues that if the opinion is considered in its entirety, no inconsistency with these findings may be found. The bank further contends that the failure before this appeal to object to the findings of fact and conclusions of law prevents the estate from now making such objection.

As a basis for its contention that the findings of fact and opinion are not inconsistent, the bank relies upon the statement in the opinion that '(t)he agreement of September 7, 1973 estops the estate from raising this (forgery) defense because of the total and complete knowledge of the facts and funds owed by Leroy Tonn, the Merritt Lease Corporation and Lakeside Industries, Inc.' This use of the word 'estops' and the trial court's emphasis on knowledge of those managing the estate, the bank contends, indicates the trial court found ratification and waiver. This contention, however, ignores the recognized distinctions between the doctrines of ratification, waiver and estoppel.

Ratification is the manifestation of intent to become party to a transaction purportedly done on the ratifier's account. Restatement (Second) of Agency sec. 82, at 210 (1957). Waiver is the voluntary and intentional relinquishment of a known right, while estoppel is action or nonaction of a person which induces reliance thereon by another, either in the form of action or nonaction, to his detriment. Von Uhl v. Trempealeau County Mutual Insurance Co., 33 Wis.2d 32, 37, 146 N.W.2d 516, 519 (1966). Although it is said the distinction between waiver and estoppel is difficult to demonstrate and the terms are often used interchangeably, this is because some of the same facts may affect both doctrines, not because the distinction does not exist. In cases involving claims of both waiver and estoppel, this court has recognized the distinction by considering the claims individually. Variance, Inc. v. Losinske, 71 Wis.2d 31, 237 N.W.2d 22 (1976); Hanz Trucking, Inc. v. Harris Brothers Co., 29 Wis.2d 254, 138 N.W.2d 238 (1965). Thus, although in this case conceivably all of these principles could operate, the trial judge's opinion must be understood to mean what it says. Because of the distinction between these three doctrines, the trial judge's opinion, only finding estoppel, should not be interpreted to include waiver and ratification. The findings of fact are thus inconsistent with the opinion.

Even a sharp conflict between the findings of fact and a memorandum decision, however, does not automatically destroy the weight of the particular findings of fact. When the trial judge signs findings of fact and conclusions of law they become the findings and conclusions of the trial court, and the responsibility for their correctness is his. Karp v. Coolview of Wisconsin, Inc., 25 Wis.2d 299, 301, 130 N.W.2d 790, 791 (1964). This court has also held that the findings and conclusions take precedence over a memorandum decision. Gordon v. Gordon, 270 Wis. 332, 348, 71 N.W.2d 386, 394 (1955).

Although incomplete findings may be supplemented by the written decision of the trial court, Breeden v. Breeden, 6 Wis.2d 149, 150--51, 93 N.W.2d 854, 855 (1959), findings, signed by the trial judge, which include more than the opinion are nevertheless the findings of the court. Thus, in Guschl v. Schmidt, 266 Wis. 410, 63 N.W.2d 759 (1954), this court, considering a finding of fact which was in sharp conflict with the trial judge's memorandum decision, did not strike down the finding because of inconsistency, but upon a determination that the finding was against the great weight and clear preponderance of the evidence. Id. at 416, 63 N.W.2d at 762. This great weight and clear preponderance of the evidence test is the general test upon appeal for the sufficiency of findings of fact, Merten v. National Manufacturers Bank of Neenah, 26 Wis.2d 181, 186, 131 N.W.2d 868, 870 (1965), and is applicable in this case despite the inconsistency.

Ratification

The most pertinent issue in this case is whether Ruth Alexander, by entering into the September 7 agreement, ratified the March 2 guaranty. The trial court found that she did ratify the guaranty, but the estate contends that the September 7 agreement was a completely separate contract which did not include ratification of the guaranty.

Whether a person may ratify a forged signature is a perplexing problem. There has been a split of authority on the issue of ratification of an unauthorized signing which constitutes the crime of forgery. In several states the rule of law, although represented by very early cases, is that there may be no ratification of a forgery, in the absence of estoppel or a new consideration. Hartlep v. Murphy, 197 Ind. 222, 227, 150 N.E. 312, 314 (1926); Wilson v. Hayes, 40 Minn. 531, 538--40, 42 N.W. 467, 470 (1889); Fourth & Central Trust Co. of Cincinnati v. Johnson, 24 Ohio App. 129, 156 N.E. 462 (1927); Funds for Business Growth, Inc. v. Woodland Marble and Tile Co., 443 Pa. 281, 286, 278 A.2d 922, 925 (1971).

Other states have, however, allowed ratification of forged documents, and the trend, if any, in this area is toward this allowance. See Common Wealth Insurance Systems, Inc. v. Kersten, 40 Cal.App.3d 1014, 115 Cal.Rptr. 653 (1974); Coral Gables, Inc. v. Granara, 285 Mass. 565, 189 N.E. 604 (1934); Magrid v. Drexel National Bank, 330 Ill.App. 486, 71 N.E.2d 898 (1947). These states recognize that one whose name has been forged to a document may have good reasons for electing to be bound by the agreement, and therefore should be able to do so. See Mechen, Outlines of Agency sec. 225 at 149 (1952).

The comments to the Restatement (Second) of Agency indicate that a forged signature may be ratified. Following section 85, subsection (1) of which states the requirement for ratification that the actor have purported to be acting for the ratifier, the comments state:

'In accord with the rule stated in this Subsection, there can be no ratification of a contract which one intends for another, even though he believes that he is authorized to make it on behalf of the other, unless the intent is manifested. However, if one impersonates another, thereby purporting to act as another, or executes or delivers an instrument purportedly signed by another, the rationale of ratification is applicable and the act or transaction can be ratified by affirmance if it does not constitute an illegal agreement.' Restatement (Second) of Agency sec. 85, comment b, at 218 (1957).

The Uniform Commercial Code expressly permits the ratification of forged signatures upon negotiable instruments. Sec. 403.404(2), Stats.

In Murphy v. Estate of Skinner, 160 Wis. 554, 152 N.W. 172 (1915), this court considered the question of ratification of a forged signature. In that case Murphy argued that the deceased had ratified his forged signature on a promissory note payable to Murphy by failing to assert the forgery at the time the note was presented for payment. Skinner, the deceased, had merely refused to pay the note. Although it found that no ratification had occurred, the court considered the merits of Murphy's claim, thus adopting the view that a forged signature may be ratified.

Even among those authorities which allow ratification of forgeries, however, there remains concern over sanctioning this criminal act. Professor Seavey in his treatise The Law of Agency, sec. 33D at 60 (1964): 'It is now generally recognized that one whose name has been forged can ratify, unless he had agreed to take no proceedings against the forger, an agreement which would make the transaction illegal because of its tendency to prevent prosecution for the crime.' The comment to the Restatement (Second) of Agency quoted above also includes the qualification: 'In...