First Nat. Bank of Wisconsin Rapids v. Dickinson, 80-708
| Decision Date | 11 June 1981 |
| Docket Number | No. 80-708,80-709 and 80-710,80-708 |
| Citation | 103 Wis.2d 428,308 N.W.2d 910 |
| Parties | The FIRST NATIONAL BANK OF WISCONSIN RAPIDS, a national banking corporation, Plaintiff-Respondent, v. Carl W. DICKINSON, Defendant-Appellant. The FIRST NATIONAL BANK OF WISCONSIN RAPIDS, a national banking corporation, Plaintiff-Respondent, v. Orville T. KNUTSON and Marilyn J. Knutson, Defendants-Appellants. The FIRST NATIONAL BANK OF WISCONSIN RAPIDS, a national banking corporation, Plaintiff-Respondent, v. Louis F. LARSON and Margaret Larson, Defendants-Appellants. |
| Court | Wisconsin Court of Appeals |
Alan H. Deutch, Milwaukee, argued for defendants-appellants; Lawrence Paul Kahn and Deutch & Hansher, S.C., Milwaukee, on brief.
Nicholas J. Brazeau, Wisconsin Rapids, argued for plaintiffs-respondents; Brazeau, Potter, Wefel & Nettesheim, Wisconsin Rapids, on brief.
Before GARTZKE, P.J., and BABLITCH and DYKMAN, JJ.
These are real estate foreclosure actions. Appellants challenge the trial court's orders striking their defenses, dismissing their counterclaims, and granting summary judgment to respondent.
The First National Bank of Wisconsin Rapids (bank) commenced separate foreclosure actions against three defendants (buyers) in October, 1977. The complaints allege that buyers entered into contracts with N.E. Isaakson of Wisconsin, Inc. (seller) for the installment sale and purchase of real property. A copy of the relevant contract is attached to each complaint. The complaints further allege that seller gave buyers warranty deeds to the property and took back mortgages on the property securing the debts. The complaints allege that the contracts and mortgages were assigned to the bank, that buyers have failed to make the monthly payments required by the contracts, and that the bank declared the entire principal and interest due and payable as allowed by the contracts in the case of default. Various amounts are claimed to be due and owing to the bank by the three buyers as a result of their defaults. The complaints demand judgments of foreclosure and sale and, if required, deficiency judgments.
The seller's amended answers, identical in all material respects, allege general denials, affirmative defenses, and counterclaims. The bank moved to strike the affirmative defenses and to dismiss the counterclaims. Those motions were granted. With only the buyers' general denials remaining as defenses, the bank prevailed on its motions for summary judgment.
On appeal, buyers claim that the trial court erred in striking their affirmative defenses and dismissing their counterclaims. Buyers also contend that the court erred in granting summary judgment. Because the issues and material facts are identical in each of the three cases, they have been consolidated on appeal.
Rule 802.06(6), Stats., provides that "the court may order stricken from any pleading any insufficient defense ...." A motion to dismiss for failure to state a claim upon which relief can be granted is authorized by Rule 802.06(2) (f). The purpose of the two motions is to test the legal sufficiency of a defense or claim, respectively. 3 W. Harvey, Rules of Civil Procedure sec. 2101 at 164, sec. 2111 at 172-73 (West's Wis.Prac. Series 1975); Morgan v. Pennsylvania General Ins. Co., 87 Wis.2d 723, 731, 275 N.W.2d 660, 664 (1979); Wesolowski v. Erickson, 5 Wis.2d 335, 342, 92 N.W.2d 898, 920-03 (1958).
Although the demurrer has been abolished as an instrument of Wisconsin civil procedure, Rule 802.01(3), Stats., motions to strike an answer and to dismiss a claim serve the function of the common law general demurrer. 3 W. Harvey, supra, sec. 2101 at 164; Lumbermens Mut. Cas. Co. v. Royal Indem. Co., 10 Wis.2d 380, 382, 103 N.W.2d 69, 71 (1960). The motions admit the truth of all properly pleaded material facts and all reasonable inferences deriving from them, although "legal conclusions and unreasonable inferences need not be accepted." Morgan, 87 Wis.2d at 731, 275 N.W.2d at 664; Sipple v. Zimmerman, 39 Wis.2d 481, 489, 159 N.W.2d 706, 709 (1968). The motions must fail if the facts alleged, if proven, would constitute a claim (in the case of a motion to dismiss) or a defense (in the case of a motion to strike) under any theory of law recognized in Wisconsin. See Keller v. Welles Dept. Store of Racine, 88 Wis.2d 24, 28-29, 276 N.W.2d 319, 321 (Ct.App.1979).
The pleading challenged by a motion to dismiss or to strike should be liberally construed with a view to achieving substantial justice. Halker v. Halker, 92 Wis.2d 645, 650, 285 N.W.2d 745, 748 (1979); Rule 802.02(6), Stats. Accordingly, a claim should not be dismissed "unless it appears to a certainty that no relief can be granted under any set of facts that plaintiff can prove in support of his allegations." Morgan, 87 Wis.2d at 732, 275 N.W.2d at 664. A claim should therefore not be dismissed if it has any merit. 1 Halker, 92 Wis.2d at 650, 285 N.W.2d at 748. Similarly, a defense should not be stricken unless the facts alleged in the answer could form no basis for any theory of defense under Wisconsin law.
Whether the facts alleged in a pleading are legally sufficient to state a claim or defense is a question of law. We therefore review the question independently on appeal.
The portion of the buyers' amended answers denominated "Third Affirmative Defense" actually contains three separate defenses. The first reads as follows:
The alleged contract, which is the basis of this action, and is attached to the complaint as Exhibit "A", is an illegal and invalid contract since same was entered into on the basis of precomputed interest, when the seller was not licensed to do business in this manner, pursuant to Wisconsin Statutes § 138.09.
For the purpose of the bank's motion to strike this defense, we must accept as true the factual allegations that the contract was entered into on the basis of precomputed interest and that the seller was not licensed pursuant to sec. 138.09, Stats. (1973). We need not, however, accept the legal conclusions that the seller was required to comply with the licensing requirement of sec. 138.09 or that the contract was illegal and invalid because of its failure to do so.
Section 138.09(1), Stats. (1973), 2 provides that "(b)efore any person may do business under this section or charge the interest authorized by sub. (7), such person shall first obtain a license from the commissioner of banking." Section 138.09(7)(b), provides in relevant part:
A licensee may charge, contract for or receive a rate of interest which shall not exceed the following:
1. With respect to instalment loans or forbearances which are repayable in substantially equal successive instalments at approximately equal intervals, ....
2. With respect to any loan .... (Emphasis added.)
The statute does not define the term "loan," but does state:
(7)(a) In this section:
1. "Precomputed loan" means a loan in which the debt is expressed as a sum comprising the principal and the amount of interest computed in advance.
Because the seller did not make a loan to any of the buyers, we conclude it was not required to obtain a license to charge precomputed interest pursuant to this statute. The contracts, which are attached to the complaints and which the buyers admit by their answers that they entered into, provide for installment sales rather than loans.
The difference between an installment sale and a loan is recognized by other Wisconsin statutes regulating loans and credit transactions. Because those statutes are in pari materia with sec. 138.09, Stats. (1973), they should be read together and harmonized. Landvatter v. Globe Security Ins. Co., 100 Wis.2d 21, 25, 300 N.W.2d 875, 877 (Ct.App.1980).
"Loan" is defined in the Wisconsin Consumer Act 3 as follows:
"Loan" includes:
(a) The creation of debt by the lender's payment of or agreement to pay money to the customer or to a 3rd party for the account of the customer;
(b) The creation of debt by a credit to an account with the lender upon which the customer is entitled to draw immediately;
(c) The creation of debt pursuant to a credit card or similar arrangement other than pursuant to a seller credit card.
(d) The forbearance by a lender of debt arising from a loan. Sec. 421.301(23), Stats. (1973).
A loan is distinguished from a "consumer credit sale," which the act defines as "a sale of goods, services or an interest in land to a customer on credit where the debt is payable in instalments or a finance charge is imposed." Section 421.301(9), Stats. (1973). The contract attached to the complaint does not create a debt by a lender's payment of money to the buyer. Rather, it provides for the sale of an interest in land on credit, resulting in a debt payable in installments. Section 138.09, Stats. (1973), inter alia refers to the Wisconsin Consumer Act. The legislature was therefore aware of the distinction between a loan and a credit or installment sale when the statute was enacted.
Our conclusion that sec. 138.09, Stats. (1973), applies only to loans and not to installment sales is bolstered by sec. 138.09(3)(e), which provides:
A licensee may conduct, and permit others to conduct, at the location specified in its license, any one or more of the following businesses: A loan, finance or discount business under s. 218.01, or an insurance business, or a currency exchange under s. 218.05, or a seller of checks business under ch. 217; but merchandise shall not be sold at such location; and no other business shall be conducted at such location unless written authorization is granted the licensee by the commissioner.
It appears from this subsection that the precomputed loan statute does not contemplate the issuance of a license to an installment seller of land. In light of the...
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