Bank of Sun Prairie v. Esser

• Decision Date: 18 May 1989
• Docket Number: No. 88-0460,88-0460
• Citation: 151 Wis.2d 11,442 N.W.2d 560
• Parties: BANK OF SUN PRAIRIE, Plaintiff-Appellant-Cross Respondent, d v. Leah J. ESSER, Defendant-Respondent-Cross Appellant.
• Court: Wisconsin Court of Appeals

Page 560

442 N.W.2d 560

151 Wis.2d 11

BANK OF SUN PRAIRIE, Plaintiff-Appellant-Cross Respondent,^d v. Leah J. ESSER, Defendant-Respondent-Cross Appellant.

No. 88-0460.

Court of Appeals of Wisconsin.

Submitted on Briefs March 8, 1989.

Opinion Released May 18, 1989.

Opinion Filed May 18, 1989.

Francis J. Eustice and Gregory J. Fumelle, and Brill & Eustice, S.C., on the briefs, Sun Prairie, for plaintiff-appellant-cross-respondent.

Carlton Roffa, on the briefs, Brookfield, for defendant-respondent-cross-appellant.

Before GARTZKE, P.J., and DYKMAN and EICH, JJ.

EICH, Judge.

The Bank of Sun Prairie sued Leah Esser on her guaranty of a loan taken out by her brother, Keith Johnson. Esser counterclaimed, charging that the bank had misrepresented the terms of the guaranty to her. The trial court denied the bank's motion for summary judgment on its claim, although it later directed a verdict in the bank's favor at the close of the trial. The case went to the jury on Esser's misrepresentation claim, and the jury found in her favor. The bank appeals from the judgment confirming the jury's verdict, and Esser cross-appeals from an order granting the bank's motion in limine prohibiting her from placing certain facts before the jury and also from the court's refusal to include a punitive damage question in the special verdict.

The parties raise a variety of overlapping issues in their briefs. We believe the dispositive issues are: (1) whether the trial court erred in denying the bank's motion for summary judgment on Esser's guaranty; (2) whether the verdict is supported by credible evidence; and (3) whether the court erred in refusing to submit Esser's claim for punitive damages to the jury. ¹ We reverse the punitive damage ruling and remand for a new trial on this limited issue. In all other respects, we affirm the judgment.

The underlying facts are undisputed. Johnson wanted to borrow approximately $4,800 from the bank to purchase a truck. He was advised that the loan would be made only if Esser co-signed the note because, among other things, Johnson had gone through bankruptcy proceedings several weeks earlier, and one of the debts involved in those proceedings was a $27,500 "business note" he had given to the bank in connection with another transaction. Esser agreed to co-sign the note and accompanied Johnson to the bank to sign the truck loan papers.

Several documents were involved in the transaction. Esser co-signed Johnson's installment note and a security agreement, and also a "Continuing Guaranty (Unlimited)." She was given another form prepared by the bank entitled "Explanation of Personal Obligation," which she signed to acknowledge receipt. The document at issue in the case is the guaranty, which contained the following provisions:

[f]or value received, and to induce The Bank of Sun Prairie ... to extend credit to Keith M. Johnson, [Esser] ... guarantee[s] payment ... to Bank when due ... all loans ... notes and all other debts ... arising out of credit previously granted, credit contemporaneously granted or ... granted in the future by Bank to [Johnson].... To the extent not prohibited by law, this Guaranty is valid and enforceable against the undersigned even though any Obligation is invalid and unenforceable against [Johnson]. [Emphasis added.]

Johnson eventually defaulted on the truck loan and the bank sued Esser on the guaranty, seeking to recover not only on the $4,800 truck loan, but also Johnson's A different judge was assigned to preside at the trial. At the close of the evidence, the court ruled that Johnson's bankruptcy did not bar recovery on the guaranty and granted the bank's motion for a directed verdict on Esser's liability for the two debts. The case went to the jury solely on Esser's counterclaim for misrepresentation. The jury found in Esser's favor and the appeal and cross-appeal followed. Other facts will be referred to in the body of the opinion.

earlier $27,500 business note. Answering the complaint, Esser claimed that the earlier debt was extinguished in Johnson's bankruptcy. The bank moved for summary judgment contending that, while the bankruptcy proceedings may have discharged Johnson's liability on the business note, the debt still existed and was subject to Esser's guaranty. The trial court, without elaboration or further explanation, denied the motion on grounds that "there are questions of fact involved in this matter...." Esser then filed a counterclaim alleging that the bank had fraudulently induced her to sign a guaranty covering debts in addition to those she thought she was guaranteeing.

I. SUMMARY JUDGMENT

The bank argues first that it was error for the trial court to deny its motion for summary judgment without stating precisely what material facts were in dispute. As evidence of the error, the bank points to the subsequent directed verdict on the same issues it raised in the earlier summary judgment motion.

Our review of summary judgments is de novo; we apply the same criteria as the trial court. Messner v. Briggs & Stratton Corp., 120 Wis.2d 127, 131, 353 N.W.2d 363, 365 (Ct.App.1984). Our own review of the affidavits and counteraffidavits submitted in connection with the bank's motion satisfies us that no material facts were in dispute, and that the motion should have been granted.

In support of its motion, the bank filed the affidavit of its vice president, Duane Manley, who obtained Esser's signature on the guaranty. The affidavit describes Johnson's default on his earlier $27,500 business note to the bank, Esser's execution of the guaranty covering all Johnson's prior debts, and Esser's refusal to honor the guaranty. In opposition, Esser filed her own affidavit, excerpts from an earlier deposition, and an affidavit from Johnson. However, none of Esser's proofs disputed the fact of Johnson's nonpayment of the prior debt, the terms of Esser's guaranty and her own refusal to pay. They went only to Johnson's bankruptcy proceedings.

At the time of the summary judgment motion, there were no claims of misrepresentation or fraud in the case. Esser's answer contained only a general denial and the affirmative defense that she could not be liable for Johnson's earlier debt because it was a listed obligation in the bankruptcy proceedings. She did not file her counterclaim until later.

As a result, the only facts material to the bank's motion for summary judgment on Esser's liability on the guaranty were the guaranty itself and Johnson's default on the prior debt. And Esser's proofs in opposition to the motion did not dispute or contradict any of these facts. As a result, the trial court's unexplained ruling that summary judgment was inappropriate because of the existence of disputed material facts was error. The motion presented only a legal question which, given the fact that the bank's pleadings and motion papers presented a prima facie case for judgment, should have been ruled upon by the trial court. Because we independently review grants--or denials--of summary judgment, we may consider that legal issue on appeal.

While the parties' trial briefs on the summary judgment motion are not part of the record, the transcript of counsel's argument at the hearing on the motion establishes that the primary issue was whether the bankruptcy judgment discharging Johnson from liability on the earlier business note also relieved Esser of liability for that note under the terms of her guaranty. The issue is not addressed by either party on appeal. As a result, we consider it conceded Our conclusion that the trial court erred in not granting summary judgment to the bank on the guaranty does not, as the bank would have it, void all other proceedings in the trial court. Indeed, it does not even require reversal of any portion of the judgment, for the trial court properly directed a verdict on the issue at trial. ²

that the bankruptcy had no effect on Esser's liability. See Charolais Breeding Ranches v. FPC Securities, 90 Wis.2d 97, 109, 279 N.W.2d 493, 499 (Ct.App.1979).

We have previously noted that at the time the motion for summary judgment was decided, Esser had yet to file her counterclaim for misrepresentation. The bank contends that because of this, the entire action should have terminated with the granting of its motion for summary judgment and asks that we void all subsequent proceedings, including the trial on Esser's counterclaim. We decline to do so. The misrepresentation counterclaim was properly pled and tried to a jury. Both parties have appealed from that verdict as well as from certain rulings of the trial court, and both have briefed their arguments for and against affirmance of the judgment. These factors, together with the fact that Esser could have advanced her claims in an independent action against the bank, convince us that we should decide the appeal and cross-appeal, rather than void all proceedings following the summary judgment motion and send everyone back to square one for possible retrial of the same issues.

II. THE JURY VERDICT

The jury returned a verdict finding that Manley had induced Esser to sign the guaranty by misrepresenting to her that it covered only the truck loan. The bank claims not only that there is no evidence in the record to support that verdict, but that the trial court should have directed a verdict in its behalf on this issue. We are satisfied that there is evidence in the record to support the verdict.

Our review of jury verdicts is strictly confined to whether the record contains any credible evidence that under any reasonable view supports the verdict. Ford Motor Co. v. Lyons, 137 Wis.2d 397, 442, 405 N.W.2d 354, 372 (Ct.App.1987). And the scope of our review is even more limited where, as here, the verdict has the trial court's approval. Fehring v. Republic Ins. Co., 118 Wis.2d 299, 305, 347 N.W.2d 595, 598 (1984). We search the record for evidence supporting the jury's verdict, not for evidence that...