Elkhorn Prod. Credit Ass'n v. Johnson

• Decision Date: 14 October 1947
• Citation: 251 Wis. 280,29 N.W.2d 64
• Parties: ELKHORN PRODUCTION CREDIT ASS'N v. JOHNSON et al.
• Court: Wisconsin Supreme Court

251 Wis. 280

29 N.W.2d 64

ELKHORN PRODUCTION CREDIT ASS'N

v.JOHNSON et al.

Supreme Court of Wisconsin.

Oct. 14, 1947.

Appeal from a judgment of the Municipal Court of Racine County; Elmer D. Goodland, Judge.

Reversed.

Action brought by Elkhorn Production Credit Association against Howard R. Johnson and his father, Herman R. Johnson, to recover on a promissory note for a loan made by plaintiff to Howard R. Johnson, who as maker executed the note which was signed also by Herman R. Johnson, as an accommodation maker, with plaintiff's knowledge. To secure payment of the note the son gave plaintiff a chattel mortgage on personal property, including a tractor, which was sold by the son with the permission of plaintiff, and released by it from the lien of the mortgage, although Herman R. Johnson, upon hearing of the intended sale and release, instructed plaintiff not to release the tractor from said lien. As the son failed to appear in the action plaintiff recovered judgment against him by default; but Herman R. Johnson alleged as a defense that plaintiff's release of said lien on the tractor operated to discharge him from his liability on the note. The court sustained this defense and entered judgment dismissing the complaint as to that defendant; and from the judgment to that effect plaintiff appealed.

Lyman K. Arnold, of Elkhorn, for appellant.

James S. Fornary, of Racine, for respondents.

FRITZ, Justice.

The facts which are material on this appeal are not in dispute; and, as there is no bill of exceptions, the issues raised by appellant as to whether the judgment, in so far as it dismisses the complaint against the respondent, Herman R. Johnson, is warranted by facts found by the court, must be determined, as appellant contends, upon such matters of fact as are stated in the court's findings. Bobczyk v. Integrity Mutual Ins. Co. of Appleton, 239 Wis. 196, 199, 300 N.W. 909;A. J. Straus Paying Agency v. Terminal Warehouse Co., 220 Wis. 85, 90, 264 N.W. 249. However, that rule is not applicable to the statements, which, although made by the court in the course of or in connection with its findings of fact, or which are so designated by the court, constitute in reality conclusions of law upon facts which are undisputed or rightly found by the court. As to all such matters the court's determination thereof is subject to review and to reversal, if erroneous, even though there is no bill of exceptions. Mars, Inc., v. Chubrilo, 216 Wis. 313, 318, 257 N.W. 157;Blaha v. Borgman, 142 Wis. 43, 124 N.W. 1047;Shaw v. Crandon State Bank, 145 Wis. 639, 650, 129 N.W. 794;Sherman v. Madison Mutual Ins. Co., 39 Wis. 104.

In the case at bar the material matters of fact of this appeal, which are stated in the findings, are to the following effect: The respondent signed the note as an accommodation maker for his son, with the knowledge of plaintiff, the payee and holder thereof, and in connection with and as security for the note, the son gave plaintiff as security for the note a chattel mortgage on certain farm machinery, including a tractor, the value of which machinery exceeded the amount of the note. Subsequently, plaintiff without respondent's knowledge agreed with the son to release the lien of the mortgage on the tractor, and upon respondent's being advised that the son sold the tractor, respondent immediately conferred with plaintiff and objected to its releasing said lien thereon and informed the plaintiff that respondent would assume no further obligation on the note. But plaintiff released said lien over respondent's objection and without his knowledge. When the note became due the son defaulted in the payment thereof.

In connection with finding the above stated matters of fact, the court stated also-as an apparently intended finding of fact-that respondent ‘in the execution of the note of April 16, 1945, payable to the plaintiff, as an accommodation maker was a surety and secondarily liable on the note.’ In so far as the court thus stated that respondent ‘as an accommodation maker was * * * secondarily liable on the note,’ the court's determination to that effect constituted, in reality, a conclusion of law and not a finding of fact. Therefore said determination is not entitled to the binding effect on an appeal which must be otherwise accorded to findings of fact in the absence of a bill of exceptions (Mars, Inc., v. Chubrilo, supra; Blaha v. Borgman, supra; Shaw v. Crandon State Bank, supra; Sherman v. Madison Mutual Ins. Co., supra); and consequently that conclusion of law is subject to review on this appeal. In passing upon that conclusion it must be noted at the outset that under the facts herein there are applicable to plaintiff and likewise the respondent, as the accommodation maker, the provisions in sec. 116.34, Stats., that:

‘An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.’

Under any by virtue of particularly the provision in said last sentence, there are likewise applicable to respondent the provisions in sec. 116.01,...