Balliet v. Wollersheim

• Decision Date: 08 December 1942
• Citation: 241 Wis. 536,6 N.W.2d 824
• Parties: BALLIET v. WOLLERSHEIM.
• Court: Wisconsin Supreme Court

241 Wis. 536

6 N.W.2d 824

BALLIET

v.WOLLERSHEIM.

Supreme Court of Wisconsin.

Dec. 8, 1942.

Appeal from a judgment of the Municipal Court of Outagamie County, Joseph R. McCarthy, Acting Municipal Judge.

Reversed.

Action by John M. Balliet, plaintiff, commenced on June 18, 1941 against Peter J. Wollersheim, defendant, to recover upon a promissory note made by defendant on May 5, 1939 in cognovit form. Judgment on cognovit without service of process was entered on June 18, 1941 in favor of the plaintiff. Thereafter, on motion of defendant, cognovit judgment was set aside and leave was granted to defendant to answer. The cause was thereafter tried to a court and jury and a special verdict returned.

By the first question of the special verdict, the jury found that after its making and before its delivery to the Appleton State Bank (payee) one Louis Lohmann inserted the figure 6 relating to the interest rate on the note. The jury found that after the note was signed by the maker, but before delivery to the payee, Louis Lohmann struck out the words “after maturity” in said note. To the third question, the jury answered that Louis Lohmann on or about May 5, 1939 made certain false and fraudulent representations to the maker to induce the execution and delivery of the note and that these were relied upon by the maker. Finally, the jury found that defendant, after learning of the false representations, ratified the transaction in respect of which they were made. Judgment was entered March 6, 1942 in favor of the plaintiff upon the verdict for the sum of $768.10. Defendant appeals. The material facts will be stated in the opinion.

Helmuth F. Arps, of Chilton, for appellant.

Sarto Balliet, of Appleton (A. W. Parnell and David L. Fulton, both of Appleton, of counsel), for respondent.

WICKHEM, Justice.

The defenses in this case were (1) alteration of the instrument and (2) fraud in its procurement. The second defense was disposed of by the jury's findings adversely to defendant and is not involved upon this appeal.

The facts are as follows: On May 5, 1939 Louis Lohmann owned a half-interest in an oil and gas lease of premises in Clay County, Tennessee. He had paid $250 for this half interest. The gas lease was not registered as a security with the Department of Securities, State of Wisconsin, nor had any application for registration been made therefor. In April, 1939, Lohmann approached Wollersheim and sought to sell him an interest in this gas lease. On May 5, 1939 he again called on Wollersheim and tried to sell him a one-sixth interest in the lease for $1,250. He showed Wollersheim a blue print and pointed out thereon the location of four wells producing several hundred barrels a day within a distance of 350 feet to 1250 feet from the premises covered by the lease. Wollersheim agreed to purchase a one-sixth interest for the sum of $1,250 making a down payment of $200, and executing the note in suit on a printed installment form of the Appleton State Bank in the sum of $1,050 with interest at the rate of 1% after maturity. Lohmann took the note to the Appleton State Bank which refused to take it without a substantial endorser. On June 13, 1939 plaintiff endorsed the note, Lohmann agreeing to pay Balliet $25 for such endorsement. The note was accepted for discount by the bank on June 13, 1939. Wollersheim made three payments of $100 each on the note after which he had become convinced that Lohmann had misrepresented the proximity of producing oil wells. Upon his default, Balliet was called upon by the Appleton State Bank on January 27, 1940 to pay the balance of the note. Upon payment he receivedan endorsement from the bank without recourse.

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The alterations by Lohmann after the note was made and before its delivery to the payee are (1) a different interest rate was inserted and (2) the words “after maturity” where those words occur on the printed form in connection with the stipulation for interest were stricken out. The effect of this was to change a provision calling for interest only after maturity and at the rate of 1% to one calling for payment before maturity at the rate of 6%.

As we view the matter there is a single question involved in this case: Was the note so incomplete and irregular upon its face as to destroy its negotiable character and disqualify the Appleton State Bank from being a holder in due course? It is not questioned that an altered instrument in the hands of a holder in due course may be enforced according to its original tenor. Sec. 117.42, Stats. If the Bank of Appleton is a holder in due course, plaintiff who derives his title through the Appleton State Bank “has all the rights of such former holder in respect of” the maker since it is plain upon the record that plaintiff was not a party to any fraud, duress or illegality affecting the instrument. Sec. 116.63, Stats. Except for his standing as successor in title to a holder in due course Balliet took overdue and...